A tale of two booms

THE NOUGHTIES: As the first boom ended in 2002, we examined our souls – for about a millisecond. The pity is we didn't gaze a little longer before restarting the party

THIS MONTH 10 years ago, Louis Vuitton came to Dublin. The launch party was in the brand new, five-star Merrion Hotel, where the fledgling boom was serenaded by a band flown in from the south of France. Brown Thomas had spotted Ireland’s emerging appetite for luxury goods, and it pounced.

The decade was barely a year old when Dublin got its own five-star Four Seasons, with such boomy touches as child-sized bathrobes and a special children’s check-in area. It gave us the Ice Bar and a neighbourhood canteen for Louis Walsh, a glitzy playground for the pinstriped Del Boys on the lash and a setting fit for the nouveau riche to rattle their bling on the soaraway charity ball circuit. Back home, the wet rooms were being scrubbed and the children being minded by fleets of help, mainly overqualified young eastern Europeans scrimping and saving towards a less menial existence.

Call it serendipity or stunning foresight, but the same year that saw Louis Vuitton hit Ireland saw the launch of VIP, Ireland's first celebrity magazine. Derided as a rip-off of Hello!and OK!,Michael O'Doherty's baby sailed on, cadging TV3's showbiz queen, Lorraine Keane – dubbed Ireland's answer to, eh, Anthea Turner – as its first celebrity. Keane's reign, bookmarked by the decade, oversaw the age of glitz, of Footballers Wivesand their champagne-swigging, size-zero clones, branded by acres of nuclear-orange cleavage, blonde highlights, nasty hair extensions, gel nails, Juicy Couture and Ugg boots. As the celebs graciously agreed to be pictured in their lovely homes in return for pre-approved, airbrushed images and fawning copy in their house magazines, the people Liz Hurley was pleased to call "civilians" cringed in their unplucked inadequacy.

Wielding their credit cards and easy-come bank loans, they flocked to the clinics, beauty salons, spas and personal dressers – all multiplying like rabbits – demanding the Botox, boob jobs and Brazilians, the nips, tucks, pampering, tooth-whitening and make-overs that would render them worthy of being “papped” falling out of a nightclub.

Night-time lingerie became the new lunch wear, sushi the new hang sangwich, Debenhams the new Roches Stores and New York shopping weekend the new Chester. In 2005, Starbucks launched in Dundrum Town Centre – where else? – where a casual stroll without a massive and massively over-priced It bag swinging out front off a buckling forearm was social death. Then came Sex and the City, with the longest commercial in history for the killer heels that in turn spawned a whole new market for gel cushions to "prevent that burning pain in the balls of the feet", which in turn became essential kit for the "Vera Wang wedding" – shorthand for the three-day extravaganza that soared to an average cost of €30,000 a pop in a few years.

Throw in the Bridezillas, engagement-ring envy (two to three carats on average), champagne-fuelled city-break hen and stag parties, the weddings abroad and the requisite gift (commensurate to the scandalously inflated cost of your dinner), and it’s no wonder that captive twenty- and thirtysomething guests came to prefer a court summons to a wedding invitation.

ONCE BACK HOME, Agas, stainless steel kitchens, €60 scented candles and sun-free sun decks became the objects of desire, as interiors and garden porn colonised the airwaves – remember Changing Rooms? – in tandem with Big Brotherand the invasion of reality television. BBwas the phenomenon that prefigured a main feature of the decade – the end of privacy. A tolerance of cameras focused 24/7 on the most intimate aspects of people's lives, allied to participants' willingness to trade their dignity for 15 minutes of "fame", paved the way for the explosion of Bebo, Facebook and the ubiquitous camera phone. The young took a look at the mediocrities who shot to fame and fortune on reality shows, and concluded there was nothing to lose by exposing their lives to strangers.

Meanwhile, Ireland saw the virtual mainstreaming of cocaine, and an explosion of binge-drinking. Between 2003 and 2007, the number of alcohol-related offences increased 30 per cent. The main culprits were men under 24, but a fifth of those offences were committed by minors.

WHAT FOR SOMEwas a decade of harmless fun, for others carries a lasting legacy of debt and regret. Could we have spared ourselves some of the fallout? There was a moment. It's exactly seven years since Charlie McCreevy pronounced the end of the last boom. That was November 2002, and six months before that The Irish Timesran a six-part series called "How We Spent the Boom". In 2001, a foot-and-mouth case in the Cooley mountains, followed by September 11th, appeared to mark closing time for one wild party. We thought it was all over. It was merely an interlude.

For a millisecond, we examined our souls. Were we feckless adolescents or rational, hard-working Europeans? Was it possible to be both? The pity is that we didn’t gaze a little longer before restarting the party. Or maybe it’s that peculiarly Irish disconnect that keeps us cheerful, even in the face of another aborted boom. A study by Amárach Consulting in November 2001 on quality of life in Ireland suggested that 38 per cent were very satisfied with their lives and 52 per cent quite satisfied, compared with an EU average of 21 per cent and 62 per cent. Moreover, some 70 per cent believed the quality of their own lives had improved in the previous five years.

So was it the new money that was making us happy then? Not necessarily. The proportion of people who declared themselves happy with their lives in 2001 was exactly the same as it was in 1980, when the economy was in tatters. Last week, amid the worst economic crisis in 70 years, the Irish Times/Behaviour and Attitudes survey found that three out of four Irish people were pretty content with their way of life, and a whopping 84 per cent even suggested that Ireland needs to start believing in itself again.

So we’re basically a cheerful, resilient bunch and ready to begin again. But what exactly should inform that resurgence? It can be useful to look back.

For example, even as the Four Seasons was getting into its stride in 2002, the fraying céad míle fáilte was attracting comment. It was particularly noticeable in Dublin, among the young, said one tour operator – “a generation that has lived in nothing but relative luxury. And that breeds a certain overconfidence”.

Crass profiteering in hotels, and the services sector generally, was a talking point. The four-star hotel chains, in particular, were accused of charging anything they liked and providing any old service on the basis that if one punter walked away, another would be right along. Mediocre restaurants thought nothing of charging €100 a head on the same premise.

The post-9/11 crisis of confidence in 2002 should have prompted a rethink. Instead, extraordinarily generous government tax breaks prompted a frenzy of hotel building, often by builder-owners who were no more hoteliers than astrophysicists. Some 26,802 new hotel rooms were opened between 1999-2008 – 15,000 too many, according to Dr Peter Bacon in a report this month. The sector, he reckoned, has been mostly insolvent since 2005.

TEN YEARS AGO, an S- or E-Class Mercedes or the odd Porsche was as good as it got. Then came the Maybachs and the Bentleys, the Maseratis and Ferraris (and not all driven by developers), reinforced with fleets of all- terrain vehicles plying the badlands of the Dart/Luas axis. But a more potent signal of the boom resided in "entry-level" cars. In 2002, small cars such as the Kia, Fiesta, Corsa, Micra and Punto occupied more than 40 per cent of the market. The figures were staggering. In 1995, 87,000 new cars were registered; by 2000, that figure had soared to 230,000.

When this reporter interviewed Paraic Mooney, managing director of EP Mooney – the State’s largest Nissan retailer – in 2002, he was seeing “plenty of disposable income”, as well as a whole new culture. People were insisting on changing their cars every two years or so, just for fashion, and heading straight for the pricier high-spec versions. “They don’t need these specifications [for example, TV cameras in the boot to aid reversing manoeuvres],” said Mooney, “but they want them. I don’t even stock the basic Nissan models in the dearer ranges any more.” New car sales mapped the boom and the bust. In the year to October 2000, 225,000 new cars were sold; this year, the corresponding figure was 57,000. For Mooney, the Tiger odyssey finally crashed last week in the High Court, when a provisional liquidator was appointed to the dealership, which has a reported deficit of more than €22 million.

Property also mapped the boom and bust, as we know too well. As the noughties dawned, those ever-creative bankers were already airing the concept of “parental gifts” (PGs in banker lingo), by which guilt-tripped parents could remortgage their own homes or withdraw savings to help launch their children into the property bubble – a perfect example of a vicious circle. At the other end, one Irish couple was hiring a world-class “starchitect” to design their house extension.

Everyone was in the market for a holiday home: some 13 per cent of Lisney’s business in 2001 was in Irish second homes. Investors hogged about a quarter of the market, ramping up inflation.

We had a chance back then to stave off disaster. Following the implementation of the Bacon recommendations to cool house prices, sales to investors plunged from 25 per cent to 10. Sense and sustainability were returning.

Then the government caved in. By 2002, investors were back up to around 20 per cent of buyers. Apartments were being snapped up in twos and threes. All of seven years ago, agents were noting that people on average incomes and looking at 100 per cent borrowing on the back of the family home were among those wannabe investors queuing for anything with a roof and a rental to cover the mortgage.

Come February this year, an era of wholesale madness was encapsulated in a Circuit Court case involving a father of three on an Air Corps pilot’s salary of €53,000, who had managed to build up a 12-house property portfolio with loans of €8 million from nine separate financial institutions.

When last week's Irish Timessocial poll suggested – to some surprise – that it was the middle-aged who were struggling most in this recession, some attributed this to failed investments and lost savings. Like much else of the decade, those hard-earned PGs are long forgotten. The bankers remain to plot their next move.