WE'RE NUMBER TWO!

[Bilk]

setanta said:

There are an estimated 33,000 millionaires in Ireland, according to a report published today.

Bank of Ireland's annual Wealth of the Nationreport found that the country's net wealth grew by 19 per cent to €805 billion in 2006. The average wealth per head of population now stands at €196,000, compared to €168,000 in 2005.

The figures place Ireland in second place, behind Japan, in the OECD list of eight leading nations.

The report - which identifies the key drivers of the nation's wealth by measuring assets such as property, deposits and investment and pension funds - notes that residential property was the main driver of wealth creation last year.

It says there was a 10 per cent increase in the number of millionaires over the last year to an estimated 33,000 - up from 30,000 in 2005.

Of these, some 330 are said to have a net worth of over of €30 million A further 3,000 have a net worth of between €5 million and €30 million, with the remaining having a net worth of between €1 million and

€5 million. The bank's definition of wealth is the sum of total assets - excluding the principal private residence.

The report also finds Ireland's household balance sheet to be in "very good health" with the country's household asset base dwarfing liabilities by a multiple of six.

Household gross assets are estimated to be €964 billion against household liabilities of €161 billion. The report sees an increase in net assets to €928 billion by 2010 and €1.2 trillion by 2015.

While identifying property as the main driver of wealth in this country, the report predicts that assets such as equity markets will become more prominent.

Personal disposal income doubled over the past ten years, according to the report, a figure that is forecast to double again over the next ten years.

The annual level of personal savings continues to outdo other OECD countries with €10 billion at the end of 2006, forecast to increase to €13.5 billion by 2010 and to €24 billion by 2015.

The 2015 estimate equates to 14 per cent of disposable income, which the bank says contrasts sharply with the recent averages of 1 per cent in the United States and 5 per cent in the United Kingdom.

Only Germany has a comparable attitude to savings, where it approaches 10 per cent of disposable income.

And this is the good news? I love this per head of population argument, it really makes me laugh. Can I suggest that if 90% of Irlelands population ever see that 196,000, that is apparently theirs, they will think they have won the lottery.

So Ireland is the second best capitalist state behind Japan, hooray, good for them. Well I'm sure 33,000 of them are happy anyway. The sacrafice of the many to feed the greed of the few.

Was just saying to someone the other day "If house prices keep going up the way they are, I am going to die a millionaire, trouble is I have to die first, and I won't see any of it.

[Bilk]

Problems solved you can pay the fees out of the 196,000 your kids are entitled to. Since they are one of the heads of population referred to in the article.
Everything we talk about these days always comes down to money, and the trouble is no one seems to mind anymore, bar the few true socialists that are still left. And they are laughed at and belittled by all in sundry if they dare point out the social costs of all this richness, some of which you have just pointed out. But that is only the tip of the iceberg.
Certainly in th UK we have one of the highest crime rates in Europe. And at the other end of the economic ladder, those considered to be in poverty has risen dramatically sice the brave new world was born. The world where everthing comes down to the crass subject of pounds euro's or dollars. Makes me sick

[He_Who_Walks_in_The_Wilderness]

money.uk.msn.com/inves...id=5451754

Ireland: a runaway economy without brakes

By Nick Louth
July 05 2007

If you want to see both the advantages and disadvantages of being part of the euro area, you can’t do better than look at Ireland.
Since currency union on January 1 1999, the republic’s economy has boomed, with falling unemployment, climbing wages and rapid growth in consumption.

That sounds great, and indeed in many ways it has been. But the flip side of this boom is that the economy has for years been in runaway mode, with no effective brakes to stop it.
Irish inflation is high by Eurozone standards at 2.8%. There’s a shortage of labour. House prices have soared, and some of the most beautiful rural areas of the emerald isle have been buried under a sprawling layer of housing and holiday home development.
The costs of growth

When growth comes, infrastructure is often years behind. The republic’s tiny country roads are jammed with giant 4x4s and caravans, while traffic jams of M25 proportions strangle Cork, Limerick and Kilarney, not to mention Dublin itself.
This summer, after years of economic glory, the Celtic Tiger looks to be heading for trouble.

Ireland’s economic slowdown has been a long time coming, but it could well be all the worse for that. The Irish stock market’s main Index, the Iseq, has risen by 150% since the lows of 2003, almost twice the 86% rise in the FTSE 100 in London.

However, in June the Irish market took a big tumble, and has fallen almost 8% from its peak of 10,000 while markets elsewhere have edged higher. That’s a forecast of stormy times ahead.
Track the latest global market prices and movements with MSN Money
In Ireland, everything hinges on housing
It is in housing, and an over-dependence on it for economic growth, that Ireland is really storing up trouble for itself. The warning signs have been apparent for years :

Ireland has the highest rate of housebuilding in the EU, per head of population. Housing starts are by OECD definitions 26% above sustainable levels.

Housebuilding accounts for a heady 15% of Irish economic output, and provides 17% of tax revenues.

Property accounts for a dizzying 64% of Irish bank lending.

House prices have risen by 270% since 1996.

Three-quarters of mortgage and consumer debt in Ireland is at floating interest rates, so when rates rise borrowers squeal.

15% of Irish property is actually empty.

Rents, which indicate the underlying level of demand for property, have fallen since 2000.

In 2007 so far, house prices have fallen 1%. This is merely likely to be the calm before the storm.
According to Professor Morgan Kelly of University College Dublin, house prices adjustments after property bubbles are quite consistent.
ECB holds rates at 4%
Prices to give up 70% of gains
“Typically, real house prices give up 70% of what they gained in a boom during the bust that follows,'' Kelly said in a recent article. “This is a remarkably robust relationship, holding across very different OECD housing markets over more than 30 years.''

So what does that mean? A home worth €100,000 in 1996, having risen by the average of 270% would be worth €370,000 now. A loss of 70% of the gain would be €189,000. That would bring the price down to €181,000. That of course depends on when the boom was actually said to have begun, but you see the point. Prices would under this scenario effectively halve.

This is terrible news for housebuilding companies, their employees, contractors and estate agents. The first thing that happens when a housing market turns is a sharp fall in the the volume of transactions. This has already happened in both the US and in Spain, which are further along the housing downturn.

Homeowners, and those that lent them money will be the next to suffer. Negative equity, the situation where the value of a mortgage is higher than the current market value of the property against which it is secured, is likely to emerge in a big way in Ireland. Repossessions and bad debts are bound to rise too.

John Stepek: US housing market should be world’s biggest worry
Why the adjustment has been so slow
Why has all this taken so long to happen? In a ‘normal’ economy - Britain, the US or Japan - the central bank will spot inflationary dangers and head them off with interest rate rises.

By raising interest rates, credit becomes more expensive and consumers with one eye on mortgage payments will curb their purchases. The trick is to diagnose quickly, and impose the medicine in small doses.

However, in the case of Ireland, as with every other eurozone member, interest decisions are not made locally but by the European Central Bank. The ECB, based in Frankfurt, has a frankly impossible job trying to get one single interest rate to serve all 13 members of the currency union.

Confused about interest rates and what they mean for your money? Read our beginner’s guide to interest rates
‘Disaster’ for homeowners as interest rates rise
Running hot or cold
Like a pair of standard issue army trousers, the ECB’s interest rate is either going to be too big or too small for each of the countries that have to wear them.

Not surprisingly, the weighting is likely to be towards the needs of the larger economies, and these have until recently been running slowly.
Germany, with an inflation rate of just 1.8%, has less need of a foot on the economic brake than Ireland, whose consumer price inflation ran at 2.8% in the year to April. The Eurozone as a whole has inflation averaging 1.9%.

How the Eurozone is meant to work
Instead of interest rates, the EU relies on movement of capital and labour between Eurozone members to even out the imbalances in economic growth. Capital, in a single currency zone, moves easily enough to where potential return is greatest, but labour is another matter.
When the German economy was growing slowly in 2002 it would have made ‘sense’ (at least in the highly theoretical ways in which economists think) for unemployed Germans to move to Dublin where there were vacancies aplenty. They didn’t, at least not in any numbers. Indeed it had to wait for Poland’s accession to the EU in May 2004 for a wave of economic migrants to reach Ireland.
Now, if you ask for a pint of Guinness in a bar anywhere in Ireland, you are as likely to be served by a Pole, Lithuanian or Latvian as you are by an Irishman.

ECB has now hit the brakes
Finally, though the ECB has started to raise interest rates. Interest rates have been increased in eight quarter point steps since 2005, and are now beginning to bite, hard. They are now at 4% and could reach 4.5% by the year end. For a mortgage at the same rate that means doubled interest payments since 2005.

Ireland’s tragedy will be that the ECB will be paying little or no attention to the pain that the Irish population of four million is likely to endure.
The Bank has 317 million consumers in 13 countries to consider, and is looking hardest at Germany and France, where growth faltered for several years and is only now getting robust.
ECB holds rates at 4%
Hard times

So the upshot is that Ireland is going to find it very tough in the next two years to avoid tipping into recession. Interest rates may continue to rise even when Irish homeowners and buy-to-holiday-let investors find it painful. The banks are likely to see much bigger write-o. It really isn’t a great time to buy shares in Irish companies either.
However, when the dust settles, those who enjoy Ireland’s rustic charms may find some bargains. The rents for holiday cottages and indeed their price, is likely to be a lot lower in a year or two than they are now.

[Jim]

Have to agree with some of that, the south doesnt have the population to go with the new economy and wont for a few years.