The leafy suburbs have become a little less leafy in the last few weeks
The JCBs have moved in on two pieces of land near my house and apartment blocks are going up quicker than you can say "housing boom". Last Friday, as the man and I wandered back from the pub, there were men working on one of the developments. Which is all very well but it was almost midnight! I don't know how much overtime or bonuses or whatever builders get for strolling along girders past midnight, but it sure as hell will be slapped on to the final price of the finished apartment, thus pushing up the economy's exposure to rate hikes even further.
I suppose they'll be sold on the basis that they're adjacent to the DART (actually they're right beside the train line which means that potential dwellers will be able to eyeball commuters at obscene hours of the morning), but they're at least a 10-minute very brisk stroll to the station itself.
The second development is almost across the road from the first, so equally close to the pub and the train line and equally distant from the station. Building there, though, has just gone to the excavation stage and to putting a wooden fence around a tree which is obviously going to be a natural feature of the development. I'm ready for Cedar View or Oak Tree Castle or something equally nauseating to be flagged in the property pages pretty soon.
It was inevitable that apartments would be built on both sites. Nowadays, whenever a house with a bit of land around it comes up for sale, it's developers rather than potential residents who can afford to buy it. The midnight-oil apartment development is on a spot which used to be occupied by a single bungalow.
There seems no let up in the amount of residential property being built and the race to secure a place to live - although I've noticed that people are becoming more and more reticent about the value of their houses now. Last year, everyone was still boasting about the quarter of a million that they'd get for the semi d; now they shake their heads and say that it's just not worth it.
Meanwhile, more comments from our euro counterparts about the alleged overheating of the Irish economy with EU Commissioner, Solbes Mira, getting on the bandwagon. Our stock response to worries about overheating are the demographics of the Irish economy - all those people coming home to the new Barcelona are keeping us at growth rates only equal to those in the States.
The Commissioner was looking at the Irish inflation rate, now at the top of the Euro league. Some economists have been stripping out recent oil-price increases to give a lower core inflation figure both for Ireland and the euro zone. (I love the way we do this - the cost of living is higher because of oil-price hikes but lets take those out because they could come down - so it's not so bad after all!)
Last time, I talked to someone about oil prices they were scathing about OPEC's attempts to limit production, but it has been spectacularly successful. Brent Crude is now trading at a rather breathtaking $28 (€29) per barrel. Sooner or later the effect will be longer-lasting - even in Ireland. (At least that's what we were saying in the pub, but it was late at that point!)
The good thing about being within walking distance of it is that it gives your clothes a chance to lose the all-pervading smell of smoke as you walk home. Since I am a wheezer by nature, my view on cigarettes is coloured by the fact that I cannot understand why anyone would want to damage their lungs by choice, even though I can understand the dilemma of choosing between six packets of additive-enhanced Bacon Fries and a cigarette - especially if you want to keep the figure of a Posh Spice.
Although plenty of people were puffing away in the pub, the tobacco industry as a whole continues to be under a lot of pressure. Before throwing in the towel in the bond market arena, I kept a close watch on tobaccos because I had a number of people who liked the yield on tobacco bonds. Tobacco companies which issue bonds have had to pay a premium over the past number of years because investors are wary about the multitude of lawsuits that surround the whole industry.
Last year, tobacco manufacturers reached settlements with the 50 states in the US and agreed to pay $246 billion to settle lawsuits. That didn't do the share prices much good and filings last Friday by the Justice department now argue that the companies made "multiple legal errors" in last year's motions to dismiss the lawsuits. Cue some more selling of tobacco stocks - Philip Morris closed at $19 5/8 from around $40 this time last year. RJR closed at $18 1/2 from prices in the $35 range and even BAT (which has less direct US exposure) closed at $9 from $21 last year on fairly brisk trading.
As a capitalist and pragmatist, I've had some terrible ethical dilemmas about the industry. A few years ago I visited the Dominican Republic where tobacco is one of the major products. On a tour of the island we were brought to a cigar factory which was probably the worst experience of my life. Leaving aside the pall of smoke that hung over the workshop (because all employees are encouraged to smoke as much as they like and they smoke cigars, not cigarettes) the smell of rotting tobacco leaves was disgusting.
But the tobacco factory paid much much more than anywhere else on the island. And so what if all the employees got lung cancer? (At recent congressional hearings all chief executives of the tobacco companies emphatically denied any link between cigarettes and lung cancer.)
Investors have had faith in the tobacco industry because they don't believe that the damages will be awarded any time soon - if ever. But, with markets trading nervously and lots of clean air etrades to do, the industry is suffering. More bad news for investors, maybe, but revenge for those of us who like our clothes smoke-free when we get home on Friday nights.
Author Sheila O'Flanagan is a former fixed-income specialist
