Growth in 2013

@Kevin O’Rourke

“Am I the only one who thinks that plus 2.2 per cent is wildly over-optimistic”

You are not alone.

Just a comment from someone in the real day to day economy – if the economy continues to perform as it has over the past 2 years there will be no GDP growth and GNP will remain on a negative trend for the next 3 years. As a business with a lot of experience and intelligence we do not currently see any trend or sign which is pointing to anything resembling slightest growth.

@Nuts

+1

So is Noonan lying or just wrong?

No, its part of the same propaganda machine that gave you melt down, ‘the guarantee’, a penal fail of a bailout; not satisfied with that, now followed by a Treaty that has the same respect for giving away the Irish Constitution as The Indian Removal Act of 1830. Its the ‘one, two, three’ stroking of the figures, Irish jig of figures goes like (3,2,1)² or (1,2,3)² with minus and plus multiple floating variants that lead to leprechaun pots of gold for official Ireland, as they try to win respect for the governors of the future principality of Direlandstein. Reality is cubed in Tir na N’Óg filled with its modern variants of Dermot MacMurrough. Forget Edward R Murrow Vs Senator McCarthy, see Irish McCarthyism portray its opponents as left wing loonies. You couldn’t make it up. Looking forward to the full campaign to see what crawls out of the woodwork 🙂
left wing loonies

Steve from Virgina

“A common remark is that for everyone to consume like Americans the world needs four more Saudi Arabias.

Since there are no more mega-suppliers to be had the next best thing is for demand to be driven to zero in some consuming areas so it can be exported to others.

Europe is ‘low hanging (demand) fruit’ because it is not federated: finance can bankrupt Europe simply by refusing to lend to it. Any fuel that isn’t consumed by Europe is available to be consumed elsewhere … in America or China. Since Europe consumes roughly 15 million barrels per day, cutting that to 5 million is the same as discovering a second Saudi Arabia … without having to take the time to drill any wells.”

Dork – there was 1MTOE less energy consumed in Ireland during Y2011 when compared to Y2010.
In a world without energy growth or decline that energy went somewhere else – be it Germany , the US or China.
They aim to drive the periphery into surplus in the most brutal monetary manner as there is no more Saudis to conquer.
We are going back to our 19th century roots me fears – and I am talking the first half of the 19th century.
Especially after the end of the Napoleonic bubble and the non default on debt policey that pretty much destroyed this country.

In my opinion Europe has been dead in the water since the early 1980s.

You had a rise of the pro bank credit anti money production mob.
This made new Nuclear impossible as it needs money rather then credit production.
Major countries programmes such as Italy & Spain were halted in the early /mid 1980s.
While the UK did it deindustrial thingy and France soon followed ….EMU finally killed it.

No BTUs no Buck Rodgers.

For Irish GDP in 2013 –

OECD has 2.4%
Eurostat has 2.3%
DoF has 2.2%

which we can interpret as a reassuringly accurate consensus or else cautious herding in a random direction.

Here’s an entertaining book on the futility of most expert forecasting:
http://www.ft.com/cms/s/2/3a56fb46-7ce7-11e0-a7c7-00144feabdc0.html

@ PR Guy
“So is Noonan lying or just wrong?”

I belieeve in giving the man the benefit of the doubt – he’s not lying but he is being given the wrong numbers. The penny will drop sooner or later. The indigenous manufacturing base of the country is being quietly and slowly etherised.

Following the 0.7% increase in GDP in 2012, the Central Bank is saying 2.1% in 2013, the ESRI is at 2.3%, the IMF say 2.0%, the Reuters consenus foecast is 1.8%….a conspiracy of sameness perhaps, but what would be your own forecast Kevin…or what would be a non-wildy over optimistic forecast…

@ Kevin Donoghue

In the language of propaganda and Newspeak impoverishment of language, the goal above all is to emphasise the positive and build confidence. No Plan B will be allowed to diminish focus on achievement of confidence in a positive result for the main stakeholders. Scare mongering tactics will be used to denigrate positions not in keeping with the party line. Do not expect any high end discussion of the pro’s and cons. As in Orwell’s Animal Farm, teachers will be expected to absorb simple arguments and pass these simple arguments on to others in as simple a form as possible. One of the leading simple arguments used will be, ‘on balance, its best to vote Y’. This allows for suspension of disbelief and the belief the recipient of this information doesn’t have to think for themselves 🙂

Aidan Kane post on data journalism, interesting study here:

http://datajournalismhandbook.org/1.0/en/case_studies_1.html

@Brian Woods Snr

“I like Noonan, he was a very clever, astute politician. But he has lost his Moxie. I can summize why, but its too late to correct. Lying, no. But greviously misled, yes. I believe he has little idea that the advice he is getting is so poor. ”

Brian – if he’s so clever and astute, how come he hasn’t figured that out?
Just asking is all.

I am definitely moving to your camp on the growth thingy. Inflation, fiat money printing, more debt, natural resources consumption, growing populations, etc. firing up so-called growth just cannot go on. I think it’s ‘gone waved bye bye some’ (to use the Aboriginal term) – that bit on the rollercoaster ride where you slightly pause at the top before the rush downhill. I wonder if I will see the fall of the empire in what’s left of my lifetime. It would be interesting to observe it if nothing else.

@Tull
I assume you think we would still be the eurozone ?
If so you must right off private debt as public sector pay & welfare is really the only money production & distribution in the economy now.

The Minister comes out with a gigantic lie (that a “No” vote will affect the growth of the Irish economy) and here on irisheconomy.ie, you’re arguing about the accuracy of his growth projection.

Typical.

@Shay
There is a willful blindness to the two different types of money both vertical & horizontal.
In terms of wasting real resourses bank credit beats base money hands down but they wish to crush more & more people to sustain their completly unsustainable bank credit model both in their consumer bank credit inflationary phase and the money defaltionary phase when Mario gives them cheap money to bail out those catostrophic investments via a subtraction of your deposits.

After 1987 this country wasted more resourses on Grot then its entire history before that time !!
Mac the Knife did not do a austerity operation – he did a transfer of present and future resourses to a kleptocratic local elite.

The horror the horror….. the waste the waste….

@Kevin O’Rourke’s

I am curious. Am I the only one who thinks that plus 2.2 per cent is wildly over-optimistic, unless there is a radical change of direction in Eurozone macroeconomic policy?

Now hold on there sir. The emperor’s suit is a little diaphanous, I’ll allow, but there was definitely a hint of some material fluttering there and I love the detailing on the crotch..

Given the trends in GDP growth that the current policies have produced expecting these trends to change unless either the policies change or the wider economic environment improves is deluded. Plain and simple.

On that front a “Yes” vote is certainly a negative, it strengthens the hand of those who have advocated (and enforced) the current policy set.

@Bond Eoin Bond

@ Ernie

do you think there are no negative growth implications, directly or indirectly, from a No vote?

There have to be, a certain proportion of FDI will be frightened away just by the idea that Ireland is not toeing the European establishment line, business investment is conservative in every sense of the word and that conservatism frequently trumps big picture analysis. On the flip side economic stability depends on more than just FDI and the capital attracted by lying back and thinking of the Euro may not make up for the capital lost through the continuing collapse in domestic demand. The economic calculus is involved.

Though it might seem a bit twee it might help us arrive at a synthesis if we paired off the pro/cons for the Yes and No vote and checked which seemed more plausible.

Vote
No: FDI is reduced as investors worry Ireland might be less “business friendly” (where friendly implies a certain amount of timidity)
Yes: FDI is reduced as permanent austerity policies reduce the overall levels of demand.

and so on.

I think that when we look at the implications for the overall direction of the EU and whether Ireland can survive in it the rationale for approving the treaty is very weak, however when it comes to the gut response of the capital controlling classes and the effect those attitudes have on Ireland’s economy the rationale for approving the treaty is on much stronger ground, at least while the German/ECB bloc is in the ascendant.

Postpone the referendum for six months is still my favourite option.

…don’t mention the international space station, it gets everywhere – worse than Simon Cowell.

@grumpy

“What is Michael Noonan’s line going to be after the referendum is passed?”

Er, external factors, beyond our control, southern Europe, unpredictable, volatility, global contraction, international space station, Simon Cowell, weak export markets, ECB not acting as lol, everyone’s fault but ours, …..

Many international commentators on FX are suggesting a significant devaluation of the euro against other major currencies in a relatively short timeframe (say within the next 18 months). It’s becoming commonplace (again) to hear of 1 euro = 1 $, etc, say 30-35% devaluation. That would be helpful! However, these fx projections have been consistently wrong (and the US just prints money or swaps it for euros in backstop arrangements) to keep its currency down. China is also suspected of being involved in keeping the euro high, in its own economic interest.

So, while I think the current Govt propaganda and spin is deplorable, it is difficult for anyone to rubbish 2.2% (or 4.5% in 2015 or whatever)…Projections are based on assumptions. Whoever is behind MN is optimistic, albeing far too optimistic in my view…..Govt believes that the Irish cost base has made the country super competitive and that, with a bit of luck, international growth will lift the Irish boat. There is feedback from the MNC sector for instance that much lower property rentals is very helpful. So too are much lower entry level salaries for qualified staff. A friend who established a very successful IT firm makes the same comments. The problem of course is that the internationmal economic climate is looking ominously threatening to the downside. Beyond that, the level of debt overall is far too high and simultaneous adjustment of private and public debt makes no sense at all.

Ultimately, there will have to be debt resolution I believe. I suspect that the John McH’s & co. are trying to buy time via the FC in the hopes that this point will be achieved /initiated by someone else other than Ireland initiating it, but knowing full well in the meantime that the current debt and fiscal trajectory is unsustainable (Ireland is chronically insolvent). The rationale I suspect too is that this approach is justified on the basis that ‘there is always a chance that it will work out’. The problem of course is that this crisis is going on and will continue for a long time. In the meantime, in the absence of some escape route based on the international economy turning positive, the domestic (GNP) economy will be increasingly decimated. If things get bad enough, social instability will set in….and then all conventional thoughts of foreign investor confidence, etc.will be moot. That point of social instability does not appear too far off…..but who knows.

I should add that Ireland also needs a functioning bank system to underpin any possible recovery of the economy. So, the Govt is also focused on that.

So, while I believe that debt resolution is required sooner, before the ‘no return’ tipping point under the existing Programme & FC path, so that Ireland has some base from which to recover (a bank-only foundation clearly willnot work…but what will be left!), the Govt can argue that it has been pursuing ‘conventional practice’ in pursuing ‘recovery’. Again however, my view (and that of many here also) is that recovery willnot look anything like the pre-crisis 15 years. Pursuing that vision is therefore folly…and unfairly favourable to Ireland’s ‘elites’.

@Paul
The fiscal defecit is the money supply , however there is no need for the money supply to be a fiscal defecit.
You simply print more money and the defecit goes away as more money would be available to be taxed.
However imports would collapse – the social dislocation would be large (destruction of the outer suburbs , sub rural areas , shanks mare for most etc etc.)

The waste withen the country lies in the built envoirment….

Good to see that some sectors in Ireland are doing well.

http://www.irishtimes.com/newspaper/breaking/2012/0503/breaking39.html

This is just insanity.

People with very lucrative careers to protect are most unlikely to come forward with career challenging forecasts, no matter how obvious the indicators.
That goes for all forecastors be they Irish, EC, EU or indeed IMF.
It also goes for private secotr organizations.
I remember doing a little forecast in August 2008, showing the impact of revenue falls to 80%, 75%, 60% and 50% of existing revenue levels. There was no comment at all on the fall to 60% or 50%. It was like the C word in times past. Not mentioned. But very scary and very real.

@ PR Guy: Been busy at the ‘day job’.

MN was very impressive. Not now. Which is a loss. Had he kept his Moxie he would not be Finance; he’d have gone through the mandarins for short-cut and have up-ended the Croker. Which would have been very un-PC. He’s a neutered tom cat. Happens.

I get the unwelcome feeling that a lot of folk are gazing fixedly where the light is shining, and not poking about in the shadows where the problems are lurking. When the light goes dim, the contrast is reduced – “Oh, no-one saw this coming!” Very true, ye were gazing elsewhere.

Frantic calls to the usual suspects. Usual guff. But this time it IS different and the peasants are a tad frisky! Less than a decade is my guesstimate. But who knows?

@ PR Guy
Blame FF (It is all their fault. MN only inherited the situation).
Blame the Loony Lefties (such as self-proclaimed capitalists such as Colm B).
Blame Fate and Faith.

Karl Deeter reckons the property market is going to bottom out this year and Noonan is calling growth for next year. I,d like some of their spliffs, pass it around Man.

Ministers spinning is not news and growth in 2013 is likely to be low.
The forecast of 0.7% GDP growth this year hardly got too much attention and I assume the main interest was that it would not be lower than 2011 and that’s why 0.7% was chosen.

A more pertinent question is what GDP growth rate would effectively mean no growth?

While it’s well known that the size of the MNC sector impacts key metrics, what is more important than ministerial spin and what should surely be of concern to the economics establishment are recent trends with the result that published data on for example exports, output and productivity are clearly misleading.

http://www.finfacts.ie/irishfinancenews/article_1024185.shtml

Someone mused about a possible -30% of EU v USD. That would sure bring a lot of folk into an upright position. Their energy and food bills would crucify them. Food looks to be cheap, but its not. There has been continual margin compression and downward changes in packet sizes and nett weights. Most consumers do not notice this – for a while. But its like ZIRP. It has an absolute bottom. Things stabilize, then turn nasty.

I guess the Norwegians don’t have a lot of faith in any Irish FM’s forecasts….

http://www.irishtimes.com/newspaper/breaking/2012/0504/breaking16.html

(Norway dumps all its Irish bonds)

Noonan’s comments on potential growth is nothing more than a thinly veiled threat that things could be worse if you vote “no”