I prefer reasoned arguments to identities. The shills arguments never impressed and the more they post them the more opportunity arises to knock them down.

Just as shills trawl the web, false results are placed into the MSM. The web is still superior. As is this site!

“I am beginning to suspect that the virus that infects politics.ie has spread here…individuals posting under multiple identities”

we want names dammit…!

The 2008 figures are the basis of a release I did:
http://www.nationalirishbank.ie/en-ie/About-National-Irish-Bank/Press/Press-releases/2009/Pages/Press-release20090224.aspx

You can also read a similar anlysis at: http://www.accountingnet.ie/recession_resources/FDI_Jobs_in_Ireland_rises_56_however_European_inward_investment_stalls_as_recession_looms.php

You misquote that survey. They said they would not choose Ireland is they had to decide now on where to locate their original businesses. So, for example, many computer MNCs originally set up in Ireland as manufacturing bases, but now conduct service operations from here. Would they choose Ireland now for their manufacturing bases? No, of course not.

I don’t think we are good at self-analysis at all when it comes to our exporting potential, and most of the data in this area barely gets a mention.

On greenfield investment, I did write last year that UNCTAD data shows that greenfield investments have been falling for several years.

Greenfield FDI projects in Ireland fell 22% to 114 in 2007, following a decline of 25% in 2006 to 146. Greenfield projects in Romania rose from 116 in 2003 to 366 in 2007 while in the same period, the number of Polish projects rose from 154 to 333.

I haven’t time to revisit this data now.

Almost half of the foreign companies based in Ireland said in a 2008 survey, that they would not choose Ireland again if they were to decide now on where to locate their existing businesses, according to a survey commissioned by IDA Ireland.

There have been a number of international surveys in recent years where Ireland has dropped down the preference ranking of international executives.

We are better at self-promotion than self-analysis and caution is merited.

Greece tightened another 15bps today to 167bps, while the Irish spread has tightened by 2bps to 165bps.

Looks like the market is reviewing its decision to push out Greece far more than Ireland following the Dubai crisis.
Pretty much neck and neck again in terms of riskiness.

The degree of international co-ordination of economic stimuli has been impressive but then this was all expected, for the last 10 years. While saying one thing to media and “markets”, financial players have been expecting this deterioration and have had time to game, in the sense of model, solutions. For obvious reasons this has been kept quiet. Fiat currencies can expand greatly. But if another more genuine currency or asset comes along, then an agreement to mutually expand can fail.

Therefore the gold hysterics may be correct and that for the last 25 years the price was helped. Down. But the old power structures internationally do not extend to the BRIC (and smaller countries) very well and there is much nervousness that sooner or later a new consensus will jettison the old. At the moment the old still import more than the new consume and it is still in the objective interest of the new to adhere to the consensus. MNCs and shadow banks challenge nations, but nations still can close down the others. China’s decision on honouring derivatives that were clearly misdescribed on sale is one crack in this edifice. Not being able to find finance for the continuing waves of shocks, eg commercial properties offices malls etc, will certainly cause problems for existing lenders who, by definition, are from rich areas. This finance has to be found by shoddy accounting principles and also by arresting falls in asset values. Short sales to connected parties have been tried but will not be effective forever.

So everyone is waiting for the accumulation of straws to kill the dromedary. Banks are being guaranteed by sates. But not the custiomers of banks where the customer has non systemic assets as in Dubai. These were indeed a vanity project. The loss of value there will not affect many asset values: uniqueness can be dangerous. Hence we have NAMA. And the massive increase in Irish debt. It is what Iceland was not. If it is accepted by the markets, still playing with OPM, then it can be used in the case of other countries banking systems.

If not, then we have problem in Ireland. We will have been seen to have swallowed too much debt. That depends on our earning capacity as to whether we can repay. That will take time. So we have bought some time for a recovery to set in. As we took from the rich and we have “repaid”, they owe us for that and the chance to see if a Japan style debt can be accepted in a two year period, when Japan has slowly raised the heat in the pan over twenty years.

If it works, the world will soon be awash in sovereign debt! Asset prices may be “volatile” as a result, but with all the huge financial fiat power, operating together, wide divergences that might threateb the system can be squeezed out. A delicate process but only if you neglect the iron fist in that velvet glove. The crazy war on terror can be used to crush any bank that does not play ball. A money laundering charge can be laid against most. By the time the dust settles the matter will be moot. Countries can be squeezed too, as the economic hitman has made clear.

The new carbon trading uindustry and global tax system will also help to keep countries in line. Once the conspirators swap what can destroy one another they are bound together and will hang together. The Hadley emails show the nature of the AGW movement.

Will the OPM continue to increase? Only if banks keep putting money as credit into circulation. Not for productive purposes, alone, but for the purpose of keeping a ponzi scheme afloat. It will squeeze out much lending for production. Crushing countries by quashing spending is not going to generate increasing circulation. But the natural level applicable to the new economy in Ireland has to be reached somehow. I see a two level world existing for some time as the consensus struggles to transfer all banking debts to sovereign lenders of last resort.

How this differs from natural capital where credit is created to balance work done is an academic question.

Next sovereign default? Austria?

NAMA might be a bikini but what it covers is not a supermodel. In truth its probably closer to the “Crying Game”. We better hope the support stays in place.

Long and interesting post.

I will get back to you.

You wrote “An impression I have (not being an economist) is that if the public sector, although not externally traded, does not improve its productivity it can only maintain its absolute share of output by cannibalising the productivity gains in the non-public sector.”

Regarding the public sector not being externally traded, let me give you this example;
Green Energy is going to be a very big business, because agreements at Copenhagen will make it very costly for countries that don’t measure up to agreed emission limits.

This is a huge opportunity for Irish business and also for our farmers, as there are a number of technologies internationally about to come out of the laboratory over the next 24 to 36 months which will revolutionise the industry. But Irish entrepreneurs are being prevented from participating in this dynamic new industry because of the actions of the ESB.

No matter which sector of renewable energy you are in, wind, hydro or biofuels, the economics of it is controlled by 3 things;

You must get a connection agreement to feed into the grid from the ESB
You must get a Power Purchase Agreement (PPA), from the ESB
You must get a Feed-In-Tariff (FIT) rate, from the ESB

The Feed-In-Tariff rate for electricity generated from renewable sources must be set at a level that guarantees profitability, and reflects the costs associated with electricity production from that source.
The price-per-unit rate should be guaranteed for a specific period of time after qualifying producers have connected to the grid. This ensures the profitability of production, and the security of investment for producers, manufacturers, investors and suppliers.

A 2009 Irish Farmers Association (IFA) policy document entitled ‘Renewable Electricity – On-farm-micro-generation’ stated; “A targeted Renewable Energy Feed-in Tariff (REFIT) must be introduced for micro energy of 22c per kWh, to allow for an acceptable return on investment in micro-generation.”

The ESB offers 9 cents per kWh. and a 5 year contract, making it economically unviable for the private entrepreneur.

Turkey offers its solar entrepreneurs .28c kWh and a 20 year contract.

The UK FIT rate is .30c kWh.

Germany, France and Holland’s FIT rate is .40c per kWh.

The renewables industry as a whole in Germany had a turnover of €21.6 billion in 2006, up from €16.4 billion in 2005, and employed about 214,000 people – more than the nuclear and the hard and brown coal industries combined.
It is expected that by 2020 the renewable energy industry will employ 500,000 people.

The German FIT has been a huge success – and is generally regarded as the best example of an effective FIT law. The first real Feed-In Law in Germany was the Stromeinspeisungsgesetz (StrEG) introduced in 1990, otherwise known as the Electricity Feed-In-Law.
This took the form of a simple one-page bill for assisting producers of electricity from small hydro stations and wind energy installations and it also required utilities to connect renewable energy generators to the grid, and to buy the electricity produced at a rate of 65-90% of the average tariff charged per unit to end-users.

Compare that to the situation which exists in Ireland, where the ESB give a dismal fraction of the German FIT rate and in so doing they keep the industry down. It can’t grow like it has in Germany because the ESB will not allow Irish entrepreneurs have the same opportunities as their German counterparts enjoy.

This is wrong, because it stifles entrepreneurship by concentrating control of the industry in the hands of the ESB, who don’t want competition. This is just like Aer Lingus in the old days.
The actions of the ESB are preventing the emergence of new Ryanair’s in the Irish Green Energy field. That is bad for Ireland.

A correct FIT rate would reduce CO2 emissions, create jobs, secure energy supplies and drive technological innovation. But none of this is happening because the ESB is both producer and regulator.

The Irish Wind Energy Association (IWEA) expressed concern at its autumn conference recently that many of its members were waiting 10 years for connection agreements, because the first planning had run out after 5 years and they had to reapply all over again.
IWEA chief executive Michael Walsh said; “the capital investments required are very large and infrastructure delays lag way behind market demand.”

Four weeks after the IWEA went public with this situation, the ESB announced that they had got a €300 million loan to invest in WIND ENERGY.
This is totally wrong and our government is doing nothing about it because the ESB is controlled by the public sector unions.

That low-cost finance of €300 million should be going to our entrepreneurs. But it’s not because they have no need for it as the ESB only make grid connection agreements available to certain parties and the same situation exists with Power Purchase Agreements.
They also enforce their dominant control of the industry with dismal FIT rates.

Now Greg I ask you, do you still believe the public sector is not externally traded?
Not only is it ‘externally traded’ but it also exercises total control of the industry and denies our entrepreneurs a level playing field by production and regulatory control.

This is totally wrong and the fact that it is allowed to happen makes a total mockery of our Taoiseach’s oft repeated mantra that he is committed to building a ‘smart economy,’ there is nothing ‘smart’ about what is happening in the energy sector, the very industry which could help us to get back on our feet.

http://www.timesonline.co.uk/tol/news/world/ireland/article6907745.ece

See New Bank Guarantee Scheme thread.

@ Concubhar O’Caolai
“What do people think will happen from a competition perspective if all the Irish banks are nationalised, assuming the foreign banks continue to make a beeline for the exit?”

Appoint a board of huge experience and unimpeachable integrity and give them complete statutory independence. Let them appoint CEOs and management teams of same calibre. It was strange that many supporters of NAMA were so opposed to nationalisation. It will be the same government in both cases and full nationalisation would have been much easier to safeguard.

What is the point of NAMA if the State ends up with a majority shareholding?

Would the conversion of the Preference Shares to Ordinaries mean that (as the ordinaries carry market risk) the investment of €3.5bn by 2 would have to go to GGD?

Very difficult to ensure competition.

Aer Lingus monopoly comes to mind. Though worse.

Negotiations must begin with the bondholders.

They should be cleaned up and sold on.

What do people think will happen from a competition perspective if all the Irish banks are nationalised, assuming the foreign banks continue to make a beeline for the exit?

Are there any historic precedents for this? (other than Iceland which is probably too recent to draw any conclusions from)

Cost of Preference Shares NPRF = €3,500,000.

Any reason why this bank should not be nationalised?

Cost of Preference Shares NPRF = €3,500,000.

Any reason why this bank should not be nationalised?

Nice.

Government to convert Preference Shares to Ordinaries.

Looses Pref Divi.

Stated policy of, at least, Bank of Ireland is that no Ord Divis will be paid for some time.

Working out well for the two Brians then.

No not new. But any significant external event could widen the spread.

How much are the subs on BoI & AIB?

well thats not exactly new news is it?

http://finance.gov.ie/documents/speeches2009/sfbl034guarantee.pdf

Yes. Its the subs I was looking at. From Tom’s link,

http://baselinescenario.files.wordpress.com/2009/11/credit-default-swap-spreads-for-irish-banks.pdf

@ Bond. Eoin Bond

And this has no impact?

“The new guarantee excludes subordinated debt and extends to instruments with a maturity of as much as five years, the EU said.”

http://www.independent.ie/business/irish/new-bank-guarantee-scheme-gets-eu-backing-1950136.html

I don’t think he is being ordered around by the Dof, ECB, EC or anyone else. They would have been a lot more sensible. He and he alone is responsible for our woeful economic decision-making. That the Dof are useless too is not decisive.

The traditional national accounts FDI data is very difficult to interpret, as it contains lots of flows which have nothing to do with the direct ownership understanding of FDI as the term is understood. (I wrote a note about this in the 2004 Forfas Trade & Investment Buleltin) The FDI stats are also dominated by Merger & Acquisition flows, which change the ownership of a firm, but have little impact on output or employment in the short run.

For these reasons, I prefer to use data on Greenfield investment projects. The data as published by the most credible source of FDI data globally - UNCTAD, last released 2007, shows that in the Northern hemisphere we are the most successful major economy for attracting FDI. We run second to Singapore in a global context. This data is also reproduced by the NCC every year in their competitiveness report. Given that 2007 is when our prices were most out of line with the rest of the world, then our strong showing then says something about the stregth of our other competitive advantages. And yes, I hope momentum matters, as in that case we will be doing just fine!!

The allocation of tax distorts our trade data, but doesn’t change the position. MNCs here employ 150,000 people directly, and spend over 18 billion in the local economy. WHile the trade figures are distorted, this is no tax dodge.

You ask why we have performed so pooly in the Eurozone. We sell 60bn into eurozone, so I am not sure what you mean on this.

The Greek spread tightened by 11bps to 184bps while the Irish spread tightened by 3bps to 168bps

@All
X Files Lenihan has started to say claim he is just following orders … from the Dept of Finance.

“Privately, Department of Finance officials expressed fears that raising income tax would do the opposite, and actually reduce income tax receipts, as some higher earners either left the country or restructured their tax affairs. They relentlessly pointed out that a small proportion of the population paid a huge share of income tax - 4 per cent of taxpayers pay half of all income tax,while half of income earners pay no income tax”.

Does anyone believe that the DoF, or Brussels, ordered him to tax only in his first budgets and are now telling him to cut only in this one?
What are the terms of the €54 Bn guaranteed long-term funding arrangement from the ECB in the secret treaty many supporters claim he signed with them? Why very conveniently do none of these bodies tell him to scrap all tax breaks and introduce a property tax?

And the big question, why the blanket bank guarantee and why NAMA?
It’s “them” again, isn’t it. “They” made him do it.