We must go to Athens. Will you come if I can get the aunt to fork out 20 quid?
So said Buck Mulligan to Stephen Daedalus in the opening chapter of Ulysses.
I’ve just come back from the Martello Tower at Sandycove – all Joyced up – where this opening scene from ‘Ulysses’ takes place. My Twitter feed is alight with stories from Greece as I try to write, between listening to some wonderful renditions of Joyce and scoffing down a few kidneys for breakfast, courtesy of Peter Caviston in Glasthule.
Greece and its ancient Hellenic classic civilisation was never far from the classically educated Joyce and it informs so much of Joyce’s writing. Isn’t it a bit ironic that here, on Bloomsday, all I can hear is how Greece is being hung out to dry by politicians who, unlike Joyce, have no sense of history?
Will Europe’s bean-counting civil servants ever learn that money that can’t be paid back won’t be paid back?
The Greece conundrum looks like it is coming to a head. Most rational people believe that Greece and its creditors should just apply the rules of capitalism to the debts. The Greeks should explain to the creditors that they are co-responsible. Athens should pay them nothing and see what happens.
The story of Greece is a universal story and unfortunately it is the story of our age. It’s the story of the poor versus the rich, the debtor versus the creditor and, most crucially, it’s the story of the difference between the man who earns his income from wages and the man who earns his income from rents, interest or dividends. One has assets and gets progressively richer; the other wages and debts and struggles to stand still.
The same applies to countries.
The debtor country, like Greece, earns its income from work and pays this (because of all its debts) to the creditor, who then turns this Greek income into rents or interest.
As long as the EU sides constantly with the interests of creditors and tries to turn the eurozone into a ‘creditors’ paradise’, where there is no risk implied in lending money, there will be massive political problems, because siding with the creditor is always going to make the rich richer and the poor, poorer. We see a similar siding with the creditor and putting the interests of the creditor first at work in everyday Ireland. It is the property market. In Ireland, the odds are stacked in favour of the landlord against the tenant.
Rents are rising much faster than wages and house prices are rising faster than both.
This means that the landlord, who is (almost always) already rich, simply gets more and more rent and the tenant pays a greater and greater proportion of his wages out as rent. In the buying market, the first-time buyer is being priced out by the cash buyer who is hoping to turn the potential first-time buyer into a long-term tenant, out of whom the cash ‘investor’ can extract rent into perpetuity.
Obviously, the bigger the landlord or cash buyer, the better the terms he gets for the initial capital he needs to buy the property and the more he can squeeze in rent out of the tenant. So the big guy is winning twice. He is minimising his costs and maximising his income. This is what I would term ‘endemic landlordism’.
This process is insidious and creates a bias in a society, which leads to all sorts of anomalies in the housing market.
Joyce would have known all about endemic Irish landlordism.
Joyce’s father, John, began as a man of some means and ended up poor. The moves he and his family made around late 19th and early 20th century Dublin describe a tightening spiral from wealth towards poverty – from the leafy, red-brick suburbs of Rathgar and Rathmines, to the less posh Bray and Blackrock and down to the shabby, poor north inner city.
Having moved to 20 different addresses in Dublin before his early twenties, Joyce ended up in the Tower at Sandycove. When he left there hastily, captured in the first chapter of Ulysses, he hurtled out of the tower and not only never came back to Sandycove, but never lived in Ireland again.
I wonder how much this lack of a secure place to live for any decent period of time affected Joyce and his view of this country?
Not having a place to live, constantly looking over your shoulder or waiting for the rent to go up or not being able to get enough money together to get a place of your own, has a profound effect on people, their marriages and families. In Ireland today, young workers can’t afford to buy a place to live and this is a massive problem, which extends well beyond just economics.
Let’s look at the fundamental inequality about what is going on, whereby rich investors are getting a massive subsidy when they buy property and the average person, who simply wants to get a place to live, is paying a massive premium.
Let’s look at a massive property fund called the Ulysses fund. The irony of a secure landlord fund named after James Joyce, who was possibly one of the most insecure and peripatetic of all tenants, shouldn’t be lost on anyone.
This fund of properties is owned by big investors who probably borrowed in foreign currencies at very low rates of interest that are available only to the very rich. The portfolio cost €150m for properties that were valued at €2bn at the peak of the commercial property market in 2007.
Ulysses comprises 14 offices, 51 retail units and 31 apartments with 90 underlying occupational leases spanning a mix of long and short-dated terms. The current annual income is €13.94m – or close to 9pc. Many of the tenants are Government agencies, so you, the taxpayer, are the underwriter.
There is nothing illegal about any of this. It just shows you how, if you have access to capital, Irish property is a winner.
If, in contrast, you are a first-time buyer, you are probably paying 4.5pc plus for your money. You are paying over the odds because you are bidding against your friends and there is the cash buyer to contend with who can always outbid you.
When I see the young and not so young of Ireland pinned to their collars to try to find a place to live, while wealthy foreigners who bought portfolios for half-nothing make out like bandits, I’m reminded of Joyce’s observation about this country: “Ireland is the old sow that eats her farrow”.
Was he right?
Subscribe. Greetings from sunny Antigua lads.
Feta Cheese
Europe remains a political unit, probably the most popular and attractive supranational entity in the modern world . Yet why does Europe retain its coherence , when almost all its recent achievements are claimed by its member states?It is not too much to claim that Europe , as a community and as an idea , is the ghost of the Latin Language community ,still respected and propitiated five centuries after its death ( Roman Empire) .
Like Latin will the Roman alphabet dissolve and make way for Cyrillic and Arabic script and our cuisine be pootinified !
Pigeon Tower
Martello Tower reminds me of a place to keep pigeons where the owner fund manager sends them away only to return again with messages and to lay eggs that will be blown out and preserved in antiquity .
Landlordism in Ireland is purely about speculation and nothing else. Tenants are considered to be a necessary evil and nothing more. This speculative approach to wealth creation is a major hindrance to growth in the productive sector. No politician will face up to it, as most are at it themselves and they know no better. They leave the difficult stuff to FDIs.
What a rant about us and them. No solutions just a commie rant. Debts that can’t be paid will not be paid. Rents that can’t be paid will not be paid either. Not a word about the fiat ponzi schems monetary system that enables and assist and abbets this inequality. nothing that explains that the issuaNCE OF UNLIMITED CASH AT ZERO INTEREST flows first to the bankers then to financial assets, then to anywhere else causing the greatest ineqity in hundreds of years. Property prices are zooming in major cities all over the world with the same lamentable results. Try… Read more »
With only 5,125 home purchase mortgages given out in Q1 2015, it is still a cash buyers market of 51% of all home sales in Q1.However it’s easy to talk up the mortgage market by saying lending is up around 50% – but that’s a bit like a car dealer saying he sold 2 cars in April and then 3 in May! Q1 central bank statistics remind us that the number of mortgages in this country is still decreasing – i.e more retired people paying off their mortgage than young people getting their first mortgage. In relation to the Greek… Read more »
Fully agree with everything said here. The debts should be written off.
Maybe David himself missed the oxymoron when he wrote “The debtor country, like Greece, earns its income from work and pays this (because of all its debts) to the creditor, who then turns this Greek income into rents or interest.”
I think that a great deal of Greece’s problems are self-inflicted, due mainly to its work-shy, tax-evasion culture. That people working at arduous jobs such as barbers and taxi drivers could retire at age 50 was ridiculous.
Hi, “I’m reminded of Joyce’s observation about this country: “Ireland is the old sow that eats her farrow”. Was he right?” Yes. We really are a nation of fuckers in that regard. 89400 voted with their feet in the 12 months to 2013 and 80400 in the 12 months to 2014. Going to countries that pay wages people can provide for families on. Meanwhile we import all the eastern European labour we can get and give them 15 hour contracts and Min wage jobs and no one bats an eyelid. Your point on the Ulysses hedge fund is very good.… Read more »
What would Joyce have done? Surely the headline should have read as being ‘What did Joyce do?’ He buggered off out of this country and never returned, that’s what he did! This country was run by clowns and idiots back then and its been run by clowns and idiots since that time. The sooner the Irish electorate wake up and take notice what’s going on and what will continue to go on if they don’t change the way that they vote. FF,FG,and Labour have made a complete and utter mess of this state since it’s foundation and they will continue… Read more »
Added to this should be the role of the banks in financing this system. Like any good parasite, the bigger the host the better. Banks are delighted to finance this scheme, sucking up one third of a workers income while adding nothing to the productivity of the nation themselves. It is very strange to hear people calling for the scrapping of the central bank rules which are trying to limit the parasites feast! The sad fact is that our politicians have deemed the crisis over, having failed to lay out any strategic plan or vision for the future, besides calling… Read more »
David, good morning from California,
I agree with you that the Greeks are being hung out to dry, and the manner in doing so is particularly odious.
I am curious as to how much of the money that Greek borrowed was fiat money, just numbers entered into an electronic register, to be paid back in hard earned money that disappears as the fiat entry is written off.
It would be interesting if an independant Greece could then pay off its debt with Fiat Drachmas.
A theme for a good economist to explore.
Bilimori
“A state without the means of some change is without the means of its conservation” Edmund Burke, Reflections on the Revolution in France Today I would like to write on debt forgiveness, but I intend to take a slightly different approach to David’s views expressed in this and his previous articles. David often says that in cases such as Greece’s it takes a reckless lender as well as the reckless borrower for the situation to arise. However, in his articles he often seems to turn a blind eye on the borrower part of the ignominious Greece v the EU equation… Read more »
Ireland is run like a Ponzi scheme. No difference between the FG/LP alignment and the FF/GP alignment – apart from the sales gimmicks. As shown by the DOB saga, there seems to be a pre-occupation with preventing all the plebs from finding out hat is really going on. Racketeering is rife. Corruption endemic. NAMAWinelake silenced. The institutional state is now a colossus that grabs from those that toil, and throws it at those that spoil. Joyce was cynical, vindictive, sometimes humourous, and often contemptuous. But mostly, I suspect that he simply was not happy. Joyce was probably the least inspiring… Read more »
What would Joyce have done?
When he figured out how mad the place is he would have gone up yo monto to fu%k his brains out.
Michael.
michaelcoughlan The spin from RTE a few days ago regarding Greece was “five months in power and the new Greek Government has brought the Country to its knees”. It omitted to state that fifteen years of foreign and domestic kleptocracy have forced the Greek people to vote in a radical Government. It’s amazing how perspective or spin can be used to manipulate. The Greeks are under serious pressure and are on their knees. When we were under serious pressure and on our knees our democratically elected Government promptly got on their knees and unzipped Herr Merkel to ensure their obscene… Read more »
Hello Grzegorz, Not that I am any expert in history, nonetheless I thought it worth mentioning a couple of things. Perhaps none are really that serious however. Jan Szczepanik may have got the patent application in first. 1897 you say? There was however a working prototype and ‘successful’ field test of the bullet-proof vest prior to 1880; in Glenrowan Victoria, Australia. Asphalt to the best of my very limited knowledge of chemistry and or geology is a naturally occurring material a form of which was know and used as tar and pitch in pre-history. Also it is possible that the… Read more »
Here in New Zealand, so far away from all of you, we have the same Ponzi scheme going particularly in Auckland our biggest City although Christchurch, where I live, is not far behind. To be fair though that may be because of the earthquake when many houses were destroyed. It seems to me that this Ponzi scheme with housing only happens in those Countries that have espoused Neo Liberal economics which seemed to start the early 1980s. Going from my own experience my first home which I bought in 1971 almost quadrupled in price by 1981 then doubled again by… Read more »
G-7 plan to be rid of fossel fuels in 85 years.
If CO2 is half the menace it is supposed to be the world will be a drought infested infurno by then.
In the meantime what is the alternative plan now that nuclear energy is largely banned.
I guess we will be reduced to 500 million serfs hand labouring garden patches to feed the elite flying around the world planning the next G7 abomination.
https://www.dollarvigilante.com/blog/2015/06/08/g7-fossil-fuels.html
Greg, I think that the current German approach is to concentrate on money accumulation, as a form of expression. The greatest irony of all is that the EU racket, has made people selfish, and indulgent in tendencies that will pull it apart. In other words it is designed to fail. The Germans are getting money out of it, but Germany now has serious problems – starting with demographics. If Germany has a mission currently, it seems to be to get as rich as possible, as fast as possible. Martin Schulz is a classic example of what has gone wrong in… Read more »
What would Leonidas have done? I believe the Greek people will eventually succeed in breaking the power of the bond markets over the world’s governments. But it will come at enormous human cost to the Greek people who are fighting this battle on behalf of all of us. If the bond markets drive the Greek people naked into the wilderness it will be a Pyrrhic victory. This is not just a Greek crisis, it is a global crisis. The global economy and therefore the world’s governments are currently controlled by runaway bond markets. That cannot last. The world’s central banks… Read more »
cooldude: because we now live in a hopelessly interconnected world. It is one of the unintended consequences of free trade. What I think will happen is that the world’s governments will gradually gain a clear picture of the unwelcome problem posed by the bond markets ability to hold world governments to ransom. I believe they will then construct some regulatory machinery to counter it. The current situation is in nobody’s interest, not even that of the bond holders. The worm has turned as far a regulation is concerned. It is being forced upon reluctant governments because the lack of it… Read more »
Off topic but as I’m logged in I may as well mention (if you’re not already aware) Rethinking Economics is taking place next weekend in Greenwich, London. There’s a good line-up of speakers and it’s inexpensive.
http://www.rethinkingweekend.org/
Employers have an easy solution to the housing problem. Hire people who don’t pay rent or a mortgage! Hence, shops and restaurants are staffed exclusively by teens and kidults.
Are Irish people the only ones who do J1’S ? You won’t find many Brits, Frogs, Krauts, Aussies, etc cleaning the jacks of Cape Cod in return for a free milkshake! American college students get relevant work experience during their vacations, grads from other nations don’t emigrate in the same numbers/proportion as the Paddies do and always have.
The quote needs to be updated.
The Irish institutional state is a sow that eats her farrow.
In the case of Greece, the useless historical debt needs to be changed for foreign direct investment. For example, repaying German taxpayers would be made easier if Volkswagon build a plant in Thesseloniki. I don’t hear any of the onging discussions coming up with such practical solutions. Its only really about taxes and welfare reform. Also what is European Union without solidarity? It would be good to cut Greece a deal as they are an integral part of European history. Also the Greek value system is more centred around family than other countries. And despite the Government debts, on a… Read more »
Proof that neither austerity nor trickle down work:
http://www.huffingtonpost.com/carl-gibson/mark-dayton-minnesota-economy_b_6737786.html
“When you look at most economists today, they are, in many ways, very like old fashioned communists: if reality doesn’t fit their model, then it’s reality that’s wrong, and the answer is to double down on applying the model; when that doesn’t work, the answer then is twist and deform reality until it does fit the model; when that doesn’t work, change all the definitions so that it looks like it works i.e. just announce that every 5 year plan was glorious success” You forgot the bit about starving millions to death; https://en.wikipedia.org/wiki/Holodomor Or digging a big hole in siberia… Read more »
It seems the hedge funds know the type of cock sucking spoofers that are in control in Poluba;
http://www.independent.ie/business/irish/odey-shorts-bank-of-ireland-as-markets-fret-over-euro-crisis-31317452.html
Fleeced again we will be for still another round of taxes when this one blows up in the face of the minister for finance.
[…] amounts to a unilateral reworking of the rules of capitalism, and it is making the EU into a ‘creditors’ paradise’. In this world, entire countries can be held hostage, some essentially turned into vassal states. […]
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