Friday, October 24, 2008
The pips are now officially squeaking.
As the Department of Finance sends auditors into the banks to view their loan books, the developers are beginning to panic properly now.
Previously, they'd been merely concerned. No one was buying their boxy apartments in the burbs for the inflated prices they'd listed them at. They'd tried every stunt in the book, from offering interest-free loans, to throwing in boats or Bulgarian apartments to seal the deal.
But the public weren't interested in buying in a plummeting market, and those few mad enough to consider it can't get a mortgage from the banks.
There seemed to be some light at the end of the tunnel for the developer classes when the budget was presented last week. The state was now going to offer its own sub-prime mortgages which would only apply to the surfeit of new build homes still on the builders' books.
Talk about a bail-out of builders masquerading as helping the homeless!
But now that people are actually being repossessed, there is little tolerance for Government stunts aimed at propping up the property market.
In recent times, the banks have been keeping the whole routine going, rolling over the interest on massive (by which I mean from the tens of millions upwards) loans to developers.
But that is likely to come crashing to a halt once the Government auditors oversee the banks' books. After all, why should the rest of us pay our mortgage under threat of repossession when builders who owe stratospheric amounts of money are being facilitated?
The builders know that many of them are likely to go bust if they are made pay the interest on their loans and the Government bail-out doesn't work.
Which is why we're seeing this week their mouthpieces in the media spinning like mad on their behalfs.
From Independent Newspapers come two classics of the genre: the first for grown-ups by someone who ought to know better (and perhaps does), the second a piece of cartoon analysis by an Evening Herald useful idiot.
In his piece, McWilliams paints his usual colourful pen portrait of his creation Breakfast Roll Man, who starred in his epoch-defining book 'The Pope's Children'.
But now Breakfast Roll Man is on his uppers - the developments won't sell, he can't afford the bank loan, pressure mounting on all sides. It's not an entirely sympathetic picture, but McWilliams ensures to inject some pathos into it.
Where McWilliams lets himself down is when he concludes that Breakfast Roll Man was duped by Bertie, and deserves a dig out of his own. This duplicitous piece of writing runs contrary to all common sense.
But since McWilliams was involved in advising the Government on the bank guarantee, we should take this latest message from him seriously. This is what he is advocating, and he currently has the ear of those in power.
The Evening Herald article is way more transparent. It's an outrageous puff piece in favour of granting Sean Dunne planning for his white elephant Ballsbridge tower before he is declared bankrupt.
Sadly, it's not available online. Let me judiciously present a few representative gobbets for you to choke on:
"Were the city planners pleased? Oh no. The well-heeled resident Leafies of lush Ballsbridge got on their mobiles to the Irish Times and muttered darkly about the destruction of Ballsbridge - meaning their snooty little enclave would no longer be as exclusive nor their houses as expensive."
It's priceless, isn't it? The coinage of the term 'Leafies', for example, as if leaves were exclusive to Dublin Four. What was wrong with the established pejorative term of 'Deefer', I wonder?
Then the snide reference to the Irish Times, the depiction of Ballsbridge as an 'enclave' - gated it is not - all add up to paint a desperate picture of little Dunne versus Big Bastard D4 snobs.
But wait, there's more. So much more.
"After all, Dunne deserves our support and indeed admiration. He's a swaggering, carefree buccaneer, who lives life to the full, takes terrible risks and spends his money rather than squirrelling it under the mattress. In short, like his tower, he's a diamond in the rough."
Let's parse that a little. A buccaneer is a pirate. It's probably the most honest word used by the author, the aforementioned useful idiot, Gwen Halley. Mind you, she likely wouldn't have used it if she knew its meaning.
But a pirate is indeed what Dunne is. And yes, he did indeed take terrible risks. Unfortunately, they didn't work out. He gambled and lost. But Gwen thinks the planning system should see 'the bigger picture' by throwing him the lifeline of planning permission.
Perhaps if Dunne had squirrelled his money away, perhaps if the nation and the Government had all done so, instead of squandering our new-found wealth (Dunne on leveraging property deals, the Government on pork barrel infrastructure and propping up their funders in construction, the nation on easy credit and inflated mortgages) we'd all be better placed to face this recession.
McWilliams and Halley are spinning on behalf of the developers, and Independent Newspapers is facilitating their doing so.
But nothing will save the developer class now. Sean Dunne will go bust, and so will Breakfast Roll Man.
The only remaining issue is how much money will the State (via this preposterous sub-prime lending scheme) and the rest of us (via buying those boxy apartments in the burbs in a falling market) waste in propping up the property ladder until its fall can no longer be postponed.