Central Bank Quarterly Bulletin

The new bulletin is here.

15 replies on “Central Bank Quarterly Bulletin”


“IRISH HOUSEHOLDS have suffered the most severe wealth destruction in Europe, according to a study published yesterday by the Central Bank using new Irish and European figures.”

Probably about the most irritating thing you will read this Easter.

Irish people paying down debt is unrelated to fear for the future?

I would also suggest that some of the ‘averages’ (e.g. at the end of 2010, Irish households’ net wealth stood at 6.5 times their annual disposable income) may be somewhat skewed by a relatively small number of people have oodles and most people having a lot less.

I would imagine that the situation has become a lot worse since the end of 2010.

I forgot this gem:

“Irish disposable income has fallen by more than in any other country surveyed.”

Consumer-led recovery anyone?

“I think I tolled ya so!”

Back in 2005 I chanced upon a short piece. Alleged that Irl (in terms of wealth) would go from # 2 rank in EU to last: time span – a generation. I thought the author was completely dopey. So I started poking about. Hmmmmm …. and two years later. Guy was ‘dead on’. Bit previous perhaps, but the analysis was essentially correct. One cited causal factor: our very insecure energy security situation. He did also allude to a rather ominous bubble in property prices.

So, like I say. You heard it here first. 🙂

The ‘Irish ‘economy is a Hall of Mirrors:

‘As the graphic illustrates, Irish export growth of 4 per cent in 2011 put it in 21st place among the EU 27, well below the EU average growth rate of over 6 per cent. But this headline figure masks a difference in performance between services exporters and their goods-making counterparts.

Irish exports are extremely unusual in that almost half are accounted for by services (one-fifth is a more normal share for a developed economy). Last year Ireland’s comparative position in services exports was good, with annual growth of 5 per cent, exceeding the EU average of 4 per cent.

Goods exports, by contrast, did less well. A growth rate of just 3.4 per cent was half the average, putting Ireland in 25th position among the EU 27
…….Finally, when measured by the contribution of net exports – exports minus imports – to economic growth, Ireland was much higher up the EU league table.
But that was because Ireland was one of only five EU 27 countries to record a fall in imports last year. A quirk of national accounting means that a fall in imports causes GDP to rise, even if falling imports is not necessarily a good thing’


With regard to Dan’s Baltic lesson for Ireland…..this is a little dated but the analysis is probably still sound:

‘Vytautas Zukauskas, expert at the Lithuanian Free Market Institute (LFMI), says that, despite brighter general assessments for Lithuania’s economy, “its very bright scenario for 2011 is unlikely.” According to LFMI, in 2011, GDP growth will be about 3 percent; exports will rise approximately 11 percent, while the average salary will go up 3 percent. LFMI’s expert asserts the high unemployment rate will be one of the biggest problems for Lithuania this year. “It will go down a bit, but it will remain high overall – about 16 percent. An unemployment decrease should be related to laying a general foundation for economic growth. It is very important not to adopt what at first sight seems attractive, but, at the end of the day could be situation-worsening decisions; this could be, for example, not to increase the minimum wage,” Zukauskas said.
He emphasizes that the shadow economy will remain a burning problem in 2011. “Its share in the gross domestic product will reach approximately 27 percent this year. At least 36 percent of all households will do a part of their work activity in the shadows. Thus, the shadow economy scenery will not be much different from what we saw in 2010. We have to admit that the shadow economy, for a good many people, remains as an alternative to poverty and unemployment. Due to its vast spread during the crisis years, Lithuania has avoided major social unrest. It is the state’s concern to pull its inhabitants out from the shadows,” Zukauskas contended.
He claims that export growth will be one of the very few buoyant indicators in the Lithuanian economy in 2011. However, he cautions, it will affect positively only some enterprises. “It makes sense to take advantage of export possibilities; however, it cannot be a foundation for Lithuania’s economic recovery and growth,” the expert warned.
Zukauskas maintains that the state sector’s deficit and debt will be a burdensome issue in 2011. “The downturn has exposed a lack of flexibility in the public sector. It is estimated that in 2011, the state’s debt will make up 40 percent of GDP, while in 2008 it comprised only 16 percent. In comparison with other EU states, Lithuania’s debt is not very high. However, we should have in mind that, even during the double-digit GDP growth years during the economic boom, Lithuania was not capable of decreasing its debt. Since 1998 it has been constantly growing in Lithuania. Thus, it purports that Lithuanian officials are not good at managing it. Likely, with the recovery spreading, politicians may not be willing to handle it in 2011 either,” Zukauskas asserted

@ PR: “A whiff of rat.”

Yes. I have a Tracker with UB, so I am waiting patiently to see what they are likely do propose. Having externalized their debts to the Sovereign (ie. the taxpayers), the financials now have to figure out how they can enlist the Sovereign as their debt collector enforcer. Big Brother Phil sort of thing. They seem to be well on track.

I trust the financials to be completely untrustworthy. If only we had both an unfettered, constitutionally protected Ombudsman, and an unfettered FoI.

What was the domestic demand of the Baltics ?
I am not big into Maoist export drives to pay off malinvested Swedish debt to be honest.

What I have read about the Baltics is that their societies have effectivally imploded.
Their generally stoic nature masks the damage done to these places – with the old remaining while the young have left the building.
I remember having a conversation with a beautiful lithuanian / Russian ? girl during the boom – she said her town was devastated (Visaginas ?) by the nuclear shutdown programme.
I don’t believe in this Europe , its a rentiers paradise – its time to re nationalise our monetory systems and rebuild the real capital base.
That will involve substantially reducing our import dependency as it opens us up to external financial shocks.

The printing of domestic currencies by each central banks to replace all or at least replace most of this bank credit (or better yet their Treasuries printing) will develop semi rational domestic commercial relationships again.
That will more accuretly reflect the true input /output dynamics.

@Philip Lane/ @Others

Clarification requested.
From Page 11 of CB Bulletin

“Within construction, all sectors – residential, non-residential and civil engineering – experienced a decline, falling by 19.8 per cent, 3.7 per cent and 27.6 per cent, respectively. The construction sector now accounts for less than 6 per cent of output – down from a peak of almost 15 per cent in 2007.”

Yet Table 4 from the recent GDP update from the CSO
puts construction at approx 2.6% of GDP.

Which figure is correct? Or how does one reconcile the two figures?

@Brian Woods Snr

“the financials now have to figure out how they can enlist the Sovereign as their debt collector enforcer”

I’d say you were on the right track. Be careful you don’t wander down any dark alleys spreading messages like that though. Boardroom terrorism is alive and well.

Outflows of deposits held by the non-resident private sector have slowed in recent months. Based on the average for the two months ending January 2012, deposits from the non-resident private sector fell by an annual rate of 6.7 per cent. This compares to an average annual decline of 23.9 per cent for the same two-month period to January 2011.

Continued outfl ows of deposits have resulted in a further decline in both Irish resident M1 and M2. Currency in circulation increased at an annual rate of 6.1 per cent, based on the average for the two months ending January
2012. However, this was more than offset by the decline in overnight deposits outlined above, resulting in an annual rate of decline in Irish resident M1 of 7.3 per cent, based on the average for these two months. Developments in term deposits with agreed maturity up to two years have contributed to an easing of the pace of decline in Irish resident M2 in recent months. The average annual rate of decline in these term deposits was 5.4 per cent in the
two months ending January 2012. The Irish contribution to euro area M3 fell at an annual rate of 4.7 per cent, based on the average annual rate for the same period. In contrast, during this two-month period, the equivalent measure for the euro area M3 on a whole is an annual increase of 2 per cent.

Enough said…..just one more sign of continuing decline, reinforcing further decline.

@ Dork
Exports nowhere near as big a proportion of their GDP as ours, so can never pull them out of the bog. Note even in theory, as they are supposed to do here.

Concur with most of that, but reducing our import dependence will be rare fun.

The money supply is declining.

I hope people are aware why this is the case.

Banks create new bank-account money whenever they process a loan. This involves typing a higher bank account balance for the borrower without reducing any other account.

Equally, as a loan is repaid the bank will reduce your account without increasing any other.

This is why there can be less bank-account money during a recession.

Reducing personal debt my sound like a good thing but we must be mindful that it reduces the money supply by the same amount.

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