The Value Of Nothing

Property prices in Ireland
Property prices in Ireland converted to 2011 currency. The red line shows the pre-boom average. ©RonanLyons.com

So house prices in Dublin have reached half what they were at the height of the boom. That’s a good sign. If they halve once more they’ll be back to what they were pre-bubble. Look at the graph (ganked from the very interesting ronanlyons.com) if you don’t believe me. Converted to 2011 money, an average house cost about €100,000 for decades. At the height of the boom it peaked at nearly four times that. Well over a third of a million, for an ordinary home.

Just one question springs to mind. What the hell were we thinking? Houses costing the price of a house, plus three other houses? Cars didn’t quadruple in price in just a few years. Food didn’t, even drink and cigarettes didn’t. During boom times, market prices are supposed to fall behind rising incomes. Otherwise they wouldn’t be called boom times, they’d be called mysterious outbreaks of rampant inflation. But during ours the cost of housing left incomes for dead. Clearly, the housing market is a deeply flawed one – almost an object model in fact of how capitalism goes wrong.

In theory the price of something is set by supply and demand, which is both efficient and ethical. Well let’s pretend it is for now, it works well enough for most things. Why does it go wrong here? Because the supply and demand of housing is almost irrelevant to the housing market.

What does a house cost? It’s an interesting question. A house in an appropriate location can be a very important asset, so in general people will spend the absolute maximum on a house they think they can afford. That’s clearly unlike wine or cars or dinners or phones. So in short, the answer to the question “How much does a house cost?” is “Whadya got?”

Or more precisely, what can you raise? If easier money is available therefore, people will borrow more. They’ll pretty much have to, as prices will rise to meet the available credit. Of course they have the option of only borrowing as much as they would have before prices went strange, but if they do they’ll get a much worse house than they could previously have afforded, while those willing to avail of the softer terms will get the shorter commutes, the better school catchment areas, the safer neighbourhoods. Competing for their and their children’s futures, it is hard to blame them for taking all that the banks and other financial institutions offered.

Speculation happens in such runaway markets of course. People will buy houses in the hope of selling them at a profit, just as if they were buying shares or gold or currency. Capitalism teaches that there is absolutely nothing wrong with that. The vast, vast majority however are buying houses because they need a house. And while some postponed purchasing in the hope that prices would come down, far more rushed into buying out of fear that they would not.

There are other factors, but we shouldn’t overemphasise them. People had become better off, yes. But did your income double? Mine sure as **** didn’t. The euro facilitated the boom because such an influx of credit would otherwise have exploded the currency, but it didn’t cause it. Houses were said to be “historically underpriced”, but even if you can bring yourself to believe a thing could be consistently underpriced for decades without anyone noticing, could it seriously be by a factor of two, even four?

And there was net immigration, that could have been expected to fuel the market. After all prices go up when demand outstrips supply. Only… Supply vastly outstripped demand. People were building houses up the sides of cliffs.

There are no two ways about it. We had a housing price bubble because we had an oversupply of credit. The blame rests squarely with the financial institutions that offered these loans. That is, all of them. Major banks should have known better and could have resisted. Had just a couple of lesser institutions been left to their excessive lending the larger banks would have lost custom, yes. But they would have survived. And minor institutions could not by themselves have super-inflated house prices.

But these lending practices were adopted by the whole industry, and quite literally they forced people to pay too much – far, far too much – for houses. There is a clear case for debt forgiveness therefore. There is also a case for punishment – though of the lenders who made the irresponsible loans rather than the borrowers who had little choice except to take them. And by punishment, I seriously mean prison sentences. There must surely be some law against business practices so reckless that they ruin individuals, families, even a whole country.

Isn’t there?

Mystery Metal of Ancient Ireland

Wenzel Hollar's historical map of Ireland
Ireland used to be a different shape

Today was spent at the Dublin Institute of Advanced Studies, a curious seat of learning I have written of before. I was there for Tionól, a symposium on Celtic Studies. Not my usual stomping ground, but it’s good to go off and explore sometimes.

Ireland is fascinating because so much of what seems like the distant past happened so recently. (And vice versa.) The coming of Christianity didn’t overwrite pagan social structures. Much of their law and their system of values continued alongside the new religion. Nor did Viking settlement or Norman invasion destroy that cuture; it was only in Elizabethan times that real efforts to replace it began. So it’s almost as though we moved from the pre-Roman era directly to the early modern.

Yet there is so much we don’t understand about that past. When the change came it came fast, and though it left us a rich supply of written records, we do not always understand them.

For example, there is a word findruine that means…. Well, from its context it appears to be a precious metal. Stories speak of valuable objects of “gold, silver, findruine and bronze’ – in some it even outranks silver to become the most precious substance after gold. Yet we don’t know what it was.

Theories abound of course. My own first thought was that it might be a special version of bronze, with more copper in the mix. Or perhaps one that substituted zinc for the tin to make gold-coloured brass. But all these have been suggested over the years. Our speaker argued that none of them were right, and that the material was bronze (and perhaps other metals) that had been ‘tinned‘.

Which is not to say it had been put into cans. Tinning is the art of heating metal and then introducing solid tin to it. Tin melts at a relatively low temperature, so it spreads out on the hot surface, bonds with it, and forms a bright silver-coloured coating that resists corrosion and tarnish. The art was widely practiced until quite recent times – it gives its name to the trade of ‘tinker’ – and we know it was done by the ancients because, though it’s less robust than a pure metal, some beautiful articles of tinned work still exist.

So perhaps an ancient riddle has been solved. In the scheme of things though, it’s a relatively minor one. For example one of the most important roles in traditional Irish society was that of file. The word is usually translated as ‘poet’, yet fully qualified members of the file class were social equals to kings. And we still don’t know exactly what it was they did.

I hope to return to this.

And My Fourth Career Is…

I wrote a play last night. Well I exaggerrate – I reached the end of the first draft of a play. Well, of a rewrite of a play I originally finished fifteen years ago. And I’ve been working on it for three weeks. But these caveats aside, I can say with some pride that last night, I finished writing a play.

Today I started writing it again.

German Oversight

Reichstag building seen from the west, before ...
Head Office

Whatever the exact mechanism, it seems beyond dispute that the German parliament knew details of our budget before ours did. It may not have been the whole budget of course, but it still doesn’t look good.

Particularly in this context. What Merkel has proposed for the Eurozone is EU oversight of members’ budgets. Critics will say that that amounts to German oversight. So this is embarrassing even more for Germany than it is for Ireland.

What Is The Markets?

fruit market in Obaköy, part of Alanya, Turkey
*This* is a market. Accept no substitutes

We’re hearing a lot about how ‘the markets’ are reacting to changes in the Greek and Italian governments. It would seem the broad assessment is ‘unhelpfully’. Mysterious beasts, these markets. The only clear thing is that they’re damnable tricky to please. Whatever you do, it turns out to be not even close to what they wanted. Basically, the markets are a dreadful girlfriend. I know, in reality they are just bunches of people. But you can never trust people in bunches.

The other day I heard someone say that markets are powerful mechanisms for finding the correct price of things because they depend on the ‘wisdom of crowds‘. This is a real and very interesting phenomenon. If you ask a crowd to estimate something, it often happens that the average of their guesses is more accurate than even the closest individual one. In other words, the crowd as a whole seems to know better than any one of its members. It’s as if all their ignorance, being distributed randomly, cancels itself out – leaving nothing behind but the smart.

Which in fascinating and useful to know. It’s not however how markets work. And particularly not financial markets, where what is being traded isn’t a tangible commodity but – when it comes down to it – promises. People making promises to repay a certain amount of money in the future (or, thanks to some of the more complex financial instruments, the past) in return for money now. People packaging up those promises and re-selling them as promises about promises. People trading on promises yet to be made. All for money – which is of course itself only a promise. It’s not a crowd trying to estimate something objective. It’s a crowd all trying to second-guess each other – a deeply unstable situation. It could turn into a stampede at the first peal of thunder. Yet this is what we’re depending on now, so soon after our experience with the property market. We’re incurable.

The Liberation Of Wall Street

The corner of Wall Street and Broadway, showin...
Stop Protesting - If You Know What's Good For You

So Wall Street is no longer occupied; not by protesters at least. The encampment has been swept away on the – quite specious – grounds of health and safety. I’m a strong supporter of laws to protect innocent people, so it always angers me to see them abused. Taking something enacted for public benefit and repurposing it to oppress undermines the rule of law and draws democracy into disrepute.

To compound the dishonesty they were told that, this being nothing more than a cleaning, they would of course be welcome to return as soon as it was over.

Only… Don’t bring camping gear.

Whose health and safety anyway? The order cites that of local residents, the emergency services, and the protesters themselves. The former two you could understand if the encampment did present some sort of hazard. (It didn’t.) Those groups have little choice but to be in its proximity. But the protesters themselves? They’re being ordered to leave on the grounds that by assembling peacefully, they pose a health hazard to themselves.

One wonders what form of protest couldn’t be suppressed on such grounds. Leave the powers that be to get on with it. Resistance is bad for you.

What Phone Is Right For You? 8 – Nokia Not Dead

Yeah, I think some people will enjoy using a phone that looks like this

I started this guide to choosing a phone not long after Nokia announced their game-changing deal with Microsoft. It seems fitting to conclude the series with the first fruit of that alliance.

Was the wait worth it? Yes. Not, alas, because the new Nokia phones are perfect. It would be wonderful to be able to say your phone-choosing dilemmas were all over, but there is still a way to go. They should be the last major development for a while though, so we know now what the real choices are.

And they are very promising. A few months back Nokia brought out the N9, their first phone with the Linux-based MeeGo operating system. It was a thing of beauty, with a genuinely novel all-touch interface and a unique body moulded and milled from hard polycarbonate and curved glass, but it seems certain now that the operating system is a dead end. It was pleasant if not wholly unexpected therefore to find that their new Lumia 800 is in many respects just a Windows Phone 7 version of the N9. (See them compared point-by-point here).

Or rather, Windows Phone 7.5 – the Nokia is one of the first phones with the new version of the Microsoft OS. And its greater polish, in combination with the the hardware refinement Nokia bring to the party, make the Microsoft system seem for the first time a credibly sexy alternative to iOS and Android.

This phone isn’t going to blow the iPhone 4S or the Galaxy S II away though. Its gestation has taken a long time, and consequently it isn’t right on the cutting edge when it comes to specifications. But I think it will be the first Windows phone to have real mass-market appeal, certainly in Europe. It’s different and eye-catching. In the US Nokia will need to find the good relationships with carriers that have eluded it until now, but with Microsoft at its back that seems eminently possible. Rumour has it indeed that they’re holding back the Lumia 800 so that they can launch with a version capable of using LTE (that is, 4G) on AT&T or Verizon’s network. That would quickly correct the impression most Americans have of Nokia as a maker of only low-end phones.

So though the Lumia may not quite be a world-beater yet, it probably does enough to put both Nokia and Microsoft on track. It lags way behind both Android and iPhone in terms of apps, but going a long way to counter this there’s a huge amount of excellent stuff built right – Office 365, Nokia Drive, XBOX Live, Bing Vision. And the interface, particularly in its bright and curvy Nokia incarnation, is very arguably better than even the iPhone’s. It’s certainly prettier. Would I buy it? I don’t think so. It’s delicious looks sorely tempt me, but I’ll wait for what they’ll come out with next. If they can get back onto the front line of hardware specs we will have a real three-way battle here.

But you should forget Nokia if you want a smartphone right now? No; don’t forget Symbian. Nokia’s previous operating system may have been around for a long time but – unlike MeeGo – it’s not about to go away. They’re still improving on it (the latest version is called Symbian Anna) and there are a great number of apps available. Yes it seems clunky and awkward alongside its younger rivals, but its maturity means there is damn all it can’t do. And if battery life is a high priority for you, a Symbian with a keyboard is probably impossible to beat.

 

Coming soon: The final phone round-up.

 

What Phone Is Right For You? 8 – Nokia Not Dead

Yeah, I think some people will enjoy using a phone that looks like this

I started this guide to choosing a phone not long after Nokia announced their game-changing deal with Microsoft. It seems fitting to conclude the series with the first fruit of that alliance.

Was the wait worth it? Yes. Not, alas, because the new Nokia phones are perfect. It would be wonderful to be able to say your phone-choosing dilemmas were all over, but there is still a way to go. They should be the last major development for a while though, so we know now what the real choices are.

And they are very promising. A few months back Nokia brought out the N9, their first phone with the Linux-based MeeGo operating system. It was a thing of beauty, with a genuinely novel all-touch interface and a unique body moulded and milled from hard polycarbonate and curved glass, but it seems certain now that the operating system is a dead end. It was pleasant if not wholly unexpected therefore to find that their new Lumia 800 is in many respects just a Windows Phone 7 version of the N9. (See them compared point-by-point here).

Or rather, Windows Phone 7.5 – the Nokia is one of the first phones with the new version of the Microsoft OS. And its greater polish, in combination with the the hardware refinement Nokia bring to the party, make the Microsoft system seem for the first time a credibly sexy alternative to iOS and Android.

This phone isn’t going to blow the iPhone 4S or the Galaxy S II away though. Its gestation has taken a long time, and consequently it isn’t right on the cutting edge when it comes to specifications. But I think it will be the first Windows phone to have real mass-market appeal, certainly in Europe. It’s different and eye-catching. In the US Nokia will need to find the good relationships with carriers that have eluded it until now, but with Microsoft at its back that seems eminently possible. Rumour has it indeed that they’re holding back the Lumia 800 so that they can launch with a version capable of using LTE (that is, 4G) on AT&T or Verizon’s network. That would quickly correct the impression most Americans have of Nokia as a maker of only low-end phones.

So though the Lumia may not quite be a world-beater yet, it probably does enough to put both Nokia and Microsoft on track. It lags way behind both Android and iPhone in terms of apps, but going a long way to counter this there’s a huge amount of excellent stuff built right – Office 365, Nokia Drive, XBOX Live, Bing Vision. And the interface, particularly in its bright and curvy Nokia incarnation, is very arguably better than even the iPhone’s. It’s certainly prettier. Would I buy it? I don’t think so. It’s delicious looks sorely tempt me, but I’ll wait for what they’ll come out with next. If they can get back onto the front line of hardware specs we will have a real three-way battle here.

But you should forget Nokia if you want a smartphone right now? No; don’t forget Symbian. Nokia’s previous operating system may have been around for a long time but – unlike MeeGo – it’s not about to go away. They’re still improving on it (the latest version is called Symbian Anna) and there are a great number of apps available. Yes it seems clunky and awkward alongside its younger rivals, but its maturity means there is damn all it can’t do. And if battery life is a high priority for you, a Symbian with a keyboard is probably impossible to beat.

 

Coming soon: The final phone round-up.

 

President Higgins

On October 29, 2011, two days after the presid...
Image by infomatique via Flickr

I’m watching the replay of the inauguration of Michael D. Higgins as President of Ireland (Uachtarán na hÉireann), a significant threshold occasion in our history. An event in my personal life too – this is after all my old Sociology professor. And, one I missed. Yesterday I had to do something to sort out the utter mess my finances had gotten into since the economy hit the windscreen.

It is moving now though, to see one of the few politicians I’ve ever had any respect for become First Citizen. What the hell happened there? After over a decade of naked materialism we’re suddenly electing a socialist intellectual, and with no intervening transition except the global failure of capitalism.

It is a bittersweet occasion though. We now have as President a man who you can say without embarrassment is passionate about equality, about justice, about actually changing society. That we esteem him enough to raise him to this position is a wonderful thing. But at the same time, it’s sad that he was raised to a position of esteem only. As President he has less power than an ordinary citizen; they at least are free to express their own opinions.

Which is unfortunate. Now more than ever we need voices like his.

 

11/11/11/11 – A Monument To Worthlessness

Serbian retreat through Albania in 1915.
Peace

The British seem to be going particularly overboard for poppies this year, presumably inspired by the calendrical happenstance of all those ones lining up in a row. But unthinkingly, they only emphasize the tragic aspect of this occasion.

Why eleven? The agreement to end hostilities had been signed more than five hours earlier. The war officially ceased only at the eleventh hour of the eleventh day of the eleventh month because that seemed a suitably grand and historic way to end a ‘Great War’. So they kept on fighting, and they kept on killing, until that eleventh hour came.

How can one feel anything but contempt for that?

But this act of inhumanity was just the start. The victorious powers chose to accept no portion of blame for the hostilities. On the contrary, and despite the fact that a great deal of the credit for the war’s end belonged to the German people for rising up against their leaders, despite the fact that the Kaiser had abdicated and the empire been abolished, they chose to heap all blame – and punishment – onto the people of the new German democracy. The terms of this ‘armistice’ would lead directly to disaster on a previously unimagined scale.

This hour marks not the end of war, but the beginning of revenge.