Let’s not end up saying ‘he told us so’

Joseph Vella Bonnici’s account (December 7) of how the Celtic Tiger slipped off its pedestal could perhaps be summarised as due to the blind faith that “bricks and mortar” investment is not only as “safe as houses”, but will invariably make you very rich.

Irish politicians and banks, like those in America and Spain in recent years, and in Japan more than two decades ago, encouraged people (with low interest rates, no need for deposits and abolishing the annual property/wealth tax) to borrow and buy property, not only for themselves to live in but also to buy additional ones to rent out. They reckoned property prices would always go up and that a sort of eternal wheel of prosperity had been established. Politicians basked in the feel-good factor they believed they had created, including high salaries and a generous welfare state.

Alas, too much money went into property, supply eventually exceeded demand, some discovered they had borrowed too much and couldn’t meet their mortgage payments, and the property bubble burst in America, Spain and Ireland, as it had in Japan earlier (the latter has not yet recovered from its property and stock-market debacle and consequent bank failures of 1989).

On the contrary, property prices in Hong Kong, after a lull a few years ago, are again going vertical – perhaps this latter scenario is the one some in Malta would like us to believe in to maintain our all important feel-good factor.

From this “Mediterranean Tiger” viewpoint, our Central Bank governor, with his repeated warnings about the long-term unsustainability of our largely non-means-tested, bloated welfare state, and the amount of bank assets sunk into the building industry (with so many empty properties), is seen by the possibly ill-informed as nothing more than an annoying overpaid purveyor of bad omens.