Further thoughts on “Ship of Fools” by Fintan O’Toole …

In so far as these things matter, I totes claim bragging rights over calling the end of the bubble in Ireland, in writing in October 2006 and my only regret is that I changed jobs and started doing something else before I had time to milk it[1]. My basic point at the time was that the rental yield on Irish property at the time was estimated at 3.25% (Daft.ie had begun to calculate a rental yield index, tragically too late – I believe unless someone knows different that at the time I was in possession of the only even acceptably accurate time series of data on Irish rental yields), and that with the most recent ECB rate rise to 3.75%, the logic of the myopic-expectations buy-or-rent model[2] was about to start working in reverse. As it did. I’ve mentioned on a number of occasions that in actual fact, this was a policy-caused bubble, and that’s true in Ireland as well. But of course, the actual mechanisms by which a bubble is inflated, since they are based on a combination of the winner’s curse and limited liability, tend to involve the sorts of tales of sharp elbows, social capital and low risk aversion which can be made to look absolutely awful with the benefit of hindsight and/or in a court of law. So let the games begin …
[click to continue…]

Too Connected to Fail

by Henry on May 4, 2010

My “review”:http://www.washingtonmonthly.com//features/2010/1005.farrell.html of “Ship of Fools,” Fintan O’Toole’s book on the wreck of the Irish economy, is up at the _Washington Monthly._ Opening paragraph:

bq. When I first came to the United States from Ireland in the early 1990s, Americans thought of my home country as a land of green fields, bibulous peasants, and perhaps the occasional leprechaun. Once, on a bus from Ann Arbor to Detroit, a fellow passenger heard my accent and asked if she could touch me for good luck. But something changed over the course of the 1990s and 2000s, as Ireland started to enjoy remarkable levels of economic growth. Blather about Guinness and the Little People made way for a new story line: the success of the Celtic Tiger economy. Between 1995 and 2007, Irish GDP grew at an average rate of 6 percent every year. Housing prices rose by 270 percent between 1996 and 2006. A country that had long been notorious for its high emigration rates started to import people instead. Gort—a tiny town in Galway—acquired a large population of South American immigrants, while Dublin supported no less than three Polish-language newspapers.

All up to dsquared now.

I’ll be voting Labour

by Chris Bertram on May 4, 2010

I spent part of yesterday at the local May Fair where, in addition to the stalls selling plants, vegetables, antiques, books, etc, there were representatives of all three of the main political parties and the Greens. I was struck by my own emotional reaction to the various politicos: loathing towards the Tories and indifference towards the Greens and Lib Dems. I felt at home talking to the Labour people even when telling them that their candidate’s main pledge (not to support an increase in student fees) made no sense at a time when my university is shedding jobs, unless they were also planning an increase in funding from general taxation – which they aren’t. So I felt they were my people, still, after years of NuLab, Mandelson, Iraq, and so on. Then there’s Gordon Brown. Plainly a disaster as a politician: either stiff and technocratic or, when he tries the human touch, an embarrassment. I’m still glad he was PM when the banking crisis struck, though, and not George Osborne David Cameron.

But here’s the decisive thing for me. We all know that the next few years in the UK are going to be tough and that the volume of cuts that each party would make are about the same. Where there is a difference is in the distribution of the pain. If the Tories are in power it will fall on the very poorest and most vulnerable. The Lib Dems will be better than that, but they too will appease their middle-class base. A Labour government will still hurt the most vulnerable but less so. Labour aren’t going to win, but it would be very very bad if they came third. Their base, again, composed disproportionately of the worst-off, would become still more marginalized. So share of the vote counts too, even in a first-past-the-post system. I’m voting Labour.

I’m expressing the views above on the general election in a purely personal capacity, of course.

What if…?

by Harry on May 4, 2010

Chris Brooke is on a roll again. Responding to fears that Cameron will demand the PMship if there is a hung parliament in which the Tories have the largest number of seats, and force Brown’s, or the Queen’s, hand:

People are making analogies with the presidential election in the United States in 2000 — but what was striking then was far more the spinelessness of the Dems rather than the unscrupulousness of the Repugs. The bottom line is that politics is about power, and if the Tories are the only ones willing to play hardball, then – bluntly – good for them. If the Queen discredits herself along the way by being pressured into being openly partisan, then that’s a good thing, as it’ll work to hasten the end of this stupid monarchy. And if voters disapprove of what the Tories are doing, then they’ll punish them when they get the chance. That’s democracy.

This reminded me, for no particular reason, of what happened immediately after Labour’s unexpected victory of 1945. Morrison (appalling grandfather of the magnificent Mandelson) tried to involve Bevin in staging a coup against Attlee. Bevin forewarned Attlee (to whom he was intensely loyal) and in the end Attlee just sat through Morrison’s demands to be given a shot at becoming PM. Bevin was stunned by Attlee’s relaxed attitude. When Morrison was done, Attlee just said something to the effect of “Well, I’m driving to Buckingham Palace, where the Queen will invite me to form a government” (not exactly — he didn’t drive, his wife did — she was, apparently, a crazed driver, and his colleagues would occasionally try to stop him allowing her to drive him — while he did the crossword).

I doubt that whoever goes to the palace on Friday will be driven by a wife, or will be doing a crossword puzzle.

Anyway, read the whole thing.