PS Property Scam

July 27, 2014

An Taoiseach, Enda Kenny, has told us there is no property bubble. Over the past year property prices in Dublin have risen by 20-25% . A professional couple with 3 times the main salary plus salary of the other salary won’t hack it. They are being outbid by cash buyers.

Of these how many are local and how many represent vulture fund capital of domestic or foreign based interests, no one knows.

Reasonable property valuations of around the €200,000 mark have disappeared with prices skyrocketing far beyond the ceiling that can be afforded by most young people aiming to start a family.

Let’s think about this problem and approach it from a new angle. Without getting into the nitty-gritty of why we are not building the 15000 housing units annually, why the government is slow to act, why planning permission for these units is in the hands of developers cocooned by their problems with the banks, NAMA and the courts, might there be other reasons for the debacle?

Property tax is resented in Ireland and regarded as a bondholders and banker tax to fund repayment of odious debt.

However it has been mooted by tripling the amount of property tax, in excess of €2bn could be raised that would allow taxation to be reduced. Alarmists have pointed out, this would be akin to giving with one hand and taking it away with the other and have derided and scorned the proposal.

However, there is method in this madness. Consider the following scenario: with QE providing plenty of collateral for banks to purchase/invest in property in Ireland with money from abroad, let’s say this money rushes to Ireland to purchase vast portfolios of land/commercial property from NAMA and property in the domestic private market?

Add to this, the savings of those unaffected by the recent property bubble wishing to cash in on rising rents to avoid low-interest rates. Add in lack of supply, and voila, we have our housing bubble?

Who gains? The banks gain. In oncoming stress tests due this fall, Irish banks will be scrutinised on their capital balances, how secure their lending is. Banks will point to rising property values as security against their lending return on domestic loans. Falling property values would lead to more falling into negative equity to tarnish the loan book of Irish banks.

Rising property charges will mean government can reduce taxes if these taxes can be offset and levied against property owners instead.

Cash rich buyers and external vulture funds can swoop in and control the market. Unable to compete, domestic buyers, young people hoping to start a family, will be priced out of the market and forced to rent.

'I don't get it...after all the budget cuts to streamline the work force, why aren't we moving faster.' Rental prices increase with domestic property charges handed on by a new slave class forced to pay whatever rent is decided by a new rentier class. Divisions between rich and poor increase.

Is there an alliance between government, the banks, vulture fund capital, a new rentier class of local and foreign capital with a Greek chorus of ECB, bondholders, to scam young people betrayed in the recent housing bubble collapse?

There is no commitment to bring down housing prices to reasonable levels. Instead there is a denial this problem even exists.

So, first you sign up all Irish taxpayers to pay for odious debt. In order to keep property prices high and safeguard the capital base of banks and continue to make returns on bondholders odious debt, you flood the market with vulture fund money: for example, purchase anything on NAMA’s books. You need to force young people out of the property market and into the rentier controlled sector.

Once you have young people there, you can make them pay any rent you like. Government can force any amount of property charges it wants. Landlords simply raise the rents and the new class of young Irish rent slaves will pay whatever is asked of them. Troika is happy, their odious lending has been securitised.

Those with a fertile imagination can imagine Mr Magoo with his puppet strings controlling Mr Kenny and all his rent slaves in a world without private property,  everything in Mr Magoo’s ownership.

Mr Magoo may turn out to be much more unkindly than George Orwell’s Big Brother!



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