I had promised myself not to write about the relationship between property, banking and media again, but instead focus on far more worthy and uncontroversial issues such as the concept of ‘peace talks’ between Israel and Palestine. However, I was trapped in a car the other day (an incident that was not even reported, let alone syndicated around the world) and had the misfortune of being subjected to ‘news radio’, a recent phenomenon where the issues of the day are debated relentlessly between ad breaks.
“In seeking to assist households in difficulty, we need to recognise that the cost of any support will be borne by those neighbours who avoided excessive borrowing themselves or are gritting their teeth and meeting their obligations.”
Cooper had two guests in studio to discuss the comments, one of which was Charlie Weston, Personal Finance Editor for the Irish Independent. Weston’s job it seemed, prompted by Cooper, was to breathlessly rile against imprudent consumers:
Matt Cooper: It’s fair to say you’re not entirely sympathetic to the idea of debt equity swaps or other types of arrangments that might help people reduce their debt burden?
Charlie Weston: No you’re right Matt, I wouldn’t favour a massive big bailout for home owners, although I would have some certain sympathies for those genuine hardship cases. The problem are those people who used their house as an ATM, remortgaged their house or refinanced their house to buy a buy to let property. The most irritating part of the boom was going down the pub and listening to some old bore telling you about how they re-mortgaged their house to buy a buy-to-let property, and how they now have two properties. And how you’re a fool and how its easy money.
The problem is that the money used to buy the buy to let property was secured on the home residence. You should never be allowed to use your domestic home as some sort of leverage vehicle where you take out loans on the back of it.
The regulator allowed that to happen and I can see why some people are furious, that people that went out and abused their home by using it as a vehicle to invest in other things, used it to finance short term debts, who went off on holidays twice a year, who went shopping in New York who bought the trophy house, who bought the 4×4, those people now are going to have to be bailed out. That’s why the people who were careful are enraged that these irresponsible people should be bailed out. Of course there are responsible people, genuine hardship cases, but there are a number of people who are in arrears at the moment who behaved recklessly and funnily enough some of them are still acting recklessly.
Weston purposely skews the debate, the subject of which was whether those encountering huge stresses due to mortgage commitments in a time of rising unemployment should in some way be supported by the state, but even if we were to accept his highly convenient narrative, is it consistent with Weston’s previous convictions and those of his employer?
Rightly or wrongly, I felt the question deserved yet another painful dive into the miserable depths of the Irish Independent’s archives. A world that is punctuated by tedious bios of Ireland’s modest, unassuming, but glamorous elite (Surprisingly I came across only one article from my previous visits, a cracker by Ken MacDonald ‘Property market’s no house of cards‘).
I should have made clear in previous articles on the subject that ‘property porn’ has never been limited to the pages of the property supplement, despite repeated claims by those attempting to explain away its existence. The property supplement simply wore its heart on its sleeve, a cold black heart, but an honest one nonetheless. The only question the property supplement was concerned with was ‘when and how do you buy a second home?‘
Property as an investment was portrayed as an intrinsic part of being Irish. “Life, love and property” was how one ‘journalist’ put it when interviewing “Irish supermodel Siobhan McClafferty”:
“She is currently on holiday in Lanzarote with her three-year-old daughter Lauren, and will fly to New York at the end of February to finalise a new business plan.”
“I’m betting it won’t be long before Lauren is dipping her toes in the property market. Siobhan’s mother Madeleine bought two apartments in Marbella last year, one of which she has already sold for more than 100 grand profit.”
The message relayed on the business and national news pages on the other hand was less assured, tending to temper market hype with mild scepticism and appeals for caution in the closing paragraphs.
In December 2006 Weston’s colleague Kevin Murphy advised readers on “How to make a killing in foreign property.” The countries topping Murphy’s list of foreign investment markets were the Czech Republic, Slovenia, the USA, Poland, Romania and Estonia. Murphy did however voice a word of warning for potential buyers: watch out for the red tape!
In early 2008, around the same time the government announced plans to cut billions in public spending, Weston was penning articles with headlines like “Houses becoming more affordable as confidence rises” and quoting prescient banking officials “predicting a pick-up in the housing market later this year.”
These days Weston is clear about the state of the market, but he still quotes the likes of EBS executive Dara Deering, who reassures readers “the improvement in affordability was set to continue.” The same EBS who in August last year could be found publicly begging to be bailed out and only yesterday became effectively nationalised.
Suffice to say, Weston and the Irish Independent were “the most irritating part of the boom,” not the chumps that bought the snake oil.
More interestingly, this meander through the Irish Independent’s archives also led me to a puff piece about property developer Garrett Kelleher, an unassuming tycoon whose latest plan was to build the tallest office tower in North America.
Kevin Murphy reported that the “shy developer” who likes “the quiet life” had been drawn into the “limelight”, attracting “the wrath of Donald Trump,” who had ridiculed Kelleher’s plan as a “pipe dream” and “financial suicide”…
“…predicting there wouldn’t be “any institution stupid enough to finance it”.”
“He was wrong. Anglo Irish Bank is funding it and Kelleher will own 100 per cent of the equity.”
The Wikipedia page for Kelleher’s Chicago Spire currently reads:
“If completed, at 2,000 feet (610 m) and with 150 floors, it will be among the world’s tallest buildings and freestanding structures.”
And according to a local Chicago developer, it never will be. Instead of a 2,000 foot tower, the site features a purpose built large black hole:
A far cry from the phallic futurism portrayed in the 2008 promotional video:
As you might have guessed “the Spire could make it into the mix of properties that loans heading Nama’s way are secured on.”
Quite predictably too, the web of toxic debt reaches back across the Atlantic in more ways than one. The Sunday Tribune reported in late 2008:
“Most of the units are already under contract and according to local reports, the $40m (€28.5m) penthouse has also been sold. Dozens of Irish investors are also understood to have snapped up apartments, which start at €534,000. “
I wonder if these ‘investments’ were prompted by the advertisements alluded to in the comments section of the same article:
“I recall when the developers were advertising this project in the Sunday Tribune. They ran a lavish double page spread, and without fully disclosing that it was a building venture, declared it ‘the most important development in the world’”
More recently the Irish Times reported, in a short article tucked away in the ‘Life – Homes & Property’ section that :
“Garrett Kelleher’s Shelbourne Developments…has closed its lavish sales office in NBC Tower after settling an eviction lawsuit filed last autumn by its landlord over unpaid rent.The developer was said to have spent about $10 million to fit out the spacious sales centre on the 18th floor of NBC Tower while the landlord invested almost $350,000. The sales centre, with a model of the proposed building, overlooked the Spire’s site at 400 North Lake Shore Drive, where construction of the twisting tower halted in late 2008.”
At around the same time Chicagoans were picking the winning idea in a competition set out to answer the question: How would you fill the 76-foot-deep hole meant for the Chicago Spire?:
“Some of the top ideas for the spire hole were a temporary cabbage field, a bungee jump into the scar, a solar heated halo of water from the hole, a water park, and a fundraising wishing well.A panel of jurors picked the winner and the grand prize of $3500 went to Alex Lehnerer, a professor and his team from the University of Illinois at Chicago for their idea called the ‘Second Sun’.His winning idea is simple. It’s a giant yellow ball made to compliment the Chicago skyline and instead of hiding the hole, it’s highlighting it.“We love the hole. We would like to have the hole there forever,” Lehnerer said.
Perhaps we need to take the lead from Chicagoans and learn to love the hole.