Recovery Secnarios for Ireland: An Update Post author By John Fitz Gerald Post date July 21, 2010 For those who are interested, our article on the above topic is available here. Categories In Economics, Fiscal Policy Tags Add new tag 47 Comments on Recovery Secnarios for Ireland: An Update ← No Frank, NAMA is Not Being Funded by the ECB → How housing slumps end 47 replies on “Recovery Secnarios for Ireland: An Update” @John Fitzgerald Can you clarify whether ESRI net migration forecasts are for the calendar year or for the year to April? So, for example, if ESRI forecast that net emigration will be 50,000 in 2009, does this mean in the calendar year 2009, or in the year from April 2008 to April 2009? In my posts, I’ve always assumed it is the year to April. That’s the only period of time for which the CSO publishes figures. The article by Dr. Garret Fitzgerald in last Saturday’s Irish Times seemed to say the same thing. As does this Finfacts article: http://www.finfacts.ie/irishfinancenews/article_1015575.shtml If so, can you confirm that the ESRI forecast, made in December 2008, and referred to in the above Finfacts article, of 50k net emigration in the year to April 2009 turned out to be a considerable exaggeration? The actual figure, when it was published by the CSO in September last, turned out to be 7.8k, not the 50k forecast. Obviously, if my assumption is incorrect, and the ESRI migration forecasts are for calendar years, then the error in the forecast will be much less, although still considerable. I am not criticising because the ESRI forecast for net emigration in 2009 (ie April 2008 to April 2009) appears to have been over six times what it eventually turned out to be (50k forecast v 7.8k actual). Its a very difficult thing to forecast. What I criticise is the way that ESRI forecasts for net emigration are presented in the media as fact (David McWilliams article in today’s Irish Independent is an example), even though so far in this recession the actual figures for net emigration have turned out to be a lot lower than ESRI forecasts would indicate. We know for certain that this was the case in the year to April 2009. Based, on the latest QNHS survey, I’d say the ESRI prediction of 70k net emigration in the year to April 2010 is also quite likely to be a considerable exaggeration, although clearly the net outflow will be much larger than the 7.8k in the year to April 2009. In addition, of course, what net emigration that has occurred has been entirely among foreign nationals going home. So far in this recession, there has been zero net emigration among Irish nationals. @John Fitzgerald It would be also interesting to see the work the Institute did with Siemens on vulnerability to oil price shocks – perhaps in a separate posting? @John Fitzgerald, I would echo JTO’s question and further ask you to confirm that your forecasts for 2010 are for a net decline in our population (stood at 4 459 300 in April 2009 according to CSO estimates). Also could you indicate the components of net emigration (emigration and immigration) – someone on here asserted that you have forecast 10k of immigrants in each of the years 2010 and 2011? And lastly JTO has published estimates of social security numbers given to immigrants (can’t locate the post) which seem to indicate that there is some stabilisation in the drop in immigrants. Do you consult new social security data when producing your forecasts? @JTO – so again you expect unemployment to be higher than forecast. From an economic perspective the nationality of the emmigrant matters only in so far as the average educational level of non-Irish is higher than that of the Irish (i.e. in so far as it reduces the avarage – anything else is sociology or prejudice!). @ John FitzGerald John, I’m surprised that you did not provide a more detailed analysis of the global post-crisis scenario compared with the pre-crisis period of the international credit boom, related asset booms and loose public spending. You take the NIER forecasts and it appears that the world hasn’t really changed but it has in many ways. Banks may be calamity howling about the impact of new Basel III capital requirements and regulatory reform but coupled with public debt retrenchment and private sector deleveraging, should we expected a sunny pre-Aug 2007 scenario, because emerging markets are offsetting fragile growth in advanced economies? Domestically, there is one reference to money credit in the report and Brendan Keenan highlights some related comments that were apparently made at yesterday’s press briefing; isn’t it inevitable after the banking crash, that bank lending practice will remain cautious for the foreseeable future? As regards, the flexibility of the labour force during the bubble, with so much money in the system and post May 2004, access to the labour market in Eastern Europe, should we be surprised? Irish full-time employment in manufacturing and internationally traded services fell 10,297 from 315,418 in 2000 to 305,121 in 2007 while the numbers in employment expanded by 429,000 in sectors such as construction, public services, distribution, retail and other services. As regards FDI, have you considered that this sector has plateaued? The pharmaceutical sector has seen exports jump by 26% in the 5 years to 2009 without hardly any additional employees. So productivity must look very good. We were likely very competitive with Western European countries, even before recent adjustments e.g. Denmark, which thrives on much higher wages and costs. However, most of the US FDI projects in recent years have been small scale and while Eastern Europe provides an option for those in search of low cost locations, the bigger markets will continue to take the lion’s share of projects. Pharma/medical devices account for more than 50% of goods exports and we already have got all the key players. The PC manufacturers have left and while commentators sing the mantra about service exports, royalty payments etc offset a lot of this gain. Besides, we still seem to be dependent on call centers even though they are often now dressed up with an R&D element to get the tax credit. We may get some projects from emerging markets but theyare unlikely to be significant. There is no reference to the potential for the indigenous exporting sector and any benefit from public spending on research may take several decades to show results. So export will remain the overwhelming responsibility of mncs. More here… http://www.finfacts.ie/irishfinancenews/article_1020192.shtml Stark figures. And that’s assuming a global recovery -whereas there’s a significant downside risk of a double dip recession. All the European countries reigning in expenditure simultaneously, while the Chinese work their way towards a more liberal regime. It’s an unpredictable situation for the foreseeable. @John. Prof Krugman isn’t impressed http://krugman.blogs.nytimes.com/2010/07/21/leprechauns-and-confidence-fairies/?src=twt&twt=NytimesKrugman @LorcanRK – the usual from Krugman, who is not known for his quantitative work. The basic fact he keeps ignoring is that nobody is going to lend us any money if we don’t reign in the deficit, and then we are going to have to reduce the stimulatory effect of the deficit to zero overnight – I wonder who is for the fairies here? Ireland returning to full employment by 2015 under high growth scenario? This dramatic turn around will defy the experience of other Western economies (such as Finland) because of the “flexibility” of the Irish labour market (though I doubt the 150k odd construction workers are all the flexible). And then we read that net emigration will be over 160,000 over the period 2009-2013. And there is no explanation of where the jobs are going to come from for those who stay – what sectors? This is fantasy stuff. @ George Orwell – “where the jobs are going to come from for those who stay – what sectors?” – indeed, the high growth scenario looks vastly optimistic, but the low growth scenario seems a reasonable scenario but not a worst case scenario. @ Scorpio The basic fact that the ESRI keeps ignoring when they making their growth forecasts is that deficit reduction in the coming years (though necessary) will cripple growth in the domestic economy and make a return to full employment by 2015 nigh impossible. The jist of the report seems to be: (i) the downsides of planning for high growth and being wrong far outweigh the downsides of planning for low growth and being wrong, therefore austerity must not be relaxed. (ii) we need to implement policies to reduce the risks of future structural unemployment by reskilling unemployed people. (iii) the future is uncertain and this is primarily due to international uncertainty. Things could go swimmingly or it could be hell in a handbasket if a number of diferent things all go against us. (iv) the banking collapse has made the hill we have to climb substantially steeper. Better to have Paul Krugman rip you a new one than the bondholders taking the job upon themselves? @Scorpio, I wasn’t saying I agree with Krugman’s article. But still feel it is important to point it out seen as the Prof is much more widely read that this blog. @ Zhou Perhaps you could address Krugman’s key point: “The authors simply assert that more austerity now would lead to a lower risk premium and hence higher growth, based on no evidence I can see.” Krugman has posted several times about how austerity is ultimately self defeating and is not rewarded by the markets. Where is the evidence to suggest that our risk premium will go down and not up following more cutbacks based on recent experience in the PIGS? Much of the growth of the last decade, not just in Ireland, was illusory and based on excessive leverage . The only way to get the global growth machine going again a la the good old days would be to put humpty dumpty the leverage machine back in action. Instead what has to happen is deleveraging and this process has barely started. When every major economy plans to secure its future through exports where are the countries to absorb all of these exports? Ireland’s fate over the next few years is tied to what happens internationally. Will the global imbalances that led to the financial crisis be resolved ? I wouldn’t hold my breath. Deficit management is a given . Ireland has to get ready to fight the next crisis. If the bankers get their way and start going back to the old way of doing things the next collapse could be way off the scale. Very dangerous waters ahead. There should be much relief that the independent think-tank has produced a report showing the stability pact 2014 target is achievable. @ Johnny Fitz/JtO what should i make of this bit from McWilliams – “The ESRI predicts that 120,000 will leave the country in the next 18 months, on top of the 100,000 who have already gone in the past 18 months.”? @ George Orwell Krugman views “higher rates” as proof of punishment. The alternative view is that we are being “rewarded” by still being able to fund at all. Greece, a country which only started any austerity measures in February this year, was not punished because of 2 months of austerity, but because of 10 years of profiligacy. @George Orwell I won’t be challenging Mr. Krugman to a duel any time soon. My point is that it appears to me that the ESRI believe’s the markets will react negatively to any failure to stick to the austerity plan and may react well to acceleration. I am worried that we might be applying the lessons of the past incorrectly. The position is not wholly analagous to the problems faced by Fitz Gerald senior. On the other hand, Mr. Krugman has not proven or asserted that failure to meet fiscal targets agreed to by Ireland will improve our credit rating. Mr. Krugman, as ever, is using us as a speaking aid rather than addressing our situation. As such we left with a vacuum of analysis. In the meantime, we know markets do not like surprises and do like plans and goals and targets being achieved. @LorcanRK – I did not think you agreed with PK but replied to you on the content of that blog entry – thanks for pointing the blog entry out – sorry for any misunderstanding. @George Orwell – it’s not a matter of risk premium, it’s a matter of anyone wanting to take the risk to lend to us at all. This is not some nice linear world – we are close to a corner lets not hit it! @ George Orwell George, As with Greece, 80% of public debt is funded by foreigners. Do we have a choice? As I pointed out above the increase in employment by 25% was bubble financed. So with debt servicing due to take 1 in every €5 collected in tax, at some point the penny would have to drop that many jobs just simply could not be maintained @Eoin I can’t believe I missed out on a lambasting on the Fahey issue. I am somewhat jealous of yourself and BWII 🙂 . Must do better next time! @ zhou it was epic alright. 😀 Unfortunately Karl ran off with his ball (joking karl!) before i could slot in a Michael O’Leary quote identical to Frank Fahy’s, and Richard Bruton saying that “The ECB, in an act of extraordinary solidarity, have agreed that they will issue liquidity at 1%”….nutters, the pair of them…. Again Krugman’s key point is this: “The authors simply assert that more austerity now would lead to a lower risk premium and hence higher growth, based on no evidence I can see. They don’t even offer any quantitative assessment of the extent to which more austerity while the economy is still depressed would reduce future debt burdens.” Krugman has acknowledged that “Ireland is truly without options”. His point is that the ESRI seem to believe that deficit reduction will appease the markets, lead to a lower risk premium and higher growth which is not backed up by evidence. Therefore the ESRI forecasts are deeply flawed. Countries that have embraced austerity continue to be downgraded and face higher risk premiums. The ESRI ignores these facts. That is not to say there is an alternative. Its more of a case of damned if we do and damned if we don’t. The ESRI ‘low growth scenario’ is more likely the optimistic scenario. The pessimistic scenario would be a default. Many thanks for providing the link to this important piece of work and respect to you and your colleagues for raising your heads above the parapet – presumably in the full knowledge of the brick-bats that will descend upon them and the spin that will attend the projections. Although this work is co-funded from the public purse, it seems to escape many commentators/commenters that it is a genuinely independent and disinterested (in the correct meaning of that word) analysis. It appears that, in the public mind, this type of work by the ESRI has some sort of quasi-official status – and the media (and those who should know) do little to disabuse those who appear to hold this view. What strikes me is that there seems to be a genuine and widespread demand for engagement and debate on these economic policy issues (I suppose we are all economists now). By advancing these possible scenarios you and you colleagues are required to engage and respond on the basis of the analysis and evidence presented. This contrasts forcefully with the official promulgation of economic policy. In principle (and in practice) only the Minister is empowered and required to pronounce ‘ex cathedra’ on government economic policy. Even though there may be scope for minor modifications and concessions in the big ‘set-piece’ pronouncements, such as the budget, there is no opportunity for the presentations of options, advancing and considering evidence for and against various options, assessing and weighing the evidence and arriving at balanced judgements on the basis of the evidence in an open and transparent manner. It seems that projections such as these advanced by the ESRI, based on clear policy assumptions, attract so much attention because there is no opportunity for the public and their representatives and for those with competence in the area to participate effectively in the actual formulation of policy. This pent-up demand seizes on work such as this by the ESRI as a substitute and the effect is to confer on it a quasi-official status it neither seeks nor has. (Indeed the authors take pains to point out that policy advice offered continuously during the long run-up to the current crisis – and which, if taken, would have reduced its severity – was ignored.) How long, I wonder, will it take before voters and their representatives recognise that the type of debate this report provokes is the kind of debate that the Government (and senior department offcials) should be forced to engage in? And how long before they realise that is in their power to make this happen? For bank funding fashionistas – BOI issues 3yr govt guaranteed paper today, smallish SF325mn. Important for the fact that i think its been a good 3 months since the last GGB issue from anyone. With NTMA funding in rude health for the rest of the year, expect Aug and Sept to see a lot more of these from BOI and ILP in particular. On the issue of re-skilling, the skills of many graduates and professionals are radically devalued and sometimes radically dimished by being out of work for a period. We should, at a very low cost, be able to help graduates and out of work professionals by providing a framework for umemployed and retired people to set up voluntary organisations where these people can practise their skills. The framework would involve the following: – incentives for landlords to provide vacant buildings rent free. (e.g. full rates rebate, total control for landlord to get them out) – exclusion of employer’s liability by law. – incentives for companies to recycle unwanted computer equipment and furniture to these outfits. – provision of moving services for occupying and vacating buildings quickly. – restricting the purpose of these organisations to training, assessment, and charitable and public benefit works. – creating a new type of body corporate for such organisations. These voluntary organisations could preserve skills, perform a social good, create networks and connections between people and should cost very little. Many of the unemployed currently are tipping into the category of long term unemployed. Does a return to full employment by 2015 not strain credibility somewhat? It simply will not be easy to move people into employment who have been unemployed for three or more years – think of the thousands of truck drivers, crane operators, labourers, and the rest tied to construction. Young single people may have the option of leaving (but finding a job is another challenge) whereas those with dependents are pretty much stuck where they are. The longer the economy stagnates, the more long term unemployed are added to the pile. I would like to hear from the ESRI on this growing problem. What is the difference in the economic contribution of an Irish person or a foreign person, both living and working in Ireland? That is the only explanation I can think of to why it is important that the Irish aren’t emigrating but only(?) foreigner are. Assuming the world economy picks up, is it not possible that this upturn will also increase the number of jobs available outside of Ireland which could in turn lead to increased emigration? Also, old populations retiring in other parts of europe and some of those jobs will have to be filled and at times it is easier to move people than move an industry. Central planning failed. Why should anyone now wish for more central planning with government incentives for this, that & the other? I’m guessing the support for this, that & the other (whatever they might be) will if introduced stay around for longer than necessary and in the end actually hurt the economy due to capital misallocations a la tax credits for a booming construction sector. There is no magic solution to this. Ireland will come out of the recession, however, before that some of the imagined wealth will disappear. The sooner that happens, the sooner Ireland will be recovering. In Ireland, in the year to Q1 2010, the number of long-term unemployed persons – – out of work at least 1 year – increased by 63,500, bringing total long-term unemployment to 112,600. The long-term unemployment rate now stands at 5.3% compared with 2.2% in the first quarter of 2009 and 1.3% in the first quarter of 2008. As of Q1 2010, long-term unemployment accounted for 40.9% of total unemployment compared with 22.0% a year earlier. In the US in June, the number of long-term unemployed (those jobless for 27 weeks and over) was unchanged at 6.8 million. These individuals made up 45.5% of officially unemployed persons — one of the highest levels since 1948. The US broad measure of unemployment was 16.5% – – includes partimers seeking fulltime jobs and workers who are categorsied as “discouraged.” @ zhou_enlai Some good suggestions there no doubt, but we would benefit more by setting our national sights on a few industries and moving to incentivise them at the same time. Look for example at Denmark, which in the 90s put its focus on wind turbines and related technologies, and now reaps the benefits with billions in exports and 40,000 jobs. Whereas here in Ireland you have a decent pumped storage hydro suggestion coming from SoI being hysterically lambasted at every turn, purported electricians and engineers jumping out of the woodwork to tell us it can’t be done at every turn, doing their level best to muddy the waters as much as possible. Of course, now every country in Europe is moving towards a PSH solution. The Dutch pipe their excess energy to PSH reservoirs in Norway. The Chinese can’t roll them out fast enough. There’s even a proposed plan to set up a European supergrid incorporating them. So they can be done, and very well, but once again Ireland missed the boat. Thats not to say that we should neccessarily focus on renewables, although why not, but there are many growth industries we could make a decent effort at building our domestic production base on. Where else are the jobs going to come from? Construction? Does the government have any plan besides getting the bubble reinflated? I am not optimistic. @Ronan Burke Even if the idea of voluntary organisations did not have a huge benefit it should be low cost, it could give people a bit of dignity and it should help people who might not fit into the new industries to learn and keep their skills sharp. Indeed, its a great idea, and others are coming to more or less similar conclusions as yourself, not just the much abused WPP, but a charity in I think Drogheda was in the news the last day for offering zero interest loans to entrepreneurs. Small budget unfortunately, but an entirely voluntary effort. @ Seafoid: “Much of the growth of the last decade, not just in Ireland, was illusory and based on excessive leverage.” Bingo!!! Funny how the obvious is usually missed. May I ask the ESRI authors to run a ‘What if …’ option for us: What if we have NO aggregate ‘growth’? Then … … What if energy prices resume their upward trajectory? Then … … The tacit asumption in the report, that we are in a temporary Recession/Depression, and that aggregate growth will (soon) resume its upward Permagrowth path, has to be challenged. I have formed the opinion that we are actually in a ‘transition phase’ between Permagrowth and Permadecline. In fact, I believe that developed western economies will revert to some previous economic level and remain there for some time before declining again to an even lower level. B Peter @ Ronan Burke, Not a very favourable comment about discussion on this site in relation to PSH, but however lets not get into a argument. I briefly looked at the SOI website, seems interesting, but lacking in any detail. On clicking a link about PSH one is directed to a IT article. No engineering drawings or general schematics of any sort. Does not fill me with any confidence that these guys know what they are talking about. However I don’t wish to be negative and or seen to be knocking what could be a very good project being pushed by clever well educated people. My question is just how do you propose to get a large Terra Forming project past the local people? I assume SOI are looking at places like Killary Harbour, building a dam across the sea entrance and filling the whole valley with water to the highest point between the hills. Or the Ring of Kerry will have large dams on either side of it. The Corrib gas pipeline was difficult enough as it was. @zhou_enlai There is a fatal flaw in your proposal for skills retention through subsidised non-commercial practice of various professional skills. There is no way to limit practice to the non-commercial. What would happen in practice is that subsidised professionals would simply undercut the remaining professionals who still have forward workload, either in the legit or the black economy. Standards would drop further (the Walmart factor) and pricing would tumble. While it may seem merciful to interfere in this way, it is not the right way. It is akin to the spin that university R&D is relevant to Irish economic growth and that stuffing money into tech-push exercises led by academic PI’s with no commercial track record will generate a worthwhile return. Rather than encourage low overhead un-bonded and uncommitted professional outfits to operate in the economy, far better to facilitate getting graduates, the redundant and the enforced retired properly trained in contemporary CPD (forget FAS) and into established Irish companies and practices. The trick is doing this in a way that does not encourage churn of existing staff through cherry-picking by employers. @Mr Vain Here, schematics and details by the truck load: http://www.spiritofireland.org/repository.php Its right in the top menu of their site. Google is wedged to the rafters with information about PSH and the aforementioned European supergrid. @Michael Hennigan Thank you for those details. Depressing trends. I read tonight on the RTE news website that in the context of budget talks “Brian Cowen stressed that domestic spending was an important factor in growing the economy and said that promoting confidence was a key task.” A few lines down Mr Lenihan emphasized the importance of cutting public expenditure. These points were headlined under ‘creating jobs’. Let me get this straight. The Irish public should spend to stimulate growth (on what? imports?) but the government must cut spending. But spending on luxury areas in R&D and nunanced subsidies to multinationals will continue. Even if unemployment stabilizes, some (many?) people will continue to tap their savings to keep afloat. And growth with jobs as opposed to growth without jobs seems unlikely for several years. Every now and then I read a headline stating that the savings rate is going up? Really? Are bank deposit books that good with nearly 500k unemployed? Another Celtic miracle. In 1983 US multinationals were reported in the Irish Times by Ken O’Brien as making £800 million on a total investment of £3000 billion. That was nearly 30 years ago. Perhaps it is past time that the government took a long term view of FDI revision. It seems curious that today the multinationals can make very substantial safe profits and leave little in the country apart from PRSI, some VAT, some employee tax and a slice of utilities bills. Without a rethink of FDI bding factored into recovery plans the country will be stuck in a perpetual loop of subsidized gratitude to FDI and condemned to re-enact its limitations. @ Ronan Burke, Good link, thanks for that. But getting a large dam built is going to upset the locals. Do you think it really is possible to dam up Killary harbour with no objections from the local inhabitants? Or any U shaped valley? I just cannot see it happening. As we all know the Corrib gas was complex enough as it was, and that was only a underground pipeline. @George – “vulnerability to oil price shocks” This is a very good point and one that I think is not taken into consideration enough. I have heard, from a reasonably reliable US Republican source, that the only reason Uncle Sam hasn’t taken out Iran’s nuclear capability is that they couldn’t withstand a spike in oil prices during their ‘soft recovery’ (which is what I think Bernanke is now calling it). That and the threat that Iran would likely counter by invading Iraq and attacking US bases there = more billions down the black hole formerly known as Iraq (I sometimes think of it as being their ‘Anglo’). However, it only takes one nervous Israel getting certain information to trigger big problems there and subsequent oil price rises. But I’m sure that JTO would tell me that is all speculation and not based on fact 😉 Sadly, in the real world, people often react to things in a less cut and dried fashion. @zhou_enlai – “set up voluntary organisations where these people can practise their skills” Excellent idea and I applaud it. I’ve also been thinking along the lines of setting up not-for-profit companies with a similar aim. Tony Owens above makes a valid response though. Either option would end up undercutting similar for-profit companies and causing further problems whilst trying to solve some. @Brian Woods “The tacit assumption in the report, that we are in a temporary Recession/Depression, and that aggregate growth will (soon) resume its upward Permagrowth path, has to be challenged. Agreed. I think the whole notion of eternal growth is severely flawed. Take the share index prices off the 6 o’clock news too. @ Scorpio “if we don’t reign in the deficit, and then we are going to have to reduce the stimulatory effect of the deficit to zero overnight” I would like to know where this stimulatory money you mention is going so I can make a valuation on it’s stimulatory effect. @Mr Vain You keep talking about unrelated issues, the “damming up” of the the Ring of Kerry and Killary harbour, and any resemblance this project might have to the ingrained political opposition the lunatics on the far left in Ireland might have to Shell as an oil company. If you could show me where in those documents a recommendation is made to dam up Galway bay, Killary harbour, or the Ring of Kerry, I’d be most interested to see it. You have read all of those documents, clearly linked from the top menu on every single page of their website, and considerably more substantial than a link to the IT, haven’t you? @Tony Owens/Joseph “There is no way to limit practice to the non-commercial. What would happen in practice is that subsidised professionals would simply undercut the remaining professionals who still have forward workload, either in the legit or the black economy.” There will alwys be a black market. That cannot be guarded against. However, there are ways to largely limit the legitimate activities to voluntary activities: 1. Full rebate for rates conditional on voluntary status. 2. Only directors of the organisations being able to give references. A public register of the directors (themselves unemployed people perhaps) to be maintained. 3. Special corporate structure which makes carrying out of commercial practices ultra vires the corporation. 4. Special legislation on which provides exemption from liability provide the activities are non-commercial. 5. Complete limitation on contractual liability for the corporation. 6. Prohibition on the corporations taking out insurances except where sanctioned by a Govt department and then only for a particular purpose. The organisations and their landlords would therefore lose benefits if the activities were not voluntary. Any person contracting with the corporation to do work would not get the benefit of any contractual liability or insurance cover (which are critical to most contracts). Whereas there may be some black-marketeering there is no reason to think it will be increased. Indeed, if clock-in, clock-out systems are developed for the purposes of references then it could be lessened. The main sector which risks being undercut are those providing services to the state which people might provide voluntarily (e.g. school re-furbs). However, there should be plenty of work to go around with the current cuts. Also, the Government will not cut expenditure which it can target to stimulate the economy. As expected, but FYI…. *BANK OF IRELAND, ALLIED IRISH SAID TO PASS EU’S STRESS TESTS *ALLIED IRISH SAID PASS TEST ON INCLUSION OF FUNDRAISING PLAN @ Ronan Burke, From the link you supplied there was this document, http://www.spiritofireland.org/content/repository/discussion_on_energy_from_hydro_and_wind_110609.pdf To save you time I have cut and pasted some excerpts from the document. “How can we calculate energy storage in the Hydro Storage Reservoirs? The maps of suitable Irish valleys were digitized and 3D models of individual sites were built. The volume of water that could be stored was calculated for a range of dam heights and required rock fill. We also have accurate information on the height of the valleys above sea level – which represents the lower lake in our pumping storage plan.” “V is the volume of the water in cubic metres an p is the density of the sea water” “A very typical natural valley water reservoir would have a dammed lake area when full of 4 square Km – e.g. average 2Km x 2Km. Based on studied shapes, depths and height from the sea etc., two such reservoirs would deliver some 200 GWh of electrical energy” “When combined with the natural valleys at our disposal for large scale Hydro Storage, the energy future for our nation will indeed be bright and green. Can we achieve this? YES WE CAN.” O.K. they did not specifically mention Galway Bay or Killary harbour etc. But they are talking about a large dam, 2 km X2 km and not just one dam but possibly three. Don’t get me wrong Ronan, I agree with the idea of pumped hydro storage as the way to store energy from wind, the electrical battery idea so to speak. With the large powers mentioned, ie running the entire country for 3 to 4 days the Spirit of Ireland proposals must be talking large scale projects or perhaps a great number of much smaller scale units. But this document specifically mentions valleys, the sea as a lower reservoir and in their calculations density of sea water is used. However I feel the daming of some valley or up to three valleys somewhere on the west coast of Ireland to be beyond the taste to many people. I could be wrong of course, but common sense and gut feeling tell me that this project would be difficult to approve. Comments are closed.