Idiot politicians' guide to rent freezes

Lumpy Talbot

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Then he went off to do a bang-up job on bank regulation as EU Commissioner. It was such a successful round of lunches with bankers that he went 'round twice.

Not long after of course the arse fell out of the banking sector and it was discovered that there were a few teeeny-weeny white lies in the books.
 


Patslatt1

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Then he went off to do a bang-up job on bank regulation as EU Commissioner. It was such a successful round of lunches with bankers that he went 'round twice.

Not long after of course the arse fell out of the banking sector and it was discovered that there were a few teeeny-weeny white lies in the books.
Economic history is full of banking crises related to boom time lending,often reckless lending to maintain a bank's market share. The tsunami of savings pouring in from Asia and the middle east oil producing countries before the financial crash incentivised reckless lending. To stop it would have required foreign exchange controls or a heavy tax on fixed interest income,both of which would have been seen as radical and very unpopular in financial markets.
 

Lumpy Talbot

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No
Blame the furriner for the lack of domestic regulation. That's new, Pat.
 

carlovian

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Economic history is full of banking crises related to boom time lending,often reckless lending to maintain a bank's market share. The tsunami of savings pouring in from Asia and the middle east oil producing countries before the financial crash incentivised reckless lending. To stop it would have required foreign exchange controls or a heavy tax on fixed interest income,both of which would have been seen as radical and very unpopular in financial markets.
Ah well if the measures to stop a bubble are unpopular, of course they should never be implemented.
 

McTell

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Any kind of price freeze has to be temporary with an exit at a certain point or date. Otherwise landlords will cut back on maintenance which makes no sense.

If a serious city landlord has a sinking fund to pay for future repairs, then a 4% p.a. rise assumes that the cost of repairs will not rise by more than 4% a year. Nobody can guarantee this.

Renters and politicians have a much shorter time frame in mind, max 5 years.

When I was a kid i saw the slums on the northside of dublin, on a visit in the 1970s, and could not believe the state of them. This was the physical result of rent controls 50 years after independence.
 

Patslatt1

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Any kind of price freeze has to be temporary with an exit at a certain point or date. Otherwise landlords will cut back on maintenance which makes no sense.

If a serious city landlord has a sinking fund to pay for future repairs, then a 4% p.a. rise assumes that the cost of repairs will not rise by more than 4% a year. Nobody can guarantee this.

Renters and politicians have a much shorter time frame in mind, max 5 years.

When I was a kid i saw the slums on the northside of dublin, on a visit in the 1970s, and could not believe the state of them. This was the physical result of rent controls 50 years after independence.
The dystopian rent controlled slums of New York made those of the Dublin northside look pretty.
 

Lumpy Talbot

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Interest rates in the UK are currently three quarters of a per cent. Banks and credit card companies charge 39% interest on overdraft, late payments etc. As well as a charge on top for administering the application of 39% interest.

And this isn't even the shark end of the market. I've become truly fascinated with this standalone interest rates issue confined strictly to the construction trade. If I bought a hammer for £12.99 will it be £15.00 if I go and check next week?

Or in the case of the children's hospital a hammer that cost £6.99 is now apparently within a year at a cost of £24.99. That's a hell of a lot of inflation alright. Oddly enough I can't see that inflation rate cloud which appears to have attacked only the Irish construction industry and left the rest of the European construction industry alone.

I suppose it must be inflationary bullying. And heavily localised. Around some pretty fraudulent cost announcements.

There have been half a dozen such projects in cities and situations akin to the setting of the NCH. None of them have suffered these extraordinary and localised inflation-storms.

Someone is telling a lot of lies around that NCH project.
 

Patslatt1

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Interest rates in the UK are currently three quarters of a per cent. Banks and credit card companies charge 39% interest on overdraft, late payments etc. As well as a charge on top for administering the application of 39% interest.

And this isn't even the shark end of the market. I've become truly fascinated with this standalone interest rates issue confined strictly to the construction trade. If I bought a hammer for £12.99 will it be £15.00 if I go and check next week?

Or in the case of the children's hospital a hammer that cost £6.99 is now apparently within a year at a cost of £24.99. That's a hell of a lot of inflation alright. Oddly enough I can't see that inflation rate cloud which appears to have attacked only the Irish construction industry and left the rest of the European construction industry alone.

I suppose it must be inflationary bullying. And heavily localised. Around some pretty fraudulent cost announcements.

There have been half a dozen such projects in cities and situations akin to the setting of the NCH. None of them have suffered these extraordinary and localised inflation-storms.

Someone is telling a lot of lies around that NCH project.
While Finance Minister Donohue took responsibility for the cost overruns on the childrens hospital,maybe unjustifiably,he pointed out that schools and other construction projects all over Ireland have been done on time and mostly within budget. One of the links pointed out that on the giant government projects internationally, costs can easily rocket if best practice project management isn't carefully enforced. The key problem is that politicians and public sector managers aren't spending their own money and can't be sacked if they fail to control cost overruns. That's one of the biggest problems with government generally.
 

Lumpy Talbot

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Not much of an excuse is it? On the big project with the biggest cost over-runs, to bank bailout levels, we really screwed the pooch. But there are schools around the country where we didn't overrun by billions so that's alright...

This is really not good enough and the excuses being given are in no way truthful.
 

Patslatt1

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Not much of an excuse is it? On the big project with the biggest cost over-runs, to bank bailout levels, we really screwed the pooch. But there are schools around the country where we didn't overrun by billions so that's alright...

This is really not good enough and the Of course, the main responsibility excuses being given are in no way truthful.
The blame for the financial crash should be shared all round, by opposition parties shouting that massive government spending increases were totally inadequate and by a public caught up in a gold rush boomtime mentality. Of course, the key government ministers and top civil servants share most of the blame, especially Bertie who was power hungry for a third general election win. He may also have been influenced by poorly thought out lefty notions resulting from a lack of historical knowledge.
 

Lumpy Talbot

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The financial crisis had nothing whatsoever of left wing politics in it at any point in the bubble market or in the fraudulent operation of banks.
 

Lumpy Talbot

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Pat, this is manically counter-intuitive stuff you are coming out with in an apparent attempt to shift blame for the pump priming of the Irish property and banking credit sectors on to a completely invisible socialist government policy from a socialist government we've never had.

Lashing together Sir Dead Lenihan's 'we all partied' with a vague blaming of the financial crisis on a non-existent link with socialism is fairly heinous if admirably optimistic.
 

Patslatt1

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Regarding the potential harmful effects of proposed rent freezes, a simple example should educate idiot politicians who sincerely believe in rent freezes and are not cynically buying tenant votes. Say lots of young single people each occupiy roughly 800 square feet housing units and can only afford the rents in a rent freeze,but would move to smaller, cheaper units if rents rose. At the same time, couples are looking for 800 square feet units in the same area. If the rent freeze applies, the single people can stay put, making it very difficult for the couples to find rental housing. To a lesser extent, this also applies as long as controlled rents are below what a free market rent would be. So preventing market rent increases prevents an efficient allocation of available housing supply.
At the same time, strict rent controls and freezes reduce investment in rental housing below what it would be in a free market. That contributes to the housing crisis.
After the Greens in coalition screwed up the rental market for low or no income people by a snobbish ban on bedsits, they should have lesrned that meddling in markets can have unintended consequences. A lot of low incone people were made homeless and the cheapest bedsits available to antisocial people including those with addiction and mental health problems were shut down. I joked at the time the ban was legislated that the resulting homelessness wouldn't be a problem because the big hearted Greens would take the homeless into their own homes.If the Greens were serious about housing, they would have pushed hard for removing NIMBY barriers to housing building so that the increased capacity of rental housing would make bedsits redundant.
The Greens aren't ashamed of their posture on bedsits going by the fact that they are cynically posturing on a temporary rent freeze in negotiations with Fianna Fail, even though the freeze is obviously unconstitutional as a serious undermining of property rights.Such a freeze would make it dufficult to lift rent controls after four years as originally promised by the government as it widens the gap with what market rents would be, especially if confidence in rental property investment declines, reducing rental housing building.
The slumification and reduction of housing quality of large parts of Irish rental property may be starting as landlords cut back on maintenance. Let's hope the situation doesn't start to resemble the dystopian slums created by New York City's very strict rent controls from the 1950s to the 1980s that gave very low rents to American blacks and Puerto Ricans.See examples of pervasive slums Then and now: 'The worst slum in America'
 
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