Posted by Observer on October 04, 2008 at 23:36:45:
In Reply to: the great irish bailout - thoughts posted by Gonzo90909 on October 01, 2008 at 14:08:24:
Been thinking about it for a good while now spurred by the excellent reports of George Lee which in themseselves are enough to give one loads of food for thought.
Amongst other things I've been thinking is that whilst we may all strive to blame the banks, we are all, in so much as we all embraced the cult of materialism and credit, equally to blame for what's occured.
For a long time i've heard this concept of the average industrial wage bandied about and for a long time wondered how much it actually was - it now transpires that it amounts to about €36k per annum which I think in itself is a bit of a sham since since I reakon the average worker in Baxter or Allergan is on about €25k at most so that, it would appear, some industrial workers somewhere (Probabaly in D4) are on colossal money.
Even if one takes what is considered a good average salary of say a teacher or a nurse or a garda - they are on in the region of €40 to €50k per annum.
Now, considering all this and the logic that held sway in the banking industry before the advent of the Celtic tiger that the maximum mortgage should not exceed 3.5 times a purchacers salary, the maximum mortgage available to the average worker in Ireland (Even if we are to accept the over inflated "Average Industrial Wage") should be not more than €115k. Considering this as an 80% mortgage for a 20% deposit, the average house in Ireland should be priced at €143k instead of an average of about twice that.
I guess what I'm getting at here is that the buying public have also themselves to blame for the rate that house prices were driven up and their willingness to pay the vastly inflated prices, because of supply demand economics, regardless of whether or not they could really affoard them. If people had refused to pay the prices, as only now in the resession it seems that people are being compelled to concede 'cos the realisation is finally hitting home that such ridicilious prices are NOT affoardable for the average person, then the developers and house builders would no longer have the willing eager market that they had, to enable them to keep raising the prices.
We should only pay what we can affoard, not what the market dictates, and if the market dictates more then it is apparent that we cannot affoard we need to walk away and accordingly with demand going down prices should aso fall.
That's my economic logic anyway for what it's worth!!!
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