Monday, 22 December 2008

Hard Times replace Christmas Carols as plot Dickens

RTE news held a recent vox pop in Henry Street, interviewing shoppers as they went about their business against a backdrop of falling retail sales figures. One woman described the new austerity, after a decade of credit-fuelled boom, by reflecting: “last year I didn’t even look at prices – but this year I have to watch them carefully”.

It’s been a funny old mirage, the boom time. Last Sunday’s Business Post listed a fireman who left over €2M in his will, along with the usual collection of millionaire farmers and publicans.

It’s been said before on this blog: the “boom” was only due to low interest rates, careless borrowing/lending, Government property tax shelters (which stoked things up by a factor of x?) and McDowell’s act of reducing capital gains tax from 40% to 20%. All this meant that there was too much borrowed money in the economy, buoyed up by extra cash that would otherwise have been in the exchequer funds rather than inflating that detached house in Foxrock to the €5 mill mark.

All in all, it was a funny mix of reverse socialism for the well-off and Simplistic Right Wing Economics for Dummies, nearly two decades after Thatcher and Reagan were pushed off the stage. A strange banana economy in which those who were already well-off become extravagantly rich; while young working people were forced out to distant commuter towns, paying 40-year mortgages for the privilege.

But now it’s all come undone. The pigeons – or vultures – have come back to roost. Irish household debt is €35,000 per capita, and it’s only the brief respite of falling interest rates that is keeping the wolf from many a wobbly door. Particularly for those who speculated late, or overstretched, in the pyramid scheme that was the property market.

Unemployment is forecast to reach 10% in 2009, and emigration is expected to take the place of immigration. Hard times indeed, if not quite Dickens just yet... and just as people wanted to feel all Christmassy. Back to the 80s, as the newspaper feature writers write when they can’t think of anything else to say, and have exhausted their supply of “Mercs in the Lidl carpark” anecdotes.

It should be an interesting new era, as it all ends in tears. But did anyone really think it could finish any other way?

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