Politics in hard times

This post was written by Kevin O’Rourke

Back in 2010, as the world turned austerian, people like Adam Posen started to worry about the political consequences. Alan de Bromhead, Barry Eichengreen and I have a new working paper which looks at the political consequences of economic hard times in the 1920s and 1930s, which you can read here.

81 Responses to “Politics in hard times”

  1. Paul Hunt Says:

    No doubt a solid piece of analysis, but are there lessons that are relevant now? Immigration doubtless strains the common national bond in straitened times, but, countering that, there has been a continuous decrease in ignorance and prejudice over time. Right-wing or left-wing extremism is likely to triumph only in countries that are already failed states - in the context of the norms of democratic governance enforced by the EU - such as Greece. But I still consider it improbable as the good sense of a majority of Greek people will cohere around a centre-right/centre-left alliance in government.

    The Dutch and Scandinavian right-wingers may have peaked - and it is possible that the antics of the Danish branch permitted a wafer-thin centre-left win in November. I expect Sarkozy to erode le Pen’s soft support. The Magyars, as always, are probably the exception that proves the rule.

    Don’t panic, Captain Mainwaring.

  2. The Dork of Cork Says:

    Things are perhaps more complex this time.
    The religious structures that binded peoples opinions into certain blocs (at least people not exposed to Flanders fields) are long gone - to be replaced by a certain consumerist nirvana of course that is struggling to maintain a hold on its flock as the money runs out.
    For Example
    One person might question lets say a academic such as Yanis Varoufakis and consider him a Marxist.
    That same person might believe Ron Paul was a Mason with interests in some game or other.
    They would believe that 1930s fascism was a corporatist plot - designed to save and favour Industrial capital over human lives.

    Kevin - I don’t think you quite get it.
    BELIEF is gone - belief in anything & everything.
    When the illusion of the Global Tabernacle disappears - control disappears - ALL CONTROL

    This is the return of the Dark Ages - the sad thing about this period much like the last one is that we really need some peace & quiet - to maintain a Gulf or at least a distance from the constant din of actors who have skin in the game of extraction.

    It time we embrace characters with a simpler perhaps duller view of reality as they are less threatening then those brighter hungrier individuals now in positions of power in what we have come to believe as civilisation.

    The Barbarians were not so bad.
    Its time to go back to the Home & the Hearth.
    The life support returns of civilisation have now becoming net negative for some.
    Its time those people just left the building.

  3. Kevin Donoghue Says:

    @Kevin O’Rourke

    Thanks for an interesting paper, which seems in line with my hazy understanding of the history. As to what lessons we can learn, I don’t have much to say so I’ll quote Burke instead:

    Seldom have two ages the same fashion in their pretexts and the same modes of mischief. Wickedness is a little more inventive. Whilst you are discussing fashion, the fashion is gone by. The very same vice assumes a new body. The spirit transmigrates; and, far from losing its principle of life by the change of its appearance, it is renovated in its new organs with the fresh vigour of a juvenile activity. It walks abroad; it continues its ravages; whilst you are gibbeting the carcass, or demolishing the tomb. You are terrifying yourself with ghosts and apparitions, whilst your house is the haunt of robbers. It is thus with all those, who attending only to the shell and husk of history, think they are waging war with intolerance, pride, and cruelty, whilst, under colour of abhorring the ill principles of antiquated parties, they are authorizing and feeding the same odious vices in different factions, and perhaps in worse.

    I’ve no clear idea of what years of depression will do to democracy but I’m sure it won’t be good. It would be nice if we could convince the ECB that it really would be much better not to find out.

  4. Overseas commentator Says:

    @Paul Hunt
    I hope you are right about Greece ,personally I am scared.

  5. Georg R. Baumann Says:

    Fascinating work, thank you Kevin.

    While it deals exclusively with right wing extremism, I can not but wonder, how historians will write about the “Austerians” in future papers or books.

    Extremists they are, in my world that is, and well, left they are not, that much is certain!

    Best
    Georg

  6. HQ Says:

    Its misleading to say that the economic recession has strengthened the hand of Dutch populist geert wilders as if the reason he is popular in that country is cause
    10 years ago a right wing party under an openly gay professor headed a party list that got 17% in the polls and very forcefully broke the taboo of discussing immigration.
    10 years ago nobody was saying watch out for the economy in Europe.
    the reason the dutch vote for Wilders, who has polled less than Fortuyn in 2002, is cause they have decided their immigration policy is a failure.

    But they decided that over a decade ago. Just because their policies might not be our policies doesnt make it accurate to say its the economy which is the reason they are getting votes

  7. DOCM Says:

    @ Kevin O’Rourke

    From the contribution to Eurointelligence.

    “For three decades or so after 1945, the three R’s learned during the Depression – regulation (above all of the financial sector), reflation (when needed) and redistribution – were used by social democracies to provide workers with the security they so badly craved. The strategy was so successful that voters eventually took this security for granted.

    Over the past thirty years, a backlash has swept away much of this postwar political consensus. The supposed competitive pressures of globalization were used as an excuse to undermine welfare protections, even as globalization increased the need for them by contributing to a widening income distribution. And the financial sector was extensively deregulated, which explains the mess we’re in today”.

    There has been redistribution. But not as you suggest cf. the case of Greece.

    http://www.guardian.co.uk/commentisfree/2012/feb/20/greece-crisis-ignorance-protest-corruption

    The redistribution in Ireland’s case is probably more glaring than most.

    http://www.independent.ie/business/personal-finance/pensions/pensions-crisis-will-mean-later-retirement-3025321.html

    The situation in the UK is hardly any better. However, the problem is common to all the economies of Europe, rich and poor, with the exception of the Scandinavian countries. If a political explosion there is to be, this will be the cause.

  8. Kevin Donoghue Says:

    What I love and hate about blogs is that I keep finding people who say what I want to say much better than I could. I take Burke’s warning (quoted in my comment above) to heart and therefore I don’t worry about the threat to democracy from guys strutting around in jackboots wearing dark shirts. In our day the threat is more insidious. It comes from “shiny-bottomed bureaucrats” (Orwell, AFAICR).

    So while I’m thinking about how to express this idea, along comes Steve Randy Waldman, who has already done it for me: “Far too much attention is given to keeping central banks independent of politicians, and far too little is given to keeping politicians independent of central banks.”

    Read the whole thing, as the Tennessee perfesser would say:

    http://www.interfluidity.com/v2/2942.html

  9. DOCM Says:

    @ Kevin O’Rourke

    It gets even better!

    http://www.independent.ie/business/personal-finance/latest-news/public-servants-600m-lump-sum-to-fuel-savings-boom-3012747.html

  10. The Dork of Cork Says:

    I find it amusing that people think Liberals really care about 1950s Micks working in Birmingham or 2000s Antonis working in Cork.
    They were merely mechanisms to change the fabric of society to the Banks wishes & specifications.
    Cannon Fodder for the CBs new Market States war model - a obtuse cryptic post modern Ian Banks like Sci Fi landscape yes - but with its origins in the more conventional Nation State war arbitrage that was the Banks more tradional mode of operation.
    I like many people dislike social engineering for monetory gain or indeed any purpose as it creates such chaos which is the Banks true purpose after all.
    Strength through Social Fracture I guess.

    The origin of this darkness goes at least as far back as the Cabinet wars of the 17th & 18th century and the creation of a new elite that supplemented and then replaced the landed classes of that time using the embroidery of the Greco - Roman republics but not the substance.

    The problem with the Irish is that they have been creatures of this system for so long now that they can’t function with any degree of Independence unlike lets say the Icelanders which have been given a moderate but shortening N.O.O.S.E.(National Organization of Security Enforcement) from which to hang themselves via their socialist goverment who wish to integrate with the wider family of criminals via more formal structures of subservience.
    Eventually the people there will wish their country was further North then 65 Degrees.

    The people of the West are only now getting their heads around the sick monetory & social order of the Post Elizabethan Corporatist depletion game - wether they can handle the truth is another matter.

  11. Livonian Says:

    @Kevin

    “Back in 2010, as the world turned austerian…”

    Only tuesday and already I have read two “classics”.

    The other one was about LBJ reportedly asking in a private comment to J K Galbraith :”Did you ever think that making a speech on economics is a lot like p….ng down your leg? It seems hot to you but it never does to anyone else”.

    History and Economics and of course Politics (of which I am supposed to be a Scientist) where would we be without them?:)

  12. Livonian Says:

    @me@Kevin

    Probably doing something useful like planting a Hibernian version of Solanum Tuberasum.:)

    BTW glad to see you back again Dork.

  13. DOCM Says:

    @ Kevin Donoghue

    Many thanks for these fascinating links. I qualified my remarks above as referring (only) to the economies of Europe. They possibly also hold true of Japan which has some concept of “equitable” redistribution. They certainly do not hold true of the US as social democracy could hardly be said to have taken root there.

    The misallocation of economic gains between labour and holders of capital has by now reached nearly scandalous proportions but there has to be a detailed study, rather than any blanket assumptions, about how this has come about in different economies. It has, for example, become a real problem in Germany.

  14. Livonian Says:

    @Kevin

    On a more serious note (because IMHO your topic is a very serious one):

    I think you and your two colleagues are correct to point out that in the 1920`s and 1930`s support for right wing anti-system parties “was greatest in countries with relatively short histories of democracy…”

    Right across Europe where (apart from Ireland and one or two other exceptions) “mature democracies” are only about sixty five years old, “middle aged” democracies are only about thirty five years old and “adolescent” democracies are only about twenty years (or less) old we are seeing the emergence of extremism. This is something,IMHO, we need to be very much aware of.

    In fact we need to realise that one of the major instruments Ireland currently has in during this recession is democratic governance. However we also need to be very much aware that we cannot “export” it so easily.

  15. Livonian Says:

    @all

    My previous posts were in response to Kevin O`Rourke not Kevin Donoghue.:)

  16. tullmcadoo Says:

    Kevin O’Rourke,

    what is your key conclusion. Is it that if Governments stop living beyond their means and imposing ruinousmarginal taxes on their working population the right (left) wing bogey man will come back?

    HOw does Ireland fit into this. We have had an economic collapse and the electorate booted out a centrist party and replaced it with a national government which straddles the centre ground. The most extremist nationalist socialist party only got 10% of the vote this time.

    Are not the austerians onto something, Governemnt deficits are incapable of funding in private markets at this level of interest rates. So it has to be edone by CBs.
    Moreover in a world with free enough movement of labour and capital, people and corporates will not accept high marginal rates, rather they will leave. So the current European Social Democratic ponzi scheme model is over. If the Austerians did not exist they would have to be invented.

  17. PR Guy Says:

    On the subject of austerians, right wing nutters, governments, consequences of austerity, etc.

    … wasn’t the AG expected to give an opinion on whether Ireland was to have a referendum on the fiscal compact by now? Surely there aren’t any complications? Or did I miss something?

  18. Robert Browne Says:

    @ PR Guy
    Well the people were told by FF,FG, Labour, the legal profession, the trade unions, and even those that are “opposed” to the Compact that they would still be voting for it nonetheless. So, I guess the government have decided that it would only be a waste of time having a vote. It is now safe for the AG to say ‘this does not require a referendum’. I would be very surprised if she says otherwise she will just go with the flow as they all do. Arguments such as, your public sector salary would be in jeopardy, your pension in doubt, your dole cut by 50% make a referendum superfluous. Who’s left to vote ‘no’? Mary Lou? Sure, even the bold Declan Ganley will be voting “yes” will he not?

    @ All
    On the rise of the far right during the 1920s and 1930s? Surely, as “democracies” in the EU continue to fail, one by one, and are taken over by supranational bodies (The New Right), and the “too big to fail financial institutions” it will become ever more apparent that the nexus of crony capitalism, banking and political dysfunction is where we can plant our new cross for democracy in Europe.

  19. Mark Says:

    Re- Paul Hunt:
    ”Immigration doubtless strains the common national bond in straitened times, but, countering that, there has been a continuous decrease in ignorance and prejudice over time. ”

    Yes, and thankfully, but I think we can only expect this where there is a ‘common bond’; a feeling that the various overlapping and parallel communities have an inter-affiliation that makes them identify as a body, or ‘macro-community’.
    But there are elements at the decision-making level that I am certain actively participate in manipulating migration to corrode this very sense of shared community. The problem then follows that, in the immediate sting of pain felt by existing communities when their economic circumstance is attacked, if another community accompanied the change, and the movement of people is undoubtedly permitted and restricted by the same forces that fix or attempt to fix economic circumstance, the ‘rush of blood’, desperate anger, will often be directed against the newcomer.
    The blame is misattributed.

    There is an equally misguided unwillingness to believe that many of the criticisms of immigration have a validity.
    Look at our case here.
    I mentioned on another thread the fact that most of the housing that exploded in at least the Dublin area was worked into the County Development Plans in the late 80s/early nineties; a quantity and density of housing was envisioned that exceeded any official population increase projections. Whether this was due to longer-term construction plans being brought forward when the early waves of immigration made the new housing stock insufficient, or whether the immigration was quietly foreseen in advance, is moot. But what’s certain is that the explosion of buy-to-let investment that came in tandem (of course not entirely due to it, though) caused the initial bloating of house prices.
    As most of what was seemingly economic policy that followed was based on home-building, a constant population growth that could not be met by natural increase was considered desirable. Was there ever much thought given to matching this growth with sustainable employment ?
    It seems like they believed that things could continue to grow exponentially so long as the ratio remained constant.
    I do remember hearing some ‘planners’ at conferences on the 6-1 news talking about pop. figures of ten million by c. 2020. And there was an incredibly large quantity of housing-zoned land revealed when NAMA was a newly-nascent Rosemary’s Baby.
    Perhaps someone here can inform me how exactly, if at all, population growth determines government borrowing abilities. VAT on consumption the basis, rather than taxes on income ?
    Only a partial element in the total story, I know, but still vital.

    Immigration can be criticised, when/if necessary, in contexts like these.
    And migrants should, I think, foster an awareness of how their actions will impact the communitie they enter; something we should bear in mind despite the need and desperation that is sending many from Ireland abroad.
    It’s a matter of disentangling the human from the inhuman, both to prevent us from becomming competing, antagonistic economic units, and to counter attempts to reduce people to transferable raw material.

  20. Tim O'Halloran Says:

    The struggle of left and right in inter-war Europe was class war,not some weird ‘anti-system’ psychological spasm as indicated in these papers. It doesn’t help understanding to patronizingly trivialize what was at issue.

    Nowhere is it recognized that the general victory of Fascism outside of the UK. USSR and Scandinavia was due to the support of the ruling classes, not to some mal-function of democracy. The great and the good simply closed down democracy throughout Europe, not because they really feared Communist revolution, because they were afraid of the taxes they might have to pay in the social democracies that were clearly the democratic future of Europe (yes TullMacadoo, the Jews and Gyspies were sacrificed by the Krupps and Thyssens ans IG Farben to ward off the dreadful Social Democratic Ponzi scheme and its dreadful taxation).

    Whether we are headed to a fresh wave of Fascism is down to whether their modern day oligarch equivalents wish it. Half a dozen individuals, (not tax payers) could close down Irish democracy tommorrow through their control of the media. Many would say that, through their support for the Guarantee, they already have.

  21. Bunbury Says:

    It was all left-wing nutters – e.g. Stalin, Mao, Pol Pot – who were responsible for far more deaths in the twentieth century than right-wing nutters.

    I’m not sure where this fact fits in to this whole thread but it can’t go unsaid.

  22. genauer Says:

    Bizarre

    Frankly, after reading the paper:

    - nice MLE Statistics, of course, as usually, practically nothing really significant. But this is totally irrelevant here

    - total lack of understanding of the political situation at this time

    How many of you, or the authors

    - have ever served in the military
    - have shot a man
    - have ever taken part in an attack, where only half is still alive the day after

    One single person ? Me either for the last 2 questions

    What was the situation after WWI ?

    - Millions dead
    - Millions, who had the experiences above
    - Millions died already from hunger

    Aware that in many of the mentioned countries, especially Germany,

    Deadly Coups from both the Communists and the Right Wings were not theory, but tried in 1919/1920

    Fascism only started AFTER the successful bolshevik revolution

    What party today in Europe could run on a platform of violent takeover, toppling democratic vote ?

    Soo, what is a fringe party with 30 % of the vote to do ?

    What would a 60 % majority in Greece do, either left or right ?
    Use their impressive number of outdated tanks to roll through Serbia and occupy Munich ?

    This whole comparison is just completely bizarre. Typical Berkeley / Oxford Ivory Tower. Sorry.

    Let us go for some completely bizarre scenario, some charismatic “savior” arises and somehow unites 90% of the GIPSI countries.
    Whats he gonna do ? Stop trading with the rest? Invading something? What?

  23. genauer Says:

    @DOCM

    Your “The misallocation of economic gains between labour and holders of capital has by now reached nearly scandalous proportions …. It has, for example, become a real problem in Germany.”

    In what parallel Universe is your Germany?

    The net income distribution in Germany is exactly the same as it was 20 years ago. Not because of some iron productivity laws, but because we make it so, with massive redistribution.

    And within the interpretation error bars, the same as it was 50 years ago, and 100 years ago, and even within the precision of our knowledge 2000 years ago in a (relatively) rich Roman Empire.

    You are living in a fantasy world, at least with regard to Germany.

  24. Bklyn_rntr Says:

    some general comments
    @DOCM it often shocks me that even well educated and otherwise rational commentators have a blind spot wrt the US. social democracy and quantative economic planning are alive and well in the US and I would argue that the vast majority of the flawed thought in Europe stems from a version of FDR’s social democratic/ economic planning reforms of the New Deal. If the social programmes are dispersed across federal, state and municipal governments, it doesn’t mean that they don’t exist, it just means it is harder to measure them. The US has many of the same problems as Europe, if you are rich or very poor ( and a single parent) you are, more or less, fine. ypu get access to health care, food, subsidized housing. if you are in the middle you pay for it. the level depends on the policies of each state. So to tell somebody in New York, Massachussets, Or Vermont, for instance that they practice a crude form of capitalism because of what happens in Louisiana for instance, is not good analysis.

    I wish I could share the optimism of the commentator that said are more enlightened/educated now. If that were true, how could any of these governments hide for so long what is actually happening? the banks have stolen MASSIVE amounts of money by transferring their losses onto taxpayers and taxpayers are still wondering what happened! how is that enlightened?

    and Genauer, I would agree, but in 1914, how many had experienced what you said? very few. the elites blundered into WW1 and allowed millions to die for no good reason except it was unacceptable to lose. today, milions will be pushed into poverty on the basis that it is unacceptable to suffer the dislocation that come with default, whatever the consequences.

    France in1780 to 1789 may be a better analogy anyway. the government wanted desperately to avoid default after Louis XV died so they came up with every possible trick to pay EXCEPT to tax the nobility. what happened there? did anyone have any clue then about what would happen if you try to solve a solvency problem with more liquidity?

  25. Michael Hennigan - Finfacts Says:

    genauer has a point about the brutalisation of a generation in a war followed by economic chaos.

    Ironically, the man who was credited with saving Europe from starvation would be destined to be forever linked to economic failure and assemblages of human misery in his own country.

    John Maynard Keynes wrote in his ‘Economic Consequences of the Peace’: “Mr Hoover was the only man who emerged from the ordeal of Paris with an enhanced reputation. This complex personality with his habitual air of a weary Titan, his eyes starely fixed on the true and essential facts of the European situation, imported into the councils of Paris, when he took part in them, precisely that atmosphere of reality, knowledge, magnanimity and disinterestedness which, if they had been found in other quarters also, would have given us the Good Peace…. “

    As for the lessons for today, there will always be more dissent, disillusion and individuals seeking to take advantage of economic dislocation.

    There are safety nets of various strengths and the trade unions no longer represent those at the bottom of the pyramid.

    Temporary workers have taken the brunt of the Spanish recession while the costs of reducing permanent staff are very high; there is a huge gulf between the protections/benefits for Irish public sector staff and the majority of private sector workers.

    Only a third of British private sector workers have an occupational pension and the average pension pot would make a payout of £1,400 annually.

    In 1993, Spain’s unemployment rate was 23%; Ireland’s was over 15%.
    Today, the majority are still at work. Individuals have no power.

    Governments react to organised economic groups.

    What’s lacking in places like Ireland is fairness in trying to return an economy to a sustainable basis.

    It’s of course foolish to argue that a bankrupt country should do nothing, because powerful vested interests should be indulged, and for cash, hope for kindness from others.

    As regards DOCM’s point on Germany, an estimated 20% of all full-time employees make less than two-thirds of the average wage. Some 1.2m people must make do with an hourly wage of less than €5.

    Chancellor Merkel appears to recognise a problem for workers in sectors not covered by collective agreements.

    Given the experience in Japan, a rising employment of temporary workers, is not positive in an ageing society.

  26. Brian Woods Snr Says:

    Am I getting the uncomfortable notion that a specific type of political economy that has been around for a while, may just be getting a tad frayed at its margins and is about to slip sideways?

    Our legislators are reckless. They want to spend more and more and more to ensure their re-elections. Whilst the source of their income is experiencing a secular decline in its income. That portends a head-on collision of politics with economics.

    We, taxpayers and voters are also reckless. We demand more and more and more from our reckless legislators without as much as a smidgen of meaningful thought as to how that more and more will be provided - like out of our incomes.

    So, who will experience that, “Come to Jesus” moment first: our legislators or us? Neither?

    Ideologues will undoubtly arise, and spout sentimental, populist garbage (its happening in the US as we speak) but their scope for real mischief-making has become somewhat constrained - not abolished. Hungry, workless, homeless folk can become somewhat irritated. Fine if they are less than 36% of population. Otherwise, not fine. We are over the 20% mark at the moment, with no sign that the trend is de-accelerating.

    Some interesting seismic activity on the energy front. Might we soon experience the miraculous ‘creation’ of 100,000 new jobs over the next 10 years? How many young folk enter the workforce age range each year? 50,000? Hmmmmm.

  27. Turgot Says:

    M. le Garde des Sceaux seems to adopt the principle that, by the constitution of the State, the Nobility must be exempt from all tax. He even seems to believe that it is a universal precedent, dangerous to violate. If that precedent is universal, it must be that I have been strangely deceived in the character of thought of all the well-informed men whom I have met in the entire course of my life ; for I am unable to recall any society where that idea has been regarded otherwise than as an antiquated pretension, and abandoned by all intelligent men {eclaires), even in the order of the noblesse.

  28. Gavin Kostick Says:

    @ Kevin O’Rourke

    Very good paper thanks.

    Take home points:

    Neo-fascist movements should be contested vigorously and early.

    Growth - or rather recession - plus other issues identified in your conclusion are the more central concerns than inflation.

    I hope you’re planning a less technical version of this for general readership.

  29. Gavin Kostick Says:

    @ Brian Woods Snr

    I’m wogeously-off topic and were we in a lecture hall I’d be whispering at the back - however I couldn’t help think about you on reading this: what do you reckon?

    Martin Wolf: “Fracking could lead to golden age of gas”

    http://www.irishtimes.com/newspaper/finance/2012/0222/1224312169239.html

  30. The Alchemist Says:

    Food for thought on the transmission of “civic culture” and democratic values.

    Political culture in Ireland, especially amongst the leading parties still seems affected by Victorian sensibilities about the importance of convention and deference to one’s “betters” in matters political and economic.

    I have never, and will never, understand the tolerance of the Irish electorate for particular politicians with feet formed not from clay but from the moral equivalent of metaphysical murk.

    The influence of political murk on the economic trajectory of the country has become plain to all in the past few years, but will it still has lent negligible impetus to reform.

    The tribunals, for example, have had about as much influence on political culture as a gong in a home for the deaf.

  31. Ludwig Heinrich Edler Says:

    Fine to report that economic hard times can have negative political consequences, but let’s not call these

    “the consequences of austerity”

    which is dishonest.

    Let’s call them

    “the consequences of living beyond a country’s means”

  32. John Corcoran Says:

    In 1999 Independent economist David McWilliams told the Irish people on the Late Late that there was a property bubble in Ireland. He was vilified,laughed at and ignored. Our then government were advised by auctioneers/surveyors and property speculators. That Dail who presided over the following eight years of the greatest property bubble in the history of mankind,failed the 95 mark question.

    Almost all the current cabinet were members of that Dail and never flagged this horror story.

  33. Kevin Donoghue Says:

    @Ludwig Heinrich Edler

    No, let’s not, at least until you explain why a country’s “means” suddenly contract when banks go bust and expand when it has a war to fight.

  34. Paul Hunt Says:

    In the ’30s, authoritarian, autocratic corporatism (often attended by a cast of robber barons and with some support from the Catholic Church) and communism (which was able to project some credibility as a political and economic system that concealed its essential tyranny) were both able to secure considerable popular support. Both have been either beaten back or have declined as foreces capable of securing significiant popular support in modern Europe.

    The debate nowadays is focused on the centre between alliances of the centre-right and the centre-left about where the boundaries of the state should lie. The centre might be assailed by the hard left and the hard right, but it only runs the risk of being over-run in failed states such as Greece - and even there it is unlikely. The benefits of civilisation have been hard-won, but they’re easy to lose. I believe most voters will grasp them firmly.

    Part of Ireland’s dysfunction is captured by the fact that the political alignments and factional disputes has never reflected the continuing dbate and dispute in other long-established democracies about where the boundaries of the state should lie. But is it just one dysfunction among many.

  35. tull mcadoo Says:

    John Corcoran,

    You d not seem to be able to distinguish between a government and an opposition in the Dail. By all means blame the goverment but the humble opposition backbencher has no powr and very little responsibility.

    Also you are a bit selective. DMcW was warning of armageddon since the early 1990s. Unlike Chicken Licken he was proved right in the end.

    While you cast rocks in the direction of others, I have to ask what action did you take in 1999?

  36. Garry Says:

    Yes, Kevin Donoghue lets call it “the consequences of living beyond a country’s means”

    its a much more honest term… maybe the long term consequences would be better

    to take just one example…. Denmark did a low cost EU presidency, they spent 35M; the Irish are planning to spend a multiple of that…

    Why cant a bankrupt country like Ireland stop trying to impress the EU with bullshit and start to try to live within our means.

    http://articles.businessinsider.com/2012-01-18/europe/30638245_1_presidency-denmark-low-cost

    Im sure our fellow Europeans in Germany and elsewhere would be happy were we to follow the Danish model and start to look for value for money…. And you never know, adopting a value for money culture in one area might result in value for money elsewhere..

  37. Jesper Says:

    A sad feature seems to be that some are arguing that actions of individuals or companies are seen as they are representative of nations.

    Banks and the finance industry have been behaving badly. Not sure if anyone is willing to dispute that they badly mispriced risk?

    Yet, what I read is that every time the incompetence of banks and the financial industry is mentioned there are those that always mention the country of origin of the bank rather than the name of the bank. It makes it easy for the ones with certain phobias to spread their xenophobic views.

    The ones with this xenophobic view argue that the banks and the finance industry should be protected from their losses. The losses are instead to be imposed in full on the people in the country where the bank happen to be based. It would be similar to pardoning a murderer and instead punishing the others in the country from where the murderer came.

  38. John Corcoran Says:

    @tull mcadoo

    Firstly I didn’t have a public platform, but I advised any family or friends not to buy Irish property that it was a bubble. Many of my family and friends were offended by my comments. It was a very lonely place. All our awful media were doing was accomodating economists from auctioneers and banks. Nobody was allowed rock the boat.
    The worst offender was the broadsheet media especially the Irish Times. The reaon is below;
    Who controls the Irish broadsheet media–the auctioneers and surveyors advertising money. In matters of Church ot State the man with the money carries the weight.
    Twenty years ago ,Irelands’s estate agents fumed because just two
    commercial media outlets controlled the property advertising market. To
    gain true nationwide exposure,your home had to be advertised in the
    property pages of either the Irish Independent or The Irish Times,then
    Ireland’s only two nationwide property supplements. But pagination
    restrictions meant a limited supply of space in both. This led to a high
    demand and high prices(16,000euro a page) that many agencies believed
    were unreasobable.
    So when the internet arrived,the bigger estate agency networks banded
    together to create MyHome.ie,then the result was not only a cheaper
    marketing platform for agents and their customers.with unlimited
    access,but one that the agents themselves controlled. They sold it at
    the top of the bubble to the Irish Times for 40 million in what proved
    to be an inspired profit decision but one that lost them control of
    their own marketing platform. Meanwhile Daft.ie, the successful
    lettings portal ,entered the home-sales market and now there were two
    dominant portals.

    Once again the marketing of Irish homes was dominated by two platforms
    owned by two media companies to which agencies are paying 6,000 to
    10,000 per annum to access today. Complaints about these costs at the
    latest annual meeting of the Irish Professionals Auctioneers and
    Valuers(IPAV),which represents largely rural based independent agents
    but also a significent number of independent in Dublin, led to this
    week’s launch of the OnView.ie, a portal that will be free to IPAV
    agents and their clients. IPAV says it will contain 35,000 homes by
    early next month. But to have any hope of dominating the portal
    market,OnView.ie, would have to link up with the Society of Chartered
    Surveyors(SCS), the larger and rival estate agent’s representative
    association. Both organisations combined represent about 95% of the
    property being sold in Ireland at any time. IPAV w’ont rule out such an
    approach to the SCS and one member added:”if we could become the
    dominant website by using our combined property pool,then overnight it
    woyld be goodbye to paysited,such as Daft.ie and MyHome.ie, and hello to
    free portal access”
    Interestingly, last month also marked the expiry of the five -year
    cooling-off period imposed on Ireland’s three largest estate agency
    networks when they sold MyHome.ie and which prevented them throwing
    their weight behind another portal during that period. Their support
    would also be a requirement for a free property portal revolution and
    the largest of the three,Sherry Fitzgerald, is flush at thr moment
    having banked 62m from the sale of its UK operation,Marsh&Parsons.
    But running a successful portal also involves sustained and metivulous
    content management and proper marketing,something that both membership
    organisations have failed at in at least four last attempts. So 20 years
    on,the big question is this:is a property portal a property business ot
    is it a media business? The comong year should answer this once and for all.

    This vital article was written by Mark Keenan for the Sunday in 2011 Times

  39. John Corcoran Says:

    Extract from the Nyberg report on the banking collapse

    2.12.5
    “Meanwhile ,much of the media enthusiastically supported households’ preoccupation with property ownership”

    The Irish Times property advertising revenues were very robust during the bubble years. In August 2006 it paid fifty million euro for Myhome.ie This was indicative of it’s concern that the internet was going to replace print for property advertising. The Irish Times is the gold sponsor of the annual conference of the Society of Chartered Surveyors.
    Each week there were many property puff pieces and opinion pieces by surveyors talking up the property market or pushing a specific pro-property agenda. Ireland has the most anti-tenant commercial lease law in the world i.e. upward-only rent reviews tied to long leases. In the last number of months there were many half page opinion pieces penned by surveyors, defending the retention of the upward-only rent review clause in existing commercial leases. These were all one sided pieces with no acknowledging the damaging consequences of this ruinous lease clause on Irish businesses and jobs and it’s contribution to the commercial property bubble and collapse. The pro-property bias of the Irish Times is likely to have played a not insignificent role in the property bubble and crash.

    The current chairman of the Irish Times is David Went. David Went was CEO of Irish Life and Permanent from 1998 till April 2007. During his tenure they purchased Irish Permanent in 1999 and TSB in April 2001 for 430 million euro. This company went bust in 2010. Irish Life was a successfull Irish company since 1939.

    John Corcoran

  40. The Dork of Cork Says:

    Ludwigs response is typical

    What he fails to recognize is that we are neither a country or a province - We now live in a sort of Political Twilight zone.
    Lost in Monetary Space
    Propagandists can be mildly amusing though.

    http://www.youtube.com/watch?v=-mF6dCD8n2E

  41. tull mcadoo Says:

    John,

    Whaty proportion of current contracts contain upward only clauses? Is it true that many large retailers have negotiated them out of their contract?
    I am fmailiar with one very common high street chain that cliams never to have signed one.

    What proportion of landlords have been pragmatic and negotiated with their tenants to de-commission the upward only claus where it exists?
    Break this down between private and “institutional”. I am told the answer to these questions are “lots, lots and not many repsectively.

    “going forward” what proportion of new contract will contain UO clauses-zero?

    Lastly, absent the over enthusiasm on the part of the current govt, why should the government intervene in a dispute between landlords and tenants. I am very hasppy that they decided they would do nothing. It is up to the courts to decide. I have a deep antagonism to govt making things better as it usually leads to the oppopite outcome.

  42. John Corcoran Says:

    @tull mcadoo
    What is so evil about tenants been allowed market rents?
    http://www.irishtimes.com/newspaper/ireland/2011/0217/1224290025106.html

  43. Michael Hennigan - Finfacts Says:

    @ John Corcoran

    Selecting property advertising or septic tanks doesn’t really help much when the underlying culture provides a common thread.

    It’s similar in other countries.

    For example, Japan’s decades of post-war success have been followed by years of stunning failures not only at a political level but also many of its once mighty companies are now listing.

    What the late Senator Daniel Patrick Moynihan wrote about the Irish winning power in New York in the late 19th century could apply in Ireland — not that there have been no achievements but there have been more missed opportunities:

    The Irish were immensely successful in politics. They ran the city. But the very parochialism and bureaucracy that enabled them to succeed in local politics prevented them from doing much else. In all these sixty or seventy years in which they could have done almost anything they wanted in politics, they did very little. Of all those candidates and all those campaigns, what remains? The names of two or three men: Al Smith principally, and his career went sour before it ever quite came to glory.

    In a sense, the Irish didn’t know what to do with power once they got it. Steffens was surely exaggerating when he suggested the political bosses only kept power on the sufferance of the business community. The two groups worked in harmony, but it was a symbiotic, not an agency, relationship. The Irish leaders did for the Protestant establishment what it could not do for itself, and could not do without. But the Irish just didn’t know what to do with their opportunity. They never thought of politics as an instrument of social change—their kind of politics involved the processes of a society that was not changing. Croker alone solved the problem. Having become rich, he did the thing rich people in Ireland did: He bought a manor house in England, bred horses, and won the Derby. The king did not ask him to the Derby dinner.

    Boss Croker died in his home, Glencairn House, Sandyford, Dublin in 1922.

    http://www.city-journal.org/article02.php?aid=1499

  44. John Corcoran Says:

    @tull mcadoo

    Its an organised cartel

  45. John Corcoran Says:

    @michael Hennigan UNTRUE The era of the Irish politican culminated in Kennedy. He was born to
    the work and was at every stage of his life a “pro“. He rose on the
    willing backs of three generations of district leaders and county
    chairmen who, like Barabbas himself, may in the end have been saved for
    that one moment of recognition that something special had appeared among
    them. That moment was in 1960 when the Irish party chieftians of the
    great Eastern and Midwestern cities, for reasons they would probably
    even now not fully explain,came together to nominate the grandson of
    Honey Fitz.

    It was the last hurrah. He, the youngest and newest, served in the
    final moment of ascendancy. On the day he died, the President of the
    United States, the Speaker of the House of Representatives, the Majority
    Leader of the United States Senate, the Chairman of the National
    Committee were all Irish, all Catholic, all Democrats. It will not
    come again.

    Untrue.
    Irish America helped broker peace in Nothern Ireland and persuade US FDI to Ireland. The four hoursemen Daniel Patrick Moynihan,Ted Kennedy.Tip O’Neill and Pat Carey were four of the most powerful politicans in the US and de facto the world. All proud of their Irish roots

  46. tull mcadoo Says:

    JC,

    Some people sign long term contracts. As long as their is no coercion what is the problem with that. If I contract to buy my gas or electricity on a long term basis from some provider why should my tariff be reset just because the spot price drifts around.

  47. Brian Woods Snr Says:

    @ Gavin: Thank you for thinking of me. I read that piece.

    I was getting along fine until the sixth/seventh para:

    “If this estimate is correct , shale gas on its own would give the US 40 years of gas consumption, AT CURRENT RATES.” “*%$&??!!”

    “WOLFIE! WILL YOU (and other silly critters, like Ed Walsh) PLEASE READ Albert Bartlett. Like , please, please, please.

    15 mills of fresh water and 225 mills of toxins. Oh dear!

    Thanks again.

  48. genauer Says:

    @Michael Hennigan

    with the 20 % at 2/3, you probably mean the median in comparison,
    for the “average” = mean, it would be steeper. And with the usual exception of the slightly lower nordics, this is not steeper than any other country, I am aware of, or any other time. But maybe you tell me, even with a link?

    The 5 Euro wage sounds cruel, doesnt it? But also under Hartz IV this is then filled up (”Aufstocker”) to some effective 27 k net for a family of 4, in an average German town. Looks suddenly a lot better, hmm ?
    I often hesitate a little bit to explain this to foreigners, I dont want to advertise this. But in the meanwhile the regulations are pretty effective to prohibit non-local people to just move into the system. And of course some communist busybody like Dr. “Class War” Flassbeck dont like it.
    The Turks are pretty successful with that, via “Familienzusammenführung”.

    With respect to minimum wages, if the social democrats didnt do it between 1998 - 2005, when you could make a lot more of an argument that the balance of power between employer and employees is fundamentally disturbed by the reunification, why now ?

    Now look a little bit who is now actually asking for laws. Some conservative busybody like the rich bitch von der Leyen, trying to score some cheap social points. The Unions are not really asking for it, because they are not stupid, they know that they have bargaining power with unemployment at 5 % and shrinking.

    And this will transfer to all sectors. With only 0.6 replacements for everybody retiring, the tide has shifted for a long way to come.

    And I really want to say, keeping the mingling hands of politicians out of the wage setting fights, I see as a good thing to learn form Germany.

    @ Brian & Gavin

    We should fight all enemies of democracies, no matter what color the are painted, red, brown, green (Islamist), green eco extremists, when they go criminal, and whatever else.

    @Paul
    I ll actually found “The economist” bitching about the service sector in Germany. With some specific examples for your general claims. I ll put it in the place of our discussion. And, I see this just as an accounting head fake.

  49. Michael Hennigan - Finfacts Says:

    @ John Corcoran

    Moynihan was ‘talking down’ the -Irish and he was even on Kennedy’s staff!

    You appear to miss the point.

    My point is that the economic crash cannot be just explained by a laundry list of particular issues.

  50. John Corcoran Says:

    @MH
    The greatest bank and property crash in the history of mankind ? Who were the property professionals;–how did our media not spot it. ?

  51. John Corcoran Says:

    @tull

    1 Jobs 250,000 in retail industry,the retail sector is the largest private employer in the state.
    2 Our lease law is unique in the eurozone
    3 In valuing commercial property in the eurozone; the quality of your property is paramount —in Ireland it’s the quality of your tenant
    4 The lease law components are–the length of the lease,exit strategies (break clauses,subletting) , rent determination mechanism
    5 Rent is the symptom;our lease law is the disease.
    6 Our lease law’s primary objective was to faciltate investors; rather than to facilitate enterprise,trade and employment.
    7 Commercial property should be a service to enterprise trade and employment,rather than destroying them.
    8 The large institutional landlords were the source of this feudal lease law—the tenants are its victims
    9 Turnovers are continuing to fall–they have fallen for the 40th consecutive month. With the planned government cuts and tax increases this negative situation is likely to continue.

    10 In 2008 Grafton Street became the fifth highest rented street in the world.

    SOLUTION
    To implement stated Fine Gael policy ” We shall pass legislation to ensure every commercial tenant is allowed a rent review in 2011 irrespective of any upward only or any other lease clause “. The optimum ,most equitable and simpliest solution is market rents for all ,an end to the two-tier market and a level playing pitch for all commercial tenants. The issue is rents, not viability or survival. In a market economy every tenant should enjoy market rents.

    John Corcoran

  52. DOCM Says:

    @ genauer

    Nobody is questioning the many excellent attributes of the German policy approach. The results are there to prove them. Indeed, were it not for the existence of the euro, there would be no real problem as other countries would, as in the past, simply devalue to compensate for losses in competitiveness. But that option is no longer available within the EA.

    Countries participating in the EA, in addition to recognising that a full and free single market is an essential concomitant of a monetary union, have also to confront the entire mix of their economic and social policies - which remain largely a national competence - and come up with an agreed common platform. If not, the system will simply collapse; to every one’s detriment, including that of Germany. This is the real challenge which politicians, and notably Merkel, are skillfully and deliberately avoiding by talking about irrelevancies e.g. the need for “political union” and economists, because they want the world to behave as their inadequate models suggest, by talking about “optimum currency areas” and the like.

    I see that you are no fan of van der Leyen but she has simply been making the point that there is a basic entitlement to a living wage and there should be no need for society to have to top it up, least of all in an economy as successful as that of Germany.

    The most positive element that I see at the moment is that French and German policymakers seem finally to have accepted the need for an agreed approach and are taking steps to do something about it, notably the rapid ratification by France of the ESM treaty and the increase in VAT to help the competitiveness of French companies. On the German side, there seems to be an increasing recognition that the policy mix is skewed and that some steps have to be taken to correct it. The tougher stance being taken by the unions is also an element.

    The question is whether this late recognition by both sides can be carried through if there is a change of government in France. (The Socialists abstained in the vote on the ESM).

    The fact that neither Germany nor France signed up to the UK initiative prior to the next summit is also, paradoxically, an indication of an emerging agreed platform. However, the steps to be taken are subject to the vagaries of domestic political debates which continue to ignore the practical political and economic implications of a monetary union. The declared intention of Merkel to participate in Sarkozy’s electoral campaign is a further sign of her political astuteness. This is often, unfortunately, of a tactical character, as the unfortunate episode of losing not one but two federal presidents demonstrates.

    The UK initiative is very useful in underlining a basic political reality; the two core countries of the EA - Germany and France - are among the economies most in need of liberalisation and structural reform. That the leaders of two others, Italy and Spain, are among the signatories to the letter suggests that the tide may finally be turning.

    http://www.number10.gov.uk/news/joint-letter-to-president-van-rompuy-and-president-barroso/

  53. Paul Hunt Says:

    @DOCM,

    I’m sure they’re all agreed in principle, but in practice…?

    You only have to look at what Mr. Kenny’s government is doing to thrash the structural reform elements of the EU/IMF package to get a flavour.

  54. Tullmcadoo Says:

    JC,
    In principal you are right. Markets out to be flexible enough so that Rents should be flexible downward/upward. Also govts should not intervene in the price setting mechanism. But if people signed onto restrictive contracts when other people did not it is not the govts problem. Other actors seem to be working around the situation by negotiating, going into liquidation, taking legal action.

  55. DOCM Says:

    @ Paul Hunt

    The list of signatories to the letter is what is significant. The new divide is between defenders of the status quo in their economies and those that recognise that change has to occur (both in terms of the debate at national level and of positions adopted in the EU).

    Relative to other laggard countries, at least on the most important dossiers, Ireland is very well placed. In any case, we are not critical to the process, other than in picking up the baton enthusiastically when it comes to our Presidency next year. With regard to the Presidency, I have not the slightest doubt about the fact that we will do so not because of anything our politicians may do but because of value that impartial chairing of the myriad technical committees brings.

    Incidentally, as to the cost of the Presidency, this is attributable in the main to hosting informal meetings nationally which are a matter of tradition and practice rather than necessity. On balance, they are probably a good thing as they increase the level of shared information and political understanding across the Union. (They are also a helpful boost to hotels etc. as the list of summits hosted by France in low season, for example, in holiday destinations from Nice, to Biarritz to Deauville can testify).

    What is forcing a re-think in Italy and Spain is the bind in which the euro has placed them.

  56. Tim O'Halloran Says:

    @Tullmacadoo

    “I have a deep antagonism to govt making things better as it usually leads to the oppopite outcome.”

    Unlike the efforts of ‘wealth creators’ in the property/finance sectors?

    Irony free zone. Listen to yourselves.Get a grip.

  57. Livonian Says:

    @PR guy

    “… wasn’t the AG expected to give an opinion on whether Ireland was to have a referendum on the fiscal compact by now? Surely there aren’t any complications? Or did I miss something?”

    As I understand it at the beginning of February the timeline was something like (I am not quoting directly) “around four weeks”.

    I am sure if you (as I would) were advising the government to try and complete the “opinion” close to Paddys day, preferably about five minutes before Enda and Co. hop on the planes to begin their Paddyś day visits around the globe.

    IMHO the last thing most reasonable Irish stakeholders want to see is the bizarre spectacle whereby (just like the “Tour de France “in the past) the French Presidential election campaign takes place in Ireland.

    If we are going to have a referendum (either as a result of AG opinion or court appeal) I am sure it would be in Irelandś best interest if it was held, and debated, after the second round of the French Presidential election is held in early May.:-)

  58. Brian Woods Snr Says:

    @ genauer: “We should fight all enemies of democracies, no matter what color the are painted, red, brown, green (Islamist), green eco extremists, when they go criminal, and whatever else.”

    Vollkommen richtig! I do not do tolerance! Though lots of dopey academic political science folk get somewhat upset when I say this. Bizzare!

  59. DOCM Says:

    @ PR Guy

    The Danish Justice Ministry, on the basis of a detailed examination of the new treaty, has announced today that a referendum in Denmark will not be required as “no transfer of sovereignty” is involved.

  60. genauer Says:

    @ Brian,

    I did not say “no tolerance”. I said “when they go criminal”, especially like toppling the government without having the majority.

    Otherwise people can believe in a dead fish or the flying spaghetti monster, I dont care.

  61. genauer Says:

    DOCM, I ll do object to many things you say.

    Nobody was forced to join the Maastricht treaty. It brought to you low inflation rates and interest rates, because people believed in stable behavior of the members.

    I told you already that we have a single market, when we discussed any specific example you came up with. I am not aware of, that there are any urgent reform needs in Germany, we need any agreement from anybody else for.

    But I invite you for another round to become specific.

    I do not see Merkel talking about irrelevancies, the actual rules for the next step to “political union” are extremely specific, numbers, rules, automatic punishments, the whole nine yards, exactly because many of our neighbours faild to live by the general rules of the Maastricht treaty.
    As far as I heard the only complaints are about this being too specific for the national pride of manys. If you find me a citation that Merkel was talking about “optimum currency area” I would be thankful.

    Whatever a von der Leyen says, there is NO entitlement to any specific wage, and certainly not set by any politician.

    I dont care what VAT the French need to balance their budget.

    Please be specific, what you mean with skewed policy mix, what corrective steps.

    What tougher stance of the German unions so far? A lot of people are wondering why they are not a little more agressive.

    This joint letter of poor little Cameron with a few others is basically just a show of compasssion, and that his complete isolation on the last summit does not mean we hate him in general.

    It is very rich in the usual Brussels blather and very poor on specifics.
    My very first thought was : yeah , …., and a pony

    Written to a Barroso, who is the incarnation of this general blabla without actions, beyond holding meetings in his home town. “Lisbon Agenda”, Lisbon Conference, Lisbon treaty, “EU becoming the most competitive economy by 2010″, hod does that now look like ? I cant hear it any more.

    This letter is just a general laundry list of what is going on in general in this Moment. Anything anybody would object to?

    I somehow missed out on having difficulties in cross-country payments.

    Low emissions economy. And who does this in practice ? Who has very specific plans to have how much energy generated by renewables ? And building lots of high voltages connections ? Who rammed massive user fees through 1998, demanded by popular vote ?

    We have since a number of years an Energy Exchange here in Leipzig: eex.com What is missing besides more wires to go with it?.

    Germany has many world class research areas, a blooming venture capital scene in Munich and Berlin, more programs for entrepreneurship than healthy.

    But what did I hear from a serial entrepreneur from the silicon valley to Spain. The guy was actually doing something useful, and not just another social networking, pet food coupon something. He likes the lower costs, for programmers, for lawyers, but the formerly archaic labor laws and socialist judges made it a brutal risk to hire people on a permanent basis.

    What we dont need is more bureaucrat jobs for the friends of a political friend in Brussel, with a little play money, which they then can distribute to their friends.

    Now, please tell me something specific, where Germany needs liberalisation and structural reform.

    I think Germany has gone through a lot if this in the last 15 years, resulting in significantly lower costs for services at higher quality, and that many others are a little bit behind the curve.

    I am open for good recommendations, but certainly not for destruction of good things like “Kurzarbeit”, as you wanted before.

    I have zero expectations for Barroso and his commision, and very limited for Brussels. They just hired in another show of blatant cronyism another aristocrate German laughing stock, zu Guttenberg, formerly Dr. hehe.

  62. Jesper Says:

    @DOCM,

    Denmark is not in the euro-zone and is therefore not bound by rules specific to the euro-area. It is hardly surprising that a country which is not bound by a new set of rules finds that it is not transferring its sovereignty by allowing others to be bound by them. Are you claiming that the findings of the Danes relating to Denmark is somehow relevant to Ireland?

  63. DOCM Says:

    @ Jesper

    It was a point of information quoting directly from the Danish Justice Ministry press release which I though might be of interest. Whatever other conclusions and suppositions you have are your own.

    @ genauer

    It is clear where you stand in the debate. On one point of detail, it is well known that Germany (Schroeder) and France (Chirac) breached the Maastricht rules and this is seen as one of the major causes of the current crisis.

    @ All

    http://blogs.independent.co.uk/2012/02/22/germany-crisis-what-crisis/

    The one element that is missing from the charts are the figures in respect of France which are also less than glorious.

  64. DOCM Says:

    @ All

    The saga continues.

    http://www.ft.com/intl/cms/s/0/f11fb484-5d7a-11e1-8bb6-00144feabdc0.html#axzz1n3R6tDHj

  65. brian b Says:

    what i do not get is this: germany since 1945 has been worried, to the point of obsession, about high inflation - rather than deflation, unemployment and austerity.

    yet it was with deflation, unemployment and austerity that the NSDAP made its huge gains.

    so why is it hyperinflation that worries the germans? was it that the well to do were hit more by this - and wrote democracy off as a result? The same well to do that went on to write german history?

  66. Tullmcadoo Says:

    TOH
    The Irish property Market was a perfect example of govt desire to be nice leading to disaster. What about all the tax incentives and blind eye turning.

  67. Tim O'Halloran Says:

    @Tullmacadoo

    Forcing young marrieds to pay 600K for semi-d in Bog of allen was example of govt. being nice? That was their motivation? Not to make semi-literate gombeen supporters rich then?

  68. Tullmcadoo Says:

    NObody forced anybody to buy anything. Every body was responsible for their actions. And yes the govt was being nice to their pals. If you paid 600k for a dump in the Bog of Allen, you were done.

  69. DOCM Says:

    @ All

    Essential reading (hat tip Eurointelligence).

    http://www.ecfr.eu/page/-/ECFR49_GERMANY_BRIEF_AW.pdf

    http://www.spiegel.de/wirtschaft/0,1518,816858,00.html

  70. The Alchemist Says:

    @tull

    “nobody forced anybody to to buy anything…”

    If you are saying that purchasers took a risk and on their heads be it (the economic consequences) then that is too general. The same proposition could apply at anytime and in any set of circumstances, so it really explains very little. There were consequences arising from not buying and consequences arising from buying.

    Purchasers were often provided with many ‘rational’ arguments and inducements for getting on the ladder. A percentage would have bought or invested while being in possession of either incomplete information and/or bad advice.

  71. Jesper Says:

    It seems like economists are getting more transparent :-)

    The report that DOCM linked to above was done by an institution part funded by the Italian UniCredit group.

    The Unicredit group has been forced to ask its owners for billions of euro as laws have not been changed to socialise their losses. Guess what the report concludes about German resistance against changing laws to the benefit of the Unicredit group?

  72. Mark Says:

    ‘“Meanwhile ,much of the media enthusiastically supported households’ preoccupation with property ownership”

    There seems to be either a false assumption behind these words in that report, or the danger of one being taken from it.

    Ireland did not develop a property bubble from ordinary owner-occupier purchases, which were always fairly high thanks to a low population and council schemes where tenants bought out their properties.

    The availability of credit to Buy-To-Let investors pushed up house prices.
    How many Landlords existed per1,000 hd. of the population in say, 1995, and again in 2005 ?
    The number of homes in the country roughly doubled in that period.
    That is a unique occurrence in the whole of Europe.
    Ordinary home-buyers weren’t all, as is still repeated today, infected with some self-serving greed that was corroding the Nation & it’s economy - they were watching house prices rise at a rate of 10 - 15% a year, rents went up from 300 punt to 1,500 € in those ten years, and of course rent is money burned. People bought homes in fear that if they did not they would be permanently impoverished. They often were moving into sub-standard housing in a forced economically regressive move from the typical home-type that their income-group had traditionally had access to, hoping that at some point they could move back into a semi-detached (!)
    Some may have been deluded that their homes were worth what they paid, and that they were not being robbed.
    For there’s no two ways about it - housing is one of life’s essentials, along with food, health and education, and when you push these things up in cost to such a degree that they cannot be afforded save through indentured servitute-debt you are committing a crime against society.

    So, for that 3 or 4% of the population who were greedily amassing portfolios, like the unscrupulous who hoard food-stocks during war or famine, a whole country is being publicly tarred, recently by it’s alleged taoiseach when addressing an audience including some of the credit agencies behind the scheme.

  73. The Alchemist Says:

    @mark

    Indeed. And let’s not forget equity release. That particular offering pushed up valuations, over heated the market, etc. Inflated asset prices everywhere.

    The impairment figures from Ulster Bank today suggest that property still has some way to fall. Hard times still ahead.

  74. Brian O' Hanlon Says:

    Kevin,

    Looking forward to reading your article, when I get an opportunity. BOH.

  75. Brian O' Hanlon Says:

    Kevin,

    There is one quick point I will make. Based upon a fairly intensive bout of research I undertook myself recently, for a simple little college assignment for an economics subject - one of the most interesting idea (apart from Geanakoplos’s description of the Leverage Cycle), - was that view contributed by Vincent Reinhart, in his American Enterprise Institute article When they were young, or his Journal of Economic Perspectives paper, A Year of Living Dangerously: The Management of the Financial Crisis in 2008.

    Basically, it is the extent to which politics has caused the current economic turmoil, rather than the other way around - economic turmoil having an effect or consequence for politics. I am firmly coming around to Reinhart’s idea of things. Bear in mind also, that it is no coincidence, that Irish political parties who pay millions to the likes of Goldman Sachs, for what former minister for finance, Brian Lenehan used to call best international advice - that many of the former White House, and Capitol Hill staffers, who moved into the private sector - can command fine prices now, for handing out the playbook, that the Clinton Democrats would have used in the 1990s, to save the world.

    Certainly, when I listen to a September 2009 podcast featuring Dail finance committee member of that day, deputy Frank Fahey exchanging blows on Newstalk Lunchtime radio program, with the great and famous Eamon Dunphy, on the subject of Nama legislation, I am very reminded of Reinhart’s observations, of the Clinton Democrats, and their need to find a role for government. It is worth bearing in mind, that while president Reagan and his 1980s philosophy is often pointed at in blame - there is also the side of the coin, that Clinton in coming to office in 1993 - was desperately to re-establish government at the centre of peoples’ lives. In fact, the recent American PBS documentary on the Clinton era, does a nice job of explaining, how the young, handsome JFK had such an impact on the young Arkansas man - and how JFK had really made government sexy again. I just worry a lot about the use of these international ‘best advice’ consultants that we use in Ireland, to outline our policies, and to what extent they are tailored, to make government look like the young handsome, energetic Robert Kennedy. BOH.

    http://video.pbs.org/program/american-experience/

  76. John Corcoran Says:

    @ Mark
    Who organised the valuations ?
    Who controls the broadsheet media property propaganda?-the property advertising revenues of the auctioneers and surveyors.

    95% of all property sold in this state is sold through members of Society of Chartered Surveyors or auctioneers. They control which broadsheet gets the advertising revenue. They had the power. They controlled the broadsheet media. Can you recall an Irish Times editorial saying there was a property bubble? Their property advertising revenues would have finished the same day. In every loan file there is a valuation from the property professionlas. They are the property experts.

    The property professionals controlled the country.

  77. John Corcoran Says:

    Unfortunately the quality and qualifications of TDs is average to poor. I doubt if any TD has created a business or a job ever. Economics used be referred to as political economy and a knowledge of this subject should almost be a pre requisite for our TDs. The quantity of TDs is excessive and the quality inferior. The majority of the current cabinet were in the Dail for the bubble years and never flagged it. Therefore they failed the 95 mark question and should consider apologising and resigning immediately.
    David McWilliams in 1999 told Gay Byrne live on the Late Late show that there was a property bubble and was ignored. The rate of pay should reflect the skills needed to be an educated and informed legislator and should be abated by the honour and power of representing your country at the highest level.
    Most of the current cabinet presided over the destruction of our economy. Failure should not be rewarded.

  78. DOCM Says:

    @ All

    I cannot resist inserting this link to the discussion in the Dáil on the outcome of the recent European Council. If there are doubts in anyone’s mind (a) as to the quality of our political representatives (b) the efficacy of our parliament, the exchanges should put them to rest.

    http://debates.oireachtas.ie/dail/2012/02/21/00014.asp

  79. Paul Hunt Says:

    Surely it should be ‘absymal quality’ and ‘absence of efficacy’? :-)

  80. Tim O'Halloran Says:

    @John Corcoran

    “Economics used be referred to as political economy and a knowledge of this subject should almost be a pre requisite for our TDs. ”

    I agree most TDs on all sides went with the bubble. They had a sound-bite understanding of economics. However, they did accuarately reflect the views of the generality of Irish economists. Why should TDs have flagged the bubble when economists did not?

    It is ludicrous to abolish the Seanad and not the ESRI. It was not the Seanad’s job to flag economic icebergs, it was the ESRI’s. And if it wasn;t why is the taxpayer paying for it at all?

  81. John Corcoran Says:

    @TOH

    President Harry Truman–”the book stops here”.
    The highest property prices in the world–the fifth highest commercial rents in the world, your four year old would ask a question ” is this for real”.

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