“It is going to take many years of determined effort and huge reform to close the gaping window of vulnerability out of which the US and Europe now find themselves staring.”
There won’t be ‘huge’ reform in Europe and it’s also unlikely in the US.
Soaring health and pension costs as populations age, will maintain pressure on public finances.
Spain, France and Ireland are countries where there are two-tier labour markets where insiders enjoy guaranteed privileges and others are either temps or have few benefits by comparison.
The beneficiaries will fight any change tooth and nail.
We have no problem oozing with outrage when the source of perceived unfairness is Europe but why should tens of thousands of workers with earnings and pension rights much superior to counterparts in the private sector, be guaranteed job security when up to 270,000 forced job losses occurred in the private sector since 2007?
There are valid arguments about austerity but it appears some of the critics appear to be using it as an excuse to maintain the status quo.
There is no big constituency for change in Ireland and putting in place modernisation can be more important in the short-term than big cuts.
Almost 11 years ago, the first benchmarking report was published with a recommendation that 75% of payments should only be made after putting in place verifiable efficiency targets; in Jan 2007, Ahern commissioned a report from the OECD on the public service and the story goes on.
The news that Dublin law firms are still among Europe elite, is part of the same coin as the conservatives of Left and Right sustain each other in resisting change.
No country owes any other a living and the world is undergoing rapid change at present with the re-emergence of Asia.
Standard & Poor’s reported in 2009 that in 2007, the average age of cars registered in EU-15 countries was 8.2 years, up from 5.8 years a decade earlier. This increase was in part because the overall quality of cars — and therefore their life expectancy — keeps improving.
Also in 2007, the German ambassador to Ireland, Christian Pauls, raised hackles when he made some disparaging comments to visiting German businessmen on the host country including citing junior medical consultants’ rejection of €200,000 a year posts on the basis that this sum was ‘Mickey Mouse’ money.
He said that he was at the National Concert Hall when an announcer appealed for the owner of a 1993-registered car to move the vehicle because it was blocking an entrance.
‘Of course no one moved,’ said Pauls. ‘All the Irish are driving 2006 and 2007 cars. For all I know the car is still there.’
I don’t know if in Ireland today, an 8.2 year old car would be called a banger.
Change is in progress but could we say today that we are the ‘Young Europeans’ or stuck in the past?
I got excited when I read:
“At the core of contemporary financial crises, however, are financial systems that remain primitive to classroom constructs of perfect markets”
But dissapointed with the proposal to tackle this:
“More sophisticated instruments indexed to measures of economic performance…strong independent councils to monitor government data claims”
Never mind the incentives facing actors in the casino world of financial capitalism or inserting the reality of warm blooded animals into our hypothetical models of money markets.
On a side note: @ Michael Hennigan
How did you jump from the content of this article to those damn selfish and inefficient insiders in the public sector?
@ Aidan R
I agree with your remark there “Never mind the incentives facing actors in the casino world of financial capitalism or inserting the reality of warm blooded animals into our hypothetical models of money markets.”
Its the typical approach to solving the debt crisis, that its to be solved by Main St, not Wall Street.
There is a tsunami of debt thanks to Greenspan lurking everywhere and a threat to economic growth elsewhere. It won’t be solved by cutting jobs and raising taxes.
Its been said Harvard is run by Wall St. So we’re unlikely to get Rogoff suggesting global Basil 111 reforms that force the monetization of debt onto public exchanges that monitor and police derivatives.
Until we get g20 reforms that deal with the fiat money problem of infinity money financing global infinity debt, we’re left with the narrow minded views of the debt sheriffs telling us the answer is to cut jobs, salaries, raise taxes, to pay for unregulated global casino debt gambling profits of the banks bonafida incentivised to exploit our gullible ignorance as to who is responsible for the mess and exactly who is exploiting who.
“future scholars will see our tax systems as Byzantine labyrinths funnelling money to powerful interests, creating staggering inefficiencies. They will surely be incredulous to see pensions and health insurance financed via Ponzi schemes as transparently unsustainable as the 1700s South Sea bubble.”
And the Squid will have the same reputation as the Medici.
@ Aidan R
I didn’t say selfish; you are rational and using collective power in a system of weak governance and limited accountability.
The truth of course can be bitter and it’s often also observed that a sense of entitlement can become common even though it’s misplaced. That can also be observed elsewhere.
I have some family members in the public service and they tend to see themselves as victims.
@Michael Hennigan
I didn’t say selfish; you are rational and using collective power in a system of weak governance and limited accountability.
That seems a lot like projection Mr Hennigan. Most would argue that “you” using collective power are clearly capital, the banks and their agents.
The truth of course can be bitter
The truth is a lot less bitter than the apostles of austerity.
The animus towards the public sector from most of the prophets of profit is so overwhelming that it prevents them from confronting the obvious and ongoing source of Ireland’s catastrophically bad situation – the socialization of private debts and the prioritization of the needs of the current configuration of the European financial system over the needs of a just and functioning society.
This overwhelming, irrational prejudice and rage is present in many a frustrated capitalist, all too willing to blame the failures of the current system on everything else other than its inherent contradictions and inefficiencies. Each thwarted entrepreneur blames the failures of capitalism to reward them sufficiently for their ambition on everything else other than the current flavour of capitalism and their own ambition.
@all
7_of_Nine puts it succinctly: Tax Kapital!
@ Michael Hennigan
What empirical data are these observations of the public sector having a sense of ‘entitlement’ based on?
I see lazy insiders and inefficient practices in large firms across the private sector on a regular basis. In fact, every job I have ever worked in since I was 15 contain such practices; retail, construction, industry and education.
Would it be a fair conclusion that the private sector is one big inefficient mess?
It seems to me that the only ‘misplaced sense of entitlement’ that exists in the Irish economy occurs in the boardrooms of the IFSC and other financial institutions across the globe.
It is these elites in money markets that “enjoy guaranteed privileges” and “will fight tooth and nail to avoid change”. The difference is, they have the money, power and lobbying power to ensure the status quo remains the same.
@ Philip,
Ken Rogoff sounds to me like a very common sense kind of a guy who has the ability to see the reality of a situation, as opposed to operating to some kind of theoretical model, which bears little resemblance to the same. Can I break this down into very simple terms for you, in the form of an experiment which you can easily carry out on your own. Having entered back into participation in education recently, I found myself part of a group of four students who were all asked to worked together and complete a 10 week assignment. This is risky territory I think you will agree.
Towards the end of the same project, I suggested to those in responsibility, that their grading system for group projects was inadequate. Needless to say, such observations are rarely greeted with approval when they come from the student population. But my point was fairly simple. The 10 week assignment was based upon a series of lectures and notes delivered by the staff in 5 subjects. It appeared to me that only two in my group (including myself) turned up to the same lectures and even possessed a set of notes. My point was, those who did not turn up to lectures, had less to contribute to the group. They were of less value to the group. I suggested a series of steps, whereby if someone broke a threshold of 80% attendance, one would qualify for 100% of marks available to the group for that subject. And over 60% attendance, you would get 75% of the marks. Over 40% attendance and you would qualify for 50%, or half marks that the group earned, and below 40% you would not qualify for any marks at all.
What I was suggesting, was that in marking the group, the professors would create a spreasheet which contained a percentage attendance for each student for each subject, that would in turn generate a weighting factor which was applied to the overall group mark. Now all of this may seem a bit pedantic, and in many groups, no doubt, the weighting factor applied mark would not be radically different from the actual group mark they were entitled to. So I said okay, if the deviation was outside a certain range, says 10%, then a certain overall penalty would apply. If the deviation between the weighting factor applied mark and the actual mark was 20%, then a more severe penalty would apply, and so on.
Here is the most important point about my suggested scheme, so here is where some of my lecturer staff in college got lost. The ideal scenario under my scheme is where the individual students are not penalises at all. Because their weighting factor applied mark and their actual mark would never show a large enough deviation to justify changing their group mark. The goal of my marking scheme was to publish all of the above at the top of the brief for the group project, and do a lecture on the same, before the group project started to explain it to the students. Then, by my own theory of human behaviour at least, the knowledge of what could happen to their marks would be sufficient to modify the behaviour of the students in the groups enough that no problems arose, where one fellow had no set attendance and no set of lecture notes, but could still lie back and take it easy and allow the stronger members of the group to make up for his or her lack of effort.
What I was saying to the lecturing staff in my college, was that their failure to make their marking scheme for the group project, so un-sophisticated, had in fact created a giant incentive to the more devious student group members, to game the system. Of course, that is exactly what happened. I found myself in a group where I found myself pulling the sled on my own for three quarters of the project. Having done so, I found myself out of energy, and the last quarter of the project I was late handing up. But lo and behold, guess which quarter of the group project the other members concentrated their focus on? You’ve guessed it, the last quarter of the project. Worse, they were so viciously devious that they handed up the last quarter of the group project with only their three names on it, and I had to hand up my half-finished piece with only my name on it, which automatically dis-qualified me for that seven days worth of work I had completed. The theoretical model for group projects does not suggest that individual will optimize for this much self-interest, but in real life, they actually do.
My basic point is this. When dealing with groups, and group dynamics, and group incentives, you can run some of these experiments using real actual agents or lab rats for want of a better term, and observe how they behave. It is easy to generate a nice pictorial gantt chart for the teams and how they allocate their resources and efforts, when working under one scoring system or another. A clever department of economics in the world somewhere could create quite a nice study out of this and publish it properly, unlike my brief rant aove. All the best. BOH.
@ All,
Clarification: In the above, the idea was to see if a different mark could be found for each individual, based on their contribution to the group, which was weighted by attendance. It does not mean, that each group would have the mark pulled down by lack of attendance by certain members. Only that the mark for that individual would be modified if it ran outside a certain threshold. I was re-reading the above, and I don’t know if I made that as clear as I could. Anyhow, the keener amongst you, may get where I am coming from, without my having to write a whole thesis to explain. The idea was to display the fact to the individuals before the project, the scoring system was sophisticated enough to pick them out, if their behaviour was less than scratch, and that they could not find shelter under the group umbrella. My personal observation was alarming, in how many did actually opt to use the group umbrellas as a shield, and therefore an advantage. BOH.
@ All,
Update: I have been thinking about ways to apply the above model, to see how it might assist us to look at individual EU member states. Maybe someone with access to the figures could have a go at inputting this model and seeing if it reveals anything useful. The point I want to make is that you expose the inner workings of this model, to the market place and allow it to ‘learn’ how to work with it. That is, rather than the strategy used by the European Central Bank at the moment, which doesn’t appear to be working, where they expose so little information to the market, and allow it to guess, and guess very poorly.
We will pretend that the ‘group score’ is the German bond yield, the yardstick by which we are all measured at the moment. Pretend the individual ‘students’ are the EU member states. Instead of ten weeks, imagine ten years. Instead of five ‘subjects’, we will use five different types of borrowing instead. That is, public, bank, corporate, mortgage and personal borrowing. Now, to calculate an analogue for ‘attendance’ of the students in their subject classes, which equates to their ability to contribute to the group effort, and therefore the ‘group mark or score’. For each of the six subjects above, for each year of the ten years, identify if the economy grew fast enough to support the level of each five types of borrowing for that particular year. Say, if the gap between economic growth and the type of borrowing was too wide, then that goes down as 10% absenteeism. Like in my student group model above, if the attendance rate drops below 80% you are penalised across to a series of thresholds. Below 40% attendance and you get zero marks or score for that subject. For instance, if the co-relation between economic growth and personal borrowing was so poor over ten years for that EU member state, then they would get zero share (the German yield for that type of borrowing). The interest charged should be of a penal nature. Obviously that EU member state does not know how to manage itself on the level in the economy that is to do with personal debt. That is, the lending institutions are not responsible for their actions.
So that is how a weighting factor could be derived, using five measures based on types of borrowing. We can apply the weighting factor derived to the German bond yield figure as of today. Where the difference between the two breaks a certain threshold, a penalty is applied. This gives you the fair and reasonable bond yield figure for the individual EU member state. You can check out how much of a premium the market is charging at the moment over the German bond yield. Now, if the difference between our theoretically ‘fair’ premium and the market applied premium for risk is very different – that is probably where the Troica of the IMF, ECB and EU should step in. What I mean is, once the market has time to absorb the knowledge the Troica will intervene immediately according to the mechanism I describe above, then it will influence how the market behaves. What I mean is, the market will learn there is no longer an profit to be made from charging excessive premiums over the best bond yield for peripheral nations. The other thing, hopeful the market could learn, is that there is no good in loaning too much to the same peripheral EU member states. BOH.
@ Aidan R
1. I didn’t say anything about lazy people.
2. In last December’s Budget, the MoF set out plans for a two tier workforce within the public service where new entrants will be paid less for doing the same work as existing staff and with a less generous pension. It was an acknowledgement that the existing system is unsustainable
3. Is there guaranteed job security?
4. The majority of private sector workers have no occupational pension; for those who do, most funds are in the red; real annual fund returns over 10 years in the red — is that likely to change soon?
Public staff pensions are heading for €3bn annually and are still linked to current salaries; apart from bankers, who many in the private sector could have such pensions?
Even after the pension levy, the annual funding cost for most staff is over 20%; Brian Lenihan said in 2009 that the post levy funding cost for a new entrant was 19%.
5. The ESRI said in 2009 that between March 2003 and October 2006 the public sector pay premium increased from 14 to 26% for comparable jobs.
CSO date shows the contrast in weekly pay at electric and gas utilities with the rest of the workforce; ditto for clerical staff.
6. Security, pay and pension benefits and contrast that with firms that will close this week (that you are unlikely to hear of) with some workers never again working and just receiving statutory redundancy.
Even in the nationalised Anglo, there are still 1,100 workers and their trade union leader is seeking a meeting with the MoF.
7. I think it’s fair to contrast the resistance to change and the protected status with the broken lives of tens of thousands with no prospects of work.
The same contrast also can be made with protected private sector professions.
@ Shay Begorrah
Maybe you should have a good look in the mirror yourself.
Rather than waste time with an ignorant rant and whataboutery, dispute facts if you can.
13 replies on “Ken Rogoff on Indexed Debt”
“It is going to take many years of determined effort and huge reform to close the gaping window of vulnerability out of which the US and Europe now find themselves staring.”
There won’t be ‘huge’ reform in Europe and it’s also unlikely in the US.
Soaring health and pension costs as populations age, will maintain pressure on public finances.
Spain, France and Ireland are countries where there are two-tier labour markets where insiders enjoy guaranteed privileges and others are either temps or have few benefits by comparison.
The beneficiaries will fight any change tooth and nail.
We have no problem oozing with outrage when the source of perceived unfairness is Europe but why should tens of thousands of workers with earnings and pension rights much superior to counterparts in the private sector, be guaranteed job security when up to 270,000 forced job losses occurred in the private sector since 2007?
There are valid arguments about austerity but it appears some of the critics appear to be using it as an excuse to maintain the status quo.
There is no big constituency for change in Ireland and putting in place modernisation can be more important in the short-term than big cuts.
Almost 11 years ago, the first benchmarking report was published with a recommendation that 75% of payments should only be made after putting in place verifiable efficiency targets; in Jan 2007, Ahern commissioned a report from the OECD on the public service and the story goes on.
The news that Dublin law firms are still among Europe elite, is part of the same coin as the conservatives of Left and Right sustain each other in resisting change.
No country owes any other a living and the world is undergoing rapid change at present with the re-emergence of Asia.
Standard & Poor’s reported in 2009 that in 2007, the average age of cars registered in EU-15 countries was 8.2 years, up from 5.8 years a decade earlier. This increase was in part because the overall quality of cars — and therefore their life expectancy — keeps improving.
Also in 2007, the German ambassador to Ireland, Christian Pauls, raised hackles when he made some disparaging comments to visiting German businessmen on the host country including citing junior medical consultants’ rejection of €200,000 a year posts on the basis that this sum was ‘Mickey Mouse’ money.
He said that he was at the National Concert Hall when an announcer appealed for the owner of a 1993-registered car to move the vehicle because it was blocking an entrance.
‘Of course no one moved,’ said Pauls. ‘All the Irish are driving 2006 and 2007 cars. For all I know the car is still there.’
I don’t know if in Ireland today, an 8.2 year old car would be called a banger.
Change is in progress but could we say today that we are the ‘Young Europeans’ or stuck in the past?
I got excited when I read:
“At the core of contemporary financial crises, however, are financial systems that remain primitive to classroom constructs of perfect markets”
But dissapointed with the proposal to tackle this:
“More sophisticated instruments indexed to measures of economic performance…strong independent councils to monitor government data claims”
Never mind the incentives facing actors in the casino world of financial capitalism or inserting the reality of warm blooded animals into our hypothetical models of money markets.
On a side note: @ Michael Hennigan
How did you jump from the content of this article to those damn selfish and inefficient insiders in the public sector?
@ Aidan R
I agree with your remark there “Never mind the incentives facing actors in the casino world of financial capitalism or inserting the reality of warm blooded animals into our hypothetical models of money markets.”
Its the typical approach to solving the debt crisis, that its to be solved by Main St, not Wall Street.
There is a tsunami of debt thanks to Greenspan lurking everywhere and a threat to economic growth elsewhere. It won’t be solved by cutting jobs and raising taxes.
here’s a rather dated ’09 article, on Harvard economic theory http://www.businessweek.com/bschools/content/oct2009/bs2009105_376904.htm
Its been said Harvard is run by Wall St. So we’re unlikely to get Rogoff suggesting global Basil 111 reforms that force the monetization of debt onto public exchanges that monitor and police derivatives.
Until we get g20 reforms that deal with the fiat money problem of infinity money financing global infinity debt, we’re left with the narrow minded views of the debt sheriffs telling us the answer is to cut jobs, salaries, raise taxes, to pay for unregulated global casino debt gambling profits of the banks bonafida incentivised to exploit our gullible ignorance as to who is responsible for the mess and exactly who is exploiting who.
“future scholars will see our tax systems as Byzantine labyrinths funnelling money to powerful interests, creating staggering inefficiencies. They will surely be incredulous to see pensions and health insurance financed via Ponzi schemes as transparently unsustainable as the 1700s South Sea bubble.”
And the Squid will have the same reputation as the Medici.
@ Aidan R
I didn’t say selfish; you are rational and using collective power in a system of weak governance and limited accountability.
The truth of course can be bitter and it’s often also observed that a sense of entitlement can become common even though it’s misplaced. That can also be observed elsewhere.
I have some family members in the public service and they tend to see themselves as victims.
@Michael Hennigan
I didn’t say selfish; you are rational and using collective power in a system of weak governance and limited accountability.
That seems a lot like projection Mr Hennigan. Most would argue that “you” using collective power are clearly capital, the banks and their agents.
The truth of course can be bitter
The truth is a lot less bitter than the apostles of austerity.
The animus towards the public sector from most of the prophets of profit is so overwhelming that it prevents them from confronting the obvious and ongoing source of Ireland’s catastrophically bad situation – the socialization of private debts and the prioritization of the needs of the current configuration of the European financial system over the needs of a just and functioning society.
This overwhelming, irrational prejudice and rage is present in many a frustrated capitalist, all too willing to blame the failures of the current system on everything else other than its inherent contradictions and inefficiencies. Each thwarted entrepreneur blames the failures of capitalism to reward them sufficiently for their ambition on everything else other than the current flavour of capitalism and their own ambition.
@all
7_of_Nine puts it succinctly: Tax Kapital!
@ Michael Hennigan
What empirical data are these observations of the public sector having a sense of ‘entitlement’ based on?
I see lazy insiders and inefficient practices in large firms across the private sector on a regular basis. In fact, every job I have ever worked in since I was 15 contain such practices; retail, construction, industry and education.
Would it be a fair conclusion that the private sector is one big inefficient mess?
It seems to me that the only ‘misplaced sense of entitlement’ that exists in the Irish economy occurs in the boardrooms of the IFSC and other financial institutions across the globe.
It is these elites in money markets that “enjoy guaranteed privileges” and “will fight tooth and nail to avoid change”. The difference is, they have the money, power and lobbying power to ensure the status quo remains the same.
@ Philip,
Ken Rogoff sounds to me like a very common sense kind of a guy who has the ability to see the reality of a situation, as opposed to operating to some kind of theoretical model, which bears little resemblance to the same. Can I break this down into very simple terms for you, in the form of an experiment which you can easily carry out on your own. Having entered back into participation in education recently, I found myself part of a group of four students who were all asked to worked together and complete a 10 week assignment. This is risky territory I think you will agree.
Towards the end of the same project, I suggested to those in responsibility, that their grading system for group projects was inadequate. Needless to say, such observations are rarely greeted with approval when they come from the student population. But my point was fairly simple. The 10 week assignment was based upon a series of lectures and notes delivered by the staff in 5 subjects. It appeared to me that only two in my group (including myself) turned up to the same lectures and even possessed a set of notes. My point was, those who did not turn up to lectures, had less to contribute to the group. They were of less value to the group. I suggested a series of steps, whereby if someone broke a threshold of 80% attendance, one would qualify for 100% of marks available to the group for that subject. And over 60% attendance, you would get 75% of the marks. Over 40% attendance and you would qualify for 50%, or half marks that the group earned, and below 40% you would not qualify for any marks at all.
What I was suggesting, was that in marking the group, the professors would create a spreasheet which contained a percentage attendance for each student for each subject, that would in turn generate a weighting factor which was applied to the overall group mark. Now all of this may seem a bit pedantic, and in many groups, no doubt, the weighting factor applied mark would not be radically different from the actual group mark they were entitled to. So I said okay, if the deviation was outside a certain range, says 10%, then a certain overall penalty would apply. If the deviation between the weighting factor applied mark and the actual mark was 20%, then a more severe penalty would apply, and so on.
Here is the most important point about my suggested scheme, so here is where some of my lecturer staff in college got lost. The ideal scenario under my scheme is where the individual students are not penalises at all. Because their weighting factor applied mark and their actual mark would never show a large enough deviation to justify changing their group mark. The goal of my marking scheme was to publish all of the above at the top of the brief for the group project, and do a lecture on the same, before the group project started to explain it to the students. Then, by my own theory of human behaviour at least, the knowledge of what could happen to their marks would be sufficient to modify the behaviour of the students in the groups enough that no problems arose, where one fellow had no set attendance and no set of lecture notes, but could still lie back and take it easy and allow the stronger members of the group to make up for his or her lack of effort.
What I was saying to the lecturing staff in my college, was that their failure to make their marking scheme for the group project, so un-sophisticated, had in fact created a giant incentive to the more devious student group members, to game the system. Of course, that is exactly what happened. I found myself in a group where I found myself pulling the sled on my own for three quarters of the project. Having done so, I found myself out of energy, and the last quarter of the project I was late handing up. But lo and behold, guess which quarter of the group project the other members concentrated their focus on? You’ve guessed it, the last quarter of the project. Worse, they were so viciously devious that they handed up the last quarter of the group project with only their three names on it, and I had to hand up my half-finished piece with only my name on it, which automatically dis-qualified me for that seven days worth of work I had completed. The theoretical model for group projects does not suggest that individual will optimize for this much self-interest, but in real life, they actually do.
My basic point is this. When dealing with groups, and group dynamics, and group incentives, you can run some of these experiments using real actual agents or lab rats for want of a better term, and observe how they behave. It is easy to generate a nice pictorial gantt chart for the teams and how they allocate their resources and efforts, when working under one scoring system or another. A clever department of economics in the world somewhere could create quite a nice study out of this and publish it properly, unlike my brief rant aove. All the best. BOH.
@ All,
Clarification: In the above, the idea was to see if a different mark could be found for each individual, based on their contribution to the group, which was weighted by attendance. It does not mean, that each group would have the mark pulled down by lack of attendance by certain members. Only that the mark for that individual would be modified if it ran outside a certain threshold. I was re-reading the above, and I don’t know if I made that as clear as I could. Anyhow, the keener amongst you, may get where I am coming from, without my having to write a whole thesis to explain. The idea was to display the fact to the individuals before the project, the scoring system was sophisticated enough to pick them out, if their behaviour was less than scratch, and that they could not find shelter under the group umbrella. My personal observation was alarming, in how many did actually opt to use the group umbrellas as a shield, and therefore an advantage. BOH.
@ All,
Update: I have been thinking about ways to apply the above model, to see how it might assist us to look at individual EU member states. Maybe someone with access to the figures could have a go at inputting this model and seeing if it reveals anything useful. The point I want to make is that you expose the inner workings of this model, to the market place and allow it to ‘learn’ how to work with it. That is, rather than the strategy used by the European Central Bank at the moment, which doesn’t appear to be working, where they expose so little information to the market, and allow it to guess, and guess very poorly.
We will pretend that the ‘group score’ is the German bond yield, the yardstick by which we are all measured at the moment. Pretend the individual ‘students’ are the EU member states. Instead of ten weeks, imagine ten years. Instead of five ‘subjects’, we will use five different types of borrowing instead. That is, public, bank, corporate, mortgage and personal borrowing. Now, to calculate an analogue for ‘attendance’ of the students in their subject classes, which equates to their ability to contribute to the group effort, and therefore the ‘group mark or score’. For each of the six subjects above, for each year of the ten years, identify if the economy grew fast enough to support the level of each five types of borrowing for that particular year. Say, if the gap between economic growth and the type of borrowing was too wide, then that goes down as 10% absenteeism. Like in my student group model above, if the attendance rate drops below 80% you are penalised across to a series of thresholds. Below 40% attendance and you get zero marks or score for that subject. For instance, if the co-relation between economic growth and personal borrowing was so poor over ten years for that EU member state, then they would get zero share (the German yield for that type of borrowing). The interest charged should be of a penal nature. Obviously that EU member state does not know how to manage itself on the level in the economy that is to do with personal debt. That is, the lending institutions are not responsible for their actions.
So that is how a weighting factor could be derived, using five measures based on types of borrowing. We can apply the weighting factor derived to the German bond yield figure as of today. Where the difference between the two breaks a certain threshold, a penalty is applied. This gives you the fair and reasonable bond yield figure for the individual EU member state. You can check out how much of a premium the market is charging at the moment over the German bond yield. Now, if the difference between our theoretically ‘fair’ premium and the market applied premium for risk is very different – that is probably where the Troica of the IMF, ECB and EU should step in. What I mean is, once the market has time to absorb the knowledge the Troica will intervene immediately according to the mechanism I describe above, then it will influence how the market behaves. What I mean is, the market will learn there is no longer an profit to be made from charging excessive premiums over the best bond yield for peripheral nations. The other thing, hopeful the market could learn, is that there is no good in loaning too much to the same peripheral EU member states. BOH.
@ Aidan R
1. I didn’t say anything about lazy people.
2. In last December’s Budget, the MoF set out plans for a two tier workforce within the public service where new entrants will be paid less for doing the same work as existing staff and with a less generous pension. It was an acknowledgement that the existing system is unsustainable
3. Is there guaranteed job security?
4. The majority of private sector workers have no occupational pension; for those who do, most funds are in the red; real annual fund returns over 10 years in the red — is that likely to change soon?
Public staff pensions are heading for €3bn annually and are still linked to current salaries; apart from bankers, who many in the private sector could have such pensions?
Even after the pension levy, the annual funding cost for most staff is over 20%; Brian Lenihan said in 2009 that the post levy funding cost for a new entrant was 19%.
5. The ESRI said in 2009 that between March 2003 and October 2006 the public sector pay premium increased from 14 to 26% for comparable jobs.
http://bit.ly/gtfAef
CSO date shows the contrast in weekly pay at electric and gas utilities with the rest of the workforce; ditto for clerical staff.
6. Security, pay and pension benefits and contrast that with firms that will close this week (that you are unlikely to hear of) with some workers never again working and just receiving statutory redundancy.
Even in the nationalised Anglo, there are still 1,100 workers and their trade union leader is seeking a meeting with the MoF.
7. I think it’s fair to contrast the resistance to change and the protected status with the broken lives of tens of thousands with no prospects of work.
The same contrast also can be made with protected private sector professions.
@ Shay Begorrah
Maybe you should have a good look in the mirror yourself.
Rather than waste time with an ignorant rant and whataboutery, dispute facts if you can.