Sunday Night Open Thread

This is a bit of an experiment following on from discussions with various commenters about open threads. There’s no set topic, discuss what you think is important for the Irish economy, I’ll close the thread tomorrow evening.

But, to make it more interesting, why don’t we agree to put in a link in each comment for further reading, with a blurb for why others should read this particular piece? I find link roundups very useful. It’s got to be one (roughly) Irish economics-themed link per post though, or the software will just think it’s spam and queue it for me to look at.

I’ll start.

NamaWineLake gets right into details about the repayment of our bondholders. The sheer detail involved in constructing this post merits a careful reading.

Comments open, no particular theme, share (and discuss) links you like. Let’s see how this goes.

Oh, and ZOMBIE MARX! Because, well, just because.

Author: Stephen Kinsella

Senior Lecturer in Economics at the University of Limerick.

65 thoughts on “Sunday Night Open Thread”

  1. “We should also mention that the feeling of rage against politicians and the police is really growing. Except for the widespread clashes, this rage is also reflected in the verbal condemnations that one can catch here and there: “we should burn the parliament”, “we should hang them high”, “we should take up arms”, “we should visit the MP’s homes” etc. It’s remarkable that most of these declarations come from elder people. “

  2. I’m working on a book chapter on default at the moment. Here’s what I’ve been reading tonight: http://www.nber.org/chapters/c8987.pdf

    It’s worth a read because it describes the phenomenon of debt default in a long run content, and puts the repayment experience of the creditor countries front and centre, as well as the reputational ramifications for the sovereign.

  3. Possibly in line with Namawinelake’s excellent post linked to in the post, this article by Nobel laureate Michael Spence http://www.project-syndicate.org/commentary/spence25/English is well worth a read.

    Following up on Spence, Leonharte in todays NYT is worth a look http://www.nytimes.com/2011/07/17/sunday-review/17economic.html?_r=1&pagewanted=all?src=tptw

    So, is everyone getting too bearish? I know the politics spun the rapid recovery for the US, but did people really believe it would be possible.

    I suppose, at least we here in Ireland have never believed the recovery would be rapid…

  4. @A Punter
    Wow that blog had some colourful conversations – don’t f£$K with the Greeks comes to mind.
    The basic problem as I see it is the dollar reserve system – when the FED/ treasuary increased its base without saving it gave America a reserve asset but banks took those dollars and looked for yield elsewhere – driving up the yields on Euro sovergin debt amongest other things outside America.
    Because the ECB did not increase its base in a year or so we can no longer service these debts.
    The present monetory system is not fit for purpose.
    Here’s a good explanation of the dollar problem from a year and a half ago and the solution which I am sure the ECB are aware of.
    fofoa.blogspot.com/2010/02/greece-is-word.html
    Lorcan RK may not like it but we need settlement of debts before we can move on – National money systems are fine for nations but not for international trade.

  5. Ireland Greecified

    “In the meantime, Moody’s also moved to further downgrade the debt of Ireland’s banks, which is guaranteed by the Irish government. It was a reminder that in spite of the decision to bail out these banks and their bondholders, said bondholders have no reason to feel secure in their position. As we have frequently noted, bailing out the banks has been a costly mistake for Ireland. Many people in Ireland are well aware of this and opposition to the decision continues to fester. The connection between the government’s finances and the financial situation of the banks, which initially was only presumed to exist by the Fianna Fail government, has in the meantime been cemented by the conditions attached to the government’s bailout by the EFSF. The ECB insisted that the ‘no bank bondholder left behind’ program be made permanent, as it feared for the solvency of banks across the euro area should bondholders be forced to take a large haircut on their exposure to Ireland’s banks (recoveries would likely have been minimal). European banks have indirectly financed the Irish property bubble by extending finance to Ireland’s banks and all across Europe, the exposure to debt of Irish provenance remains vast.”

    http://www.acting-man.com/?p=8950

  6. It would be really interesting to see a post on debt stock versus flow…in many conversations with bond people ove the years, their first utterance is “separate the stock from the flow” because while the flow normally sets the turning point in bond prices, the stock is important for fundamentals.

    Ireland has both. Stock and a flow problem and while the EU is helping us with the flow part, the price for us is that we recognize and honour our longer term obligation to the stock of debt that has built up. The conclusion seems to be tht if Ireland wants to control it’s longer term destiny it needs to find alternative sources to deal with the necessary flow (public sector deficit, repayments) and then it can negotiate the stock from a position of strength.

    What do posters here believe is the best way forward? Go with the current trend? And if not, what are the options to deal with the flow first and then how aggressive can we be in reducing the stock of debt?

  7. And in the optimistic hope that this will trigger a discussion….the stock appears to be About €107bn and public sector deficit is €17bn, excluding Nama debt…..if you want you can use €the stock of €225bn (+/- 10%) and a fiscal deficit of €5bn per annum

  8. Follow up o that earlier post on Eamon Gilmore..
    “Eamon Gilmore, Ireland’s deputy prime minister, said issuing eurobonds was “one of a series of options that have to be looked at” and “an option I favour”.
    Mr Gilmore said the stronger European countries had to see the crisis as a “eurozone problem rather than an issue for individual countries”.
    http://www.telegraph.co.uk/finance/financialcrisis/8643740/Markets-braced-for-falls-as-EU-argues-over-Greek-bailout.html

  9. The most interesting article in this week’s Sindo is Siptu’s Jack O’Connor’s rational rebuttal of Shane Ross’ call for unilateral default.

    Shane Ross likely agrees with all the arguments made.

    What the country doesn’t need is a renewal of the Eircom Ross-Dunphy double act where the protagonists lambast an inept government for acting on their advice.

  10. All of the FT is worth reading today: everything from easy stress tests to markets teetering on the edge because of what’s going on in the USA (with a bit of Greece having to leave the Euro thrown in for good measure). I may seriously have to pay for a copy this morning so that I can read it at my leisure.

    http://www.ft.com/home/europe

    Lots of doom and gloom for those who want it. We should of course, look for the positives in all of this 😉

    I think I’m going to sell Belgium and Spain this week. That will hopefully pay for my winter holiday… I sure as hell ain’t going to get a summer one this year.

  11. @PR guy, If you would like something positive google South Koreas strong economic response since having the IMF in in ’97. Also see Icelands current response.

  12. Standard and Poors on the Bank stress tests.
    “We consider that the European Banking Authority has pitched its stress scenarios at a level that attempts to be sufficiently tough to reassure markets, but not so stringent as to suggest material capital shortfalls. We consider that a moderately harsher scenario would add greater value in terms of assessing the resilience of the European banking sector.”
    and Professor Hans-Peter Burghof, chair of the Banking and Finance Department at the University of Hohenheim.
    “The stress test is a pretty blunt instrument. And what’s more, the test was designed with certain political motives. Of course a Greek default is not part of the scenarios, because that would expose certain banks holding lots of Greek debt.”

  13. While on the subject of the uselessness of Dublin 4 population and migration forecasters, the Ulster GAA finals took place yesterday. Remember how, when the phoney ESRI-inspired emigration hysteria was at its peak, there were numerous media claims about how the GAA in counties like Donegal and Cavan was being denuded of its youth. In fact, there were one or two threads opened on this site about it. Well, yesterday Donegal won the Ulster senior title, Cavan won the Ulster minor title, and earlier this year Cavan won the Ulster under-21 title. The first time that I can remember that all 3 Ulster titles went to ‘southern’ teams, ), and from from counties that were supposed to be experiencing a mass exodus (I use the term ‘southern’ in its Dublin 4 sense, of course, since only a nut thinks that Donegal is ‘south’ of Tyrone).

    The explanation for this surprising sporting development? Well, it might be related to the fact that between census 2006 and census 2011, the population of Cavan increased by 13.9 per cent, and the population of Donegal increased by 9.3 per cent. Some exodus! In contrast, the population of the six counties ‘north’ of the border rose by only 4 per cent in that time. So, you can get a better picture of population trends in rural Ireland by studying the GAA results, than by paying any attention to what ESRI or Joan ‘500k’ Burton say. Not great news for Tyrone, of course, if our rival counties’ populations are increasing at 3 times our rate. Cavan, in particular, could well be on the way back to former glories with that rate of population increase, and this year’s results might be the first sign of it.

  14. No expert here but to my mind there are many more important events in the past few weeks than census results.

    Events bringing the country to a point where one of the increased number the census shows may soon have the job of turning the light out as the country closes!.

    In his ramblings on the increased numbers, does the writer look to see where the increase has come from, it’s not all from the indigenous people and with respect only a fool would take GAA results as a measure of the state of a country, even in Ireland where interest in GAA is akin to a cult.

    The past and present government and it’s daily action in kowtowing to Europe whilst the country and it’s people sink below the surface of financial survival is surely of greater importance ?.

    Reading comments on the countries leading economists ‘utter mind-boggling uselessness and corruption of the Dublin 4 political/media/academia establishment’ I have to ask what planet is Tyrone on these days ?

    Without the constant and informed comment, backed by hard fact, delivered objectively by the group he rails against, the people of Ireland would still be little more than ‘humble peasants’ dependent on buying the crap doled out by Ireland’s number one political party Fianna Gael Labour Fail.

    Politicians wearing the same political shirt, intent on sweetening the electorate with their photo opportunity interest in GAA and kissing babies but rarely presenting facts, truth or respect whilst they implement Europe’s dirty work and preserve self interest and pensions.

    For the population in general, far beyond the border of Dublin 4, the economists & academics have been the most valid source of information, at times the only reliable source of information, in a country fed a diet of rubbish by politicians and traditional media alike.

    Far from berating them – Bravo to them for bringing truth to the electorate,
    I and many others know the best source of valid information is from their constant monitoring and reporting and not a 10 yearly snapshot produced by State bureaucrats.

    So well done to the lads in Dublin 4 or wherever else they choose to be – keep on doing the great job of informing the people of Ireland.
    .

  15. @ JTO

    It would appear that your take on migration, immigration and emigration was superior to that of the many “experts” from state organs, academia and Dublin 4. ( For the record I don’t qualify under any of these headings).

    I seem to have noticed this being acknowledged a number of times on this site. So that’s OK too!

    I support and share your disdain for “emigration hysteria” and those peddling it. And I don’t think you’re alone there either.

    Now, to substantive, future issues on the basis that you couldn’t possibly be suggesting that that the “real”, “positive” census numbers are, or will be, the solution to our financial, indebtedness, enterprise strategy or unemployment challenges, here’s a question.

    In a small, open economy heavily dependent for growth on exports ( from MNCs and the indigenous sectors), where even those employed in Ireland need to be up to speed on global trends, best practices and rapidly changing customer ( “industrial” or consumer) behaviour, are you in favour of Irish people of all ages and competencies spending some of their educational and working careers in the markets on which our future is so dependent?

    Or should “we” all stay “at home” for all our formative and working lives?

  16. @Stephen Kinsella
    @JTO

    Sorry, I meant to illustrate the fast-changing demands of the global employment market ( only some of which can be learned by “staying at home” by the following ( further reading) from: “The start-up of You” by Tom Friedman in his piece in the New York Times. http://www.nytimes.com/2011/07/13opinion/13friedman.html

    In case the link doesn’t work, he talks about employees being evaluated every quarter, ( not yearly). Employment being the response to the question ” Can this person add value every hour, every day – more than a worker in india, a robot or a computer…so my company can adapt and export more to the fastest-growing global markets?”

    MNCs, the life-blood of the bulk of our exports, (and therefore our growth) increasingly will recruit only adaptable, resilient people who have been educated and gained work experience other than “at home”.

  17. @Richard Fedigan

    I am in total agreement with you on this issue. I am not against emigration or immigration. I have never said that I was. People come and go all the time. That is a good thing. I myself have come and gone, and gone and come many times, and have lived in several different countries.

    The real issue is NET emigration and population growth. Large NET emigration and population decline are bad. If the flow is 2-way, and the NET figure is positive, and the population is growing, then, if within that there is some outflow of people seeking to expand their horizons and learn new skills, possibly with a view to returning at a later date, then I see nothing at all wrong with that. But, if the flow is largely and permanently outward, and the NET migration flow is largely and permanently negative, and the population is continually falling, then that is unreservedly a bad thing. The complaint against the media and ESRI is that they led us to believe that that was happening again on a large scale, but the census figures showed that it wasn’t. Ireland did have that for over a century after the famine, until the 1960s. The population decline continued in the north and west until the 1990s, even after it had been reversed in the south and east. But, in the last couple of decades, even the north and west have seen it reversed and the population growing rapidly.

    These are the figures from the latest 2011 census:

    Donegal: population up 9.3 per cent in 5 years
    Cavan: population up 13.9 per cent in 5 years
    Leitrim: population up 9.8 per cent in 5 years
    Sligo: population up 7.2 per cent in 5 years
    Longford: population up 9.3 per cent in 5 years

    Dublin: population up 7.0 per cent in 5 years

    Who would have believed a few years ago that the populations of Donegal, Cavan, Leitrim, Sligo and Longford, would all grow faster than Dublin, which itself was growing much faster than virtually every other EU city? These figures are a vindication of FF’s core values. They haven’t occurred across the border in Derry, Tyrone and Fermanagh (hence my slightly joking reference to the Ulster GAA results above). Over the years, the core FF value has been primarily about reversing the century-old decline in rural Ireland, while the Dublin 4 establishment mocked it for this, and jeered at every measure FF brought in to bring that reversal about; measures such as Shannon airport, Knock airport, good roads to the north and west, decentralisation, and so on. That is why, election after election, until the most recent one, people in these areas, to the consternation of the Dublin 4 establishment, continued to vote FF. But, the most recent census figures are a vindication of FF in that regard.

    Irish media treatment of the subject is infantile. They can’t be bothered to study the wealth of population and migration indicators that are published regularly. Their modus operandi is to send a reporter to a pub in London, interview some nice-looking girls from Galway, and, on the basis of that, write rubbish about Ireland experiencing a mass exodus. According to the last (2006) census, there are almost 2,000 Swedes living in Ireland, mostly in Dublin. I’m sure that, if I was an Irish Times reporter, I could while away a very pleasant few hours chatting to some nice-looking Swedish blondes in a Dublin pub, and then writing a load of rubbish about a Swedish exodus to Ireland. Plodding through the population and migration indicators is a lot more boring, but it leads to more accurate predictions.

  18. Ooops, I made a typo in my last post. The population increase for Longford between the previous (2006) census and the most recent (2011) census was 13.3 per cent, and not the 9.3 per cent I typed. Apologies to Longford. If this continues, they may eventually reverse the result of Saturday week last. However, as far as this debate is concerned, the correction actually adds to my agument.

  19. Joan Burton is reported to have said that social welfare abuse stood at between 1% and 3%. With a social welfare spend of €20bn that means that between €200m and €600m is being wasted.

    If I am not mistaken, Labour and FG both said before the last election that they were going to save circa €1bn to €2bn from cleaning up welfare fraud. Has this figure decreased and how does this affect their policies?

  20. http://outside-of-the-walls.blogspot.com/2011/07/paying-piper-enduring-tune.html

    Leaving aside the economic implications of the ECB policy of preserving bondholders investments -there is also a problem of governance in this issue.

    The key decisionmaker at the beginning of the crisis was the ECB which ordered Member States to protect bondholders and preserve all of the banks. However the bill for this decision was left at the Member State’s door.

    Whether or not you agree that this power should be held centrally and taken in the Eurozone’s interest without reference to the wellbeing of Member States -it is not good practice for the decision to be taken by one body and the bill sent to another. If the decision was taken to protect all Eurozone Member States, then all Member States must be involved in paying for this protection. If the bill is to be sent to individual Member States, then we must allow them to make the decision themselves.

    However, we have a situation where a decision is taken with the interests of the Eurozone as its aim and the Bill is sent to a handful of Member States -in Ireland’s case, one of the smallest Member States. Even if the economics of this was right, the politics is back-to-front and needs to be addressed.

  21. @ Ger

    The crisis began in Aug 2007; In 2008, there was an agreement that ‘systemic banks’ be supported.

    Even at that stage, there was no clear ECB policy on protectin of senior bank holders.

    The problem for Irish banks was that other banks would not lend to them on the wholsale funding market. The ECb became their funder and as Trichet often points out, the central bank is accountable to over 300m citizens.

    There is often little if any principle in these cases; for example if Ireland had been run like the Netherlands or Austria, you would likely be making the opposite argument.

  22. @ JTO

    OK. Great to be in agreement. And, once again ( all together now), you were RIGHT. We believe you. More stats will only make you more RIGHT. ( RIGHTER?). Bravo!

    So, if, as somebody, maybe even Stephen Kinsella ( and others), also seem to agree, net employment increase is a consequence/function of aggregate demand, we won’t get a solution to “our” serious unemployment problems in the West (Spain, France, the US included) until aggregate demand takes off in the West OR the West exports significantly more to where the aggregate demand is growing (in the BRICs) OR we get more people (as Tom Friedman says) with completely new mind and skill sets using experience learned away from “home” and through global information and intelligence networks identifying new opportunities wherever they are and starting businesses wherever it makes most sense employing the people it makes most sense to employ for as long as it makes sense to employ them ( but not longer!).

    In an Irish context, and in line with what you and others say about Irish government and media spin, could it be “valid” to generate, as a tentative working conclusion of “economics” debate on this site, the recommendation that we need ( as I believe Tony Owens has suggested on another thread) a working strategy that incorporates incentives for Irish educational institutions to get bright students to LEAVE Ireland, incentives for grant-receiving SMEs to recruit people with “export” market experience or send them abroad to get it and a framework for “tracking” and networking these people wherever they are?

    This “conclusion” is really very simple ( execution more complex) but it addresses directly the “spin” industry by simply and categorically “concluding” that we don’t have enough people who know enough about the world we depend on for our survival and potentially ends all further debate about “emigration”.

    Whaddya tink?

  23. “Second, no country can be expected to generate huge primary surpluses for long periods for the benefit of foreign creditors. Meeting debt burdens at rates currently charged by the official sector for credit – let alone the private sector – would involve burdens on Greece, Ireland and Portugal comparable to the reparations burdens Keynes warned about in The Economic Consequences of the Peace.”
    http://blogs.reuters.com/lawrencesummers/2011/07/18/europes-dangerous-new-phase/

  24. @Richard Fedigan

    The most important thing is not that I was right, but that others were wrong. What does it matter if I was right? I am nobody, and I am not taxpayer-funded, and my forecasts are not reported on Bloomberg. Even if I had been wrong, it would have been of no more consequence than some pub bore being wrong. What matters is that others, who occupy high positions, are paid for by the taxpayer, and have their forecasts reported in the world’s financial media, got it wrong. That indicates incompetence. Do we really want more taxpayer funding to those who have shown that they are incompetent? The least that we can expect from them is some acknowledgement and explanation as to why they got it wrong, and some effort from them to undo the damage to confidence in Ireland’s economic prospects, among domestic consumers and global investors, that their erroneous forecasts have contributed to.

    Regarding your points on employment, I don’t disagree with any of them. But, employment comes in many forms. You can be employed writing state-of-the-art GIS software, that is sold in a hundred countries, as I am (although only partly south of the border), or you can be employed selling ice-cream, fixing car engines, or in brick-laying. All are needed. Those at the ‘higher-end’, like myself, that have M.Scs and Ph.Ds. should not disparage those who make their living at more humble occupations. I certainly never have. While I don’t dispute for a moment the need for ‘high-end’ jobs of the type you describe, another obvious source of employment is in the construction industry. This has now been allowed to run down to a level (about 2.5% of GDP) never before seen in a developed country, and the level of new house completions has been allowed to fall to about 6,000 annually, while the census showed that the underlying growth in the number of households is over 40,000 annually. The surplus of houses is falling, and it takes 2 years before any decision to start building more new houses actaully results in more new houses being completed. Revving up the construction industry again would make a very significant dent in unemployment, although I totally agree that export-generated high-end jobs are also needed.

    I have emailed the Taoiseach and enquired as to when he will be commenting on the census results.

  25. Well done, John the Optimist.

    I passed on your comments to some friends; one of whom commented:

    “London recently defeated Fermanagh in the football
    championship but failed to beat any southern counties. Shows that
    emigration may be gaining in London at the expense of Ulster (occupied
    part)”

    Poor wee Ulster (occupied part)! Diminished prospects of sporting success… except for a few mickey mouse golf tournaments!

    But seriously, JTO. Keep up the good work!

  26. On the Bondwatch initiative pioneered by the villagers in Ballyhea in Cork linked to here

    http://www.facebook.com/pages/Bondwatch/136610376421120?sk=wall

    There will be regular messages sent to the IMF hammering home the fact that massive sums relative to our economy continue to be paid because the IMF sits on its hands and confines any criticism of the EU position to press conferences,

    Regular messages will also be sent to our Finnish friend, Olli Rehn so that he understands with each payment to bank bondholders we drift further and further away from the 60% debt:GDP cap that Olli is supposed to police.

    And no doubt politicians of all shades will be reminded of the bond payments every time a cut or tax is mooted.

  27. @JtO

    My apologies if you have addressed this elsewhere but with respect to the recent preliminary Census 2011 results, on what basis can you conclude anything about the annual net migration in each of the five years 2006, 2007, 2008, 2009, 2010 and 2011. All the preliminary census shows is a total net inward migration of 120,000 (Table E – 5 yrs x 24,000) in those five years which might (to exaggerate the point) have been 600k net inward in 2006 – 2009 and 480,000 net outward in 2009 – 2011.

    Don’t get me wrong, the implications for the ESRI are not good either way, because even if the ESRI was right in 2009-2011, they would have been wrong in the earlier years. And ever since the ESRI declined to respond to my questions about the representativeness of their PTSB house price index which seemed to be based on a mortgage company with less than 4% of the market, I myself have not been too enamoured with that organisation.

    But all that said, how can you say that the ESRI overestimated emigration in 2009-2011?

  28. Re “Did the ECB buy Spanish and Italian bonds last week”. That’d be in the negatory.

    *ECB SAYS IT DIDN’T SETTLE ANY BOND PURCHASES LAST WEEK

  29. Reliance on the Census 2011 figures is troubling to me because it implies that if we took a snapshot of 2008 property prices and saw they were above 2003 ones then Ireland was doing well, when in fact it had passed the inflection point. I’m more interested in what the CSO could reasonably do to improve their intercensal estimates.

  30. @ Grumpy

    …if the ECB was actually able to get a 10-day settlement line with the banks! 😉

  31. @Jagdip

    wrt what looks like conflation of statistics from the census, we have been here before. I got no response to the queries below – so it looks as though a fundamental point is not worthy of consideration. Maybe you will get a reply that assists in understanding properly his conclusions.

    http://www.irisheconomy.ie/index.php/2011/07/04/namas-mortgage-enhancement-scheme/#comment-155439

    http://www.irisheconomy.ie/index.php/2011/07/04/namas-mortgage-enhancement-scheme/#comment-155452

  32. Oh, and ZOMBIE MARX! Because, well, just because.

    I think there’s more reason to it than that.

    If the Soviet Union was still extant, their propagandists would have eaten the western world alive over the fall out from this entire financial farce. But more importantly, their economists and theorists would have released countless papers, books, and other volumes explaining in detail why and how the crisis happened and probably how to fix it. The western economic establishment has yet to do this.

    It seems to me that western society, at an economic level, is just as ideologically warped and restricted as the old Soviet Union was. Witness multiple developed nations (even the US) running up massive debts in the middle of a credit crunch, at yet none will raise their taxes. Witness an destabilised international banking and currency system cracking at the seams, yet no-one speaks seriously of regulations or reform. Witness a balance of trade imbalance unprecedented in history, yet none see value in adding value to goods domestically. Nothing short of a pervasive dogma or ideology can explain this continued and debilitating management of western economies.

    Meanwhile, the Chinese for one actually manage their economy, at the state level no less. You may disagree with their methodology of course, but you cannot argue with the results; the manifest hand of the state delivering demonstrably better results than the invisible hand of the market.

    Which isn’t to say that we should follow the Chinese model entirely. But equally I see no reason why we should so blindly follow the Market model either.

    People seem to believe that Marx’s works became entirely discredited after the Soviet Union collapsed; that his was a failed ideology. But Marx was an economist who wrote long before the USSR even existed, and he was writing about capitalism and its own “internal contradictions” which bring about its crises and collapses. It seems to me that these ideas are as relevant today–perhaps more so–than when they were originally written.

    I think economists across the world need to swallow their pride, buy a copy of Das Kapital, and read it. Otherwise we’re all going to be fumbling around blindly for another three years.

  33. OK, a touch of option premium re-pricing today.

    Financials might be termed a soft market;-) Always a good laugh those bank thingys like the one published on Friday.

    Talk of Punt printing: http://www.independent.ie/opinion/columnists/shane-ross/shane-ross-false-confidence-will-be-fatal-2823645.html

    Quite a contrast if I may say so, to the intense discussion and debate of last year. Remarkable really!

    Usually there is cover when people go on holiday – it can’t be that everyone’s with the TDs on a beach with no internet access.

    Maybe nobody can think of anything new to observe – it is all old news recycled – just further “down the road”.

    Maybe everyone is now conditioned to expect the Germans and the Republicans to fold. The political “put”?

    Anyway I suggest it’s one for Liam D’s psychology discussions.

  34. @ OMF

    Marx’s mate Friedrich Engels was familiar with work in the cotton trade in Germany and the UK.

    The conditions of migrant workers in China today would have a lot in common with what Engels saw.

    Globalisation has been goodbfor it and the EU is its biggest customer.

    The system of state capitalism has a finite shelf life.

  35. @jagdip

    There were 2 levels of error in the ESRI estimates:

    (a) The census figures reported a population 100k greater than the CSO pre-census estimates suggested.

    but

    (b) ESRI had been saying pre-census that the CSO was under-estimating net emigration and over-estimating the population by 100k

    So, the census figures reported a population 200k greater than ESRI were predicting pre-census, although only 100k greater than the CSO were estimating pre-census.

    In summary (and just going from memory, so the figures are approximate):

    Both the CSO and ESRI agreed that there was net immigration of 104k between April 2006 (the last census) and April 2008. From the latest census, this might now be an under-estimate, but pre-census both the CSO and ESRI were agreed that this was the figure for those two years.

    Then, they diverged.

    For the next 3 years from April 2008 to April 2011, the CSO estimated net emigration of 7.8k, 34.5k and approximately 34.5k respectively, giving 77.8k total net emigration in those 3 years, thus bringing the total between April 2006 and April 2011 (the two census dates) to net immigration of 26.2k, and a population of approximately 4,480k.

    ESRI disagreed pre-census and estimated net emigration of 50k, 70k and 60k for the 3 years from April 2008 to April 2011, giving 180k total net emigration in those 3 years, thus bringing the total between April 2006 and April 2011 (the two census dates) to net emigration of 74k, and a population of approximately 4,378k.

    Prior to the census, my posts were limited to highlighting that discrepancy between the CSO and ESRI. In the event, the census showed that the population was actually 100k greater than even the more optimistic CSO figure indicated (not even I expected that), and so was 200k greater than the more pessimistic ESRI figure. And net immigration between April 2006 and April 2011 turned out to be 120k, compared to the CSO’s pre-census net immigration estimate of around 26k and ESRI’s pre-census net immigration estimate of -74k (or, if you prefer, net emigration of 74k).

    I agree with you to some extent. We only know for certain the population figures for 2006 and 2011. Until the CSO revises its population figures for 2007, 2008, 2009 and 2010, we don’t know for certain the migration pattern in those years. But, in relation to the ESRI forecast, they have an extra 200k persons to distribute over the 5-year inter-censal period. I find it hard to believe that there won’t be a good chunk of them allocated to 2009 and 2010. If there aren’t, then both the CSO and ESRI would have under-estimated net immigration by about 100k in each of 2006-07 and 2007-08, which seems incredibly unlikely, as that would bring total net immigration between April 2006 and April 2008 to over 300k.

  36. @DOCM
    From that article…
    “While an interest-rate cut would save the Irish taxpayer relatively little each year, it would still be regarded as a symbolic victory for the Government. A longer repayment date would be more significant as it would allow Ireland to ‘park’ the repayment of the bailout loans while we attempt to return to borrowing on the international money market next year.”

    so we can go back to the market next year while we park a truckload of debt!!!
    Utter nonsense.

  37. We talk about defaulting on bank bonds as if it is all or nothing. Usually the default is partial and is related to the indebtedness of the entity involved. It was and is now ever more obvious that Ireland should not have back stopped the banks. We turned a bank debt problem into a sovereign debt problem thereby violating the first principle of governing which to remain solvent.

    I do not see Ireland defaulting on its obligations to the ECB and IMF. Are we now inextricably on the hook to continue supporting the banks. If we are, then sovereign default is inevitable. The payout will be related to the current value of the paper outstanding. That means it will be closer to 1/3 than 100% of face value. How this will be managed depends on the know how and courage of our Gov’t. The short term price of staying in the EuroZone will be higher than exiting the EuroZone. The inability to balance the budget is proving to carry a very high price which gets higher each month.

    How the ECB, IMF and European Commission treat Ireland has changed in that Italy will expect and get equeal treatment and precedents have to be observed.

  38. ‘Regular messages will also be sent to our Finnish friend, Olli Rehn so that he understands with each payment to bank bondholders we drift further and further away from the 60% debt:GDP cap that Olli is supposed to police.’

    This is actually a very good point. Only goes to show how ready the EU elite is to walk over their own rules in opportunistic fashion. Americans at least follow their own rules and will default unless the debt ceiling is increased. The Europeans only fudge the issues beyond recognition.

  39. @JtO

    Thanks for explaining. I see what you mean. Looking at the CSO estimates here,

    http://namawinelake.files.wordpress.com/2010/09/popcsorep.jpg?w=500&h=386

    which include estimates of annual net migration pre 2006, it seems obvious that 300,000 in three years would look very unlikely (the CSO’s previous annual estimated high was 71,800 for 2006) but a series like 50,000 per annum for 2006,7,8 might look okay (especially with the financial shock in the UK in 2007 which might have prompted a spike movement from the UK to Ireland) and then 18,000 net emigration in both 2009, 2010. That would give you 124,000.

    The reason to challenge that is the similarity between the CSO and ESRI in 2006-8. So time perhaps to study the method used to estimate migration.

    I am one of the people that is surprised by net inward migration of 124,000 between 2006-2011. The reason for my surprise is anecdotal and no more, just observation of people moving to the UK, Canada and Australia mainly, and the return of Poles in particular to Poland. And I noticed this especially from mid -2009. But that’s anecdotal.

  40. @OMF>
    “Meanwhile, the Chinese for one actually manage their economy, at the state level no less. You may disagree with their methodology of course, but you cannot argue with the results…”

    Wow. I guess it depends on what you mean by “results”.

  41. Smaghi, member of the board of the European Central Bank, gave a bad speech….

    On 11 July Lorenzo Bini Smaghi, member of the executive board of the European Central Bank, gave a speech about the present state of the economy for ‘The Ruling companies association’ (I don’t make that up, M.K.) in Milan. He’s proud of it, as he put a link on the homepage of the ECB. http://www.ecb.int/press/key/date/2011/html/sp110711.en.pdf?061f56720e9a2d1fd1286e24b3b0b5cc

    Should he be proud? No. Among other things, the ‘profit margins’ metric he uses implicates that profit margins increase when oil prices go up…. Generally, the mistakes he makes have three sources:

    1. Arithmetical impurities
    2. Bad, bad graph reading
    3. Conceptual flaws

    Below, I’ll point this out in more detail.

    http://rwer.wordpress.com/2011/07/18/smaghi-member-of-the-board-of-the-european-central-bank-gave-a-bad-speech/

  42. @JtO

    Re discrepency between forecasts and census figures. Why are you choosing to believe that estimates using the census method are correct, whereas the estimates derived from forecasts (or whatever the pre-census methodology is) were not ? In another thread you alluded to a similar situation happening many years back. So the CSO has form. Presumably whatever deficiencies existed in the pre-census methodology were corrected at the time. Yet this methodology still produces diverging results wrt the census. So maybe the census methodology is wrong.

  43. @ #zombie# marxists

    ‘If we are to engage in these ways with modern economics, what, if anything, makes our analysis distinctively Marxist? It is the two-fold project behind Capital as a critique of political economy: first to demonstrate the social preconditions that lie beneath the concepts of political economy, and especially their dependence on class relationships; and second, to demonstrate these social relations as historical, not eternal.’

  44. Beware anybody who believes that the answers to the problems of the world can be found in a single book. Marxists poring over Das Kapital, Maoists waving the Little Red Book, mullahs demanding fidelity to the Koran – it is never good news – – Gideon Rachman in FT today.

  45. @Stephen Kinsella

    I don’t know if you’ve reached any conclusions from your ( very) short “Open Thread” experiment.

    In the context of my recent challenge about what “economics” and, more particularly, this site, could bring to the “economic future of Ireland” party in terms of synthesis, “conclusions” or working hypotheses on which future policy (ies) might be more realistically based may I offer the following:

    From my experience of running a Davos-like global ( food and cpmg business) thought leadership forum ( a network of CEOs from big and small retailers and suppliers from all 5 continents but calling on interventions and inputs from heads of state and international institutions, leaders of non-food businesses, civil society leaders ( many of them very “contrarian”), academics and even religious, sporting and entertainment business ‘celebrities’) you, the site “managers”, have two choices:

    1.) Go on as you are with “light” management and selection of topics allowing and facilitating what are essentially “open” threads anyway ( given the amount of time and comment spent “off piste” by contributers and commenters!).

    2.) Migration to a “more managed” model with better (sic) topic selection, periodic (“executive”) summaries of comment and possibly even balanced, position statements or “editorial”. (e.g. “the sense of aggregate contribution and comment on http://www.irish economy.ie over the month of July was, on the one hand ( it’s an economics blog!) that the situation is X and what we should do is: 1.), 2.), 3.) and, on the other hand, we are at Y and we need to do a), b), c).

    Option 1.) implies more of the same, with current resources yielding current levels of influence.

    Option.2.) implies MUCH more WORK ( not necessarily resources) yielding potentially vastly more influence.

    I believe that, properly executed, Option 2.) represents a major opportunity to build a provocative (“Irish”) and world class thought leadership platform, with out losing the unique sense of serious “fun” that I, at least, appreciate in the site. ( Is that “Irish”? Who knows? Or cares? Actually, now that you mention it…….)!

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