POUFFF... it was gone. But where did all the money go? If the Irish economy was one great pyramid scheme then there must have been a payoff somewhere.
And taking the Ponzi metaphor to its conclusion – where are our Bernie Madoffs to do the walk of shame in manacles and jump suits? Who’s going to allay our lust for vengeance?
No one. The grey men are just that, they fade into the background and we’re left to pick up the pieces of an imaginary world, a world where there was full and plenty and gold cards for everyone.
But there was money, lots of it, fluttering around like butterflies in summer and snuff at a wake. Where is it all gone?
Like the grey men, it’s nowhere to be seen.
So, let’s try and work it out.
The farmer sells the land to the developer, the developer borrows the money from the bank to buy the land and build the houses.
The bank lends the money to the people to buy the houses, the developer takes the money and buys more land and builds more houses and pays back the bank.
Then the bank gives more money to more people to buy more houses – and so on ad infinitum.
Until, September 2008, when the whole house of cards came tumbling down – and with it, the banks.
Question. Did the farmers get all of the money?
No, they certainly received a large and to date, unquantifiable portion – but not all.
And certainly not the huge profits that were made in turning the sod. Some of that went into helicopters, yachts, big pads on the Monopoly scale and overseas investments. Most went back into the market – even the best and brightest were suckered.
The farmers who inherited land free and clear and sold for gazillions in the major urban areas made money – lots of it.
But not all did, and even if they became multi-millionaires overnight, they were just the starting point in the growth pyramid.
But what did the farmers do with the money?
Some went far and wide buying bedsits in Budapest, penthouses in Paris, duplexes in Dubai and commercial property in Copenhagen. Others cleverly bought the farm next door and stuck to what they know best, while more cautious types put the money into bank shares. There are sorry tales up and down the country of paper multi-millionaires who sold the farm and took the safe option of shares. After all, it was a banker, wasn’t it?
The men in the pin-stripe suits and the laptop hoovered up the remaining cash in various vehicles and then, there were a few, a small few, who kept the money in liquid form.
According to one established agricultural consultant, at the forefront of a number of property deals in the noughties, the trajectory of farmer to millionaire follows six definable stages:
Stage 1: The Zoning Stage.
Everyone gets very excited – there’s a little bit of political shenanigans, a vote on the council and the farmer asks: “am I going to be a millionaire?”
Stage 2: The Selling Stage.
This is the hardest because the farmer has to make up his mind – even if it’s only 12 acres. The farmer doubts the motives of his advisor, there’s the fear of being seen to be a failure, of having to sell, and sometimes there are those who are happy in their lives and don’t want the disruption that selling will bring.
Stage 3: Sold.
There’s the sound of champagne corks popping and this has been defined as the ‘Jeeps and Conservatories’ stage by the agricultural advisor.
He gets a jeep, she gets a jeep and the house is done up from top to bottom.
It’s all great fun, they love the attention and the bank manager, (who refused the extension of the overdraft), is now calling around in person.
Financial advisors are all over our farmer like a rash.
Stage 4: The Difficult Phase.
Our farmer is now argumentative, arrogant and not likely to take advice – ‘I have the money and I don’t give a s**t’. The farmer and his wife are sick of everybody hounding them.
Stage 5: The Hermit Phase.
They pull down the shutters and don’t want to talk to anyone and are sick of everyone trying to sell them things. This is the man who’s gone from not having enough money in the overdraft to pay the silage contractor to giving 10k to the local GAA club.
The f**k-off gates go up with security cameras – but they still farm.
Stage 6: Resolution.
They revert right back to normal and get focused on farming again. They may buy more land and go back to pushing their enterprise, but on a higher plane. This is also called the ‘stick to the knitting’ phase where the farmer invests in what he knows. Contentment ensues.
This generation of farmers are the last to make the big windfall, to dream the dream like the Lotto ad of yore, of drawing bales with a Ferrari.
The resurrection of the Kenny report by the Greens, translated into an 80% windfall tax, means there will be a 20% gain at most for a farmer willing to sell land. That’s back on Kenny’s original figure of 25%. And while its aim is to end speculation and, by extension, all sorts of planning corruption, the result could be a constipated land use system.
Because it is bred into the nation’s agriculturalists to hold onto land at any cost – 20% certainly isn’t going to make the cut.
So we may have the situation where zoned land will remain under cows, where it’s more important to the farmer with a neat, single-block farm, than to break it apart for semi-d’s and little reward. In that scenario, (and this is into the future, as there is no demand for zoned land at the moment), the Government may be faced with a situation where they will have to compulsorily purchase farmland in certain areas.
However, the less nuclear option, and one being posited by property experts, is that in future development will take place in the context of a joint-venture project between farmer and builder.
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