I don’t have time to report any detailed analysis of today’s Live Register figures but it is worth noting that September was the first month since December 2007 in which the unemployment rate did not rise. The standardised unemployment rate remained at 12.6%. As an aside, I’d note that this is still two tenths higher than the rate previously reported for August because higher second quarter unemployment in the QNHS, upon which this measure is based, saw the previous figures revised upwards.
Combined with last week’s GDP release, which showed flat seasonally adjusted GDP in the second quarter—consistent with a 6.7 percent year over year decline if GDP stayed flat for the second half of the year—there are now good reasons to believe that the economy is bottoming out. Of course, there must be concerns that further fiscal contraction could undo this stabilisation but hopefully by the time this kicks in there will be a decent world recovery to help out.
I think we’d be remiss if the blog failed to mark the one-year anniversary of our Bank Guarantee Scheme or, as I like to call it, the initiative formerly known as “the cheapest bailout in the world so far.”
Useful points for discussion might include whether the guarantee was a brilliant move that saved the country from ruin (as our small but dedicated band of Lenihan fans will most likely view it), whether it should have included Anglo Irish Bank, whether it should have included subordinated bonds, and whether it should have applied to all existing liabilities or been limited to deposits plus new bond issues.
SPEs have been much discussed in the context of the global financial crisis: the BIS has just released a comprehensive new report on this topic.
Patrick Honohan has now officially taken over as Governor of the Central Bank. The Sunday Business Post had this snippet yesterday:
* Much speculation about who will fill the chair of international financial economics and development at Trinity College, Dublin, shortly to be vacated by Professor Patrick Honohan when he takes up his appointment at the Central Bank.
Particularly, one wonders will the selection board be watching irisheconomy.ie, the excellent forum for economic debate and general nerdy competition. Are any of the likely competitors for the prestigious Trinity gig – which is, according to those familiar with such arcana, a ‘‘proper professorship’’ posting their thoughts and learned analysis on the site? Should they steer clear and concentrate on more serious work? Should they promote their media profile? Have they been too strident in their criticisms of the government?
[at the end of this compendium article]
While I have not encountered this speculation myself, it may be worthwhile to point out that Irish universities operate under an extensive recruitment embargo, such that no immediate vacancy has been created by Patrick’s departure!
The FT outlines some of the elements of the new fiscal austerity budget in Spain – especially noteworthy is the hike in VAT rates. Although the Spanish fiscal deficit is not as large as ours, the unwinding of unsustainable boom-period tax cuts and spending increases is qualitatively similar.
Regardless of the rights or wrongs of NAMA, it is shocking how many commentators have accepted the notion that a 10 percent rise in property prices over the next decade will be sufficient for NAMA to break even. The “logic” is this: we are paying a little over €51 billion upfront for assets thought to be currently worth €47 billion, so a 10 percent rise in the value of the assets will give us our money back. Let’s be as spectacularly optimistic as John Mulcahy, NAMA’s senior property valuer, who (alone?) believes that the property market is at the bottom of its cycle. Would anyone consider it a good deal to lend someone €100 today and have them return €100 in 10 years time? Obviously not. Firstly, with any increase in the general price level, €100 will be worth a lot less to you in a decade. And secondly, you would expect the money to be repaid with interest (especially if you had borrowed it commercially yourself!). Property prices will have to rise by a multiple of 10 percent for NAMA to break even. (Apologies for having to state something that must be so obvious to everyone on this website!)
Q & A UCD Tuesday 29th 1pm, Theatre Q, UCD Arts Block
The Economic, Legal and Social benefits of the Lisbon Treaty
Dr. Gavin Barrett, Expertise in EU Constitutional Law.
Prof. Patrick Paul Walsh, Expertise in International Development Studies.
Prof. Brian Nolan, Expertise in Public Policy.
Hosted by Generation YES and UCD Students’ Union