EU Commission Review Post author By Seamus Coffey Post date September 9, 2011 The latest EU Commission Review of Ireland can be read here. Categories In Uncategorized 13 Comments on EU Commission Review ← Higher education and research → ECB Statement: Jürgen Stark resigns from his position 13 replies on “EU Commission Review” I think we have to thank the new government. Micheal Noonan, Joan Burton and Ruari Quinn in particular. This a very good result and hopefully international events won’t blow us back in the mess the last crowd left on the front door. Did we really need 68 pages to tell us the programme is on track? In keeping with all recent reports there is one paragraph on risks to the program. What a joke. Even still the report says risks to the programme remain “significant” but nobody in Ireland at official level (or in this forum) seems to want to discuss how to assess, measure or mitigate these risks to any extent. Lets just continue to hope each roll of the dice comes up 3.5. I see they are keeping growth projections of .6 and 1.9 for 2011 and 2012 respectively. With the IMF indicating they will lower the projections in September is this good practice? With grim growth projection in the western world, surely it is important to take a realistic view of the single most critical determinant of our prospects. The population growth figures in Table 4 are very likely wrong. They give the following y-o-y figures for population growth: 2008 +1.6% 2009 +0.8% 2010 +0.3% 2011 +0.0% or a cumulative 2.7 between 2007 and 2011. But, the census told us that population growth between 2006 and 2011 was 8.1%. The population growth figures in Table 4 appear to be the old pre-census estimates. We know from the census that the pre-census estimates under-estimated population growth over the period 2006 to 2011 by 110k or about 2.5%. We don’t know yet how this error was distributed over each of the 5 years. The only way the figures in Table 4 could be correct is if all the under-estimate occurred in a single year, 2007. While nothing is impossible, this seems very unlikely. It would mean that there was NET immigration of close to 200k in that one year alone, and population growth of close to 250k in that one year alone. I find it hard to blame them though. There has been that little discussion of the Irish census results that anyone outside Ireland can be forgiven for not being aware of them. Who is this Sven bloke ? The lack of ambition just leaps off the page. The core mantra seems “whatever happens don’t mention the GNP figures” We must export our wealth to declining core European countries…. and use these as a yardstick !!!! How is private credit going to create wealth ? – here’s some news for some economists – it does not , its role is just to distribute the wealth downwards efficiently which it does not due to corruption. Wealth depends on the energy density and the technology used to make this energy happen in the real physical world… remember that the physical world thingy ? Unless MONEY and not credit ( credit aggregates in this monetory system is dependent on global oil production – i.e. if oil production falls credit falls) is spent to increase our energy density and increase our energy efficiency no internal wealth will be created. We will continue to depend on declining industrial powers ability to buy our goods and holiday here. This is not a rational policey in any shape or fashion. Its a Malthusian nightmare – this is a gross failure of industrial policey which so happens to be recorded on bank balance sheets. Therefore saving banks will not save the real economy. This is simple stuff folks that even Dorks can understand – why are we listening to failed bank protectors to supposedly save our ability to provide basic life support ? There is something deeply wrong with the present western worldview – its a sort of anti enlightenment. We are in a deep Do-do if we take seriously such imagination improvised functionaries. They generally get to the top by sucking up to the Boss – this is not the time to speak platitudes. Its time to call a spade a spade – these powers need to suck up our remaining resources so that they can remain enjoying the high life for just a little bit longer. ‘There is something deeply wrong with the present western worldview – its a sort of anti enlightenment’ True. The failure to connect the dots is spectacular. So much social science and so little application of it. I guess Friedman and his like left a deep footprint. @Paul I don’t think people realize Friedmans fictional works elevation to the economic stratosphere was based on interested parties wanting to keep the dollar as the worlds reserve currency. Max domestic US oil production 1970ish , soon after the insane era of freefloating currency pairs which is just a wealth extraction exercise as there is not enough stability to engage in long term wealth creating endeavours. The subsequent debt build up during that time is just a record of the global oil / gas burned. I am deeply disappointed with the French to be honest and their abandonment of the western ideal – it has been catostrophic. They are building two EPR reactors in China now !! and leaving us to sink into a abyss. This belief that currency has intrinsic value is a joke – you just create the money baby and they have been creating the stuff for all the wrong reasons. Basically they have been creating it to burn the stuff as fast as possible to prevent another bunch burning it. Maybe the French now consider us a new colder wetter Vietnam with now empty Paddy Fields. http://www.youtube.com/watch?v=1cWR963no68 Me thinks the European contract is broken – don’t you think ? “Mistress of a older European man – well that pretty much describes the entire country does it not ?” If I am reading this correctly than the 2011 deficit (@10.2% of 157.7 nominal GDP) has been revised down to 16BN Euro. I notice this report refers to a “visit” in July so I am not clear if this is factoring in the new “bailout/stichup” interest rate but it looks like the deficit will have to be narrowed by roughly 10BN Euro over the next three years. After that,IMHO; the exact interpretation of 3% deficit can be left to the the politicians to squabble over. In the meantime it would not surprise me if MV Euro will have much more serious things than Ireland to worry about. Mr Kenny`s recent statement “cést fini” is beginning to sound very relevant. If we have to “adjust” by 10BN Euro I suppose it could be 5BN cuts and 5BN taxes which would give something to everyone in the left-right audience. @Dork “Who is this Sven bloke ?”. I do not know but I find it entertaining (judging by his name) that someone from Sweden (which is not in the EZ) is also responsible for Lithuania and Poland which are not also not in the EZ. Considering Swedens experience of economic meltdown following the Scandinavian banking crisis and the complexities of the Polish and Lithuanian economies it would not surprise me if Sven`s perception of our particular “crisis” is a lot calmer than our perception. Swedish chap is he ? Maybe he struggles cooking international dishes ? Maybe Micheal Hudson can give him some advice …… http://www.youtube.com/watch?v=TxwI61FrK_w Swedish chap is he ? Maybe he struggles cooking international dishes ? Maybe Micheal Hudson can give him some advice …… http://www.youtube.com/watch?v=TxwI61FrK_w I thought this data, and the quotes below, were of interest Total revenue % of GDP: . . 2010 34.2; . . 2011 34.8; . . 2012 34.7 Total *current* expenditure % of GDP: . . 2010 41.8; . . 2011 41.2; . . 2012 39.8 General government balance % of GDP: . . 2010 -32.0; . . 2011 -10.2; . . 2012 -8.6 General government debt 2010 % of GDP: . . 2010 94.9; . . 2011 109.9; . . 2012 116.2 Nominal GDP, EUR bn: . . 2010 156.0; . . 2011 157.7; . . 2012 162.1 Change in gross debt levels, EUR bn: . . 2010 43.3; . . 2011 25.4; . . 2012 15.0 Gross financing needs public sector (before bank recap) EUR bn: . . 2011 23.5; . . 2012 24.5 The “Exchequer cash deficit” now no longer appears in the publication (it was there in Feb. plus lots of other info that allowed us understand the financing needs).You’d think there’d be interest, as actually the figures on financing needs have bounced around quite a lot, over the three reports that the Commission has published. However other forecasts outside of the financing are quite precise – and stable in some cases – with sometimes changes of a 1/10 of percent seen as noteworthy in the text. But as Livonian’s comment above indicates, an idea of the exchequer deficit in cash terms is one of the first pieces of information you’d want to get and read up on (for info long-term debt securities, maturing, is E4.4bn in 2010/11 and E5.6bn in 2012). Quotes of interest: “Fiscal performance so far this year has been strong. The government deficit for 2011 as a whole is projected to be well below the 10.6% of GDP programme ceiling”. “Public finance cash data for January-June 2011 show a better-than-expected outturn. Tax revenue was 0.3% above the forecast of the programme’s spring review” “For 2011 as a whole, Commission Services currently estimate the government deficit at 10.2% of GDP – below the EDP and programme target of 10.6%. As compared to the spring 2011 larger deficit forecast of 10.5% of GDP, the current estimate includes the measures in the recently-launched Jobs Initiative and more recent public finance cash data until end-June 2011. The Jobs Initiative is designed to be budgetary neutral over the period 2011-2014, but it has a deficit-reducing effect of 0.1% of GDP in 2011” “Deficit forecasts for outer years have also improved somewhat relative to the Spring 2011 forecast round, and are now closer in line with EDP targets: For 2012, the overall deficit is now projected to be just at the EDP target of 8.6% of GDP, down from 8.8% of GDP in the 2011 Spring Forecast, as the higher nominal GDP level and higher 2011 basis for tax revenue would each reduce the deficit ratio by 0.1% of GDP”. “the Minister for Finance has publicly stated that the government may aim for a larger consolidation effort in the 2012 budget, without however being able to commit to specifics in advance of the conclusion of the ongoing expenditure review, which is expected for September.” “Fiscal consolidation is progressing well, but the task ahead is still very demanding. So far, effective measures have been introduced to meet the fiscal deficit limits set in the context of the excessive deficit procedure. The fiscal consolidation strategy, which will set public debt on a downward path beginning from 2013-14, calls for additional sizeable efforts in the coming years. Policy credibility would benefit from combining the strong track record thus far with early clarity on the specific measures that the government wants to introduce to better reflect its priorities. Staff therefore looks forward to discussing the authorities’ plans in this regard in the context of the next review mission. Important and difficult policy decisions will need to be taken detailing fiscal consolidation measures for the years ahead. Another area where clarification of plans would be highly beneficial is the management of state assets, which could greatly contribute to the economy’s overall competitiveness as well as to alleviating the State’s financing needs including after the programme.” . . Quite tempting to compare to http://www.imf.org/external/pubs/ft/scr/2011/cr11276.pdf especially p28 General Government Finances, 2007–15. The IMF research also includes an assessment of the impact of revised EU loan terms (p36 in pdf) which the Commission didn’t do (EC figures are before any allowance for revisions). Letter of Intent P33. A most cringing supplication. Like having to kiss your bank manager’s ass every three months in public. Ireland should at least demand an exchange letter from the EU/ECB stating why Irish citizens have to pay the debts of private bankers, with appropriate detail explanations. Or simply include a section stating the total national debt and break it down to show how much was used to bail out the private banks. Comments are closed.