Sunday, 29 August 2010

We Face Greek Style Crisis...

They're all away as we face Greek-style crisis

Immediate action needed on debt, but Dail won't cut short holidays...

THE Government is to leave the political apparatus of the State on holiday throughout September -- even though there is growing concern that the country could face a Greek-style crisis before the end of the year.

Widespread bewilderment was aroused in high finance circles last week by the publication of photographs of the Taoiseach, Brian Cowen, playing golf the day after Ireland's sovereign debt was downgraded again.

In what is seen as an example of ill-judged timing, Mr Cowen played golf in Connemara on Wednesday with other seemingly carefree TDs and senators, who still have four weeks of a two-month summer break to go.

But while the Oireachtas is in repose, enjoying a longer than usual break, the financial markets are in overdrive and are now evidently training their sights on Ireland with the apparent intention of again testing the resolve of the EU later this year.

There is growing consensus among economic commentators here that, to counteract the threat, Ireland desperately needs to address the concerns of the markets between now and the end of September.

The markets' concerns relate to the massive and seemingly open-ended debt burden being foisted on taxpayers by the Government in an attempt, effectively, to bail out the banks -- primarily Anglo Irish Bank.

There is agreement among commentators that Finance Minister Brian Lenihan urgently needs to draw a definitive line on the cost of the Anglo bailout.

The markets are also awaiting a decision by the Government on whether it intends to extend the bank guarantee scheme; and, if so, to what extent and for how long. An announcement will not be made, however, until the day the Oireachtas comes off holiday.

A Sunday Independent/ Quantum Research poll, conducted on Friday, asked whether the Government should extend the bank guarantee scheme: 58 per cent said no, while 42 per cent said yes.

"It gets more and more damning and more and more worrying," Brian Lucey, economics professor at Trinity College, Dublin, said on Friday. "Where is the Dail? On its bloody holidays? Where is the Government?" he asked.

Ciaran O'Hagan, an Irish economist who is head of rates research at Societe Generale in Paris, said measures to limit public debt and contingent liabilities were now needed.

On whether these urgent measures were required before the end of September, he said: "Bang on."

But the Oireachtas will not be back off of its holiday until the end of next month.

The significance of the downgrade by the rating agency Standard & Poor's is regarded as of minor importance, although it still has serious consequences.

An immediate consequence last week was that yields of Irish government debt rose sharply, at one point closing at its highest since the EU agreed a bail-out fund in early May when the entire euro project was under threat.

Last April, Standard & Poor's decreased the Greek debt rating to the first levels of 'junk' status amid fears of default by the government there. Following that downgrading, yields on Greek government two-year bonds rose to 15.3 per cent as analysts questioned Greece's ability to refinance its debt.

Last week, Standard & Poor's also assigned a negative outlook to Ireland, citing substantially higher costs to support its struggling financial institutions.

The influential Financial Times, in an editorial last week, said: "It is time to staunch the bleeding. As Irish state guarantees near their expiry date, some banks will not be able to refinance their balances.

"The government should prepare insolvent banks for forced debt-for-equity swaps, which would instantly recapitalise the banks in question and cap the government's exposure.

"This cannot be done frivolously; European institutions are exposed and EU partners must be consulted. But someone must put an end to the practice of handing banks blank cheques.

"Some Irish pluckiness would benefit us all."

In the absence of out-front political leadership, it has been left to the Governor of the Central Bank, Dr Patrick Honohan, and the National Treasury Manager Agency chief executive, Jim Corrigan, to effectively defend policy.

On Wednesday, Mr Corrigan said Standard & Poor's analysis was "flawed".

Among economic commentators, there is some sympathy for Mr Corrigan's argument; there is also widely held opinion that rating agencies should be held to greater scrutiny for their role in mis-rating many of the toxic assets at the centre of the international financial crisis.

Nevertheless, Ireland's rating at three notches below the top, triple-A ranking has caused a further problem for the Government at a time when it is making plans for what will be a politically sensitive Budget.

Report by JODY CORCORAN - Sunday Independent

Friday, 27 August 2010

Bertie Blames Banks For ALL Our Cash Woes...

FORMER Taoiseach Bertie Ahern has pointed the finger of blame firmly at the bankers for the country's economic problems in a new RTE series.

The TD is interviewed alongside economic heavy hitters former UK chancellor Alistair Darling, Central Bank Governor Patrick Honohan and Minister for Finance Brian Lenihan in the new series Freefall.

The programme investigates the banking system failures and the widespread collapse of the property bubble which fuelled the economic recession.


Coinciding with the second anniversary of the controversial Government bank guarantee, the two-part documentary series tells the story of how a huge property bubble, fuelled by the lending practices of the banking system, brought the economy precariously close to the edge.

Former Chancellor for the Exchequer in Britain Alistair Darling said Europe must learn from the mistakes and that every part of society should take a portion of the blame.

"If we walk away from it, it will happen again and the next time it could be worse, really much, much worse," he said.

However, Bertie Ahern paints a more black-and-white picture.

He said that the economic recession was due to failures in the financial institutions.

"They were bank mistakes, bank errors, bank regulations," he said.

Mr Ahern said bank chiefs failed to give the government at the time a clear overview of what was happening.

"When we asked about those we got the glossy answer they were running their businesses well," he said.

UCD's Professor of Economics Morgan Kelly, who is known as the doom merchant for his ominous warnings about the state of the economy, revealed that he noticed that the upper levels of banking and governance were complicit in the recession.

"There is an Omerta, a code of silence in the upper reaches of Irish society that I somehow had violated," he said.

Freefall airs on Monday, September 6 at 9.35pm on RTE 1.

Report - Claire Murphy - Evening Herald

Wednesday, 25 August 2010

Insane Metro - Disaster For Dublin...

The Metro is an insane idea -- and a disaster for Dublin...

We've been bombarded with cataclysmic figures for the past two years, all of which related to financial obligations caused by our past blunders. Many of you were clearly unaware that the Metro represents an entirely voluntary leap into a fresh and cataclysmic debt that could bring disaster to Dublin.

Now, no one would back a plan to build a huge coal-fired power station that had been conceived before global warming. So why is this technically bankrupt State hoping to build an underground rail link from St Stephen's Green to Dublin Airport which was conceived before the financial meltdown?

We are borrowing €20bn a year merely to run the State and to pay civil servants' salaries and pensions. And yet we still propose to build the Metro?

This is not rational behaviour, but akin to the conduct of an alcoholic who has foresworn alcohol totally -- apart, that is, from the open-ended credit-card account with Tesco wines, beers and spirits.

Tens of thousands of people are repaying mortgages that are vastly greater than their homes are worth. Unemployment is rocketing, as entire swathes of the secondary economy -- restaurants, shops, taxi companies, solicitors -- are collapsing.

Yet the Government, nonetheless, determinedly proceeds with the most expensive infrastructural project in the history of the capital.

Official estimates for the Metro declare that it will cost €5bn. Is this figure as much value as government estimates for earlier projects?

The Dublin Port Tunnel went from an estimated cost of €220m in 2000 to €580m in 2002, then to a final cost of €789m -- some 350pc of the original estimate. The M50 widening increased from €190m to €560m: 300 pc of the estimate. The Luas went up from €290m to €750m.

So all government predictions are in the realm of how long is a piece of string?

Therefore, allowing (modestly) that the Metro will probably cost 300pc of the original estimate, the final bill will be about €15bn. But this is not even like squandering money on a greenfield site in north county Dublin. No, the project requires a series of major assaults on the streetscape of Dublin and on the already-bleeding commercial centre around Grafton Street.

Sit down, while you read what is being proposed: a vast underground station beneath St Stephen's Green. This will require the destruction of the Green, the felling of its trees and its probable closure for two years. During this time, the removal of waste from beneath the Green will require 400 lorry movements a day through the city-centre's narrow streets to some dump in the greater Dublin area. And which lucky rural community will be the beneficiary of these thousands of lorries a week, unloading millions of tons of spoil a year?

This would have been barking at the height of the boom: but now we are borrowing nearly €60m a day to keep the State going, it is the kind of insane and Gothic fantasy that Hitler might have entertained as the Soviet tanks were rolling towards the fuehrer-bunker.

For at no point does the Stephen's Green scheme touch reality in terms of the commercial needs of an already crippled city centre, the actual transport requirements of airline passengers or what is financially possible for the Irish State.

NOW, I don't think that the civil-service mandarins who are backing the Metro scheme (along with the Greens, who are, of course, actually clinically mad) are doing so because they are consciously thinking of their own personal needs. But it's hard not to conclude that a huge collective unconscious is driving this desire to locate the transport hub at the very heart of the civil service. For nobody lives in St Stephen's Green (apart from guests in the Shelbourne Hotel, to which we can probably wave a fond farewell). Otherwise, there's no reason to make it THE underground hub for the Dart and Luas lines.

A rival hub -- where Dart and Luas and buses and mainline rail all converge -- already exists, although it is where almost no senior civil servant could find it, even on the map -- for it's north of the Liffey, at the Store Street-Amiens Street junction.

Further official figures will presumably be trotted out to justify the Metro, but most of these are soviet in their meaninglessness.

For example, the National Roads Authority -- those fine fellows who have just built a thousand miles of motorway without a single petrol pump -- routinely finish their projects ahead of their own schedules. Well, if you asked the NRA planners what time a rugby match will end, they'll invariably say: "Oh, about four hours after kick-off" and then be acclaiming themselves at the "early" whistle. So despite recent and very selective NRA claims, virtually all traffic flow is falling dramatically across the State.

The statistical projections which made the Metro notionally viable (and only then in the hallucinogenic fantasies of officialdom) are now as meaningful as Chad's military designs on Nebraska.

"Metro", means "mother" and "-polis" means city: "metropolis" therefore means "mother of the city". But if this insane scheme goes ahead, this underground line will probably be called "Necro".

Article by Kevin Myers - Irish Independent

Thursday, 19 August 2010

Mass Emigration Returns To Ireland...

Big move is abroad as market stagnates...

MASS EMIGRATION may be an unwelcome throwback to the past for many Irish people but for the removals industry the growing exodus of workers to far-flung destinations means business is booming once again.

Some of the sector’s largest firms are reporting dramatic increases in the numbers of people moving lock, stock and barrel to Australia, Canada, New Zealand and the UK. Most of these migrants are families who have cut their losses on property at home or are renting out their homes in the expectation of a return in three to five years’ time.

Last month, a report from the EU Commission showed more people were leaving Ireland than anywhere else in the European Union and commentators attributed these rising emigration levels to departing non-nationals and young Irish males in search of better job prospects.

But according to Eamonn Finn, of Allen Removals, the “overwhelming majority of clients are Irish families who have decided to move overseas permanently” to escape the deepening economic crisis at home. He claims he is moving five to six families a week and says more than 80 per cent of his business is now focused on “deep-sea shipping”.

It’s a radical turnaround from the halcyon days of the Celtic Tiger, when spiralling property prices meant overseas removals was a niche business.

Now it’s “our bread and butter” says Finn. “It’s not a business we would have chased in the boom times,” he says, but he concedes the resurgence in emigration has delivered a valuable lifeline to an industry that threatened to go the way of many other property-related companies .

Although the company has reduced its workforce, it is still going and, Finn claims, “we would have gone to the wall” without the rise in migration.

Aubrey McCarthy, managing director of AMC Removals and Storage, tells a similar story. “During the property boom, about 80 per cent of our business was in the domestic market and about 20 per cent was in exports. That situation has been completely reversed.”

He maintains the sharp increase in families leaving the country – AMC moves an average of seven families a week – has driven up profits at the firm and led him to expand his fleet.

Demand for storage has also jumped. According to McCarthy, many families will “put their furniture into storage and rent out their homes” before committing to a more permanent move. “We do have some clients who like to get a feel for a country first.

“They usually wait for three to six months and then ship out their furniture.”

But Deirdre Fitzgerald of Move Masters, a company that specialises in international relocations, warns that not all families find the grass greener on the other side of the world. While overseas removals now, in the wake of the property market crash, account for 85 per cent of her firm’s business, she points out that “two out of every five clients” decide to return home within a year of moving.

Moving to Australia causes the most serious adjustment problems, according to Fitzgerald, “The Irish tend to regard Australia as an easygoing country, with good weather and a booming jobs market.

“Then when they get there they discover the cost of living is too high, many of them end up double-jobbing and then return disillusioned. Unfortunately it means these families bear the cost of moving twice in a short period of time and of course they go through the trauma of moving children from one side of the world to the other and back again.”

McCarthy concedes that some families find the relocation to Australia and Canada – the two most popular countries for emigrants – “stressful” but points out that “today’s migrants are very different to “the panicked people” forced to leave in the 1970s and 1980s. “Back then,” he says, “many fled to New York and the UK with little more than a suitcase, whereas these days people are going further afield, they’re more educated and they’re wealthier because they have either sold or are renting out property here.”

While many may feel sad at this growing exodus, a return to the Celtic Tiger era, when mass emigration looked like it had been consigned to the history books, looks unlikely. A report issued by the Economic and Social Research Institute last month predicted up to 200,000 people will have left these shores by 2015.

Report by Gretchen Friemann - Irish Times

Wednesday, 18 August 2010

Collapsing House Prices? We Ain't Seen Nothing Yet...

THE most comprehensive report on the Irish property market is out and it evidences the total destruction of wealth of a certain generation. According to the wonderfully detailed work done by Ronan Lyons at, asking prices countrywide fell by just over 4pc in the second three months of the year -- a slightly larger fall than in the first quarter.

The average asking price nationally in the second quarter of 2010 was just over €224,000 -- 36pc below its 2007 peak. The acceleration in price falls will come as little surprise, but the question now is how can a generation whose balance sheet has been so totally vaporised ever start spending again?

Back in 2007, I wrote a book called 'The Generation Game', which focused on how the generation between the ages of 30 and 40, who had got into the housing market via huge mortgages, would be financially eviscerated. This group was termed "the juggling generation" because they were trying to juggle being good parents and good workers, while still paying these huge mortgages.

The book focused on a generational gap between these commuter-workers and the older generation, many of whom had become accidental millionaires as a result of an unexpected windfall from the housing market.

Obviously, negative equity would swing against the jugglers in the predicted bust, much as positive equity had enriched the accidental millionaires in the boom. In the book and the related documentary, the housing boom was painted broadly as a massive transfer of wealth from one generation to another.

The figures from show just how extreme the negative equity trap now is. Prices in Meath, for example, have fallen by 38.4pc from peak to trough.

The figure for Louth is over 40pc; Kildare's is 36pc and Wicklow's 36pc. These were the counties that were growing fastest during the boom.

The question is, where next for the property market?

Are we at the bottom or is there yet more negative news in the pipeline?

During the evolution of a housing crash, there comes a time when the fall in prices tells us less than other indicators, such as the time it takes to sell, the total stock of houses in the market or the amount of houses coming on to the market.

The time it takes to sell gives an indication of how realistic the asking prices actually are. All around the country, estate agents' windows are full of houses -- but if they are not selling, then the price asked is of limited value in determining the next phase of the market.

So, for example, the average time to sell is four months in Dublin, whereas it is up to a year in Connacht and 10 months in Munster.

The suggestion here is that prices in Dublin -- having fallen by 50pc in the city centre since the peak -- are not at the bottom yet but might be getting close.

In contrast, the rest of the country has a long way to fall.

The other concern, given what we know about unemployment and negative equity, is how many of the sales are forced sales, rather than voluntary sales? How much of the new stock reflects bankruptcy, rather than people thinking: "Okay, now I might put the house on the market because I think there is more activity"?

In terms of where prices go, it is now crucial to understand the change in mass psychology.

A property crash normally ushers in a period where people choose to rent over buying, particularly with so much choice out there and with so much uncertainty about job prospects.

Furthermore, to assess whether a house is good value or not, the prospective buyer has to do some basic maths to see why he should buy. And whether we like it or not, for a housing market like Ireland's to clear, investors need to come back into the game.

Let's look at it from the perspective of the investor, by looking at the return to buying houses now through the prism of yield. What percentage yield does an investor have to get to make it worthwhile investing in bricks and mortar for rent?

LET'S do the sums. With government bonds yielding more than 5pc, it's fair to suggest that an investor would need to get a yield of at least 7pc from housing. So taking the average house price at €220,000 and the average rent at €863 per month, we see that the investor gets -- with these prices and these rents -- a gross yield of just over 4pc. This is before he takes into account his funding costs. Why would he bother getting into the market just yet?

In order to make a 7pc yield at the present average rent, the average price of houses would have to fall to €135,620. This suggests a huge further drop in average house prices here.

This is quite stark reading, particularly when you consider that house prices overshoot, both on the upside and on the downside.

So even without the overshooting process, the investor would be crazy to get into the market at these prices. So too, therefore, would the renter be mad to buy the house that he is in at these prices.

Prices would have to fall by another 30pc for the renter in the commuter belt to choose buying over renting.

This is the central inconsistency which exacerbates the generation trap in Ireland. For the housing market to clear, prices have to fall much further; the basic maths can't be fudged. But when this happens, the negative-equity trap will tighten on the recent home-buying generation, whose only crime is that they were born in the wrong decade.

So for Ireland to recover, there will have to be a 'lost generation' who will be largely shut out of whatever economic future this country experiences.

This generation trap is the poisonous legacy of the Ahern-Cowen years.

"A lot done, a lot more to do."

Yeah, right.

Article by David McWilliams - Irish Independent

Monday, 16 August 2010

Housing Nightmare...

'The estate is shabby now. I don't know how they'll sell anything'

Unfinished roads, stalled sewerage systems and dangerous empty houses: welcome to a housing nightmare...

CIARÁN DOYLE lives in a well-designed, highly insulated, nicely finished three-bed house which he describes as “perfect”, yet everyone in town refers to where he lives as “the building site”.

Rinuccini, incongruously named after a 17th-century Italian cardinal, is just one of several unfinished estates which encircle Portlaoise town but, on first sight, it’s the worst. Four storeys of bare grey concrete criss-crossed with rusting scaffolding, intended to house up to 70 apartments, fronts straight onto the Dublin Road.

“The apartments are a holy show. Because we’re on the Dublin Road, it’s one of the first things that hits you coming in and it looks shocking bad for the town. I’ll never understand why they didn’t start building at the road first and work in.”

Ciarán has plenty of opportunity to ponder the question, as he has to pass the strip of unfinished apartments to get to his house near the back of the estate. His house is fully finished inside, with a high standard of workmanship. Outside, however, there are problems.

“The house is perfect. It’s an awful shame they didn’t do the same with the rest of the place. There is no lighting anywhere in the estate. They put up the posts, but they’re not wired in. There’s no green space, absolutely nowhere for kids to play, so they go climbing the scaffolding.”

The unfinished apartments and houses are an obvious safety risk. Ladders have been left leaning against the scaffolding, making it even easier for small children to climb up to the higher floors where there are unboarded window spaces and unrailed balcony platforms.

“There were security guards on it, but they’re gone more than a year now. I’ve called the gardaí a couple of times. There’s not much they can do, but I don’t know who else to call.”

Not knowing who to call in relation to problems in the estate is a persistent problem. Ciarán’s house is ringed by finished but vacant properties that are beginning to manifest the problems of unlived-in houses – peeling paint, burst pipes in winter, overgrown gardens – but no one seems to be in charge.

“Event Horizon, the developers, they’re gone. So who is responsible for the place now? Is it the banks, is it the council? I would like to know if someone is going to make a decision about what to do here.”

His own preference would be for the unfinished blocks to be levelled and turned into a recreational space. “If houses are not completed, the developers or the council or whoever it is should come to an agreement to cut their losses and knock them. The blocks and the timber, if it’s not rotted at this stage, could be reused, and then it could be turned into a green area. I’m not looking for miracles, I know things will never be 100 per cent, I just want the place to stop looking like a building site.”

The Commercial Court in July 2009 ordered that Bank of Ireland was entitled to proceeds of the sale or rental of houses in Rinuccini to cover debts of €22 million owed by Event Horizon Ltd.

On the other side of town on the Mountrath Road is Maryborough Village. It’s less than a mile from the town centre and, on first inspection, is an attractive estate, but move further in and plots of rubble-filled waste ground surrounded by wire fencing begin to appear. The building site atmosphere isn’t helped by the road surface.

“They never put the top surface on the road, so the ramps are too high and, when there’s a heavy spell of rain, the potholes are unmerciful. It’s particularly bad coming out of the estate, the back of the car is creaking at this stage,” a resident who did not wish to be named said.

A mother of two young children, she said she asked the foreman several months ago what they were going to do about the road surface. The answer was nothing. “They said they’re not going to put on the road surface until they’ve built the houses at the end, because the building equipment would damage the new surface, but they’re never going to build them.”

Having paid full price for her house in 2008, it galls her she is living in an unfinished estate waiting for houses that will be sold for a lot less to be built.

“We were sold this house on a false promise of a finished landscaped estate. That’s not what we’ve been living in for the past two years. The estate is gone shabby now, so I don’t know how they think they’re going to sell anything.”

With children aged three and six, she is becoming increasingly concerned about safety. “The barriers to the sites are connected with twisty ties, they get blown over easily. There are pipes sticking up out of the ground. Rusty nails. I wouldn’t even think about letting them out there.”

Developers Graham Builders Ltd in 2008 accounts – the most recent filed with the Companies Registration Office – said there would be no new development work at Maryborough Village until demand for houses returned.

Back on the Dublin Road, a little further out than Rinuccini, in the townland of Rathbrennan is a development without a name. It is unlikely to ever get one. The houses and apartments are just shells, the site frequently floods and structures are already starting to crumble.

There has been no construction onsite in 18 months, and no one will ever live here, Sinn Féin county councillor Brian Stanley said.

“This site in my opinion has to be levelled. I don’t say that lightly. I don’t go in for knocking down things for the sake of it but in this case there is no hope of it being finished. The developer is gone and the council has no means to finish it.”

This is in contrast to Triogue Manor, near the Mountmellick Road. The houses in this estate were completed when the developer folded, but there was no road surface and water, and sewerage infrastructure had yet to be completed.

“The council used the development bond, but also leveraged parts of the site that hadn’t been built on to finish the estate.

“There can be creative solutions to these problems.”

Report by OLIVIA KELLY - Irish Times

Sunday, 15 August 2010

State of the Nation Address...

When property prices in a leafy corner of Dublin 4 hit world-record heights, the signs were all there for catastrophe...

Four years ago, property editors of leading international newspapers just could not believe what they were hearing. Homes on Shrewsbury and Ailesbury roads in the Dublin suburb of Ballsbridge, which had long set the record as Ireland's most expensive, were reaching new peaks, rivalling some of the most expensive properties in Manhattan or Paris.

Prices of a country's most expensive residential properties are a useful early indicator for economies facing economic trouble. Prices of top-end Irish properties at their peak were signalling that the Irish economy was heading for a crash, because residences on Ailesbury and Shrewsbury roads were not only the priciest in Ireland, but were also arguably the most expensive in the world.

In 2006, high-end properties, selling for an equivalent €4,450 per square foot, in a London economy fuelled by bankers' multi-million-pound bonuses, were considered the dearest on the planet. Prime properties in New York, at over €4,100 per square foot, were not far behind. Yet sales in a leafy corner of Dublin 4 were breaking all sorts of Irish and international records too.

In early 2005, 'Walford' on Shrewsbury Road, famously selling for in excess of €55m, or €13,750 per square foot, was three times more costly than the world's most costly properties. Walford's potential for development was evidently the lure, but other 4,000 square foot properties selling on Shrewsbury Road for €30m and for €15m on Ailesbury Road were also challenging international benchmarks.

Prices and transactions multiplied. During one week in May 2006, four properties on Ailesbury and Shrewsbury roads quickly attracted offers.

Four years later and the market is dramatically different. The history of housing markets around the world suggests that the longer prices rise in a boom and the higher average national house prices rise, the longer and steeper the subsequent bust will be. Research also suggests that the higher prices rise at the top end, the steeper the crash.

Ailesbury Road homes at 4,500 square feet, selling for between €10m and €13m at the height of the boom, are now probably worth €4m to €5m, say valuers. Shrewsbury Road properties that were valued at €30m in 2006 are now worth between €8m and €12m. Nothing on the two roads has sold for the last two years. "There have been no transactions and the market has to be tested," said David Bewley, director at Lisney.

Simon Ensor, director at Sherry FitzGerald, predicts prices on Shrewsbury and Ailesbury roads will ultimately fall 65% from their peak prices, indicating price falls will be steeper than almost anywhere else in the country.

Other experts say that a price slide on the two wealthiest roads is understandable: a mortgage bank would now require a prospective buyer to put up hefty amounts of cash to finance any purchase. Rumours continue to surface that a handful of distressed sellers along the two roads will formally put properties on the market this autumn. That will be the first big test of the market for the priciest properties in Ireland since the crash.

What goes up must come down

The IMF report on the Irish economy published last month put it simply: what goes up fast, comes down hard. Irish house prices and those in Britain and Spain went up rapidly, but Irish house prices went up more than most.
Prices here soared by more than 350% in the 10 years before the 2007 crash. The pain here, as in Spain, will be even sharper because a house-price boom was accompanied by a construction boom.

It is not as if the government had not been warned. In 2006, the head of the Ireland desk at the Organisation for Economic Co-operation and Development said the housing market here was in danger of "boiling over". Since the crash, much academic effort has been focused on researching global experiences of housing busts.

Just how long does it take to recover after a huge house-price blow-out? In research published last month, TCD's Agustin Benetrix and University of California professor Barry Eichengreen, along with TCD economics professor Kevin O'Rourke, showed that Finland experienced the deepest peak-to-trough drop yet recorded when prices, accounting for inflation, fell by 51% from their 1989 peak. Finland's house-price slump lasted more than six years. In 1978, the Netherlands experienced a similarly large drop in prices but its slump lasted even longer. In Britain's most recent crash, in 1989, prices took seven years before rising again.

Ireland's prices fell 32%, accounting for inflation, in the country's last big housing crash in 1979 and took eight years to recover. The severity of this bust is greater and therefore will likely last much longer.

Neil Callanan meets the neighbours

Derek Quinlan

Lionised during the Celtic Tiger years, Quinlan set up private wealth advisory service Quinlan Private which ended up acquiring assets worth €11bn. But much of the spree came as the market peaked and his clients are now sitting on significant losses on a number of the properties. Quinlan has become one of the poster boys for the dangers of highly leveraged property spending and has offloaded a number of assets, with others likely to follow. Quinlan bought three houses on Shrewsbury Road as well as a number of other houses in the area and at least some of these will now be sold off.

Niall O'Farrell

Dragon's Den's O'Farrell is best known for founding Blacktie, but has other retail and property interests. O'Farrell said Blacktie made a solid profit last year after accounts for the end of June 2009 showed it, and other retail businesses O'Farrell owns, made a loss of €2.7m for that financial year. O'Farrell said he had restructured the business. O'Farrell put his Shrewsbury Road house on the market last year, asking €14m. He also lodged plans to demolish the property, which is next to the home of developer Sean Dunne, and replace it with a house more than double the size.

Sean Dunne

Dunne received planning last week for the redevelopment of Hume House, an office block in Ballsbridge. It lies close to the Jurys-Berkeley Court site which Dunne acquired for €370m but is now worth a fraction of that. The banks behind the purchase of that site took a majority stake in its development earlier this year. He also bought part of AIB Bankcentre and is currently awaiting a decision on whether he can develop offices on the site. The New York Times reported months ago that Dunne said he could be "considered insolvent" if the banking crisis continued. Dunne denied the comments.

Larry O'Mahony

Polo-playing O'Mahony made millions from property development but has since seen property go into receivership and a number of judgments entered against him. He received a boost recently, however, when he and business partner and former IRA hunger striker Tom McFeely won a case taken against them by rival developer Noel Smyth in relation to land next to the Square shopping centre in Tallaght, west Dublin.

Carl McCann

McCann chairs Blackrock International Land, the property company spun out of fruit importer Fyffes, which has shed 45% of its value this year. The shares last week were valued at 25c, a long way off the 40c that they were worth at the end of their first day of trading on the stock exchange back in May 2006. McCann is still involved in Fyffes through the Balkan Investment Company, which owns 10% of Fyffes.

Paul Coulson

Coulson made a fortune from selling the Irish Glass Bottle site in Poolbeg, Dublin, at the top of the market for €412m. The site, 26% owned by the state, is now worth about €50m. Coulson's main business interest is glassmaker Ardagh, which saw sales and earnings fall nearly 10% last year, resulting in a net loss of €52m. Trading this year has been stronger, he told bondholders in April, adding that both revenue and volume were up year on year. Coulson put his house on Shrewsbury Road on the market in 2008 with an asking price of €27.5m. He had bought the home a decade earlier for a reported €1.3m.

Dermot Gleeson

Barrister Gleeson is best known for being chairman of AIB when it went on a property-loan lending binge. Last year he said he regretted the bank's lending to developers and apologised for the "anxiety and distress" shareholders had suffered. He is non-executive chairman of Travelport, which pulled a planned €1.45bn flotation earlier this year following market uncertainty. Gleeson has invested in a number of properties around Dublin. He is a former attorney general.

Paul Anderson

Cinema mogul Paul Anderson has been less affected than most by the recession, as cinema audiences have largely held up. The family's Omniplex Holdings recently opened a cinema on top of its Swan shopping centre in Rathmines, south Dublin, and is seeking planning permission for a €9m cinema on top of the St Stephen's Green Shopping Centre in central Dublin. Anderson's house is regarded as the best on Shrewsbury Road by many.

Denis O'Brien

O'Brien bought his house on Shrewsbury Road for a reported €35m – sources close to O'Brien have said it was less than that – from IT and property entrepreneur Tony Kilduff, but was subsequently denied permission to demolish it and replace it with a 21,500 square foot home. O'Brien made about €250m earlier this year when his Caribbean-based mobile phone group Digicel bought the majority of Digital Pacific. He will make a further €250m at a later date when the sale of the rest of the Pacific company is completed. O'Brien had already realised a profit of about €600m after refinancing Digicel in 2007. His investment in Independent News & Media proved less successful, with losses standing in the hundreds of millions.

Paddy Kelly

Kelly has moved off Shrewsbury Road, renting out his house to the Chinese embassy and relocating to Morehampton Road, itself one of the most expensive addresses in the capital city. He has admitted that he is broke and €350m in debt and now conducts his business from the bar of a five-star hotel in Dublin city centre. He has been here before, having sold his house after huge losses as one of the Lloyds names in 1987. But he retained the garden and built his current house there when his financial situation improved. Kelly tried to diversify into hotels and leisure but those sectors were also hit during the property downturn. "I'm 66, so what do I care if they make me bankrupt?" he recently declared.

Report by Eamon Quinn - Tribune Property.

Saturday, 14 August 2010

New 21st-Century Monopoly...

New 21st-Century Monopoly edition missed a few tricks...

Go directly to jail. Do not pass Go. Do not collect €200.

We've all had the sinking feeling of picking up a card and reading those words. These days, however, it's also a fair summary of what most of the country would like to say to the politicians, bankers and developers who've landed us in such a mess.


The Irish edition of Monopoly has just been given a radical makeover for the 21st century -- but even so, it's hard not to feel that they've missed a few tricks.

When Monopoly first appeared in shops exactly 75 years ago, America was in the middle of the Great Depression. Charles Darrow, the man who launched it, had lost his job in the Wall Street Crash and thought that people might enjoy the escapism of a game that allowed people to become property tycoons.

He was as astonished as anyone else when it made him a real-life millionaire.

In modern Ireland, things are a little bit different. We still like the idea of being rich. We're just not sure about a game where you mortgage yourself to the hilt, pay huge taxes, bleed your opponents dry, laugh when they go bankrupt and spend so long trying to win that you're too exhausted at the end to care much one way or the other.

In other words, Monopoly represents capitalism in its purest form -- greedy, selfish and utterly ruthless.

Rich Uncle Pennybags, the smiling old man in a top hat who serves as its mascot, looks suspiciously like one of those snake-oil bankers urging you to bail out his massive property debts.

The new Irish edition is clearly aimed at children who might find the original a bit too old-fashioned. You now keep track of your money on bits of plastic that feel like credit cards, an uncomfortable reminder of how quickly those little devices can empty your bank account.


There are now sound effects for various Chance and Community Chest cards, so that, for example, you can hear the door slam when you're sent off to prison. The square board has become circular, perhaps a subtle reminder that no matter how hard you work, you always end up back where you started.

Unfortunately, the revised property values suggest that the makers haven't paid a trip to any time recently. Part of the original's charm was getting the chance to rent Croke Park for a tenner or buying the Clarence Hotel off Bono for less than a grand. In today's Monopoly world, Shewsbury Road will still set you back a cool €4m -- and at a time when prices are dropping like a stone, that frankly looks like a bit of a rip-off.

There are other ways in which this feels like a relic from that ancient era known as the Celtic Tiger. You're still supposed to win by building houses and hotels, not something that anybody who's seen a ghost estate will be doing for a long time.

If you get into debt you can remortgage your properties without any questions asked, a request it would be advisable to avoid in our bailed-out banks if you don't want to get laughed at.

There is Free Parking (what's that?) and a Get Out Of Jail Free card, highly inappropriate given that none of our crony capitalists is ever likely to be put away in the first place.

Above all, the new Irish Monopoly has forgotten to include a NAMA option -- a toxic bank that buys up all your loans, overlooks your record of dodgy behaviour and screws your opponents as they work themselves to the bone to pay for your mistakes.

Now that's a game we'd all like to play.

Article by Andrew Lynch - Evening Herald

Monday, 9 August 2010

Ghost Estate Dangers...

Problems at 'ghost estates' identified...

So-called “ghost” housing estates are posing serious health and environmental dangers through problems such as incomplete sewerage systems, water contamination, unfinished roads and open manholes, a study has found.

The issues have been identified in a pilot study in Co Laois, ordered by the Department of the Environment, on the likely effects of the sudden end to the building boom, particularly in rural areas.

The study, which assessed housing developments that were granted planning permission in the county in the last five years, found a quarter of them had health and safety problems.

It also emerged that local authority requirements for builders’ bonds are in many cases seriously inadequate.

The bonds are supposed to be taken out to ensure estates are completed. In some cases the requirements appear to have been ignored completely.

Minister of State with responsibility for planning Ciarán Cuffe said it was expected that most of the unfinished estates would end up in the hands of Nama. But he said local authorities would also be given the power in the new Planning and Development Bill to take over estates.

It is anticipated that the study will provide a useful base for Nama to assess the value of loans given out to speculative builders which are secured on such ghost estates.

But the findings have shown that in addition to financial consequences, there are also visual, environmental and pressing health implications.

Mr Cuffe said many people were facing significant difficulties because of incomplete facilities for new houses in rural villages and towns.

There were problems of estates where houses were partially built, but also where people were living in completed homes while neighbouring houses, roads and drainage systems remained unfinished, he said.

The Laois study raised public health and safety fears at one-quarter of sites surveyed. These included open sewers and manholes, water contamination and unsecured building sites, he said.

Almost one-third of housing developments recently completed in the county remain unoccupied. The study also found a significant 40 per cent of planning permissions for houses in Co Laois had not yet gone to construction.

Mr Cuffe said he was pushing for the full State-wide survey, which will include a county-by-county breakdown, to be published.

The Co Laois survey revealed a “maverick culture” in relation to the developers’ insurance bonds,where speculators simply ignored conditions and pressed ahead with their plans, according to a senior Government official.

While a lot of bonds were not paid at all, in other cases they were so minuscule that they are now deemed irrelevant given the scale of the clean-up operation.

“Even in some cases where there were conditions to pay bonds, a lot of them just went ahead and started developing without discharging any of the pre-commencement conditions,” he said.

The Department of the Environment believes there may be as many 620 ghost estates whose future remains uncertain. It will likely fall to Nama to decide whether to seek extensions to planning permission timescales, if they are to be completed.

In such circumstances, the new Planning Act will allow local authorities to set new bonds.

Otherwise, councils will be allowed to take charge of the estates and to complete unfinished roads and sewerage as well as demolish half-finished houses.

Report by TIM O'BRIEN - Irish Times

Sunday, 8 August 2010

Good Reason Leprechaun Is The National Symbol...

The taxpayer saved the banks, so now they turn the screw on mortgage rates...

When the European Central Bank this week kept its key interest rate at one per cent, worried mortgage holders who are struggling to meet their repayments breathed a collective sigh of relief across euro land. Except in Ireland, that is. In Fair Eire, allegedly the land of a thousand welcomes, mortgage interest rates are actually going up.

Economists say the main message from the ECB monthly press conference last Thursday was that the first hike in official rates is a relatively comfortable amount of time away -- probably no earlier than late 2011. That gives most people space to put bread on the table, squirrel away some extra cash and pay off their credit cards.

Not so here, however, where public sector workers have seen their wages slashed and, as unemployment rises in the private sector, the public has watched helplessly as billions of euro of taxpayers' money has been used to prop up the banks.

Billions more of unpaid property developer loans are being transferred to the nation's bad bank, Nama.

There is good reason why the leprechaun is the national symbol here. He is a chancer that will fleece you as soon as your back is turned. He hops about, telling yarns about economic booms and pots of gold at the end of rainbows.

Speaking of which, there's been quite a few showers here of late, while Europe enjoys sunshine. No wonder Irish eyes are frowning.

Bank of Ireland will raise its standard variable mortgage rate by 45 basis points to 3.49 per cent on Tuesday. It will impact around 44,000 residential mortgage customers. The bank has already been recapitalised by the State to the tune of €3.5bn and is transferring billions of euros in loans to Nama.

The bank's latest rate hikes for its standard variable rate and other products are the second round of rate increases this year, but management says it won't increase mortgage rates again this year unless the European Central Bank increases its key rates.

This hasn't stopped it in the past -- but it's a small mercy for householders nevertheless.

"We're paying more to customers for deposits than we are receiving for mortgages," the bank's director of consumer lending Brendan Nevin said. He added: "While any increase is regrettable, we have no choice but to make this move to ensure we remain open for business and continue to support our customers and the Irish economy."

Regrets, they've had a few. The notion that Irish banks are all about supporting the Irish economy is a bit like saying that icebergs are all about supporting the Titanic.

Over-lending by banks here fuelled a dangerously overheating construction sector during the Celtic Tiger years that helped to effectively sink this once-booming economy.

Ciaran Lynch, spokesman on housing for the Labour Party, was not amused. He said: "These increases are unjustifiable when the underlying ECB rate has remained static. Banks are hell-bent on improving their revenue streams and are gouging ordinary families."

Finance Minister Brian Lenihan said he couldn't interfere with bank rate policies.

The hikes don't end there. Last Tuesday, mortgage lender and life insurer Irish Life and Permanent raised its standard variable mortgage interest rate by 50 basis points to 4.19 per cent--its third hike in 12 months. Its interest rate hikes affect about 80,000 mortgage customers. Again, higher funding costs, rather than bad management, were to blame.

And it's not over yet. Allied Irish Banks' managing director Colm Doherty said last week, when he announced the bank's first-half results -- a net loss of €1.73bn -- that AIB will also likely raise its variable mortgage rate by 50 basis points. AIB also received €3.5bn from the Government and the taxpayer gets it in the kisser. Again.

"I think, reluctantly, we're going to follow all the other banks in increasing interest rates," Doherty said.

He added: "The price we have to pay for deposits means we are losing money on mortgages. It's unsustainable and if we don't do something, we won't be able to continue to lend to the mortgage market."

And whose fault is that?

The EBS Building Society -- which also received State support -- increased its standard variable interest rate by 60 basis points on August 1, the third time this year it has hiked rates.

The EBS said: "Unfortunately, as there has been no relief in the cost of funds to EBS, this further increase is required." And no relief for customers either ...

The Government is setting up a five-year plan to help mortgage holders in trouble to agree new repayment terms with banks and building societies, a situation that can only be exacerbated by an environment with rising interest rates and a country whose unemployment that is creeping closer to 14 per cent.

It would be hard to find a worse time to hike rates.

Making the situation worse, more than 85 per cent of mortgages here are variable, according to the European Mortgage Federation, although others point out that this figure includes mortgages that track ECB rates. The Irish Mortgage Corporation says that makes Ireland one of the more "sensitive" mortgage markets in Europe.

Fine Gael TD Bernard Allen said: "It's vital that action is taken now to force the banks to make repossession the absolute last resort.

"If this does not happen, we could be facing a repossession disaster in this country, which could have major implications for any fragile economic recovery."

Or it could lead to headlines like: "Dermo fights for dis digs." Dermot Ivers last week threatened to use his own digger to bulldoze his house if sheriffs tried to repossess it. He boarded up the downstairs windows and barricaded himself upstairs.

Neighbours in the Co Wicklow town of Arklow cheered him on.

The banks lent aggressively to developers during the good times. The property market went belly up and the banks were bailed out by the State ... by taxpayers like Mr Ivers. Now, the same banks are hiking interest rates when the ECB doesn't.

For many homeowners already steeped in negative equity, pay cuts and job losses, it's the final insult.

Report by Quentin Fottrell - Sunday Independent

Friday, 6 August 2010

Irish Emigration Soars...

Irish emigration soars as Celtic Tiger’s cubs hunt for jobs...

The number of people leaving the Republic has swelled far beyond those of every other country in the European Union, says research.

An estimated 40,000 people emigrated last year, according to the EU's statistics office, Eurostat, a rate almost twice as high as that of Lithuania, the next most affected country.

It is expected the flow may worsen as the Republic faces years of severe financial difficulties. A research institute has warned that 200,000 people, in a country of 4.5 million, may be forced to emigrate by 2015 if job opportunities do not improve.

The unprecedented prosperity of the so-called Celtic Tiger years seemed to have consigned emigration to the history books. Its reappearance is regarded with dismay.

Some of those leaving are thought to be immigrants who came to Ireland in large numbers from mainland Europe over the last decade and who, unable to find jobs, are returning home.

But a large proportion are young Irish men who, with unemployment at over 13%, see little prospect of work in the near future.

Large numbers in the building industry — so important to the economy — are on the dole. Many are contemplating leaving the country as construction has almost shuddered to a halt.

The return of high levels of emigration is just one of many negative factors in a country which considers itself among those hardest hit by the global recession. It has not been plunged into poverty — some say that it has merely returned to the economic standards of 2000.

But its debt is huge and the general population has been hit hard by government cuts and raised taxes. Many more cuts are on the way, the government has warned, over the next few years.

House prices have tumbled, while there has been a dramatic rise in debt, insolvency and winding-up of companies.

In another indicator, the average cost of hotel rooms has dropped back to 1999 levels, with one third of hotels having difficulty meeting interest repayments on their bank loans. A spate of building, encouraged by the government with generous tax breaks during the boom years, means Ireland has an excess capacity of some 10,000 hotel rooms.

All this has produced huge public anger against bankers, developers and politicians. Fianna Fail, which has been in power for more than a decade and presided over the boom years, is deemed to have no chance of re-election.

Report by David McKittrick - Belfast Telegraph

Thursday, 5 August 2010

Republic's Recession 'Worst In The World'...

The Republic's budget targets remain on track despite the country being €10bn in the red, the Government said last night.

Latest exchequer figures show €17.2bn taxes were collected in the first seven months of the year - 1.4% or €247m below target.

Separate figures revealed the Irish economy shrunk 7.6% last year.

Fine Gael claimed the country had suffered the longest and deepest recession of any advanced economy in the world.

Richard Bruton, enterprise spokesman, said the rate of economic decline was five times worse than the average fall suffered by advanced countries.

"Despite all the evidence and the conclusions of the recent banking reports, some Government ministers continue to pretend that Ireland's problems were caused by outside forces, when the truth is that Ireland and its people have been the victims of catastrophic economic mismanagement," Mr Bruton said.

The exchequer deficit at the end of July was €10.2bn, down from the €16.4bn recorded at the same period last year.

But the Department of Finance said the Budget day forecast for tax revenues of €31bn in 2010 could be achieved, but warned there were still significant targets to be tackled in the days and months ahead.

Separate figures from the Central Statistics Office reveal personal spending last year plummeted by 11.1% while Gross Domestic Product fell 7.6%.

Mr Bruton said nothing was being done to get the country back to work.

"These latest adjustments are further depressing evidence that this Government has contributed significantly to the current crisis," he said.

The Labour Party said the Government could not reduce the deficit without first tackling the jobs crisis.

Sean Sherlock, a member of the Oireachtas Economic and Regulatory Committee, said: "Trying to reduce the deficit without a proper jobs and growth strategy is like a dog chasing his tail.

"The Government just doesn't seem to get the fact that growing the economy, getting credit flowing to SMEs and tackling the jobs crisis are fundamental to closing the budget deficit."

Report by Colm Kelpie - Belfast Telegraph

Tuesday, 3 August 2010

Anger At State's Silence On 'Brain Drain'...

THE Government has been accused of presiding over a graduate "brain drain".

Unemployment among graduates has almost trebled in the past two years, and student leaders say more and more college leavers are being forced to quit the country.

Central Statistics Office (CSO) figures reveal there were 68,600 unemployed graduates in March, compared with 25,400 at the same time in 2008.

The jobs problem is greater for males, who account for 60pc of out-of-work graduates, up from 56pc two years ago.

The Economic and Social Research Institute recently warned that 200,000 people may be forced to emigrate between now and 2015 if unemployment is not addressed.

And the Union of Students in Ireland (USI) says many of these will be highly skilled graduates.

USI president Gary Redmond said it was ironic the Jeanie Johnston famine ship was docked in Dublin's IFSC, the area that was once the heart of Ireland's Celtic Tiger economy.

USI members are planning a protest at the ship today to highlight the plight of graduates forced to leave the country in search of work.

Mr Redmond said CSO figures for June showed that 91,646 people under the age of 25 were unemployed. He said the Government continued to pay lip service to ambitions of building a knowledge-based economy.

"Their silence on the issue of graduate unemployment is deafening. USI is not prepared to stand idly by while this Government oversees the loss of yet another generation of young Irish men and women," he said.

The unemployment figures may not reflect the full picture as many graduates are now staying in college to pursue further education, in the hope of an upturn in coming years.

A recent survey found job prospects and starting salaries for graduates were slowly picking up.

Companies preparing for economic recovery in the second half of the year are getting ready to boost staffing -- 34pc of employers predict that they will be recruiting more graduates in 2010, compared with 15pc in the same period in 2009.

Report by Katherine Donnelly - Irish Independent

Monday, 2 August 2010

Dublin Streets Where A Dream Died...

Junkies and empty spaces litter streets where a dream died...

The ill-fated Northern Quarter would have transformed our capital city:

A mid-afternoon stroll around the place that would have been known as the Northern Quarter shows, emerging from the cracks, what we have come to expect in these days of broken dreams.

There are junkies everywhere, in the numerous alleyways and on street corners, cravenly going about their business; there are the usual scatterings of beggars too, wrapped up quietly within themselves. In unequal measure, then, it is an uneasy landscape, both edgy and pathetic.

People walk past, eyes in the distance, without taking notice -- or so it seems -- hurrying for trains, cars, buses, and bicycles, any mode at all out of the city and home.

I was once familiar, indeed, with this area, before moving office in 2004, shortly after the arrival of the Luas -- a shining symbol of the new and of renewal, if ever there was one, at a time of optimism not that long ago.

These days, on Henry Street and on Middle Abbey Street -- and on all streets in between, and beyond -- there are boarded up shopfronts, some of them lying idle for what seems to be months. Or is it years?

The Irish Independent's old office is empty since Arnotts bought it six years ago, a vital part of what the Irish Times, with noticeable disdain, likes to call the retailer's "grandiose" plan. Now the old office serves only to advertise Arnotts' "bargain basement".

The Independent relocated to Talbot Street, a short distance away, but which is no better; it has its own social realities, alongside a psychedelic mix of headshops and Polski shops, and the like, which seem to open overnight and disappear just as quickly.

Back on Liffey Street, in what would be known as the Northern Quarter, discount stores are everywhere, their shelves piled high with cheap tat imported from God only knows where.

It is said that prostitutes also ply their trade around here and the names of Brazillians and Venezuelans occasionally appear in court reports of garda raids.

When it first opened, shortly before the Luas arrived, the Epicurean Food Hall gave us what Epicurus himself might have called a modest pleasure.

Lately it hasn't had the same atmosphere that it had during the heady days of the Celtic Tiger.

On Moore Street, me jewel and darlin' Moore Street, the Chinese are doing their thing, selling stuff to other Chinese and Africans through a hatch in a window.

The fruit sellers are still there of course, rare auld Dubelin wans, shouting and roaring and generally abusing passers-by. There is a strong smell of fish in the early evening sun.

This is to be cherished, they will tell you; they being the people who like to knock, who think they have an answer to everything -- or certainly the reason why -- neatly parcelled, and with assumption dressed up as fact.

To be cherished like Bewley's a few years back, when it was selling scorched coffee in stained white mugs; or like O'Connell Street, before its makeover, and the erection of the Spire, which, when it happened, was denounced by the same flat-earthers who now, smugly, almost welcome the strangulation at infancy of the Northern Quarter.

The dressed-up assumption is that Arnotts has been holed by hubris, the illusions of a property bubble. The truth is less simple.

In large part, says my man behind a big desk, it has more to do with debts of about €150m from a 2003 management buyout -- that and a few foolish decisions, granted -- and this most insidious of recessions: "In 08 and 09, sales fell off a cliff," he said, "from about €200m to about €120m."

What a magnificent concept it was, the Northern Quarter, to encompass much of what is already there and to add to it in so many ways: a lively shopping and entertainment area; 47 new shops; 17 new cafes, restaurants and bars; 189 apartments; and a 152-bed, four-star hotel, with Arnotts, the brand, still its centrepiece.

Huge sums of money were to be invested, around €750m. The banks were hammering down the door to lend about €500m. Anglo also encouraged a move, temporarily, to the Jervis Centre to keep alive the brand while work was under way. It was an ill-fated decision which cost Arnotts almost €30m before it was abandoned.

The Northern Quarter was more than a concept. Arnotts had done much to make it a reality. The going rate was paid for tracts of property, about €50m.

At the outset, the plan was met with typical cynicism, as these things tend to be -- especially when a few ambitious men stand to make a profit.

Almost inevitably, that cynicism gave way to objection. It cost Arnotts about €20m in professional fees just to get planning permission. Debts were approaching €300m before the crash came.

Similar objections have also delayed an adjoining plan, further up O'Connell Street, where stands today, as it has for years, the gaping wound that was the Carlton cinema.

Together, these developments would have reached out to Mick Wallace's Italian Quarter, and probably further down to the stagnating Smithfield. In the other direction, it might eventually have connected to the Docklands.

The upshot would have been a city centre, which had suffered from a clogged heart, breathing anew again, fresh and alive with the business of life -- eating, working, sleeping -- with all of the commerce that it would bring. Instead, we have the mess of today, worsening by the day.

Last week, the Irish Times said that the Northern Quarter, and by extension Arnotts, had been "fatally" undermined, not by legacy planning issues, not by legacy debts, not even by the collapse in retail, but by the "hubris" of the late boom years -- the "illusions" of the property bubble.

One man's hubris is another man's imagination. But, no, hubris is the charge, twice repeated; for it is the "poisonous legacy" of the boom years and threatens a 200-year-old fragment of national individuality, whose customers shop down the road in Pennys these days.

Arnotts, of course, is going nowhere. It will be with us, at least in name, for another generation and maybe for generations to come -- its pension fund alone is asset rich, to the tune of about €200m.

A buyer will be difficult to find, though, on account of its size, age, configuration and its union agreements; the retail and property empire cannot be easily split.

The tragedy of last week has nothing to do with the mawkish sentimentalism wherein we like to wallow: the end of Arnotts, Bewleys, Frawleys, even Switzers.

The real tragedy was confirmation that the desperately needed redevelopment of the north inner city, heralded by the new O'Connell Street, given a reality of sorts by Richard Nesbitt SC, and by others, is now mothballed.

There was another word, not hubris, more than a hint of which was in the air last week: it was the German word schadenfreude, which roughly translates as taking a strange kind of pleasure from the ruination of someone else's dream -- in this case, a dream that would have transformed the centre of Dublin into something appropriate for a modern European capital.

Ah, but no, that would only be to cue a lament for the passing, or indeed the "homogenisation", or even the "Anglicisation", of a thing called Irish shopping; a guilt-laden transaction these days, dying on its feet anyway -- the city, and the country, seemingly caught in its slipstream.

Article by Jody Corcoran - Sunday Independent