Dublin property prices falling by €4,500 a month

[EvotingMachine0197]

...
It's my theory that the Japanese ZIRP policy has actually been feeding the Japanese deflation for years now. Because interest rates in Japan are so absurdly low, everybody with savings in Japan - not just corporations, the average housewife is at it - is playing the carry-trade game. And so no productive domestic investments are not being made and huge amounts of money are flooding out of the country every year. The inevitable results should be obvious, to everybody except the BoJ......

Good theory, but now I'm afraid i'm confused again.

I understand how BoJ ZIRP is causing a massive flight of Yen to Eu and US, but I can't see how this is increasing money supply in the west.
I would have thought the Yen carry traders bought Euro or Dollar Bonds or something ?
i.e what happens to the Euros when they are bought using Yen ?

[feargach]

I'd argue that it's debt that causes inflation: when you have to repay more than you borrow, then your only possible strategy is to grow your business as much as possible.

When everyone does this, a harmful vicious circle is created.

As time progresses, it takes more and more debt creation to allow economic growth to continue.

The US economy must borrow $4 to create every $1 of economic growth.

And the family home is wha tso much of this debt revolves around.

The "subprime problem", I assume, has a lot to do with risky borrowers getting their homes repo'd and the bank failing to clear the loan because of a fall in its value.

If the same were to happen here, God I shudder to think.

[Sidewinder]

Good theory, but now I'm afraid i'm confused again.

I understand how BoJ ZIRP is causing a massive flight of Yen to Eu and US, but I can't see how this is increasing money supply in the west.
I would have thought the Yen carry traders bought Euro or Dollar Bonds or something ?
i.e what happens to the Euros when they are bought using Yen ?

Welcome to the wonderful magical world of fiat currencies and fractional-reserve banking systems

People assume that our currencies are actually based on something real, some tangible underlying asset, and that therefore they have to be created from something, and that there is a finite amount of them in existence.

We did away with all that decades ago. All our money is imaginary, really. The banking system can create as many Euros or Dollars as they like.

Essentially they take the original Yen asset and balloon it up into as much as 50 times the value in issued Euro or Dollar debt...from thin air (the required reserve ratio in the Eurozone is a mere 2%, the UK doesn't even have one but has a "voluntary" code of 3%, and the US claims to enforce a 10% RRR but no-one believes them). This is largely only possible because since 1971 we have ditched asset-backed currencies and at the same time radically reduced bank required reserve ratios beginning in 1988 with the Basel I Accord.

It's no coincidence that the same period has seen greatly increased financial instability, declining real wages, massively increased personal debt, chronic inflation, and a huge increase in income-inequality across most of the West.

[EvotingMachine0197]

Ok Thanks SW. I'll need some time to soak that up. There's a couple of things there I need to get my head around.

[Akrasia]

it's a bit of a scam really.

Banks create money in the economy by making loans. The amount of money that banks can lend is directly affected by the reserve requirement set by the Federal Reserve. The reserve requirement is currently 3 percent to 10 percent of a bank's total deposits. This amount can be held either in cash on hand or in the bank's reserve account with the Fed. To see how this affects the economy, think about it like this. When a bank gets a deposit of $100, assuming a reserve requirement of 10 percent, the bank can then lend out $90. That $90 goes back into the economy, purchasing goods or services, and usually ends up deposited in another bank. That bank can then lend out $81 of that $90 deposit, and that $81 goes into the economy to purchase goods or services and ultimately is deposited into another bank that proceeds to lend out a percentage of it.

http://money.howstuffworks.com/bank1.htm

So when Bertie Ahern kept all of his money in a safe in St Lukes, it wasn't because he was doing anything corrupt, He was just doing his patriotic duty by helping to control inflation

[feargach]

Happy August, people. ESRI housing report for June has been delayed yet again!

Not to worry, because as we now know, the ESRI report had no basis in actual sale prices of homes.

In fact, there are NO published reports based on actual sale prices, and there haven't been for years!

Is that fact politically relevant? It seems vaguely important

[Coles]

AIB's chief executive, Eugene Sheehy, said applications for mortgages were down 25%, which apparantly he described as 'very significant'. Of course it is, but it may be far more significant than it appears. It is unlikely that the level of 're-mortgaging' (for home improvements) is down, and while they are a large number, they are usually for smaller amounts of money than property purchases. This 25% drop in mortgage applications may represent a 50% fall in property buyers.

[kerrynorth]

That jump in properties coming onto the market in July catches the eye alright - up circa 50pc on the previous 6 month average. Especially as nothing gets sold in August. If representative it implies a glut in the market for the Autumn selling season starting in September. I wonder if the July jump may be partially related to the ISEQ collapse and the stories going around that property developers were crucified by their CFD investments?

[rockofcashel]

Since theres an absence of hard facts about the property market, I decided to generate some from Daft.
http://andrewjpage.com/index.php?/archi ... arket.html

Its still a work in progress though but it breaks down the number of unsold houses by the month they went on the market.

The average length of time property is on the market:
3.6 months - Nationwide
4.8 months - Dublin
3.4 months - Nothern Ireland

2.88 months - Nationwide (only counting properties listed in 2007)
2.9 months - Dublin (only counting properties listed in 2007)

where did I read a few years back, once houses are more than 100 days on the market, the auctioneers admit they are in trouble

[Leftfemme22]

Since theres an absence of hard facts about the property market, I decided to generate some from Daft.
http://andrewjpage.com/index.php?/archi ... arket.html

Its still a work in progress though but it breaks down the number of unsold houses by the month they went on the market.

The average length of time property is on the market:
3.6 months - Nationwide
4.8 months - Dublin
3.4 months - Nothern Ireland

2.88 months - Nationwide (only counting properties listed in 2007)
2.9 months - Dublin (only counting properties listed in 2007)

where did I read a few years back, once houses are more than 100 days on the market, the auctioneers admit they are in trouble

Indeed, it’s a far cry from when my partner and I where outbid in the living room of the cottage/bungalow we were viewing. The final price was simply outrageous for the property in question. I imagine I would now get it for less than I was prepared to offer in 2005.