Living in denial - The property bubble

Living in denial seems to be one of the most common pastimes these days.

In fact, it's probably the third most common pastime in Ireland today, behind slumping in front of the telly to watch CSI: Miami and slurping wine with friends while comparing the notional values of their overseas property portfolios.

I thought it might be useful to run through a few known facts that people are living in denial of in Ireland today, just as a reminder and in the vain hope that some people might snap out of their torpor and face up to some of the scary realities that await us all.
Today, we'll kick off with a biggie - the Irish property market.

Irish property prices are about to collapse, because it is the biggest bubble in the global property market bubble. Yes, people have been predicting this for years, and with good reason. It is inevitable. No, it hasn't happened so far, but that just means the crash will be more severe when it occurs, which is very, very soon.

That one bed apartment you bought within a mere hour's commuting distance of Dublin city centre (if you leave for work at 4am) will not continue to inexorably rise from the half million euros you bought it for.

The reason for this is because it is simply not worth anything like that amount in real terms.

Let's look at the fundamentals of this market. Historically, the average family house anywhere was thought to be worth approximately three times the average industrial wage. In Ireland, accommodation now is a factor of around 12 times the average industrial wage.

Also, the US property market has just tanked, and Ireland's exposure to America makes us particularly vulnerable to economic developments there.

Finally, didn't you notice that the only people talking up house prices are those with vested interests in selling them? Auctioneers (recently demonstrated on Prime Time to be utter cowboys), Estate Agents (who increasingly and quietly have been selling their own houses and renting), and newspapers (whose lucrative property sections which shrilly trumpet new developments are dependent on the advertising from those same developers).

Get out now if you can. Banks have already divested themselves both of their own property (HQs and bank branches) and of their property debt. The clever speculators left the Irish market at least a year ago.

This is a pass-the-parcel game where the last one holding the overpriced package will see it explode messily, devastating their finances and personal security.

Indications from data gleaned from popular sales and letting website Daft.ie show that more and more places are on the market longer, being repeatedly listed at ever lower prices and that a full crash is imminent.

There has never been a soft-landing in a bubble market. There wasn't one with Dutch tulips or South Sea stocks, there isn't one in the US housing market now or the London and Tokyo bubbles from previous decades, and there won't be one in Ireland now.

The market will crash, perhaps by as much as 30% in one year. If you are still in doubt, cast an eye over the excellent web analysis conducted at Daftwatch, and the informed discussions on The Property Pin.

Prices in London took the best part of a decade to recover from their crash in the late Eighties. Prices in Tokyo took even longer to recover. Prices in Ireland are more inflated now than either of those markets ever were.

If you've just taken out a large mortgage, you could be trapped in the property you've just bought for a decade or more, in order to avoid negative equity.

If you have a string of properties, each leveraged off the back of notional equity increases in previous properties, you are extremely exposed and could even find yourself close to bankrupcy like this fella.

The party's over and normal rules of engagement are about to resume, people. Which is good in the long term for all those unable to purchase their own dwelling, but very bad news for those seeking to make money by sitting on their backsides.

There's more than one holocaust being denied

I've been thinking all week about the Iranian conference on the holocaust, and all sorts of things are disturbing me about it.

Obviously, there are the initial concerns about holocaust denial in general. Western media coverage has been vociferous in its condemnation of the motley crew of white supremacists, rogue rabbis, neo-Nazis and other dubious types who gathered in Tehran to 're-examine' the holocaust.

I share the concern that so many varied interests would seek to deny the mass murder of millions of people. It is certainly deeply worrying to see so many bizarre fellow travellers gathered together with the intention of casting doubt on the historical veracity of the holocaust.

But there are plenty of other things to get concerned about in relation to this conference. The first would be the erosion of the concept of journalistic objectivity. When BBC correspondents happily say that one must 'take sides' when reporting a story, I get very worried about whether even good old Auntie Beeb can be relied upon to provide objective reportage rather than propaganda anymore.

The result of this lack of objective reporting is that we in the West fail to either understand why this conference was convened, nor what it's ultimate purpose is.

In one sense, it is a knee-jerk response to the 'freedom of speech' defence offered by Danish newspapers and others after they published derogatory cartoons about the prophet Muhammed which were deeply offensive to Muslims worldwide.

And in that regard, one is forced to ask, in what way has the West's adherence to the Holocaust come to resemble an article of religious faith? We have laws in countries like France and Austria that send people to jail for questioning the holocaust, just as we once had laws on heresy.

Whether these laws genuinely impact upon the ability of historians to examine World War Two is debatable, but there is no doubt that they act as a genuine infringement upon the concept of freedom of speech.

Then there is the issue close to Iranian President Ahmedinejad's heart - the formation of Israel in Palestine following World War Two. Like so many Muslims, especially his Arab neighbours, Ahmedinejad is outraged by the continuing atrocity committed on the Palestinian people by the Jewish state.

His analysis traces the formation of the state of Israel to European guilt at how the Jewish population of Europe was treated during the 1930s and 1940s, and he has asked in the past why a Jewish homeland could not have been created in Europe instead of on Palestinian lands following the war.

And that, unlike querying the historical veracity of the holocaust, is a fair question to ask. But the West's continuing Holocaust guilt ensures blind loyalty to the Zionist state, so that our media tends to ignore or seek to justify Israeli atrocities committed against the people whose homes, lands and lives they stole and continue to steal.

There is little doubt that the Iranian President would wish to see the eradication of the state of Israel. He has said as much in the past. But despite how Israel and their US supporters would like to spin it, this is not the same as calling for a second holocaust. Basically, Ahmedinejad's position is that the Jewish homeland should not be located on land stolen from others.

The whole issue of holocaust denial is more complex than many in the West realise. Thanks to continued Israeli and general Jewish insistence that there was only one holocaust (usually with a capital H for added effect), we are generally left in ignorance about other genocides which were equally horrific, such as the Turkish holocaust against its Armenian minority which inspired the Nazis, or indeed the Naqba which Zionists perpetrated upon the Palestinian people.

Intriguingly, the official Israeli position in relation to the Armenian holocaust is that it didn't happen. Why is this their position? Because secular Turkey is one of their few friends in the entire region, and because Turkey itself still has laws to lock up people like this year's Nobel laureate in literature Orhan Pamuk for 'defaming Turkey', when they highlight this atrocity in Turkey's history.

So Israel itself is happy to deny a holocaust despite posters about it littering every wall in the Armenian quarter of the old city of Jerusalem. But they aren't very happy when the holocaust which led to the foundation of their own state is queried in Iran.

To my mind, the coverage this Tehran conference has received is deeply suspect and disingenuous. The howling headlines in usually sober British broadsheets must be seen in the context of George Bush and Tony Blair's phoney war with Iran, as well as the erosion of impartial reporting.

Blair is off to Turkey at the moment, in an attempt to patch up relations which have gone frosty as the EU backs away from Turkish accession. Will this great warrior against holocaust denial raise the issue of the Armenians with his hosts? Of course not.

And while George Bush seeks to make a case for the invasion of Iran due to a potential nuclear weapons capacity, a case as spurious as the one made against Saddam's Iraq, will he also invade Israel, after Ehud Olmert admitted accidentally to his country's nuclear capacity? Of course not.

We are utterly right to condemn those who would seek to deny the deaths of six million people in the last century in Nazi death camps. They are inhumanly wrong.

But if we cannot understand the reasons that underpin the hosting of this conference, we will inevitably find ourselves watching from the sidelines as America and Britain jihad across the entire Muslim world in order to placate Israel's unending imperialist quest for an Eretz-Israel cleared of its indigenous population and surrounded by weak or occupied Arab states.