The Price of the Irish Boom

WHEN I was a youngster there was a successful businessman in the small town where we lived who was always talking about money, and whose conversation used to fill my late father with a mixture of envy and exasperation. "That man knows the price of everything and the value of nothing," my father would say, shaking his head. The familiar old saying came to mind last week when I was reading the latest reports about the recession into which the Irish economy, like the U.S. economy, is now sinking. I don't like the prospect of the harder times ahead any more than the next guy. But there is one reason why I won't be mourning the passing of the Celtic Tiger, and that is the way the boom made us forget the value of everything. Let me give you an example or two. At the top of the scale, of course, was the property market madness that saw the price of an ordinary four-bedroom house in an average middle class suburb around Dublin reach the million mark. We all knew that was crazy, that the true value of such a house had to be less than half that even when you allowed for inflation. Yet people fell over themselves to pay the crazy prices. During the boom people talked endlessly about the price of property. It was the main topic of conversation at every dinner party. As my father used to say, people knew the price of everything and the value of nothing. At the other end of the scale, I remember having one of those light bulb moments early last year when I met a friend of mine in a hotel on the south side of the city. He had been abroad for a few years and had come back on a visit, and we met for lunch to catch up. We had a bowl of soup each, a plate of pasta each and one glass of wine each, followed by two coffees. Nothing else. All the way through this modest lunch he talked about how shocked he was at how expensive everything in Ireland had become. It's not that bad, I said, calling for the bill. It arrived promptly because the restaurant was not that busy, probably because the food was not that good. It was *76 (or just over $100 at the conversion rate at the time) without any service charge. It seemed to prove his point. Even I was shocked, since the old hotel the restaurant was in was elegantly faded and not nearly trendy enough for young Celtic Tigers. We examined the bill together. The *18 pasta plates were the high point, but the bit that annoyed both of us the most was the *6.50 for a glass of barely drinkable Chianti. I could have bought the bottle of Chianti in my local supermarket for not much more than I was being charged for the glass. It's the little things that get to you. Life in Ireland during the boom had become a succession of those little things that were twice as expensive as they should be. The light went on in my head when I looked at that bill and I suddenly realized that this madness had to stop. And stop it now has. I have not been back to that hotel since then, but I'm prepared to bet that they're not charging *6.50 for a glass of very ordinary Chianti this week. No sir.The madness affected everything here. Whether you were buying the skinny lattes the Tiger cubs drank or the sofa for your new apartment, you were paying twice what you should have been. One had the feeling of being permanently ripped off.Even worse was any kind of service. Whether it was a plumber to work on your central heating or a tiler to repair your bathroom wall, you ended up paying a few hundred euros for a day's work. It seemed that everyone had this grossly inflated idea of what their work was worth. Everyone was a supermodel who wouldn't get out of bed for less than so much a day. There was no question of justifying it. It was just a case of take it or leave it. They had more work than they could handle.I know a bit about this because I hired a contractor to build a new house for me in Dublin five years ago, and as I told readers of this page before, even the young guys leaning on the shovels were getting *1,000 a week. The electrician got *350 a day basic, before any extras he could dream up. And so on. It was crazy. And it affected everything, spreading out from the construction sector to all other areas of the economy. Everything became stupidly expensive, from the pint of beer to the pair of jeans, especially if you were in the trendy areas in the new Dublin. The conspicuous consumption of stuff that you really did not need at prices that were clearly a rip-off was enough to make anyone feel ill. Now that it's over, I can't say I'm sorry. It's the plus side of the recession. Now we can all go back to considering the value of things when we are told the price. There are signs everywhere that people who threw money around during the boom have suddenly become very price sensitive. Retail sales are way down, and there are summer sales on everywhere with prices slashed. The new belt-tightening, euro-stretching mood that is out there now has affected shoppers at all levels. In my area people who used to do their weekly shop in the upmarket and expensive Superquinn supermarket can now be seen in their local branches of Lidl or Aldi, the down-market, cut-price German supermarket chains that have spread across Europe.They're buying weird looking salamis and cookies with strange brand names and packaging redolent of Eastern Europe. At dinner parties they're now bragging that the Chianti was only *3.99 in Lidl. There was further evidence of this trend last week when the upmarket furniture store Habitat on Dublin's trendy Grafton Street had a closing down sale, and the news emerged that the venerable old premises was likely to become a Lidl. Was nothing sacred? The reason for this trend is simple - a recent consumer survey showed that the own brand items in Lidl were one third cheaper even than in Dunnes Stores, Ireland's famously low price supermarket chain. The packaging may not be familiar and the quality may not be the same, but it's nearly as good so people are switching. Saving a few euro has now become the deciding factor on where you shop. One final illustration on how far things have got out of line here on prices was brought home to us on our recent holiday on the Jersey Shore. We were in an apartment in Wildwood Crest for two weeks, and on our second day there we went to the local supermarket (Acme) to do our normal weekly shop for our family of five. I won't bore you with the details, but the wagon was full to overflowing with all the same sort of stuff we buy at home in Superquinn. The weekly shop at home costs around *240 euro (or $360). In Wildwood it cost us $168. And if anything we had bought more expensive items in Wildwood (extra steaks for the barbeque, etc). As far as the economy is concerned, things here remain bleak. One straw in the wind that caught my attention a couple of weeks ago was the decision by Ireland's most high profile stockbrokers, Davys, to make a chunk of its workforce redundant and to impose pay cuts on the rest. With the Irish stock market - like markets elsewhere - in a slump, a lot of people have stopped trading shares and have switched into cash. So a lot of brokers have nothing to do. Davys, by the way, have a heavyweight economic and research team, and they were forecasting as recently as three months ago that there would be GNP growth of 1% in Ireland this year. Now they are predicting that the Irish economy will decline by 0.3% this year and by 0.7% next year. And they also warn that the slump could continue "indefinitely."We are now definitely in recession, and just how long it lasts will be determined by how the government handles the situation and by international factors. Construction is now about to close down here for the traditional August holidays. The fear is that when the holiday is over, a few more thousand workers will be joining the tens of thousands who have lost their jobs in the sector here over the past year. Those who have been told not to come back won't show up in the unemployment figures until Sept