The Irish Economy
Commentary, information, and intelligent discourse about the Irish economy
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Last November I had a strange conspiracy theory forming in my mind which came back to me a few days ago after I watched an interview with LBS (I am not going to attempt to write the gentleman`s full name name as I am sure I would not do justice to him) of the ECB. I understand the the link was kindly provided by Michael Hennigan on a recent thread.
The interview with LBS contained a curious mix (IMHO) of carrot and stick approach to Ireland. It seemed to me LBS wanted to praise Ireland but not too much in case we eventually decide to leave the Euro currency.
It would not surprise me if certain members of the ECB would like to show that at least one country (Ireland) suceeded on their “programmes”but are also aware that we may not necessarily want to hang around in the currency club as we emerge from this (artificial?) crisis.
To me the interview with LBS had a strange sense of deja-vu which made me recall the various accession states refenda (to join the EU) in 2003.
Essentially the argument in favour of EU membership in most accession states during 2002/2003 went along the lines of “You too can be like Ireland”. Of course the fact that other EU/EEC countries had also received billions in EU funding but had effectively urinated the funding up against the proverbial wall was never mentioned in those referendum campaigns.
The quaint concept of being a mature democracy was also not discussed as having a bearing on Irish success wihin the EU/EEC but was portrayed as somehow being a by-product of membership.
Once all twelve states had joined by January 2007 Ireland started being referred to as a Euro sceptic state from June 2008 onwards through November 2011.
The new narrative seemed to be going along the lines that this Euro sceptic state was “failing” (becuse of itś misbehaviour) until it reached a stage where even relatives of Polish immigrants to Ireland apparently started ringing up enquiring after their well being.
Sometimes I feel we seem to be one of the very few member states which still remain totally committed to the European Project and as a result we have a disproportionate (relative to our population and economy) burden placed on our shoulders.
The only other countries who seem to share this total unconditional commitment are Denmark and Sweden (which have kept out of the EZ and often get branded as Euro sceptics) and to a lesser extent Finland and Norway (which is only a member of the EEA)
Needless to say all IMHO.
Strange day in RTE land – they seem to be preparing the nation for a dramatic rewilding.
Nationwide had a interesting programme about the Luas Green line designed for the 100,000 strong Pale backpacking community (strangely Germanic me thinks)
Then our great leader was out enjoying himself ( I don’t begrudge him his Holidays if he truely accepts this chain of command – he should remain on permanent holiday in my opinion )
But how can economists remain mostly silent during a dramatic period of over & malinvestment and now accept this further misallocation of resourses by not investing in anything ?
The visual landscape perhaps need a 100 years of healing before it can become visually appealing again – is this the strategic timescale for this new leisure based / continental tourism drive ?
I appreciate long term planing and all but what do we do in the meantime ?
I like doing my best Ray Mears impersonation for 2 or 3 weeks in the year but do economists suggest we hunt & cook conies in the sand spits of Dingle bay for most of the year ?, perhaps sell the pelts for some transactional currency …….
I prefer a Ireland where we can afford a few pints but not the German car myself but whats rationality got to do with economics right ?
Lets embrace this great rewilding in the interest of greater European integration.
completely agree with comments about the sceptic countries being the most committed to implementation. That is a documented phenomenon -summed up beautifully by Yes Minister [quote anyone?]
I would also agree that there’s not much incentive for Ireland to remain in the Eurozone after all this has subsided. Right now, we couldn’t launch a currency if we wanted to. But in the future, when we are more in control of events, a cold look at this crisis period will show that the Eurozone is not a well functioning currency, and has an appallingly cavalier approach to some of its smaller members’ balance sheets.
As for conspiracy theories. I wouldn’t necessarily call it a conspiracy. People tend to speak what they are thinking, and their thoughts about ireland have drifted over the years from admiration to embarassment for us.
The second half of 2011 will be the truly interesting part of the programme. The measures to increase competition are well overdue. I only wish this section of the programme was even wider and more prescriptive. We have been inexplicably resistant to even slight competition improvements for years.
RTE Nine o’Clock News Bulletin : One set of news pictures shows the Taoiseach, resplendent in lycra shorts, mounting his bike for a 44km cycle around Clew Bay as his colleague, Michael Ring, assures us this tourism initiative will make Ireland the walking capital of the world or some other such gibberish. The next set reveals the Troika, led by Mr Chopra, outlining the terms of Budget 2012 – 1.1bn in increased taxes and 2bn in social welfare cuts etc. – and the precise contents for a revised four year plan. Am I the only one who finds this juxtaposition of ‘spin’ and ‘power’ quite extraordinary?
Kenny promised there would be no income tax rises or social welfare cuts in December’s budget. Anyone who can tell the Pope to get on his bike is not going to be pushed around by some Chopra guy.
Brian woods II
To paraphrase Stalin..how many billions has the pope (lent us)?
Being a clear objective by Q4 2011, it will be fascinating to see how the Central bank instructs its flock to deal with arrears and forbearance in such a way as to avoid moral hazard. The combination of bank deleveraging will leave the economy bone dry on credit. I’ll have my popcorn and 3D glasses out for that car crash
The Guardian’s take on the Cyprus crisis.
The narrative almost writes itself now, with a government in turmoil, an over-mighty and over-exposed banking sector threatening the sovereign, downgrades, reduction in growth forecasts, increased borrowing costs and of course, the solution being to take on the ‘profligate public sector’.
I was on the lovely Limerick/Cork border last weekend near a long cycling track. I was told by the locals that the problem at the moment is the loss of cheap Ryaniar flights into Cork.
@ Brian Woods II, etc
I sometimes really don’t understand politicians. Enda Kenny informs us that to ease uncertainty in order people can plan ahead, there will be no income tax increases. He doesn’t say the bands won’t be adjusted, this is pointed out at the time and indeed that is what we see coming. Now I’m really uncertain. Why say these things?
There is a simple enough explanation for his choice of words, it is a dog whistle to those already at the top of the pay ladder that their income will not be significantly affected by the taxation regime. If you make 200k pa the widening of the tax bands is of incidental interest to you only. Enda’s promise was not to tax the very well off more or to engage in any kind of distasteful “equality” politics.
Fine Gael (as Richard Bruton has callously demonstrated with regard to the JLCs) remains the party of enterprise, and by that they mean employers.
I find that much of Fine Gael’s current policy set makes more sense if you forget the important bits of recent history (the global financial crisis and the ECB’s power grab) and just imagine that they are a conventional centre right party catering to people with high wages and access to capital. Even the last BOI deal makes much more sense in that context. Same ole same ole.
I wasn’t sure which thread to stick this on. Is this for real (if you will pardon the pun)?
@ Brian Woods II
Kenny also said a few weeks ago we would soon be waving Chopra goodbye. Presumably, he’s been told to get on his bike too.
Since the Pope has to be carried, I guess that would place him in the wire basket at the front, with AJ precariously balanced on the cross bar and our Lycra Taoiseach furiously pedalling them both off into the sunset?
Seriously though, it’s disconcerting that the only response from this government to the publication of the Troika document is yet another cheap PR stunt. A few days before that it was a round of golf with the heroic Rory McIlroy chap and before that we had Obama and the Queen. It’s all going downhill…
How come A.J and his colleagues can set out their stall relating to the terms and conditions on which Ireland will be granted further assistance whilst our own government has nothing to say in response? And we’re all, as citizens, supposed to wait until December 5th next to find out what that response is going to be? It’s just not good enough.
@ PR Guy
Which do you think is the better collateral, Ronaldo or a NAMA bond?
I hate to break this to you , it may come as a shock I know.
You are not a citizen – you are a subject of independent capital movements.
What has the document section heading been changed to “Memorandum of understanding on specific economic conditionality”
I must say I find the letter from the Department of Finance addressed to “Ms Christine Legarde” to be both nationally humiliating and emasculating. The protestations of the ‘successes’ achieved make it all the worse.
At least Myles Na gCopaleen when his back was to the wall had the guts to pen a sturdier letter.
Mise le meas.
I wonder what new name will be given to this quarterly national humiliation letter.
It begs a name that will shame not just the people that sign it, but the people to whom it is sent.
“RTE Nine o’Clock News Bulletin : One set of news pictures shows the Taoiseach, resplendent in lycra shorts, mounting his bike for a 44km cycle around Clew Bay as his colleague, Michael Ring”
I read somewhere that there is nothing more embarrassing than middle aged men in Lycra…..
The timing of the announcement of total capitulation to the Troika is splendid
Our government at behaving like reek…
@Dork of Cork,
As I have no capital, independent or otherwise, its movements do not overly concern me. As a citizen of this state, I’m not sure if I should be amused or infuriated by the way in which I and my fellow citizens are being patronised by a political class who still appear to be living by the rules of ‘spin’ when those rules are no longer appropriate to the situation in which we all find ourselves. They’re all still living in that Leinster house bubble in which most of their communications are directed towards each other and political one upmanship stakes rather than addressing the policy choices that must be confronted and what those decisions will mean to the things that really matter in people’s lives.
So you see, all I want the government to do is to set out what measures they propose to take in the next budget in order to meet the loan requirements and to do so by early September so that we, as citizens, have time to debate the options that may exist within the constraints which apply for the foreseeable future.
It seems to me from what I’ve been reading, particularly of the MacGill school contributions by Philip Lane and others, that there are options on the marcoeconomic side. Professor Lane, Colm Mc Carthy and others appear to advocate taking a really tough stance on the deficit now, with a view to imposing the pain over the next three years as opposed to stringing it out over five or six years. Are the government even thinking about that? What would it involve in practical terms and what impact would it have on people’s lives?
As for the 3.6bn in cuts and taxes that most people must by now recognise is definitely on the cards, it would be worth debating now what options exist in respect of cutbacks, elimination of programmes etc. in the big spending departments and the range of taxation measures that may be considered, their rationale and possible longer term impact on the economy rather than having to wait until early December when whatever package our current political geniuses have dreamt up will simply be imposed and can be voted through the Dail without any difficulty because of the government’s overweening majority.
I don’t want to have to listen to anymore blather or spin, or have to endure any further embarrassing PR stunts framed to convey messages of ‘leadership’ or other political codswallop. I just want to know how they propose to fix the flaming deficit and, as a citizen, have the right to contribute to the ensuing public debate on what’s the best course for our country.
Leo says the EU/IMF ARE “OPTIONS”
Speaking in Killarney, Leo Varadkar confirmed the figures, saying there will be an adjustment of €3.6 billion in spending cuts and tax increases in the budget.
Fianna Fáil senator Thomas Byrne said the Government has completely reneged on previous commitments that it would not cut the welfare budget or increase income tax. FROM rte
If you have little or no capital you are much more likely to be influenced by its movements – your remaining labour value is a monetory commodity and in this world of extreme excess labour it is likely to be extremely undervalued unless you can supply the remaining holders of capital with scarce value they appreciate.
When professors propose to cut the budget defecit what they are in fact doing is reducing the collective consumption so that the holders of paper can obtain the remaining surplus.
If they want to cut the defecit they must change the entire monetory system first if they want to be progressive – otherwise its the same increase the efficiency by reducing productivity mantra – otherwise known as trickle down economics.
There seems no hope for the future when Labour activists wish to cut their own throat for the prospects of a fictitious nirvana.
Its hard not to give up & head for the hills really.
“I don’t want to have to listen to anymore blather or spin, or have to endure any further embarrassing PR stunts framed to convey messages of ‘leadership’ or other political codswallop. I just want to know how they propose to fix the flaming deficit and, as a citizen, have the right to contribute to the ensuing public debate on what’s the best course for our country.”
Everyone should have the right to contribute to the debate on the basis of facts rather than blather and spin. I find it extraordinary that one of the most controversial and substantive issues for debate over the deficit is effectively kept out of it by blather and spin. It is possible that a debate about Croke Park would result in a consensus that it is on balance a good idea. Debate about it is though closed off by all parties on the premise that it binds the government to no further pay cuts, compulsory redundancies directed reforms etc.
In this context it is shameful that the sort of briefing below is airbrushed out of history:
” Q Is there a ‘get out’ clause that would let the Government introduce more pay cuts even if we co-operate with change?
A No. Clause 1.28 of the agreement says: “the implementation of the agreement is subject to no currently unforeseen budgetary deterioration.” There were similar clauses in all previous national agreements. The Croke Park clause reflects the reality that an unforeseen shock to the economy – like the collapse of the banks around the world in 2008 – would create a new economic and budgetary situation.
The clarifications IMPACT got from the Labour Relations Commission confirm that the implementation of paragraph 1.28 “will be applied in a bona fide manner by the Government side” and that “it is not envisaged that, on the basis of any currently known facts, that the clause would be utilised.” The clarifications also confirm that, if such a situation were to arise “the parties would meet at central level (i.e. Government/ICTU) to discuss the circumstances that had arisen and the implications for the Draft Agreement prior to any decision being taken that would adversely affect the pay provisions of this Agreement.”
If these high level discussions have taken place, and a decision that no unforeseen budgetary deterioration has taken place since March 2010, or that if it has, it is a really good idea to ignore it, then it is odd that the Implementation Body made no mention of them.
So has the government secretly re-made the exact same Croke Park agreement since coming to power, or has this highly significant part of the agreement been accidentally on purpose lost behind the sofa cushions?
How much blather and spin would you like?
Kenny also made promises about a hospital in Roscommon and we all know how that ended. Maybe we should all get in some cycling practice now as that will be the only form of transport we’ll be able to afford after the carbon tax increase and the property tax (which won’t be €100 for too long).
I should imagine the support is going to wane if this is true:
Somebody please tell me this is not true.
…but it wasn’t until I got to the top article on the front page of the Sunday Times that I really choked on my porridge: “Nama gives up on 37.5bn of taxpayers’ money” (says that sources close to Nama have confirmed they are only looking to recover the 30.5bn actually shelled out and will write off the rest in a ‘debt forgiveness’ programme).
The world is going mad.
There hasn’t been an unforeseen budgetary deterioration since Croke Park. The budgetary situation has, predictably, stayed the same.
Not much of a link but it’s obviously getting picked up in Ireland.
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