Celtic Tiger...strong as ever ..or is geting long in the tooth?

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Permalink Reply by Daithi Locha on November 23, 2007 at 12:57am

McWilliams has been predicting the bubble burst since 1994 :) so he was going to be right sometime. I reckon its a 2 way slowdown. If external factors such as sup prime mortgage bank sector fallout and resulting dollar devaluation continue unabated then we're in for a severe dip for at least 18 months. If these external factors are less severe long term we will continue slower growth albeit at a rate akin to Germany etc 2.7% ish. The housing market will bottom out regardless and this is a good thing as the ridiculous investor driven hypermarket was deflecting away from what we do best. I think the eastern tigers are a bit over hyped by comparison (Mc W reckons they are our biggest threat) as we still, and will keep punching way above our weight for a small country of 5 million. Go to Poland and try set up a software research company or R+D in pharmaceuticals. Then come here. Its lets do it, no bull and lets do it.
Regardless of all the above eyes on events in the middle east over the next few months could sway everything down the tube for a long time no matter what part of the globe you live. €200-300 a barrel?

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Permalink Reply by Todd on November 23, 2007 at 5:26am

Daithi- Wow, it must be about 1:00am Dublin time when you posted you comment. I'm lucky to make a coherent sentence by 1:00am let alone a detailed response like the one you made above ;)

I wasn't aware McWilliams had been on the bubble bust soapbox for so long. As they say, a blind squirrel will eventually find a nut. He may have found his.

You are probably right about the Eastern Tiger, the strength if Ireland so far has been the ability to provide resources for high-tech and pharma R&D (which is my field of work and why I have the opportunity to come to Ire) Eastern Europe is probably a generation away from having the same resources.

As for external factors like the mortgage/investment banking sector, I'm afraid that will be the tipping point for a sever down turn in both the EU and US economies. Property appreciation was driven up by loose lending standards not just in America but all over the world. I’m amazed to see that many of the same mortgage devices like 100% financing, negative amortization and ARM with low introductory rates are being used in many countries not just the US. It’s those types of mortgages that were then securitized into highly leveraged investments. When those investments go bad, credit will become difficult to secure and the whole financial/business sector grinds to a halt. I have been following the housing bust here in America very closely and it has a long way to go down before it will recover. It appears that Ireland and England are about 12 months behind the US in the rate of mortgages going bad.

As for the Middle East, yes all bets are off if America does something stupid to antagonize Iran into a full war. The only saving grace may be that we are entering an election year.

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Permalink Reply by Daithi Locha on November 23, 2007 at 10:36am

Just as a matter of interest...where did you get that pic of the celtic tiger??? It was filled with hot air anyway! :D :D

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Permalink Reply by Todd on November 23, 2007 at 12:15pm

Not sure how I came across the pic, probably did a quick google/yahoo search.

I was going to use this pic

But he seems to be full of more than hot air. HAHAHA

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