Saturday 7 December 2019

They're forever blowing pretty bubbles

We're surrounded by people on the make. And their experts, who are always wrong

Illustration by Tom Halliday
Illustration by Tom Halliday
Gene Kerrigan

Gene Kerrigan

So, we've decided, have we, to start another property bubble? Or, maybe we haven't. It depends on who you listen to. This has all the makings of a property bubble, says one expert, this is how they start.

Oh, not at all, you fool, says another expert - every bit as confidently as the first expert.

Half a dozen people queue for a sale of new houses in Swords - just one eager potential buyer for every ten houses. Someone blows a whistle and the media obediently trots along to chronicle this evidence of a bull market.

(Carefully covering their asses by pointing out that they're not actually saying there's a bull market. Just acting as though there's one.)

And the usual suspects scrape the ground like bulls that can't wait for the gate to be opened so they can stomp all over whoever gets in their way.

There's hardly an hour in the day when you won't find a government minister, an economist or one of the usual cheerleaders talking about how rising property prices is evidence of "the recovery".

In short - if we don't get another property bubble going, it won't be for the want of trying.

And that's the nugget of truth worth taking away from recent events. We're surrounded by people on the make. And their cheerleaders. And we are fodder for their plans.

The reality is this: wealthy gamblers crashed the financial system in 2008 and their political friends made us pay the bill. For them, it's about getting the same game going again.

They have political and media cheerleaders who believe this is the only game in town.

The assumption the hustlers and their admirers make is that because rising property prices are good for them they're good for us.

Yes, rising prices are good for those with property to sell. And if you're a fool you can think yourself into all kind of fantasies.

I remember well the moment when the Celtic Bubble peaked and I realised my house was worth almost half a million - given what similar houses were selling for in the neighbourhood.

Yippee! I was rich! All I had to do was sell the house and not buy another one and I'd be able to rub shoulders with the gentry. It was when I was picking out the bridge under which I'd sleep that it dawned on me that there might be a flaw in this cunning plan.

Ah, yes, but rising house prices are good for people in negative equity.

Maybe so. But people in negative equity are there because they paid more than their house was worth - pushed into it by a riot of land hoarders, developers, estate agents, the media, crappy politicians and stupid bankers. And now we're supposed to be happy to see house prices going up at a cracking rate, because as soon as they reach the truly ridiculous the people trapped in negative equity will be free?

Too many among us behave as though rising prices are a natural phenomenon, like daily temperature fluctuation, or the pollen count. Property prices derive from a mixture of greed, fear and market manipulation.

Like most people, if I think too long about economics a little spot over my left eyebrow gets very hot and I have to lie down with an icepack. Which is why, like most people, I leave that sort of stuff to the experts.

Which is a pity. For three reasons.

First, because, ever since the financial system collapsed in 2008, politics has been mostly about economics. So, when we leave economics to the experts, we're handing over our future to people who are often employed by wealthy interests, obsessive about becoming wealthier.

Second, the experts are bloody awful at their jobs.

That's not an abusive insult thrown at people who are highly educated and often quite public spirited. It's an observable fact. How many experts - economists, academics, senior civil servants, business journalists - stood up last time and shouted stop?

And, no, don't show us an ass-covering paragraph you wrote in 2006 that said a measure of prudence wouldn't be inappropriate, on occasion.

It's not just that they didn't join in asking the sceptical questions, when the likes of Morgan Kelly raised a red flag. It's that they actively rubbished anyone who didn't sing along with the approved song.

Which brings us to the third reason it's a pity we leave economics to the experts.

They're extremely impressive. They were impressive when they explained in 2005 that we'd have the infamous "soft landing". And in 2009, when they explained that a wee bit of austerity would see us right. And in 2011, when they argued that, despite the evidence, the governments of Europe were right to deflate the economy.

They're so impressive that challenging the experts on the economy is like getting into an argument with mechanics about what's going on inside your car. You cannot win.

They know all the names of the bits and pieces, and how they interact. If mechanics say that the lateral rotation of the secondary throughput sprocket has "thrown a wobbler", you're unlikely to be able to argue the point.

And if you happen to know that the secondary throughput sprocket is in fine shape, because it's obviously oscillating as it should, the mechanic smiles indulgently and reminds you that the oscillation is dependent on the transverse camshaft medulla, which in this case has shifted alignment.

To which, the only possible reply is - how much will this cost?

Economists and business journalists can take most of us apart, when discussing economic policies. If they tell you the downside on the structural adjustment is counterbalanced by the buoyancy integral to all expansionary contraction - well, what can you say? Except - how much will this cost?

Last time, the answer to that question was a minimum of €64bn.

The alleged banking inquiry is intended to be a barbecue, on which the carcass of Fianna Fail will be slow-roasted in the run-up to the next election.

I've no objection to Fianna Fail being subjected to extreme torture, but I'd rather have a frank examination of the role of the estate agents in the 2008 collapse. The role of the builders. The role of the bankers. The role of investment capital. The role of the media. The role of the experts.

Meanwhile, the European Central Bank is about to pump forty billion into the eurozone economy.

Wait, now - late breaking story - it's not forty billion - it's five hundred billion.

Unless you believe the other experts who expect it to be seven hundred billion.

And, why? Well, for the past six years the experts have been telling us about how austerity was the key to recovery. Get that deficit down to the magic 3pc and just watch the eurozone taking off, baby.

The intellectual case for austerity was weak, but we believed the experts and we did as we were told. By and by the intellectual case for austerity fell apart. Now, Germany is stagnant, France is limping - and they're the success stories.

Now, here comes Mario Draghi with bags of money. We'll let the experts explain what they think he's up to, but to some of us it looks like he's maybe trying a version of the Irish miracle - flood the kip with cheap money, see what happens.

Here, of course, the "recovery" is well under way. Things have stopped getting worse, there's an upturn in employment. Things are looking up - if you don't count the emigration and the asset-stripping of the hospitals and the schools and the libraries.

And the glaring consequences of the axing of the social supports that hold communities - and individuals - together.

Things are so great that Fine Gael is preparing an election budget, while explaining that they're doing no such thing. Things are so great that hustlers are talking positively about the next property bubble.

They have made a wasteland and they call it recovery.

But, then again, they're the experts.

Sunday Independent

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