Who cares about the economy? They don’t.
Damn, the economy! Now what do I say about that?
This is my column in The Malta Independent on Sunday today.
I’m sorry, but I’m going to have to speak about Franco Debono and Jeffrey Pullicino Orlando again. I’m also going to have to drag in that Joseph Muscat.
To all of these, the economy comes a far second, third or fourth to their personal, pressing interests. So they don’t much care about the extent of the damage they’re causing with their trouble-making, their grandstanding and their calls for an immediate election to lance a boil that can otherwise be dealt with if the boil were only to get a firm grip on himself.
But sadly, the boil has no insight and cannot see that he is a boil. And matters are not helped much by those who egg him on or who actually think he is great.
Franco the Boil at least had the honesty to admit that he doesn’t much care for the economy. The economy, he conceded, is important, yes, but not as important as his amazing democratic initiatives like a parliamentary television channel so that all of Malta – if it is really that transfixed by boredom – can watch members of parliament at play.
If they were at all witty, and we found ourselves treated to some David Cameron/Ed Miliband type of exchanges, then that might be fun. But somehow, I don’t think so.
Jeffrey Pullicino Orlando never mentions the economy at all. He is forever at it on his Facebook wall, discussing all manner of idiotic topics of the sort which appeal to his ‘potential Labour voter base for Carmen’ audience, but the economy?
It just doesn’t figure in his world view.
Joseph Muscat, on the other hand, talks about the economy all the time. He has to, you see, because he is gearing up to become the next prime minister, and also because he is Leader of the Opposition and doesn’t have much choice.
He tried to avoid it as long as he could, talking about electricity and tax on cars and divorce and how he doesn’t agree with gay marriage but doesn’t mind civil partnerships and blah blah blah. But now, with time pressing and the rocket that’s been put under manifesto-writer Karmenu Vella having whistled out like a damp squib, we’re beginning to hear a bit of Joseph Talk about the economy.
And he’s also wheeled out that Xandir Malta fixture from the 1980s, Edward Scicluna, to help out (because you know, Karmenu Vella is hopeless, but shhhh, let’s not talk about it here).
It’s just too bad that all Muscat’s talk right now is actually harming the economy as he takes to the hustings rather too early in the day and does his best to up the pressure for a prompt election. That’s the best and most efficient way to freeze action in the economy and he probably knows it.
But does he care?
No, because getting to be the Boss Man a year earlier than expected, so that he can knock even more points off the ‘young prime minister’ historic competition, is more important still.
I don’t suppose many of you bothered with one of the most important news stories of the last few days. Statistics, eh? Too boring. But in this case, they’re worrying – and framed in the context of what’s happening with Franco, Jeffrey the Kvetch and Joseph Muscat and his troupe of creeps only points up their gross irresponsibility.
The headline was ‘Maltese banks hit by drop in home loans – house prices fall by 2.6%’ Now to spell it out in simple terms, the banks have seen a fall-off in demand for home loans not because people are suddenly flush and paying cash for their houses, but because people are not buying houses at all.
This is not because they are out of work and can’t find a job. Our unemployment is really low and very few people have actually lost their jobs and not found another one.
Nor is it because they don’t want to buy a house or flat. It’s because they are reluctant to take on the commitment of a home loan because they are nervous about the future and don’t know where they will be in terms of income and employment within the next few years.
People take on big loans when they feel secure. When they don’t feel secure, they draw in their horns.
Is it a good thing that house prices have fallen? Not really, no – not when it’s a symptom and consequence of something fundamentally bad going on. When the real estate market begins to dry up, and it’s been in a pretty bad way for a while now with all the bad news coming at us from different directions in the world, the skittle effect is felt throughout the economy, especially in those sectors which are geared entirely towards servicing new homes and buildings.
The news report said that requests for home loans “fell sharply” – by 20 per cent – during the last three months of 2011 and “worse figures are expected for the coming year”.
The figures come from a survey carried out by the European Central Bank, which polled banks across the euro zone. It found that Malta is among six euro zone states which are experiencing a “significant deterioration” in requests for new mortgages (home loans). The others are Spain, Italy, Belgium, Finland and the Netherlands.
Requests for mortgages are obviously down right across the euro zone, given the current economic climate, but the sharp plunge in these particular six states, including Malta, is of specific cause for concern, the European Central Bank said. The spokesman’s exact words were: “Malta’s results show the country is heading for some economic trouble if the trend reported by Maltese banks continues.”
The ECB, however, was quick to add that Malta’s economy in general grew during 2011 at a higher rate than the euro zone average.
The point here is that we need less trouble and not more. Confusion and chaos help nobody and they certainly do not lend themselves to building consumer confidence.
I do not think that an early election will help matters. I actually believe that, from the consumer confidence perspective, the rush to an early election will make matters worse.
So will the constant pressure and hyping up of uncertainty by people like Franco Debono, Jeffrey Pullicino Orlando and the Labour bandwagon.
I tend to look at it pragmatically: that the election is a year away at most anyway, so until then everyone had best get a good grip on themselves and focus their minds before their behaviour tips the islands into an abyss instead of moving across the bridge to safety.
But this is what happens when damaged egos are in control. And no, I don’t mean the prime minister.
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Banks are making it much harder to loan against proerty and one bank is not even considening loaning against property.
Your analysis of Labour’s lack of response holds. However, the way The Times reported the lending survey was very wrong and very dangerous.
The 20% drop is not in actual demand for loans, but in the banks’ expectations on future mortgage demand.
The “drop in home loans” as reported by The Times suggests a massive drop in housing market confidence. What the report really says is that the Maltese banks surveyed are now more wary on the future outlook.
In addition, this is a survey, and is not representative of the whole banking industry. A single bank in the survey sample can, on its own, skew the whole results.
The question I’d put is why The Times chose to report the story in terms of ‘these are the current conditions’ rather than ‘this is what a/some bank/s are expecting.’
“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way – in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only.”
This is the opening paragraph from “A Tale of Two Cities”. It crossed my mind reading your article – the level of uncertainty in our country is reaching large proportions. I found this excerpt echoes perfectly what is going on right now in Malta, considering that the two chattering monkeys and the PL bandwagon are doing nothing to allay alarms and fear for the future.
These people can’t be bothered with the country’s economy. Actually they never cared. I can only remember one “serious” episode of their attempts at reviving our economy in the 80s, the famous “Fabbrika tal-Kappar” that AST was enlightened with!
I’m wondering what the PL’s Stabilità actually means. In the 70s and 80s we were subjected to excessive taxes (remember when some paid up to 65%? I you don’t remember I surely do!) and freezing off any increases to wages and bonuses. Businesses were subject to the infamous ex-ufficio taxing system, and no way could one “save” a penny. That was the MLP then and from what I gather, if nothing serious is being planned, may be Silvio Parnis’s use of the word “save” was not a mistake after all (it may have been an unconscious warning!). Perhaps we’ll have to bring out our piggy banks and save a few cents for when there will be nothing else to do but despair. What a shame to bring Malta to its knees when in the past twenty or so years it has regained respect and economic stability and is the envy of quite a few countries.
Yet I have to remember that voting is a right given equally to all yet quite a few vote with their belly (to avoid being rude) and not with their head. Voting intelligently means one votes for what is best for the country… All right, I give up — if we want to see Malta ruined completely, let’s leave it in the hands of these incompetent creatures and those two “misunderstood” chatterboxes who seem like two strumpets showing off their woes of the “kemm batejt” type, whilst JM sucks on their blood.
Labour has been very clear. The save-employed will be “safe” under Labour.
Like this one. And Labour will hold the key to grab what it likes whenever it feels like it.
http://www.iconarchive.com/show/security-icons-by-aha-soft/safe-icon.html
It’s not just that Muscat doesn’t care about harming the economy. I sometimes wonder whether he’s doing it on purpose.
Joseph Muscat would want to create as much uncertainty as possible now, so that the economy will slow down or even come to a halt now, before the elections.
He would rather have that, than the unavoidable slowdown we would have if elections were to be held on time and he unexpectedly gets into power.
Once in power, he would then be able to claim that the economy is doing well under a new Labour government if things start moving again.
Cicc, the slowdown is due to the uncertainty of a potential Labour government.
When Labour gets into government, apart from the uncertainty about the global economy, we will have the added bonus of not knowing what they’ll screw up next.
I watched the news and found out that in Greece the minimum wage is more than 700 euros a month.
The minimum wage here in Malta is ridiculous and I just do not know how people manage on it. Many European countries have a much higher minimum wage then here. On the BBC I learned that the British government will limit SOCIAL benefits to 500 STERLING a week.
Now we all know that many items there are cheaper than here in Malta.
[Daphne – Yes, Silvio, they are. But life generally is far more expensive. It’s possible to live on the minimum wage in Malta. It is not possible to live on that minimum wage in Britain.]
So ‘experts’ stop saying that because of our meagre yearly increases we are losing our competitiveness. If that is so look elsewhere, at freight costs, monopolies, greed, government-induced costs and a general free for all.
@Mr Farrugia, try living in the UK with Malta’s minimum wage and use public transport daily as well as heat the bed-sit and eat enough to get by.
@ Mr. Farrugia – the fuel charge aloneis crippling. A Maltese friend of mine, living in Farnsborough said that it’s the elderly who are suffering the most because of the fuel charge, they are trying to safe as much as possible on the fuel, then suffering the consequences.
Typical reply from a typical Maltese person only interested in comparing wages. The minimum wage in most US states is 1250 dollars gross (roughly 1000 euros). A single bus fare costs $3.20 and a single subway ride costs $2.20.
Need I also mention the rent?
In Malta you get rent a decent-sized apartment for 300 euros. n the US (most cities) you’d be lucky to find a tiny studio for less than 800 dollars. Comparing wages alone doesn’t get you anywhere.
They have no solutions to improve the economy. They just want to get into power so that they can bring back their socialist agenda and put their carefully crafted unrevealed plan to withdraw Malta from the EU.
Make no mistake, once in power they will revise history with impunity.
They are already revising past history. Don’t you ever listen to ONE media?
I dread to think of what will happen once they are voted back into power.
“But this is what happens when damaged egos are in control. And no, I don’t mean the prime minister.”
Daphne, I’m sorry to disappoint you, but I have to admit it this time. Joseph Muscat is proving to be particularly good at running the egonomy.
Good one!
Thanks, FP. While on the subject, here is another Labour Egonomist (they’re so full of them recently) who cares about the economy.
http://www.timesofmalta.com/articles/view/20120213/letters/IMF-warnings.406514
“…..the Labour Party has both the heart and the beef to put our country back on the right track.”
I see that things are improving in the Labour camp. Labour can now afford beef.
I wonder how McKenna is so sure that Labour are better at improving competitiveness.
Has Labour been promised the GWU’s hand in marriage again, per chance?
FP, Labour’s divorce from the GWU was null.
I’m no economist but surely, with such a decline in birthrate in the 80s and 90s, I would have thought it was bloomin’ obvious that there’s less people around in their 20s/30s getting married and/or seeking an abode.
Not to mention the insane oversupply our developers have built without having the foresight to realise that less babies = less buyers.
The market is simply correcting itself in the wake of demographic changes and imbalance in supply and demand. As Mik Kaminski titled his solo album “No cause for alarm”.
Words of wisdom. Before our PM rushes to wring his hands and hyperventilate on national TV with Christian earnestness, he should have a look around the streets.
Not that many homeless people, last time I checked. What we have is a gigantic oversupply of overpriced housing units. About fricking time the property market felt the pinch.
I must disagree with your comment here. The property market is our only “resource”; everybody has a house or flat, therefore it is in no one’s interest that house prices plummet.
Also, our economy revolves almost entirely on the construction industry therefore when the property market feels the pinch, everybody feels the pinch.
And that is PRECISELY what’s wrong with this ruddy country. The construction industry is taking up an increasingly smaller fraction of European economies, as the economy turns to hi-tech and knowledge and Vision 2015 whatnot.
Not so in Malta, where we strut about spouting bollocks about the knowledge society when the whole place is chock a block with cranes and building sites, and where people sink their wealth into immoveable assets which do nothing for the economy.
Besides which, I don’t have a house or flat. I rent one. So if house prices plummet at least I’d be able to buy one.
The demographic theory does not stand, I’m afraid. Whereas up to five years ago the property market was driven by couples, today most young people have realised that they should invest in property regardless of their marital plans or whetherh they will actually move out of their parent’s home.
Also, it wasn’t any developer’s miscalculation, it was every Tom, Dick and Harry who wanted to cash in on the property market and decided to demolish their pretty terrace houses and “keep the penthouse” only to find out that you need a marketing force behind selling property and you must finish properties these days because few can be bothered doing it themselves and the result is an unfinished block of apartments every hundred paces.
I definitely have to say that Daphne hit the nail on the head: uncertainty in the construction industry has grown since last January because of a possible Labour government. If anyone had money to spend, they are holding on to it until they see how this election issue will be resolved.
I do not agree totally with the statement that people are not buying property because of uncertainty about their future.
Yes, that has an effect, but how much? We have to look at what drove the demand that we have seen in previous years.
From the research that I have carried out, and from papers written on the subject, one can conclude that a huge part of the demand that has pushed up property prices was speculative.
People bought property not because the needed somewhere to live but as an investment on which they expected a return. Now that this market has cooled down and the housing bubble has exploded, there is no speculation and property prices have been driven downwards.
The situation is made worse by the fact that some of those who bought in the expectation that prices will continue to increase are now trying to offload their holdings before prices fall still further, and thereby contributing to over-supply in the market and a further downwards push in prices.
I would say that prices will continue to be driven downwards until a new equilibrium is found.
The market is stable, indeed has seen growth, in urban conservation areas.
People look at these as a safe long term investment as well as the place where to set up home, which is, after all, what most buyers are after.
We could be facing a situation where certain locations will only pick up when overdevelopment, (resulting in eight storey empty blocks with the one occupied penthouse) is reversed.
Developers, like any business, need to innovate their mission statement or risk going bust. They need to realise they’re not entitled to any say in demand and must respond accordingly. What we’ve had to date is intensive lobbying to maintain existing practice and knowhow.
What are they smelling? Do they know something we do not. The fish stinks from the head.
http://www.youtube.com/watch?v=smk_C6eyYZQ&context=C302ac7aADOEgsToPDskIowwLed3gEJuKh73OH0Lix
So according to Jeffrey, when toothpaste oozes out of the tube, you throw the whole tube away because you can’t put the toothpaste back in.
Oh Jeffrey! You’ve been a huge disappointment ever since 2008, and you’re getting worse every week with every word that oozes out of your mouth! Using your own analogy, Gonzi should have dumped you ages ago.
So what’s this hurry to go for early elections, Jeff? Got a pack of new tubes ready, have you?
The economy is important but is not the most important or the only important factor. The two thousand year old dictum that man does not live on bread alone is still relevant. A richer economy often means that social inequalities increase.
The decline in home loans will spell less income for banks. However it also means that there are less persons living beyond their means. As the President of Malta recently stated, it is important to encourage a culture of saving.
Who would want to take out a loan to buy a new home when we are likely to have the underdogs in government and we will get free housing from the Konsulent tal-Housing?
A sharp drop of 20% in the last three months isn’t normal.
One should also, however, keep in mind the rental scheme as well as the grants for refurbishment of existing property introduced in November. Both mechanisms, which Sandro Chetcuti’s MDA is up in arms against, geared to attenuate further development. A development sector, which in Malta, isn’t regulated to restrict speculation and property hoarding.
Labour’s shady pledge to provide an unregulated space for ‘projects’ could be having its effects. When will they ever learn an open market has its own forces?
Labour can’t win an election on their own record, policies or initiatives, so what do they do- they count on disgruntled MP to win an election.
In this parliamentary term the Opposition has made history, with one no-confidence motion after another. An Opposition with no vision. Clueless.
Why is it possible that half of the population thinks that the MLP is the better party to lead Malta? What I am missing?
http://www.timesofmalta.com/articles/view/20120212/local/mintoff-s-condition-improves.406458
Bugger
Weather’s too cold and wet anyway.
I just need it to function, not to impress the ladies.
A present fall in the demand for bank loans does not mean that it is the present economic situation that is worrying – not necessarily so.
Bank loans, especially house mortgages, are paid back over many subsequent years.
The ability to pay back the banks today would not always suffice to allay fears that in the near future, possibly under a different government, run by finance “wizards”, today occupying the opposition benches, could be a severe damper on the rush to apply for a bank loan.
Bland MintoffYana was on Simone Cini’s brand new One tv/radio programme Forum this morning.
She is going to be contesting the local council elections in the south..
Her “cavallo di battaglia” is health issues including cancer (according to her) related to environmental damage caused by decisions re to the current power station.
She’s probably imagining the Lord Mayor’s procession and Guildhall dinner. Has anyone told her the truth about our local councils? (sorry, “Local Councils”)
Supply has far exceeded demand where houses and flats are concerned in recent years.That is the main problem.