INTERVIEW: Ireland’s Economy Could Recover Very Strongly

Eamon Quinn interviews Brian Hayes – article is here.

46 replies on “INTERVIEW: Ireland’s Economy Could Recover Very Strongly”


from Ivan Yates

ENDA Kenny’s presidential address to the Fine Gael conference included the obligatory sentence: “Ireland will not default on its debts”.

They refuse to get it. Ireland is marinated in debt at every level. These debts are unaffordable. Whether it’s promissory notes, tracker mortgages or Eircom, the solution will require, sooner or later, debt restructuring. Debt deferral only buys time. For Ireland’s economic recovery and societal salvation to be achieved we have to face our problems with honesty. The same scriptwriters that convinced Brian Cowen, that a sovereign bailout was avoidable, have persuaded the cabinet that economic growth can lead us to debt sustainability. They were wrong then and are wrong now. ‘

Read more:

Just close your eyes, click the heels of your ruby slippers together three times and tell Toto, “I want the economy to recover, I want the economy to recover, I want the economy to recover.”

Talking to Toto is not a strategy.

|@ David O’Donnell
You are completely right and I really don’t know why these politicians behave so disgracefully.

I will just pick one sentence from the many follies. “”I think people recognize that they (trackers) are a noose around the [lenders’] necks,” he said.”

Hmm, many of them also feel a noose around their own necks since they will be in negative equity for years to come, paying down mortgages on a property that is worth a fraction of what it was valued at by the banks and their expert valuers. While they are doing this, the government want to take aim at a second bailout from ESM to protect themselves from having to face reality after Croke Park. This “insurance policy” as Enda Kenny calls it, is referred to as the new Fiscal Compact and is being sold to the people as ‘doing the right thing’. Doing the right thing can be interpreted as, making sure there is money there to pay my salary. It is the wrong strategy completely for this country.

“”A good deal [on the €28 billion of notes] for Ireland would be stretching out the payments over a longer period with a more competitive interest rate,” he said. “I am not going to speculate on [how many years] but significantly more years than is currently there in terms of the existing deal..would certainly help the debt profile.”

Mr. Hayes said the government is also hoping to address the problem of about €30 billion in loss-making tracker home-loan mortgages held by Irish banks. The mortgages are losing money for banks because the loans cost customers very little above ECB rates, and don’t adequately reflect the costs incurred by the banks.”

Now according to my calculator, 28bn plus 30bn = 58bn.

In reality this bit isn’t really true:

“In late March, the government replaced a cash payment of €3.06 billion it was due to pay out on the promissory notes with a long-term government bond. ”

And 58bn Plus 3bn = 61bn

That EFSF & ESM must really really like Ireland. After June 2013 there will be 500bn lending capacity in the ESM so far as I recall.

500bn less 61bn = 439bn.

Spain can’t get any bonds away at a sustainable interest rate that are longer than the LTRO. It wouldn’t be too surprising id the Monti novelty wore off Italy before long as Europe slips back into recession and (note today’s NFP number) the US continues to dawdle along. Will Greece be forced out of the Euro or get another ‘bailout’?

Still, whats 61bn?

Not a second bailout anyway, according to the government!

I wonder if the people being asked to take on the 30bn of trackers will ask for an estimate of the stimulus they already provide to the Irish economy through the provision of extremely low mortgage rates to many households.

Europe is already in a whopper of a recession – it looks like late 2008 early 2009 to me.
If you look at EU new car reg for JAN it is marginally higher then the Jan 2009 shock .

But if you look at the Feb figures……… compare & contrast feb 2012 with feb 2009 figures.…/20120315_PRPC-FINAL-1202.pdf
We are going into the pit again.

Europe can no longer afford car based transport …… the input costs are just too great.
And yet it is still sucking capital from other areas – we just won’t give up on it too easily.
Those guys up in Dublin just don’t get it.
We are looking at a phase transition in the way we live and yet they refuse to accept reality , which means we continue to invest in the wrong areas………..dead debt.
I just don’t get it – people accepted buses would replace Trams and narrow gauge in the 30s.
A regression to a lower energy density time is not in their programming it seems.
It still remains a land of concrete dreams.
Despite getting kicked in the bollocks we incredibly refuse to wake up.

Sorry the feb thingy did not come out right
Refer to
& then look to the right
Passenger cars: registrations drop by 9.7% in February 2012
second graph.
Also refer to PDF document below for more detailed info.

We are essentially bailing out the core so that they can waste it via capital misallocation.
Madness squared.
Almost All available capital that can be mustered should be vectored towards New Nuclear Build & Rail transport but it cannot happen in this monetary envoirment as the currency has been kept artificially strong giving sucker to Arabia, China & a smaller & smaller fraction of Europe.

@ dork,

I agree with you to an extent, but it is possible to overstate the importance of oil. Europe had net imports of 3.3 billion barrels of oil in 2010. At €100/barrel, that’s €330 bn. This is about 2.5% of our €13,300 bn 2011 GDP. But there’s no doubt that the marginal barrel of oil has greater utility in the Orient which given limited supply puts the pressure on us.

The production decline rate in mature fields has stabilised at 2% per year down from 3% in 2008. A recent report by the vampire squid shows lists 360 projects which would have a peak supply (in 2020) of 25 mb/d at an oil price curve below $100/bbl. Of course execution has always been below expectations and projects are now riskier.

Thanks Philip for putting that on the record.

Does that man think that the US is another planet? Ridiculous

The correct price of oil should be much higher in the eurozone.

You must remember the boys in the ECB have created a massive deflationary engine that is feeding Germany.
This means the PIigs cannot substitute goods for other goods as they have not got enough tokens to engage in commercial activity
( these Piig economies are effectivally in hibernation hoping for summer soon but there might not be a summer so although they are burning less calories they are still burning calories for no purpose)
Meanwhile in the Sterling zone Transport substitution is taking place as we speak with massive increases in rail passenger numbers as not only has there been a rise of the oil price but at least until recently a rise in the number of tokens available to purchase goods.

Look at the med / heavy bus reg data recently from countries of roughly the same size , UK / Spain / Italy.
This could be a statistical quirk given the limited data set but……(I will look deeper into it)
UK med / Heavy Bus sales

Jan Y2011 : 363 Jan Y2012 : 450 a 24% rise (Spain -63.5%) ( Italy-35.2%)
Jan Y2011 : 256 jan Y2012 :491 a 91.8% rise (Spain -35%) (Italy -24.6%)

Looks like effective good substitution is happening in the UK while the 2 biggest pIigS are in the killing pit.
(Ireland is showing massive % rises in the 100s but it is too small to make a judgement)

“In February, new bus and coach registrations grew by 2.5% in the EU*, boosted by demand in the UK (91.8%) and Germany (+13.1%). From January to February, the same two markets remained the largest, growing by 52.0% and 16.7% respectively. France (-7.3%) ranked third, followed by Italy (-29.7%) and Spain (-53.7%). Overall demand in the EU* fell by 1.2% during that period.”

I think one of the problems with economists is that they have it too cushy in the main – they forget about the nuts & bolts of the economy – one of the most important nuts is transport

Yeah the 2011 Data effectivally confirms my hunch ……. you had growth in Germany and some growth in France during that year while Iberia & Italy contracted
Total commercial vehicles for 2011
Germany +18.7% / France +5.6% / UK +17.6%
Italy -3.4 / Spain – 6.6%

As for Y2011 buses regs increases which may or may not confirm people are dumping their cars for something more efficient although there is a time lag of some period between new demand and purchase of a capital good I guess.
(but you must still have available money tokens for bus transport – otherwise it shanks mare)
Germany -3.4% (too rich for buses) / France +15.2% / Italy +33% / Spain 10.3% (enough tokens for transport)
UK -16.4% ( a hole in my pet theory ?)

Portugal -32.8% (too poor for buses ?) – although too small to be statistically credible I guess.


A mad Irishman is not a Aberration.

However a mad Irishman that somehow gets even is statistical freak.

If you can find one put him in a museum for us …… we can all have a good look at him as we have never seen one before.

One key issue about the economy is not the disconnect between the exports sector and the domestic economy but the deflated rise in exports by over 60% since 2000 without any net jobs being added.

Services export data are significantly overstated. I have done research on this which I will publish next week.

A few thousand workers account for a third of services exports.
On the goods side, exports have hardly changed but there has been a big rise in industrial production while traditional industry industrial production is down about 11% since 2000.

There has been a big rise in ‘wholesale trade’ by US firms which could explain the apparently huge jump in labour productivity.

UK bus & coach sales
Jan Y2011 : 256 jan Y2012 :491 a 91.8% rise (Spain -35%) (Italy -24.6%)

Sorry that should read FEB.

FEB Y2011 : 256 FEB Y2012 :491 a 91.8% rise (Spain -35%) (Italy -24.6%)

We are looking at a complete failure of European monetory & fiscal policey and as a consequence its energy policey which is really a belief system rather then a practical endeavour.

Just listened to Bernard Ingham on Sky news – he was trying to introduce rationality into the debate…………
First thing we do is Ban all investment in wind farms.




from Ivan Yates

ENDA Kenny’s presidential address to the Fine Gael conference included the obligatory sentence: “Ireland will not default on its debts”…”

Surely there will come a point in the very near future when Enda Kenny will have to make a choice between being labeled a ‘Defaulter’ or a ‘Liar’.

Perhaps its just my upbringing but I’d much prefer to be called a Defaulter. Being labeled a Liar has much more serious long term implications because the element of doubt around your personality pervades you until your dying day.

I’m sad to say that Michael Noonans statement to the Dail re the PN non deal came dangerously close to being labeled as a lie to the citizens. One wonders for how much longer such Govt statements will be as cryptic – in time the more obvious ones will come our way and the Referendum debate will be full of them no doubt. Watch this space.

@PR Guy on Brian “The Brain” Hayes analysis of international economic trends.

Just close your eyes, click the heels of your ruby slippers together three times and tell Toto, “I want the economy to recover, I want the economy to recover, I want the economy to recover.”

This make total sense to me.

“close your eyes”: Only then can you see the part of the Fiscal Compact that announces it is a gateway reform.
“click the heals”: Sign the Fiscal Compact and implement further growth enhancing austerity[*1]
“of your ruby slippers”: Your shiny obligations to your Eurozone partners.
“three times”: The two pack, the sixpack and then the Fiscal Compact. This time we really mean it markets – we’ll be good to you!
“tell”: signal your extreme seriousness to.
“toto”: The large and aggressive German Shepard who has trapped you in an empty office building and then repeatedly bitten you as you tried to leave but who you remain strangely devoted to.

Note [1]: Please note that the growth enhanced will not in Ireland and may in fact be in central European financial sector balance sheets, but we are all partners in this – right!

Just to clear my mind, when you advocate default along the lines of Greece, do you also advocate the 50% cut in pensions, the slashing of public employment and public services.

@Yields or Bust

Without honesty – we are done in!

Oracle Hayes adds to the confusion … if these politicos cannot figure out how to implement a reasonably fair property tax what hope that they can figure out how to make a case for ‘write downs’ on odious financial system debt?

I cited the piece from Ivan Yates – which, imho, is realistic in terms of addressing the ‘real’ debt dynamics.
I see a write-down of a minimum of 50billion of financial system debt, which should be EU, in line with the calculations from the Kiel Institute for the World Economy as step1. Otherwise present insolvent/unsustainable will lead to bigger crash down the road and decimation of real indigenous economy and massive depletion of high quality younger human capital – not a lost decade but a generational desert from which grass might never grow again. The Gougers are still being protected.

I put some basic ideas on previous thread in response to John McHale on local changes/initiatives that remain within our control.

In terms of state expenditure, I think it wise to review all the excessive ‘buy votes’ increases, including pubsector pensions and upper level salaries for all upper echelons, introduced by the ideologically insane PD/FF administrations from about 2000. In terms of puplic services, there is huge room for increased efficiency and productivity – mainly process and technological that are possible and now economically imperative. I could go on and on … not simply cutting the few bob for the blind or leaving the older underclass to simply die for accounting related reasons. but Heineken cup awaits ….

I think this is visible to pragmatic realists on left, roight and centre. The Political System is failing abysmally – which I predicted on this blog in mid 2009. I’m beyond ideology at the mo ….

I think you are ducking the question a tad. The bulk of the “defaulters” do not live in the real world, viewing it as a relatively painless exercise. If your premise is that all bubble era debt has to go away then all bubble era increases in income will be put on the table at the behest of our creditors. So PS wages, transfer and employment terms have to go back a decade. Same in private sector. It will be painful and unfair.
As in the Greek example sOme of those with assets will have them outside the reach of the revenue.
As such a process may also be unpopular abroad we my have to resile from membership of various EU institutions perhaps up to and including the EU itself.
The alternative is to plough on not the present couse and hope for a game changer in terms of something like a Spanish default which forces the system to break or the Germans to pay up to save the Union.


Peter Mathews, when in the Bundestag, explained to the bund’Estagers that an equivalent bust in Germany would have cost the Germans 1.3 Trillion. We are simply not communicating this reality at EU level.

Everything is on the table: we need a serious write down on vichy-debt or IBRC reloaded with trackers and Nama in perpetuity and ever expanding interest payments and gougers in control will leave a wasteland.

First step, which Yates puts clearly, is to face reality on Debt – not the simplistic soundbites from the politicos. IMF are realists. Second step is to communicate this reality to Europe. Jaw Jaw. Then project ability and balls for Unilateral if necessary. PussyCats get nowhere.

Irish Final possible in Heineken Cup! Pints at a £ (-;

Again, talk is cheap. The Germans are not listening & have no inclination to negotiate. Moreover we have no intention as a society of taking any pain. So round it goes.
Perhaps we should send in Peter to bore them with golf analogies.

in our history we have been here before .. spose it’ll have to be a Coup then! Have you met Blind Biddy? She just got another consignment of those bazookas from the backs of a hundred camels from the Taureg in the Sahel …. gratis, compliments of Nikki’s lunacy in north africa … which has destablised the Sahel …

I would say the German’s are quaking. Your negotiating stance carries all the potency of a Kerry intercounty team in hurling.

Damian Kibred article Sunday Times February 2011

“A very strong PR campaign has been launched to protect the vested
interests of a small coterie of institutional property owners in the
debate over upward-only rent reviews. In tandem,there`s some
bleeding-heart commentary on the impact of the planned reforms on the
National Asset Management Agency`s balance sheet. The theory is that
Ireland will become a pariah state if it decides to protect its entire
rertail economy–including 200,000 jobs–by moving to a more
business-friendly property leasing system.

This campaign to protect the current leasing system is special pleading
of the worst kind. It is the sort that enabled the British Liberal
party to ignore the great famine of 1847 so its theories on market
economics might not be disturbed. Its time to get real “


You don’t seem to get it – follow the line – it eventually leads to where Ivan Yates indicates i.e. a default. Its not a question of choices its a case of being honest with the citizens and spelling out the inevitable. The consequences of a default have been spelt out in a recent book, perhaps you could indulge.

Read again. A default is highly likely in the absence of a policy change in the EU. The impact will be felt mainly by the bottom three quarters of the population in terms of reduced living standards, services etc. Anybody peddling it as a painless solution is a snake oil merchant. The top 20% will do ok. Assets will be largely offshore and beyond the reach of the tax man- again look at Greece.

@ Likely Lads
Default withen the Euro or outside ?
It appears it best to break with the Euro given the Greek experience as the core gets the oil ration wether we Drachmaise the place or not but at least we would have a positive money system domestically.

Or perhaps we can just print euros and participate a inflationary collapse of this Soviet.
What exactly could they do if we Print at the very least to keep the domestic M1 stable as Steve from Virgina suggested.

I have to say I am shocked our masters do not accept printing base euros to pay off malinvested debt , I mean if you accept these absurd debts must be paid you must inflate the base right ?
I mean the UK bought 1 quarter of all the buses in Europe during Feb !!!!……….there is very little oil good substitution happening outside of Germany & the UK now.

This is the craziest Monetary policey I have ever seen.


I’ve never claimed that default on vichy financial debt is painless.

That said, I’d take the full back line from the Kerry Hurling Team or Camogie Team into any negotiations before any of the PD-FF-FG-LP of recent years. After declaring a state of Emergency, I’d back it up with the savvy young turks in Sinn Fein, one or two of d’independents, and a battalion from Blind Biddy’s Citizen Army. Who cares what the Germans or the Frency think or not – time to place the interests of the Irish Citizenry First.

p.s I’d keep an eye out for Kerrywomen with white shillelaghs 😆

Picking the Shinners will only lead to disappointment. Remember they are now administering British rule on this island!!!’
Sadly I would not send you to pick Amy negotiating tram for this country as I think you have no testicular fortitude for what lies ahead.


No part of this Island is sovereign at the mo.

As to my ‘testicular fortitude’, as you put it, come out of your anonymous burrow and I’ll address you at dawn in Merrion Square. Blind Biddy will act as my second.

I’m with Dork
Default and then print euros in Dundrum until the paper runs out.

@John Corcoran

“A very strong PR campaign has been launched to protect the vested
interests of a small coterie of institutional property owners in the
debate over upward-only rent reviews.”

aka Pension/investment funds. A difficult campaign to make fly though without government support – whether that be covert or overt.

Going back to fundamentals;
When processing a cashless loan a bank increases the borrower’s account without decreasing any other account. This is how money enters circulation and this is why every euro has a corresponding debt.

Any money required to give an increase in GDP will also have a corresponding debt.

Deferring debts buys time. Ultimately so does debt restructuring but this recession does provide a platform with which to discuss a better origin for our money.

@PR Guy
Get rid of the Euro and bring back national currencies and we will lose this deflationary wage arbitrage regeime.
Irish rail has had big problems with its Alstom vehicles over the years but I think the vehicles or vehicle parts were made in its Spanish plant where quality control was poor. (open to correction)
With the IE8200s EMUs Dart vehicle being particullary unreliable.

They also apperently intend to retire the Alstom IE 2700 (with one rumour they are to be sold for spare parts to Scotrail)
Its a shame – they could be used for the Waterford Rosslare port route with some DMUs stripped to keep others going.

When we go back to the Punt we will need every Irish Gauge loco & DMU available no matter how old.

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