Sunday, September 8, 2013

8/9/2013: Priory Hall Is Enda Kenny's Problem to Solve

Gene Kerrigan in the Sunday Independent has a very passionate column on the relationship between the Government leadership and the case of the Priory Hall residents.

The column is here.

On foot of my tweets earlier today, few of you asked to get my response on the issue. Here is the summary in the form of my earlier tweets:


Brian O' Hanlon said...


You know all about this yourself, with reference to the publication of book last year, on 'fair tax' system in Ireland. I read in the newspaper this week, that a borrower of one of the Irish banks, wanted to obtain planning permission for a few hundred new homes on a site outside Longford, where there were ghost estates within 100 meters of the proposed site. Reason, it would raise the value of the land, which was collateral against a banking loan the parties had taken out - and the solution in the loan resolution process was to build hundreds of more homes, in the middle of ghost estate land.

And its crucial to understand, that it is never the second tier developers (the guys who purchase land on credit, obtain permissions and flip the lot when its value has ascended), who ever touch a spade or a brick. It all passes down the line to the 'market' of builders of family homes, who are not the ones drawing most of the cash out of the deal, because the cash has been extracted by the second tier builders, by the time the primary tier guys ever get their hands on it. And what was happening with green party legislation introduced in north Dublin in the 2000s, was there was a rush on to get all kinds of planning permissions built, by first tier builders who had obtained land with permission at high prices, and they were getting squeezed from the top also by new construction energy standards and regulations.

While we were doing all of those new green party improvements to regulations, it caused a huge bulge of building in places like north Dublin, with builders rushing to throw up stuff before the new regs were imposed on them. And in trying to combat climate change, the Irish construction industry did not have the 'capacity' needed to cope with the bulge in demand for building that had been created. The industry was simply running at over capacity. And the Irish government of that time knew all of that.

Its the guys further up the line, who do business on flipping land with permissions attached to them I think are the culprits, because they can hold onto that land which becomes collateral inside of the bank's loan books, and is used to further leverage and extend that borrower's finances, . . and then when that second tier developer has had their merry way with it, and milked it for what it is worth, . . they release that land/collateral to the 'market' of hungry front-line builders, who are at the same time looking over their shoulder for the green party coming around the corner to get them.

And this mess will be re-produced again and again, in Ireland, in many places, until we find a way to make life a bit better for the front-line builders, and make the second tier 'rent seekers' pay their fair share of things - and also, make the green party think a little bit bigger in all of this, about sustainability, than just adding more millimeters of insulation all the time, and waiting in the long grass for builders who are getting attacked from every angle.

Brian O' Hanlon said...


I might even go one step further than the above, if I may.

There is an 'Al Capone' style racket in operation in Ireland here for the last thirty or forty years, involving property and banking. And no one seems that interested in finding it, much less breaking it up. Every political party in town has had a go. The greens, FF, FG and Labour have had 'a go'. But we still haven't found where the beer is being put into bottles, after two whole governments.

The Irish banks have traditionally had two types of customers. The 'front line' builders and construction professionals, to whom they grant sufficient finance to keep them breathing in air, and no more. And the second tier boys who make sure that as much wealth in the land/property transaction has been soaked out of the deal, before it even gets as far as the builder/construction professionals.

Take the example of the hundreds of new houses planning for the outskirts of Longford town, which is intended to boost the collateral value of some bad loan that an Irish bank extended to some party. These hundreds of new homes, in the middle of other ghost homes. Some poor smuck of a builder, or an architect or somebody is going to have that scheme land on their lap at some stage. The wrong design, the wrong type in the wrong place. But someone will have to go on and try and build it. And that is the stage at which the green party councillors come out of the woodwork too, and abush the whole process.

But nobody wants to find out where the beer is being bottled in the first place. That is out of bounds. And its there right underneath everyone's noses. Even though, five years post bank guarantee, the banks have a gaul to move back into Nama-land and add to the mess that they left behind them.

In the meantime, back in the capital city, the greens are at the throats of the 'baddie' builders. The economists at the throats of the 'baddie' government. And in the middle of it all, the Irish banker is sitting their laughing to himself, and saying, now isn't this the best scam of all time. The thing is, everyone is so busy fighting with everyone else, the system stays intact decade after decade, just like it always has done.