Froogle Scott at VREAA 10 Feb 2011 1:44am – “I’m halfway through the Vanity Fair article (“When Irish Eyes Are Crying,” by Michael Lewis [hat-tip to Nick for alerting us all to it -ed.]). Every couple of paragraphs I’ve been struck by the parallels to our situation here in Vancouver. Ireland is interesting, because in some respects it might be a better parallel for Vancouver than the United States. The US is such a vast economy, that even down on one knee, it’s still a heavyweight. Ireland is the provincial society that suddenly blew up grand — with a bad result. Something about that dynamic feels closer to home than what’s occurred across the entire US real estate market. Although BC is part of a much larger country, our geographic isolation, our relatively small population, our history of being outside the centers of power, does have an “Irish” aspect to it. And perhaps that isolation can lead to becoming ungrounded, or disconnected in certain ways. There was obviously an insularity to the Irish mentality during their bubble. I feel something of that insularity here in Vancouver.”
Thanks for the thoughts, Froogle, very interesting associations. We don’t have the overbuilding that the Irish had, but the fact that we are ‘insulated’, as you describe, may make us vulnerable to some of the same engines that popped their bubble. It is possible that, with a simple turn of sentiment & loss of imagination, we rapidly find ourselves less a cosmopolitan capital and more a medium sized provincial city with almost no discernible means of economic support. Another way in which we are ‘insulated’ is one which is, of course, common to all bubbles: statements like “All real estate is local” and “It’s different here” are used unconsciously by bubble-players to ‘insulate’ themselves from glaring external realities. When the history of our boom and bust is written (by you, perhaps?), we are sure that one of the most remarkable features will be how long prices chugged on up to more and more preposterous levels despite the glaring examples of bubble implosion all around. US, Spain, Ireland, etc, etc. All a testimony to the ability of the human mind, in particular the ‘group mind’, to ignore that which is inconvenient to face. -vreaa
While we’re partly on the subject of Ireland, ‘Charlie Mackay’ is a blogger who has archived quotes from their bubble. Take a look; Spot the similarities.
Here’s a nice one, from Sean Dunne, Property Developer, in 2006, just before their bubble imploded: “Every economist associated with every stockbroker in Ireland mistakenly forecast the end of the housing and property boom in Ireland”. They had been “vociferous and repetitive”, in the process encouraging outside commentators, including the Economist, the IMF and the OECD, to issue warnings about Irish house prices being overvalued. Well, “The hyenas have stopped laughing . . . each and every one of them was wrong. Instead, the price and supply of housing units has continued to break records.”
[For examples of quotes from Vancouver Sean-Dunne-equivalents (and a few ‘hyena’ naysayers), recorded here, in real time, while our bubble is actually still a bubble, see the ‘What Bubble?’ sidebar.]