Seamus Coffey: Reasons to be cheerful parts one, two and three

At the risk of setting up Seamus for apoplectic rage in comments, he nicely gathers together much of the recent good news on the Irish economy in an article for the Evening Echo.   The text of the article can be accessed via his excellent Economic Incentives website here.   We still face serious challenges, as Seamus clearly notes, but it is no harm to accentuate the positive every now and then.

57 replies on “Seamus Coffey: Reasons to be cheerful parts one, two and three”

It’s all very well to be positive, but I don’t think articles such as this one are very helpful to the country right now.

What every Irish economist should be doing right now is identifying the problems we face, and then proposing solutions to them. Focusing on good news like this(this article is one one example) strikes me as being akin to “praying for rain”. It might make us feel good, but it is not actually dealing with the issues.

And we must tackle the issues instead of avoiding them. One issue in this crisis has been the inertia of the country in even acknowledging that problems exist, let alone in dealing with them. While quick to acknowledge any morsel of positive news, people seem sloth to talk about the elephants in the room. It’s a big problem in Ireland.

So, here’s my challenge to Irish economists and commentators: What would you identify as the single biggest problem facing Ireland right now? What is the most significant issue that the country needs to tackle, and how should it do so?

I’d be interested to hear what many people’s reasons to be negative are; and–more importantly–what steps they would take to make people hopeful again.

I think I might have truncated that list a bit.

“Sales of new cars have been strong component of retail sales in 2011with 81,175 new passenger cars sold up to the end of July. By the same time last year 73,846 cars had been sold. There are many households in serious difficulty but sales of ‘big ticket’ items such as cars are slowly recovering. ”

Last chance to avail of scrappage scheme for debt free pensioners.

“Seventh, figures from the Central Bank show that the balance sheet of the household sector is slowly improving. At the end of 2008, the household sector has loan liabilities totalling €203 billion. The most recent figures show that this has fallen to €185 billion. There has been an €18 billion fall in household debt in just three years. Most of this is because of repayments.”

It occurs to me for many, household sector assets might be falling in value. There is also a polarisation occurring in which there are those with secure well-paid jobs, many of whom are on tracker rates at record lows whilst others have neither and perhaps negative assets.

“Ninth, the yields investors require when purchasing Irish government bonds have been falling. In the run-up to the summit, the two-year bond yield was 23%. Such a return is indicative that these bonds were considered very risky.”

Market bottoms (when they are allowed to occur cf Nama) are usually volatile events – much more so than tops. There is a reasonable chance there may be no lower lows and Gilts may not reach such low prices again. You can make fundamental arguments both ways.

If you haven’t wrestled with attempting to follow volatile markets much, then you might think about how you react to the prices going up and down. It can be very interesting, but the more volatile the moves, the more it indicates that views are diverging and basically, there is no “market view”. I have seen many comments that reference a bond yield with a wide spread, in a thin market and “calculate” a probability of default. I isn’t quite nonsense, but it is getting there. Sometimes the real answer “we don’t know” surfaces from the markets – usually when prices are dropping quickly as tail risk gets factored in.

This bit:

“the yields investors require when purchasing Irish government bonds have been falling”

refers to secondary market trading. Investors are not going to buy Irish gilts from the government because the yields investors are demanding are way too high. Don’t get carried away, If 10year yields were 7%, Ireland would still be shut out of the bond market.

Politics is going to play a very important part in rehabilitating Ireland in the market. Many international investors have little idea about the resistance to further deficit reductions in the country and the lack of real political leadership or determination to close the deficit. They will find out. It will be interesting to find out how the market reacts over the next year.

@Grumpy
The old fashioned way of reducing the defecit is increasing taxes on imports , not reducing the money supply which is the only thing that can pay down debt.
The loss of internal consumption from all those imported cars is appalling – we should be making better use of a progressively older car fleet – employing more car mechanics , reducing car safety standards etc etc.

The post Soviet Cuban experience is a interesting example.

@OMF

At the risk of oversimplyfing things, the overarching problem we face is adverse feedback effects. I tried to capture some of the main feedback effects in this picture last year. Impaired banks lead to a contraction of credit, which slows business investment and economic growth, which worsens the fiscal situation, which undermines the guarantees on new funding for the banking system. Going back the other way, banks losses impair debt sustainability, forcing austerity measures, which further slow the economy, and further undermine the banking system through income and asset price effects.

Against these sources of fragility there are also forces of resilience: export growth, population growth, households with decent balance sheets and incomes, etc. Seamus’ article is a reminder that the forces of resilience are stronger than we might fear, though he clearly would not say we are out of the woods. Moreover, while I would certainly not claim that blind optimism would turn the feedback effects around, it is not hard to see looking at these mechanisms that excessive negativity about the economy could be partly self reinforcing. It is important point out some of the positives while not losing sight of the challenges.

It is good to see that Seamus Coffey is getting priority on this site over the ESRI Quarterly Bulletin (summer edition), which was published today (1st of September). Apart from the fact that ESRI obviously don’t know that it is now autumn (their summer edition usually comes out in June – what delayed it this year?), it is notable that nowhere in their Press Release, in their Executive Summary, or in any of the media reports, do they utter a single word about migration. No forecasts for migration, no reference to what the census revealed about the accuracy of their past forecasts for migration. Quelle surprise! I expect Arsene Wenger doesn’t want to talk much about last Sunday’s match either. But, I wonder if any of the media raised the subject at the ESRI Press Briefing last night? I very much doubt it.

In fairness, I should point out that I haven’t read the full report yet (just the Executive Summary and media reports), as you have to pay for the full report, and I certainly have no intention of forking out any money to ESRI. So, if there is any mention of migration in the full report, maybe someone can post what it is on here. But, for the last few years, ESRI’s doom-laden migration forecasts have been their most prominent and most publicised forecasts, but this time round, barely a mention (if any) despite the fact that the census results have been published since their last quarterly bulletin.

In addition, I notice that in their tables in the Executive Summary, ESRI are still using the old figures for employment. But, as Seamus Coffey points out in his vastly superior analysis, these will now have to be revised upwards because of the census results. Yet, ESRI don’t even allude to this likelihood (at least in the Executive Summary). Lets’s hope that they do better in their autumn edition, which should be published next May.

@ seamas

‘The best performance has been in the dairy sector where exports are up nearly 50% on last year. Our temperate climate and quality of grazing land means to potential to expand is virtually unlimited as there is huge demand for Irish milk in the powdered milk and baby formula markets’

What gave rise to the 50% increase ?

It would be nice to know:
• current numbers employed in dairy sector
• trends in same over past 20 years say
• how our dairy sector compares as % GDP with Denmark or NZ
• how our dairy products are branded and marketed

@John McHale

As you now work in the inner councils of the Government (to great effect, I may add, as is borne out by the fall in the bond interest rates since you took up the position), alongside the eminent Professor Alan Barrett, perhaps you can tell us if he ever intends to comment on the wildly-inaccurate emigration forecasts he was doling out continuously to the media over the past several years, particularily in early February this year, and what his explanation is for getting them so wrong? And while on the subject, are the Taoiseach and the Minister of Finance aware of the census results yet? If they are not, I will gladly purchase and post them a copy of the CSO Census 2011 – Prelimary Results for Christmas. I only ask because neither of them have said a single word about the census results since they were published, which is unprecedented. I do hope that they are not being silent on the subject because the census results contradicted every claim that they made about emigration at election time, and because the universal acceptance (bar a handful of dissenters) of the accuracy of the ESRI emigration estimates and forecasts being bandied around then helped them achieve such a large majority.

@John McHale,

I suspect you meant apoplectic rage 🙂

I fully understand your desire to introduce some rational balance into the debate (ably supported by Seamus Coffey and a number of others) so as to counter the overwhelming tide of the Dad’s Army Frasers’ “Doomed. Doomed. We’re all doomed.” And it is, of course, very pleasing to the Government and the government machine that reputable economists are doing their work for them, because this is the line they wish to communicate both at home and abroad. “We’re very different from the Club Med crew, you know”.

But I suspect you are well aware that this more sanguine narrative will be seized upon by the forces of darkness and reaction to stymie any effort to introduce the thorough-going structural reforms that are required in the domestic economy.

There is very little tangible, objective evidence emerging, but anyone with eyes to see or ears to hear will be well aware that the forces of darkness and reaction are lobbying furiously behind the scenes to water down, frustrate and, in every way possible, block the structural reforms specified in the EU/IMF MoU to be implemented by Government over the next year.

The basic line advanced by the forces of darkness and reaction is that implementing these structural reforms to the extent required by the Troika will generate such upheaval that it will totally derail the sanguine recovery narrative you, Seamus and others are crafting. This is totally self-serving and consumer and economy-damaging balderdash. The structural reforms demanded by the Troika do not go far enough, but, to the extent that they do, they are unambiguously in the interests of the vast majority of citizens and of the domestic economy. But the ability of the forces of darkness and reaction to mobilise the trades unions is putting the ‘fear of god’ into Government and any resolve they may have had is evaporating like the morning dew.

The ‘freshwater’ economists in the US proved to be very ‘useful idiots’ for the Neocons and their acolytes in other developed economies. You and those crafting this sanguine, but plausible, narrative run the risk of, inadvertently, being ‘useful idiots’ for the forces of darkness and reaction. To avoid this it is long past time for reputable economists to counter the self-serving and consumer and economy-damaging balderdash that they propogate.

I agree with Seamus that the news about the Irish economy has substantially improved in recent months. The same was true, by the way, last summer — just before the capital markets lost patience and forced the so-called bailout.

I have a different view on Seamus’ first point. The Census results may be interpreted as emigration being lower than feared. That may not be a good thing, as emigration reduces unemployment and public spending. Another interpretation of the Census results is that we really don’t know how many people are and were in this country.

“What would you identify as the single biggest problem facing Ireland right now?”

Political ineptitude and cowardice.

“What is the most significant issue that the country needs to do?”

Private and corporate debt overhang leading to high level of paydown. Also, large Gov liabilities (current and future); taxation regimes that are socially inequitable.

@ Dork: “The post Soviet Cuban experience is a interesting example.”

More than interesting Dork, its actually the way to go if you want to have a freer, less unequal and almost sustainable society. It demonstrates the ideological and economic poverty of ‘westernized’ politics and society. If there is anything worse in the eyes of Neocons its snatching political and societal success from the jaws of capitalist failure. Whereas, we only encourage and admire the obverse – successful failures.

I have only one little nitpick with SC:

“There have been calls recently for blanket debt forgiveness of mortgages.”

Like by whom? I have seen suggestions that we must have a debt Jubillee (I am one of these), but I note that even these calls are carefully tempered. Fallacy of Composition?

Private debt is DOWN by how much? That’s defaltion! That’s good???

Brian Snr.

@Paul

Yes indeed on the spelling. Now fixed; many thanks.

On your broader point, I think it a reflection of the expertise of a majority of our posters. I was worried from your absence fromcomments that you had lost heart. Great to see you back and highlighting these issues.

@Brian
We are in danger of becoming a mutual appreciation society Brian , I am guilty of howling at the moon on this site but so be it.
Even I don’t think we are in imminent danger of hyperinflation just yet but maybe others do ?- the best and only mechanism to save in such dire circumstance is by buying stuff – do others think the same way ?

Looking at the Cuban oil consumption drop during that time period we are in a similar % range although coming from a extremely high wealth base.
We need not convert trucks & tractors to buses just yet.
But I think the scrappage of perfectly good cars for minor road safety problems is a form of collective EU madness with perhaps a underlying rational Teutonic mercantile logic.
We are in a behind the front triage situation here – resourses spent keeping German bank balances healthy will deprive us of much needed resourses which if we wanted to save lives would be best spent in Hospitals despite their sporadic ineptitude.
The days of the Kinsale to Cork Sunday evening drink fueled bike races is over – we are drilling into the bedrock of misallocated resourses to satisfy our poltical correctness urges and not being rational in our resourse allocations.

And if anyone is in any doubt about who the forces of darkness and reaction (FODAR) are, all they need to do is to think about who will experience a curtailment of the excessive market and economic power they exercise, of the excess profits they capture and of the unjustified priviliges they enjoy if the structural reforms demanded by the Troika are fully implemented.

This doesn’t appear to have been reported on this side of the border in our media, and although bad news for Derry is good news for the Kingdom

http://www.bbc.co.uk/news/uk-northern-ireland-foyle-west-14714278

300 jobs in pharmaceutical centre of excellence

This was announced earlier in the year but amidst accusations of feet-dragging by the IDA, Derry was examined as a potential alternative site but it seems the jobs and investment are coming to Kerry.

Our 12.5% CT rate was cited as a factor in our favour. But this is the second time in two days that I have seen accusations of feet-dragging by the IDA (the second was on RTE yesterday with the parking sensor company in Galway). Unreasonably demanding investors, or is there a problem at the IDA?

@Jagdip
Glad to see Tralee getting something – it like many of our towns is suffering more then average from this depression and has a large housing surplus with some nice apartments built alongside the old canal.

@John McHale,

Thank you, but I think ‘apocalyptic’ was, perhaps inadvertently, quite apt.

I haven’t lost heart, but my focus is on how the public debate is being channelled, managed and closed down. I take your point about the expertise of the majority of the contributors here, but I think that applies mainly to the most prolific. There is no shortage of expertise to tackle these issues, but most are compromised or conflicted in some way. I had a comment on another thread:
http://www.irisheconomy.ie/index.php/2011/08/29/world-bank-the-impact-of-economics-blogs/#comment-165179
which seeks to place my criticism of those who are knowledgeable and competent, but who fail to speak out, in an appropriate context.

We simply do not have the forums for adversarial disputation based on analysis and evidence that seeks to reconcile conflicting interests in the common good. (And this is the case generally throughout the EU. The US has these forums, but the current polarisation of its politics has destroyed their effectiveness by permitting the ‘tyranny of faction’ that the Founding Fathers endeavoured to prevent.)

The interests of owners, managers and staff pursuing any economic activity will always confict with the interests of consumers, but this conflict is suppressed and ignored. The focus is on managing the conflict between the interests of owners and managers, on one side, and those of workers, on the other, to the detriment of the interests of consumers. Much lip service is paid to ‘more competition and better regulation’, but competition exists to create threats to producers and suppliers; to destroy the value of the capital of inefficient or unresponsive suppliers. We don’t believe in that sort of competition in Ireland; every effort is made to create and sustain an optical illusion. And it is precisely the same when it comes to regulation in the absence of competition. And to make matters worse statutory consumer representation and advocacy has been neutered to ensure it can’t shatter this illusion – and it has been decided to neuter it even more by folding it into the Competition Authority.

This blog may be ‘Irish Economy’ but it seems to shine light only on very limited parts of the economy – and frequently only on those parts where the government and the government machine are happy for light to be shone (or can’t avoid having light being shone).

@Grumpy
The 185b for private debt quoted is interesting. I wonder what the total debt to GDP figure is..State, corporate and household. Ambrose at the Telegraph has an interesting chart but it doesn’t include Ireland. The Greek figure is remarkable and if correct would make you wonder what all the fuss is about. It strikes me that maybe it is only State debt that is important and with our potential pile of 200-250b it is going to be some time before a return to normal market participation.

@ Paul Hunt Composition of ‘FODAR’?
Some guesses – legal,medical and educational professions and ‘Big Four’ accounting companies?
Lobbyists and implanted ‘opinion influencers and formers’lodged within the state apparatus?
Very senior state,semi-state and local administrative ‘executives’?
Very senior financial ‘executives’?
Vested business interests – suppliers to the state apparatus,large grocery traders,big pharma?Big farming?

@Vinny,

You’re getting close to identifying the full standing army of the FODAR, but the Troika were constrained (limited time to specify targets, ‘guidance’ from the government machine, a requirement to identify privatisation options, etc.) in their targetting and focused on the medical, legal and pharmacy professions and on the semi-states in the privatisation context (but with a detailed focus on electricity and gas). But a requirement to beef up the powers of the Competition Authority could target other parts of the FODAR that you’ve identified.

But the limited immediate focus on these targets has provoked the plaintive cry: “Why focus on us? We’re providing genuine public and utility services. What you’re talking about will do serious damage to our ability to provide these services. Some of those other b*****ds are getting away with daylight robbery that is far more serious and damaging than anything you might accuse us of.”

Apologies for multiple posts, but while we’re on the public policy debate trope today’s Indo has an interesting piece on the ESRI:
http://www.independent.ie/opinion/analysis/thomas-molloy-why-tk-whitakers-heirs-need-some-of-his-boldness-2863799.html

But, being the Indo, it misses the main point. The ESRI’s fundamental problem is here:
“The Institute’s research is funded from a variety of sources including: an annual grant-in-aid from the Irish Government; competitive research grants (both Irish and international); support for agreed programmes from government departments/agencies and commissioned research projects from public sector bodies. Sponsorship of the Institute’s activities by Irish business and membership subscriptions provide a minor source of additional income.”

The ESRI should be funded 100% from a grant authorised directly by the Oireachtas to conduct completely independent public policy research. If it wants to fund additional research by securing competitive research grants, fine, but any of its ‘consulting’ activities should be spun off.

Reasons for NOT being cheerful…
It’s those Greeks again.
”
Greek public debt is running out of control and the budget is certain to miss its targets even if all measures planned are implemented in time, a report by the Parliament-based State Budget Office said on Wednesday.

“The significant further increase in the debt, the high primary deficit that in the seven-month period considerably exceeded the annual target, and the deepening of the recession have boosted the dynamics of the debt to its utmost and it is now out of control,” said the report, which took into account fiscal developments in the January-July period.

“These developments seem to largely offset the positive impact on the debt dynamics of decisions reached at the [EU] summit of July 21 [interest rate reduction by 1 percent and a rescheduling of the repayment of loans to Greece],” it added.

The authors of the report further cast doubt on the IMF’s prediction that “the ratio of debt to GDP will reach 172 percent in 2012,” saying that a stabilization of the ratio is unlikely in view of the deepening recession.

Finance Minister Evangelos Venizelos, who met the team of international auditors representing Greece’s creditors yesterday, said “we are discussing measures for stemming the recession.”

There appears to be a drift going on towards ‘accentuating the positive’. This might be more properly described, perhaps, as a move to restore a modicum of balance to public debate about our current problems. But is it too late? Back in the boom years, anyone expressing a doubt about the soundness of the hubristic ‘great little country, rich little country’ consensus either shut up (for purposes of self-preservation) or was publicly slapped down. In the bust, from the outset ,negativity has reigned supreme. So anyone suggesting that there may be another, more positive interpretation placed on Ireland’s economic indicators, rather than the ‘we’ll all be dead, says Hanrahan, before the year is out’ meme risks being labelled, variously, as ‘donning the Green Jersey’, or acting as a dupe of the establishment, or worse. This spiral of negativity is arguably just as bad for Irish society, and the prospects for clambering our way out of the hole we’re stuck in, as was the ill-founded consensus of Celtic Tiger ‘invincibility’ during the Bertie era or the uncertainty of any predictions in the face of external events over which we have absolutely no influence or control.

Seamus Coffey’s article appears to be soundly based on the facts. However, positive interpretation of the macroeconomic indicators doesn’t cut much ice if the reality of daily living is a profoundly negative experience for so many people. Trying to impose rationality of interpretation in a profoundly irrational atmosphere is a difficult sales job. Especially one in which, as Paul Hunt consistently alerts us to, there are as many agendas at play as there are actors.

@Dork: “We are in danger of becoming a mutual appreciation society Brian , I am guilty of howling at the moon on this site but so be it.

“Dat’s KO!

“Even I don’t think we are in imminent danger of hyperinflation just yet but maybe others do ?- the best and only mechanism to save in such dire circumstance is by buying stuff – do others think the same way ?”

Now funny you should mention ‘buying stuff’. That’s exactly what I have been about. Buying the best – not Chinese s**t – power tools and other pieces of DIY equipment. Replacing my existing stock and adding some new ones. Good point about vehicle maintenance.

@PH: FODAR!!! Our wonderful Min of Finance was wittering on at some cmtte about NOT doing what NO ONE has demanded. Gosh, the man is a marvel.

How about absolute constitutional protection for our Ombudsman (immune from Supreme Court challenge). Full FoI. Taoiseach and Mins have to publish their Dept correspondence. Our legislators could get all this done in about three months flat. But, there would be consequences. Non?

Brian Snr.

@Brian
Bought that portable wood stove , unfortunetly something more permanent is not viable in my urban setting – should be able to rip out the gas fire and cook things in the event of a larger break down crisis.

Not much Evening Echoes to burn though – must must be more inventive , perhaps like a immobile Phileas Fogg on a stranded urban house boat.

First the furniture , then the floors………………….

@Veronica,

Commenting on the macro stuff is ‘safe’ – and if you’re smart you can make yourself look very clever by pulling in some insight from the bleeding edge of international macroeconomic research; increasingly, it is now becoming ‘prudent and wise’ to comment in a positive manner because that accords with the line the Government and government machine is trying to spin.

But commenting on the micro stuff is ‘dangerous’. If you dig into the sectors at the micro level that, in aggregate, constitute the macro you could nick a toe of one of the members of the FODAR. And you wouldn’t want to do that. In addition to the power and influence they wield – if they wished, they could make your life very miserable, they also command the resources to commission the services you might be offering (consulting or other) – and your livelihood might depend on the revenues from providing these services. And there are dozens of other ways they can get you if you threaten their interests. So it makes sense to adopt the “Yes, Sir. No, Sir. Three bags full, Sir” line. That’s why there are only a few eejits like me who highlight what they’re up to and the balderdash they propogate.

I know I shouldn’t be seeking to provoke and be teasing those who know full well what’s going on, but who are afraid to raise their heads above the parapet. If I were in their position I might well be more circumspect – though I doubt it. It’s just that the optical illusion being perpetrated is so flimsy and disbelief is being suspended by so few threads that it would take only a few direct words from a ‘person of standing’ to allow reality to come crashing in.

It took a major external event to bring reality crashing in at the end of Sep. 2008 – and the Government panicked. I don’t envisage any major external event that will bring reality crashing in on the optical illusion the FODAR have created – unless the Troika cut up rough in response to Government prevarication and procrastination – and the time-hallowed ‘slipperiness’.

Further comment is probably futile, but it is worth while keeping a watching brief, since, if or when it blows, it should be fun.

@Gavin
As always the Irish economy blog is a educational ramble down the lane of efficient resourse allocation.
Thanks Gavin.

@Gavin
“Tut Dork, do you know nothing. It’s the bannisters first.”
Poor old Minnie, no more polkas for her…

@Paul Hunt
Unfortunately for us, a success story is required and we are most likely to provide it. Soft soap, back-pedalling and damning with faint praise to come.

@Hogan,

Unfortunately, but characteristically, I suspect you’re ‘on the money’. The deadlines for the structural reforms that the Troika demanded – and which the FODAR have been fighting tooth and nail behind the scenes – have been slipping out with each revision of the EU/IMF MOU. Presumably the Government’s line with the Troika is that it can’t push these reforms too hard as all hell could break loose and the sanguine, sunny macro narrative would be scuppered.

So the FODAR win again. No surprise there. But they would be wise not to rest too easy. This is just one battle and Ireland is only one front in a battle that will be joined throughout the EU.

@ Paul,

I see your argument, but taken to its logical conclusion isn’t there a danger of designating any and all who put forward a positive analysis as ‘collaborationists’ with the power elite when their real position is arguably more nuanced? Increasingly, I find the culture of negativity as pernicious and pointless as the Celtic Tiger pomposity which preceded it.

As far as where the real power lies, it’s worth bearing in mind, I think, that, we haven’t experienced regime change, just a switch in personnel. Those seeking to influence opinion or policy change in any area find themselves swimming in the same pool; it’s just that the ‘chief sharks’ have different stripes.

As for your FODAR, what’s their relationship with FUBAR?

@Veronica,

I have been very careful to avoid labelling John McHale, Seamus Coffey or others who have presented a more sanguine macro narrative as being ‘collaborationists’. Such an accusation would be unfounded. I am just pointing out the happy coincidence from the perspective of the Government and the government machine which is seeking to push that line. And that, with such a consensus emerging, it provides the FODAR with the opportunity to justify ‘business as usual’ and to issue a veiled (or maybe not so veiled) threat to scupper the narrative if the proposed structural reforms were to be implemented. (I’m also highlighting the imbalance between macro and micro posts and comments and the unwillingness of so many with knowledge and expertise to expose the depradations of the FODAR.)

And I’m not contesting the sanguine narrative. I’m asserting it could be so much better if the prescribed structural refroms were implemented and the FODAR beaten back.

And I agree. All that has changed are the people at the cabinet table and their special advisers. The government machine remains intact and almost unchanged. The top two layers should be compelled to re-apply for their jobs.

And as for the relationship. If we allow the FODAR to proceed unchallenged we will all be FUBAR 🙂

‘FODAR’ – excellent piece of ‘branding’ by Paul Hunt – quite similar to Sean Lemass’s reference to ‘the forces of resistance’ – but far stronger and vivid.
Let us ensure it enters the ‘vernacular’ in the macro/micro discussions of how our economy and society should be renewed!

@ Paul Hunt

‘The government machine remains intact and almost unchanged. The top two layers should be compelled to re-apply for their jobs’

Fat chance I am afraid, even though your instincts are sound and your recipe wholesome. While the formal political structures have their own particular internal hierarchies and vested interests, I suspect the place we need to be looking is the general way in which our public or not-for-profit institutions get turned into private fiefdoms. The hydra-headed web of intergenerational influence which runs underneath our formal decision making structure.

We need to think about the ‘agenda setting’ backroom decisions which set exclude meaningful change at the top, and leave open the door open only to another Hobson’s choice. The ‘obvious’ approaches and the tacit understandings which ‘frame the terms of reference’ ( a high art which combines legalistic reasoning and acute sensitivity to power relations), which in turn determine what questions can legitimately be asked and what must be accepted without question. Taboo.

We have a profusion of Chinese walls which prevent the glaring governance problems, and the endemic conflicts of interest, from being acknowledged. The normal institutional culture is, in reality, the polar opposite of joined up thinking is, because these ‘gaps’ and lacuane are critical to the perpetuation of existing elites.

It’s all about how any other approach is rendered ‘unthinkable’, about the people who decide who is ‘sound’ and who Must be Consulted, who can be trusted not to break ranks and who can be relied on to refrain from ‘letting the side down’.

The kind of folk who will happily do the duty someone chooses for them, who can sit for months or years on a committee whose report is already destined to end up on the shelf, because they know it is not for them to enquire about big issues…….

Transparency is like oxygen. We get it or we die.

@Paul Hunt
Of course, though, differentiating ourselves from the rest of the errant flock (in terms of making us appear the one most easily saved, therefore the one most likely to be saved) is a huge success story for the government. Nice noises from Europe are exactly what is required, at least until after the next US Presidential election.

Ego currently requires that Ireland be saved. The Greeks have squandered their lead. Portugal is still a dark horse, though.

For the moment, the PIGS is back to being one-i’d.

@Paul H

Were the FODAR responsible for paragraph 1.28 of the Croke Park Agreement rather remarkably being the only part that the Implementation Body made absolutely no mention of whatever in its report – not even under “Status of Agreement”?

I had assumed they were just either incredibly dim or crooked rather than possessed by the FODAR.

Follow up on the Greek saga..
“The Finance Ministry’s strong reaction to a report appears to be behind the resignation on Thursday of the head of a newly created parliamentary agency created to monitor budget progress.

Stella Savva-Balfousia, head of the State Budget Execution Monitoring Office, which is staffed by independent analysts, tendered her resignation citing the strong reactions against a report issued late Wednesday, which warned that the dynamics of the public debt, boosted by a significant debt increase, a high primary deficit and a deepening recession, were now out of control.

Earlier on Thursday, Finance Minister Evangelos Venizelos had attacked the credentials of the authors of the report. “All responsible international organisations know in which way macroeconomic and fiscal reports are compiled, checked and published,” Venizelos said in a statement. “It is clear that the budget office still lacks this knowledge, experience and sense of responsibility,” the minister said.

The report warned that Greece was likely to miss its budget targets in 2011 even if it fully implemented the reforms adopted, and that the primary deficit had already exceeded the annual target in the first seven months of this year.

@OMF
“It’s all very well to be positive, but I don’t think articles such as this one are very helpful to the country right now.”

God no, giving people some hope and balancing out the doom mongers with some actual facts instead of dire predictions.

Not helpful in the slightest.

Only to those who love being depressed and angry all the time.

A bit of consumer confidence might make things even better, and we can’t have that now can we?

@Ceterisparibus

Stella Savva-Balfousia was also a member of a previous panel of experts that blew the whistle on the statistical irregularities/manipulations used to conceal the true state of Greece’s finances.

I’m sure you’re more than capable of drawing your own conclusions.

You know how crisis situations are: difficult to keep a lid on things sometimes.

@Sarah Carey

“A bit of consumer confidence might make things even better, and we can’t have that now can we?”

I can assure you that my wife is displaying lots of signs of consumer confidence and frequently ‘spends into the real economy’ 😉

@PR Guy

Your wife is a wonder. I want to get new curtains for the front room. The curtain lady needs the business and I can hardly go into the room because I hate those rotten curtains so much.
I’m plucking up the courage to get them….but it is amazing how insistence that we are all doomed induces money hoarding. To hell with it I say! Noooo says my husband. We don’t know what’s coming!
I know some people slag the whole concept of consumer confidence, but it does matter.

@cet.par.

Re Ms. Stella Savva-Balfousia, do we know if she was pushed or did she jump? Or is it a bit of both? A salutary warning for members of the Irish Fiscal Council – and for members of such bodies elsewhere.

@Paul Hunt

Looks like she walked after the Finance Minister said that the report lacked validity and questioned the competence of the State Budget Office but the big news breaking at NYT is the Troika have stopped the review of Greek finances.

@Sarah
You would have got a bargain on those curtains if you went to Greece for a little holiday….
“Summer sales fell by 25 pct

Shoppers looked without buying at this year’s summer sales, which ended on Wednesday.

According to the National Confederation of Greek Commerce (ESEE) this year saw the greatest drop in turnover of the last three years, amounting to 25 percent on average compared to last summer.

The data that ESEE has collected from 84 traders’ associations across the country show that nine out of 10 traders have reported a decline in sales.

Cities and towns such as Florina, Trikala, Grevena and Nafplio reported a drop that reached or exceeded 50 percent.

Shops launched the traditional 10-day special-offers period on Thursday, maintaining their summer prices in a bid to recover some of the ground lost in July and August.

It appears that the Greek rescue is falling apart… Must be why the markets are tanking this am..
“In a related development, it emerged that the finance ministers of Germany, Finland and the Netherlands are to meet on Tuesday to discuss a problem that has threatened to scupper a fragile consensus on Greece’s second bailout – Finland’s insistence on guarantees from Greece. Amid speculation that Finland will revert to its original demand for state assets to be put up as collateral for loans – a demand Athens has dismissed – Finance Minister Evangelos Venizelos insisted that the matter will have been resolved by mid-September”
As Tull says…Mandy Rice Davis

@Paul Hunt

“do we know if she was pushed or did she jump?”

I believe the phrase being bandied about is, “she was resigned.”

@Ceteris

Damn! Stable door….
BUT you see, the point is that I spread the money around the Irish service economy where it is needed. It’s a patriotic thing. I wonder will my husband fall for that? 🙂

@ Seamus et al

One more reaon to be cheerful: which I suspect may only slowly be coming to light as Irish companies become more proactive in competing for contracts throughout Europe.

Despite (relatively) high wages for skills, efficiency output, and productivity compared to gross labour cost is very competitive relative to practically every country in Europe within trades/professions which require a high level of training, skills , timely delivery and initiative/management.

Even at home within lower paid services (hospitality etc) the level of efficiency is often much higher despite a higher minimum wage compared to other countries. Wages or labour cost (depending which side of the “supply” one is on) have to be measured against output.

If we exclude the public sector (and “whizz kid”, or should that be “coke head” bankers) return on labour costs are actually very good. The lack of competitive edge, domestically, is often the result of other factors.

AND before anyone feels I am indulging in “PS bashing” it is actually my experience that at an individual and unit level Irish public sector workers are actually very efficient. My only “gripe” with the public service is that salaries are just far too high (even at lower levels because of the built in pension and security premiums) and take up too much percentage of particular (eg Health) budgets.

The sooner we recognise these realities ( labour efficiency across all Private and Public sectors and need to moderate PS salaries to a more equitable level) the more prepared we will be to ride the crest of the global recovery wave whenever it arrives.

@ Seamus Coffey

Thanks for bringing some reality to this site .

All progress comes in small bites and the economy is no different. Just as it took 5 – 10 years for the Politicians and the others to destroy our economy it will take some years to see progress in reviving the state of our economy. Some of the contributors here have one track minds and live in the hope that we are all stupid enough to keep destroying ourselves. Fortunately the average Irish person is a lot smarter than these people.

Please keep up your factual analysis of events in our economy which educates us as to the path forward.

@ceterisparibus
“Reasons NOT to be cheerful part 3
Greek 1 year yield at 72.06%.”
Absolutely. The Greek situation is dreadful (as in to be dreaded). The knock on effects of a Greek default could see peripheral country debt (not just in Ireland) expensively priced for a generation.

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