McWilliams on the Fiscal Treaty

Depressingly correct analysis.

Yes will win though as most still compute (incorrectly) that the status quo is the best option.

I particularly despair that young people are being scared into maintaining the status quo when they have most to gain from upsetting the applecart.

Maybe if they ever get representation in the Dail that might change.

@actuary

I particularly despair that young people are being scared into maintaining the status quo when they have most to gain from upsetting the applecart.

The Irish Labour party, who one might expect to offer some resistance to the neoliberal Europe on offer are an old and conservative lot, the youngest of the four senior ministers is 56, their average age is 61. These are people who fear change and with no fight left in them.

The Irish Labour Party will of course be left ruined by this, which will greatly amuse their EPP ‘partners’ here and in Europe.

FC is about tightening the noose of loans around the neck of the Irish economy and making sure the bankers get their money back. This will lead to deeper austerity. Our debt profile will worsen and deepen under the demands of FC. More loans will be required at more punitive rates involving asset grabbing. Its time to leave the euro before the noose is pulled.

We won’t be ‘isolationist’ outside the euro, other countries will leave; its highly likely Germany will be among them

Other opportunities exist such as closer ‘commonwealth’ links to sterling growing more fruitful and beneficial economic links between UK and Ireland and Ireland and the rest of the world.

However, consider the scenario if the Irish economy economy is not meant to be self sustaining, but Debt sustaining. Deep austerity, cuts to public services – school, hospital closures, etc – are made as the weight of debt increases, sustained by declining growth due to the financing of this debt.

http://international.ucla.edu/media/files/Przeworski_Vreeland.pdf

“Program participation lowers growth rates for as long
as countries remain under a program”

Argentina was a country that suffered the catastrophe of policies re debt sustainability currently being pursued by our government:

“But it gets catastrophically worse for a country that has committed itself — as Argentina did — to a fixed exchange rate. When investors start to believe that the peso is going to fall, they demand ever-higher interest rates. These exorbitant interest rates are crippling to the economy. This is the main reason that Argentina has not been able to recover from its four-year recession.

It gets worse, Krugman on Europhoria and Nevada/Ireland comparison

http://www.nytimes.com/2011/01/16/magazine/16Europe-t.html?pagewanted=all

“What does this have to do with the case for or against the euro? Well, when the single European currency was first proposed, an obvious question was whether it would work as well as the dollar does here in America. And the answer, clearly, was no — for exactly the reasons the Ireland-Nevada comparison illustrates. Europe isn’t fiscally integrated: German taxpayers don’t automatically pick up part of the tab for Greek pensions or Irish bank bailouts. And while Europeans have the legal right to move freely in search of jobs, in practice imperfect cultural integration — above all, the lack of a common language — makes workers less geographically mobile than their American counterparts.

And now you see why many American (and some British) economists have always been skeptical about the euro project. U.S.-based economists had long emphasized the importance of certain preconditions for currency union — most famously, Robert Mundell of Columbia stressed the importance of labor mobility, while Peter Kenen, my colleague at Princeton, emphasized the importance of fiscal integration. America, we know, has a currency union that works, and we know why it works: because it coincides with a nation — a nation with a big central government, a common language and a shared culture. Europe has none of these things, which from the beginning made the prospects of a single currency dubious.”

Ireland remaining in the euro is simply not sustainable. Deciding to remain in search of further bailouts is a disastrous decision. Are we likely because of ill informed propaganda reducing the issues to trite ad absurdum trivial nonsense re growth, to vote Yes. Yes, we are.

Vote No and avoid the sudden realisation in years to come that by voting Yes, you share Benedict Ireland’s legacy of selling out your nation’s constitution and future, to those unconcerned banking interests, who’ll trample on your children’s future in ways your hopes may not realise.

@ Stephen Kinsella – if you are just giving out the information why do you not give a link to this:
http://www.indecon.ie/publications/policy.html
instead of a link the well known views of David McWilliams???

I wrote the following response to the equivalent article David wrote on his website;

Following our use of digital can provide a good analysis of why this recession is so unique and where we may be headed.

Prior to the 1960s a fifth of our money supply existed as cash. The remaining 80% existed as bank-account money. While cash and bank-account money appear to be one and the same, since they are interchangeable, both have remarkably differing properties.

Cash is created by the state and is spent into circulation by the Government. Bank-account money is created by the banks and loaned into the economy. Hence every bank-account Euro has a matching debt. Bank-account money is also deleted as loan repayments are processed so even though reducing our debts may seem like a reasonable thing to do, the bank-account money no longer exists after you repay a loan.

Since the 1960s our cash money supply has dwindled to just 3% of the total and the 97% existing as bank-account money, or digital money, comes with a corresponding debt.

This gradual increase in our use of bank-account money over cash has had many consequences on our economy because a much higher proportion of our money exists in tandem with debt and is only temporary since it’s constantly being deleted through loan repayments.

Since the 1960s it takes two incomes to run a household, recessions are much more severe and occur more frequently, we have housing bubbles which we didn’t have before the 1970s, The Government invents new taxes since its ability to create cash is insignificant, business is more and more about the bottom line, every economy attempts to become a net exporter, products become less durable, the country is often accused of losing its culture etc.

All of the above is primarily because we use more digital money over cash and because every digital euro has a corresponding debt.

This system of money creation is unsustainable and as David has pointed out before ‘When something can’t go on forever it will stop’.

To keep this system going we need people to organise more bank loans than year than last. The beginning of the digital money system in the 1970s was a self-fulfilling one because entrepreneurs could no longer earn enough from circulation to start up a business. Hence they got banks to create the money through lending. This made it even harder for the next wave of entrepreneurs who got banks to create even more money through lending.

Equally house buyers could not collect enough from circulation to buy a house outright and so they too got banks to create money, and debt, through mortgages. The next wave of house buyers found it even harder to buy a house outright and banks created higher and higher amounts of money, and debt, and mortgages have taken longer and longer to repay.

However mortgages have now hit a natural limit. They take two incomes thirty years to repay and cannot increase in duration. For this reason, and the inability of the money supply to dwarf itself periodically like it has done, we appear to be at the end of this system of money creation.

This system of money creation isn’t going anywhere. The policy makers are desperately trying to get bank credit, and it’s equal debt, flowing again but for the first time in history Governments, households and businesses appear to have no further borrowing capacity.

One solution is to provide debt-free digital money as well as cash to the Government. This is ultimately where we’re headed but it appears we’re a very long way off since the money creation/deletion system seems to be so misunderstood by politicians and, dare I say it, some economists.

@ Stephen Kinsella

You’re too young to sit on the fence when you have opted for a public role.

Whatever the choices made over the next decade, life will be difficult or desperate for many people.

The ancien regime has failed because of a failure to tell bitter truths to an electorate always ready to be bought. The alternative that will be on offer is likely to be some cocktail of policies that have been discredited wherever they have been implemented — sometimes at a huge human cost.

Economists generally feared challenging conventional wisdom during the bubble. It would surely be against the public interest if that was to be repeated.

Testimony to the Seanad or whatever is not a reason to avoid taking a position on a crucial issue of our times.

It is possible to disagree with some of David McWilliams’ current prescriptions, but he did sail against the strong winds of hysteria and delusion which has destroyed the lives of of tens of thousands of our people — some complicit, others innocent victims for the second time in a generation.

@david

Nonsense.

Perhaps you could tell us which debt to disposable income ratio you had in mind in the quotes in your article? i.e. the one that “Since Ireland adopted the euro, its ratio of household debt to income has risen from 93 per cent to 220 per cent”. The central bank series has fallen back to 207%

The readers of this column can see the one reported by Central Bank (here), Chart 2. and make up their own minds, i.e. its fallen sharply.
http://www.centralbank.ie/polstats/stats/qfaccounts/Documents/2011q4_ie_qfaccounts.pdf

You make no distinction in your article between existing savings (asset) and savings from current income. Rather
“Ireland’s savings ratio has exploded to 17 per cent of income; it was minus 5 per cent in 2007. “. That’s current income is it not.

In any case you just tell us what official CSO/Central Bank series show’s the debt burden is getting heavier relative to income and we can all see if there has, or has not been a factual error.

In any case as you note yourself the savings rate (i.e. savings as a proportion of disposable income) is extremely high. This is because people are paying down debt. That is, savings our of current income.

Why don’t you admit the error, and stop attempting to muddy the waters. The readers of this column can read the central bank report for themselves here. Chart 2

@scorpio

Just so the readers of this site are clear: the Indecon economists poll is a poll of economists who are all State employees and those that are not State employees are being paid by the State in some form for conducting the survey in the fist instance i.e. the non State economists are Indecon economists.

I’m not for one moment discrediting the views and opinions of those in the survey but surely it would make more sense to spread the breadth of opinion a little wider than those who enjoy the backstop of the State to support their livelihoods. Don’t you think?

@Colm Brazil

The ratio of household debt to household disposable income has fallen sharply in recent years, in part savings have been high.

David McWilliams asserts that “At a time when income is falling because of rising unemployment and taxes, this means the debt burden is getting heavier every day relative to income. “ – DMcW

The official central bank series is based on household income. Clearly, the falls in household income have not been sufficient (the key point) to offset the increase in the household savings ratio. Rather this ratio has fallen, in stark contrast to what David has asserted.
See chart 2 attached
http://www.centralbank.ie/polstats/stats/qfaccounts/Documents/2011q4_ie_qfaccounts.pdf

That the household debt burden has fallen is not an assumption, its a fact. For now I think I’ll stick with the official series produced by the central bank. If you David or anyone else has a series for the debt burden which shows it rising I’ll be happy to look at it. I suspect you’ll struggle as it doesn’t exist.

You seem to suggest we should look at arrears. Arrears do not measure the debt burden – they measure the ability of those in debt to service it. Indeed, it is possible we could have a far higher arrears rate, for a much lower level of debt?

I like to base my economic discussions on the facts, yourself and David plainly do not

That’s government debt GDP ratio, not household debt which is the topic of the discussion.

Today’s topic is the Fiscal Treaty. You’re the one that keeps bringing up the Central Bank quarterly report on household debt( Protip: CBI reports habitually sugar coat the country’s current state)

Can I recommend the ladybird book of economics

You might as well. I can’t see where else you’re coming upon all of these notions.

@Stephen

David has written an article for the Financial Times which as you know is an extremely influential publication with investors.

If he has made a factual error in his article on the Irish economy, he is fair game. I think my posts above make clear where the error is.

To say the household debt burden is rising, when it is not, is a large error.

Why is it that when DMcW or ‘he who cannot be named’ (MK) get mentioned on this blog, people start handbagging each other?

And God forbid I should ever mention Brian Lucey.

Uh-oh. I’ve done it now.

‘Chill out’ is appropriate advice.

@scorpio

Precisley what I said above – what you actually mean to say is the vast majority of State employed economists recommend a Yes vote. The fact that ‘most economists are employed by the State’ does not mean that their opinions are any more valid than those in private employ. The point I’m making is that the chort for the Indecon analysis is far too narrow and as a result the overall findings in the survey are questionable.

@Yields or Bust – if the majority are employed by the state then this is hardly biased. At least their job does not depend on their view and is therefore a lot more reliable than those peddling a particular line for their own benefit.

@JMK

“To say the household debt burden is rising, when it is not, is a large error.”

This is not deductive reasoning, its faulty inductive reasoning. You cannot infer because some people can pay back debt out of their savings, the overall debt burden on people faced with higher taxes, etc etc is reducing.

This kind of reasoning only brings the economics profession into disrepute. Its unsound, misguided, unobjective and a misuse of empirical data and most of all its unscientific.

You need to get back to mathematically verifiable data based arguments based on the laws of deduction, not induction.

This is a nobrainer, Moody’s know this, the Irish Central Bank know this, the Govt by flagging the need for a second bailout know this, but JMK stands behind the argument “household debt burden” is decreasing because some people have used their savings to pay this off; while the vast majority of us feel the pinch of higher taxes, household charges etc and the numbers falling into mortgage arrears now represent 10% of all mortgages.

Their household debt burden is reduced so much they can’t pay their mortgage.

Ah well, along with “Vast Majority of Economists Recommend a Yes” Propaganda machine is full steam ahead….

I saw a dead cat on the pavement the other day, not a good omen! “Nothing will come of nothing”

Vote No 🙂

@ scorpio
I’d have to agree with YoB that it is clearly a biased sample set – not only are the economists principally paid by the state, but by targeting those in academia, they have also selected a certain personaility type (those who would prefer to research and teach rather than ply their wares in the finance industry). I’d imagine that if it were a poll of people with phds/masters in economics, which included research analysts at investment banks and hedge fund managers/traders, you would come up witha very different proportion in favour of the treaty.

@Edward v2.0 – most bank economists are civil srvants too – I have not heard any against the Pact except those who will gain from people moving money out of the Euro zone (interesting to note that the outfit aparently owned by the patriotic Declan Ganley appears to have opened an office in Switzerland to this effect).

Some in the country are overindebted; others are not.

Over 40% of owner occupiers in Ireland have no mortgage compared with 12% in Sweden and 9% in the Netherlands.

So the farmers are already on European welfare for four decades, is it realistic to ask Finland to provide a dig-out for the rest when the earnings of the sheltered sectors in Ireland are much higher.

Shame on us to even expect it.

In Finland in 2009 according to the OECD, a Finnish GP’s pay was 1.8 times the average wage and 3.5 times in Ireland; a salaried medical specialist earned 2.6 times the average wage in Finland and 4.5 times in Ireland.

An Irish TD’s pay is 28% higher than that of a Swedish counterpart and onwards the litany could go.

David provides good material for the victimhood audience but the reality check (also cheque) is that the cargo-cultists will not get gifts without strings. Not everyone is as foolish or as stupid as some of the Irish were.

Another public episode of the Croke Park ‘Dance of the Seven Veils,’ is due soon.

Minister Brain Hayes ‘reassuringly’ said last January:

It is now time for local management to show a level of ambition about opportunities for change under the Agreement. There are sectors where both the challenges and the opportunities are very great. Management agendas that were hard won in Croke Park now need to be pursued by sectoral management even where that means that they have to go into a difficult negotiating space. (George Orwell where are you?) Implementation needs to be approached with greater urgency in all sectors.

And beyond all this farce, we will have people in the same public offices, doing the same work for different levels of pay and benefits.

Forty years to reform unfunded public pensions and it’s of course let them eat cake elsewhere.

@What goes up – the bondholders have been fed a long time ago so they are totally irrelevant at this stage (to be fair they were very relevant some time ago and I would have burned them).

@scorpio

a little detail on that ‘vast majority’ would be helpful?

@Alan Gray

?

Peter Boone and Simon Johnston

Der Euro ist fertig

The End Of The Euro: A Survivor’s Guide
http://baselinescenario.com/2012/05/28/the-end-of-the-euro-a-survivors-guide/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+BaselineScenario+%28The+Baseline+Scenario%29

VOTE NO FOR A CHANGE IN DIRECTION AND DO YOUR BIT TO SAVE EUROPE FROM BEING DESTROYED BY NEO-KON IDEOLOGY

@scorpio

if you are just giving out the information why do you not give a link to this:

Because they are appealing to an authority they do not have?

One of the eye openers for me when visiting the Irish Economy was just how unreconstructed the Irish economics community was after the start of the collapse of the housing bubble and the bondholder bailout. It seemed that after the staggering market failure of the global financial crisis most economists held exactly the same positions as before. The world had changed but they remained they same people with same enthusiasms and hobby horses.

So David McWilliams gets a pass because he was publicly, vocally right about the seeds of our current crisis in the property bubble and the insanity of extending the bailout while I would need to check the history of the economists in the Indecon journal before accepting their vision of the world was a realistic one.

Simply put anyone in the economics profession in Ireland who failed to flag either the housing bubble, the dangers of EMU or the malign influence of the financial sector is on probation. They have to prove themselves useful again.

FYI

Banking crisis
Can Spain make a solo comeback?
29 May 2012El País Madrid

Assurances from the head of government cannot amount to much: victim of a severe banking crisis, Madrid will soon be forced to seek help in the EU. Like Ireland, it will then be placed on a drip-feed – and under guardianship. [……..]
What would happen if the Spanish government were finally forced to dip into the rescue fund? Harvard professor Kenneth Rogoff answers: “If the eurozone and the ECB fail to take unequivocal and speedy steps, there’ll be bank runs throughout the periphery and devastating capital flight. To avoid this, banks must be provided with liquidity.

“The eurozone should move several rungs up the ladder of fiscal union with Eurobonds. We will see exceptional measures, which until very recently were unthinkable – but that has happened every time Europe has been on the verge of an accident.”

http://www.presseurop.eu/en/content/article/2077841-can-spain-make-solo-comeback

Vote NO for a change in direction – Rapidly.

@ Scorpio

State employed or state dependent economists, in theory, can say Y or N but why do I think that they know what side their bread is buttered on and what % how of that butter has to be borrowed? Minister Rabbitte, was on ‘This Week in Politics’ with Sean O’Rourke who pointed out that two Nobel prize winning economists believed that Europe was totally on the wrong track. Stiglitz has described the FC as an economic “suicide pact”. What was Pat’s response? Pat got a bit huffy, but quickly fired off his response. Well, they might have Stiglitz and Krugman but “most economists who earn their living in this state (from the state) support the “Y” vote.

Well, they would say that Pat would they not? I mean it is very hard to persuade economists that this could be a disaster when their salaries depend on them not understanding that it could and will be a disaster. Not that I would ever question their integrity, models or assumptions.

Is it not a bit strange that when the government desperately wanted something to be believable the last people they hired were economists from this state to do the analysis. They brought in “independent” experts from abroad and payed them millions. Of course we did use home grow “independent” economists such as Dr. Alan Ahearne to advise Brian Lehihan and independent economist Dr. Peter Bacon to advise on NAMA and that ahhem! worked out just fine.

@The Alchemist

We have not ratified the ESM in the Dail .. er .. yet. BTW, the ESM does not yet exist. We live in turbulent times. EZ does not need an ESM – it needs a properly functioning ECB. Smell the breeze in Europe …

I’m not in favour of further ‘bail-out’ money for the financial system – where do you think most of the last one went?

Looking to 2012, the budget targets further fiscal consolidation totaling 2¾ percent of GDP and that lowers the deficit to 8.6 percent of GDP. This target is still achievable even with the reduction in the growth outlook for 2012 because the starting point for 2011 was a little stronger than was allowed for in the budget projections, inflation is expected to be a little higher owing to the weaker euro, and the budget projections included some prudent buffers.

In the area of fiscal policy, the report discusses policy reactions in the event of a further reduction in growth for 2012. In the current circumstances, where the Irish authorities have already in Budget 2012 adopted about ½ percent of GDP in measures additional to that originally planned, the IMF would support the accommodation of revenue shortfalls associated with weaker growth. The reason is that additional fiscal consolidation in 2012 would unduly threaten the still-fragile economic recovery, which is needed for debt sustainability and regaining access to market funding.
Transcript of a Conference Call on the Fifth Review under Extended Fund Facility Arrangement for Ireland
with Craig Beaumont, Mission Chief for Ireland, European Department, and
Olga Stankova, Senior Press Officer, External Relations Department
Washington, D.C.
March 2, 2012

At the same time, Ireland’s overall fiscal deficit remains large and it’s important to preserve the credibility of the medium-term fiscal consolidation plan to reach a deficit of 3 percent by 2015. If a reduction in growth in 2012 was part of a more lasting revision in the medium-term economic outlook, it would be appropriate to reevaluate the consolidation plan for 2013 through 2015 to allow the burden of the shock to be spread over time.

http://www.imf.org/external/np/tr/2012/tr030212.htm

No comment for pragmatists, as opposed to fearmongers, necessary.

Nice use of anger David.
The argument has cleanly fallen into
no -we are being shafted
yes- we need to comply or else.
A divided nation arguing over a fractured union. Again.
Can you imagine what some of the landlocked EU countries or US states would give to be a small independent nation with identity, an island.
But what does Ireland do…..
PS.rumour has it the fiscal treaty was worded by the trio
Onall Forze, Archur Bach and Telmi Whozier-Dadi.

If Ireland does vote no I wouldn’t expect any sympathy from thar lear

These numbers are from 2008 but Ireland is still well off compared to Poland, Czechistan, the Mezzogiorno, Portugal, Wales

http://epp.eurostat.ec.europa.eu/statistics_explained/index.php?title=File:Gross_domestic_product_(GDP)_per_inhabitant,_in_purchasing_power_standard_(PPS),_by_NUTS_2.PNG&filetimestamp=20111020141821

Wilde could face competition these days. Krugman is in rare form at the LSE:

“The US does have a big structural problem: one of its two political parties is deeply insane.”

“The US does have a big structural problem: one of its two political parties is deeply insane”

How about this for a ringing endorsement of Romney and his former life at Bain capital ? Sure to go down well in the Rust Belt.

“Steven Davis, a University of Chicago expert on private equity buyouts and their impact on job creation, calls the whole line of attack “pretty worrisome”.
“It’s not that private equity guys are angels who are always doing good, but they are an important part of a market economy,” he says. “I’m concerned these attacks will translate into policies that retard the creative destruction process

http://www.ft.com/cms/s/0/4f410a0e-a673-11e1-9453-00144feabdc0.html#ixzz1wHtWqnqS

@ All

An interesting thought is that the quality of economists is a function of the quality of the economy in which they are operating, especially in relation to the reliability of the statistics that give an indication of how an economy is performing. As MH has demonstrated, the measures that are used in relation to the Irish economy, despite the best efforts of the CSO, are dubious. GIGO in other words.

Another measure in economies that perform well is that reward is related to performance. The system of relativities taken as sacrosanct in the Irish public sector is an indication of a major weakness that simply has to be corrected.

@ Stephen Kinsella

Good call!

@Tullmcadoo.

“One thing for sure, it won’t be coming out of revenue and we will not be borrowing it on the open market. No peripheral EZ sovereign will be borrowing from private market in euros in its own name for a long term in the remainder of my working life (20 years), if ever again.”

We may not agree on lots of things, but I certainly agree with you on that. IMHO the same applies to most of the peripheral banks.
I find it very odd that we still have to listen to the mantra of sovereigns and particularly banks ‘getting back to the markets’ not only from the Irish government but from the ECB / Troika . In the case of banks it simply will not happen. They do not appear to have acknowledged the depth of the failure of mobile capital in terms of the financing of banks or sovereigns and the devastation caused by the unfettered mobility of the capital.

The status quo ante is not coming back. In fact it is not desirable that it does. A better system of mutuality between financier and financed will need to be developed. One would have thought that the ECB and other central bankers would be proposing ideas.

Or is that too much to expect from people entrusted with responsibility.

@JR

Re unfettered capital

The NZZ, a Swiss newspaper, reported on Sunday that the Swiss Central Bank is looking at setting up an emergency task force that would be deployed when the Central Bank is overwhelmed by the wall of money that might leave the EZ in the event of a Greek exit. One of the options would be capital controls, according to a spokesman.

@Seafoid
I saw they were going to introduce negative interest rates. They did that before. At .58% on their 10 yr bonds it looks like a sure fire way to lose money and it is the same with german bunds. Pimco warned today of a bubble in the market.

This is 3 years old but not much has changed in the meantime

Where’s all the money going to ?
I ain’t seen none of it
It’s going to keep these bullshit banks afloat
And they are still paying out bonuses on Wall Street
…And you talk sh*t about it and they say oh we gotta retain the talent
What are you talking about talent you stupid ******
That’s the same ****** talent that ****** the whole thing up
And for all the money that we done paid to these goddamn banks
we could have recapitalised a brand new banking system

http://www.youtube.com/watch?v=zOZnRUZKf48
From 2:45

FT on how much subsidy the UK taxpayer provides to its banks

http://ftalphaville.ft.com/blog/2012/05/28/1018781/how-much-an-implicit-banking-subsidy

I wonder how the numbers would look for the EZ.

…with skewed questions favouring the Y position and no pull outs favouring the No position. It doesn’t address the question of whether we should stay in the Euro. Ignoring Iceland’s reduction of its unemployment stats to 7.5% with ours at 14.5% it posits FC as a way to growth. Its a study in propaganda and does not address the individual clauses of the ESM, its conditionality; everything is reduced to the view ESM will be a source of funding. It doesn’t even get this right as we can merely apply for funding with no guarantee we will get it, or what terms. It doesn’t address the question of debt writedown. It doesn’t address or pose the question of deferral of FC until Hollande produces his protocols though one answer re No is produced here. But The tactical nature of voting No is not the subject of any bar charting. It has a simplistic reduction of arguments in the referendum campaign to issues that ignore the legal matters involved.

A Nobel prizewinner is consulted for the following quote:

“Some economists argue that smaller countries are better off with fixed exchange rates against some larger trading partners, I don’t feel I know enough about this issue to comment.”

Oops, if he doesn’t know much about it, he doesn’t want to be in your survey; he’s told you he doesn’t know enough about it. Tip, ask Krugman, he knows all about it; he knows how they don’t suit small countries.

Colm Brazel; witth regard to: ‘…the question of whether we should stay in the Euro… Iceland’s reduction of its unemployment stats to 7.5% with ours at 14.5% it posits FC as a way to growth…’

Some time ago an Icelandic Minister, interviewed on RTE, was asked whether they feared repurcussions from the EU – that could negatively impact their joining it – as a result of the course they had chosen .
The man calmly smiled at the interviewer, and said that Iceland had been watching how the EU was treating certain member states (the inference from what preceded meant it was certain that it was primarily ourselves he was referring to) and that matters such as this would determine whether or not the country wanted to join at all.

Breaking Newz

Unconfirmed rumours, from a usually very unreliable source, that An Taoiseach is voting NO. Hence the silence …. shurely the most devious, the most cunning, the most silent of them all.

Speechless in awe – absolute awe. What Certainty! What can be more certain than sayin nathan – nathan at all at all.

Suggest Spain is now making Greece and an Irish wafflefest of a referendum campaign look like curiosities.

@docm

The ECB appear to have said ‘no’ to setting a precedent of the ECB printing the cash to recap Spain’s banks – the plan, as reported, seemed to be for repos with the ECB (though don’t be amazed if that is misreporting and it was to be Spanish central bank).

If that is correct, Spain may try to get permission for their own CB to print in a similar way to the promissory note arrangement Ireland used.

Note the similarity between the Spanish plan and the Irish plan (and the ECB’s response) to replace the pro notes, or repayments, with Irish gilts and get the ECB to repo them. That would have turned Irish printing into ECB printing.

@ David O’Donnell

Saw your post earlier deeply critical of the role and performance of academics from the economic profession in Ireland. I didn’t contribute a view to that because of other more irons in the fire re the No campaign I was occupied with.

Relatedly I’ve been turning my mind to the question of propaganda and have written about it on my occasional blog http://colmbrazel.wordpress.com I don’t have the resources of time etc to go more deeply into the subject, it’s an area worthy of deep investigation in Ireland. I didn’t touch upon the SF challenge to the Referendum Commission, for example; plus there’s a lot more I could’ve written about the subject.

Irisheconomy.ie has been an interesting journey and study for me since I became involved approx one year ago. I wished to deepen my understanding of economics from an Irish perspective. Since then I’ve read and contributed to perhaps 95% + of the opeds and avidly read posts and links. My goal has always been to understand the causes and the nature of the Irish financial meltdown.

I realised quite quickly there is a preponderence of right wing pro government leaning economists on Irish economy.ie. I like to read views that are challenging and thought provoking even if they are occasionally one sided. The site also had a good number of critical posters who did not belong to the status quo who were quite prepared to let their views be known. This led to many quite entertaining and heated exchanges exasperating both points of view but also achieving occasionally a sense of balance.

It was interesting to read the views of Karl Whelan, until he decided to vacate the site unctuously protesting re views critical of his position. One economist, Brian Lucey, emailed me critical of a post I’d made re KW position on a particular point; he commented he wouldn’t be surprised if KW walked off the pitch, he didn’t post here anymore as he felt dealing with criticism was too much a hassle. Its become apparent to me other economists don’t post opeds here because they wish to avoid public criticism.

Yet there are very pro Y economists who are regular contributors to irisheconomy.ie who are to be congratulated for giving opportunity to debate. I would particularly like to thank Philip Lane and John McHale and Stephen Kinsella for their contributions; though I’ve clashed with each on the subject of censorship occasionally annoyed at the removal of a post of mine as I take care to ensure critical comments are impersonal and made at the theoretical level on matters of content alone.

Occasionally my posts were censored, but it was a rare occasion. As I said, there is a lack of balance on the site. We’ve had a parade of economists stating their reasons for voting Y. Its been left to posters to mount a rearguard defense of the No position.

This current op-ed unusually featured DMcWilliams known critic of the status quo ably writing on the FT many arguments that feature in the No campaign. What happens next explains the censorial nature of irisheconomy.ie and why I’ve had a Richard Toll epiphany moment leading to my decision to move on and away from this site for inspiration on intellectual matters related to the study of economics in Ireland 🙂

Good to see you guys posting, you NO who you are. Take a bow if you’ve been NO from the outset spurred on by the humiliating way we’ve been treated by Brussels and represented by ‘ political leaders ‘ who’ve sold out this country to banking
interests.

Scorpio Says:
May 29th, 2012 at 2:11 pm

Asked for balance that a link be given to
http://www.indecon.ie/publications/policy.html international perspectives

We then had a discussion above on his post, fair enough, eg

“@Yields or Bust – if the majority are employed by the state then this is hardly biased. At least their job does not depend on their view and is therefore a lot more reliable than those peddling a particular line for their own benefit.”

Robert Brown countered with,

“@ Scorpio

Note, I began by saying, I’ve had problems on this blog before re posts being pulled and censorship rearing its ugly head.

Stephen Kinsella then responds to Scorpio by providing a link in his op-ed to a survey indicating the majority of economists agree with the Y campaign. Kinsella uses the phrase, “in the interests of balance’. Nah, Stephen, this is just a new level in raising the censorship bar on Irisheconomy.ie. That update could have been given an oped on its own, it was included, not for balance; but to detract attention and discussion away from DMcWilliams and his views and to bring focus back to the Y campaign.

That in itself would not lead me to leave this site. It took a post of mine written last night to deconstruct the survey of Irish economists as skewed in the questions it asked, skewed in the 99% highlighting in pull out boxes of statements favouring the No campaign, skewed in the lack of questions put re the timing and content of the Referendum, skewed in its lack of probity re constitutional implications of the Referendum: in general, a piece of low quality propaganda favouring the Y side. The post was pulled twice but I got a rewrite in 9:50 🙂

Robert Brown wrote above: “State employed or state dependent economists, in theory, can say Y or N but why do I think that they know what side their bread is buttered on and what % how of that butter has to be borrowed? Minister Rabbitte, was on ‘This Week in Politics’ with Sean O’Rourke who pointed out that two Nobel prize winning economists believed that Europe was totally on the wrong track. Stiglitz has described the FC as an economic “suicide pact”. What was Pat’s response? Pat got a bit huffy, but quickly fired off his response. Well, they might have Stiglitz and Krugman but “most economists who earn their living in this state (from the state) support the “Y” vote. ”

Its been an interesting and meaningful learning experience for me on irisheconomy.ie. Its time for me to graduate and leave. Some will be delighted; if you’re happy in your nappy, clap your hands 🙂 Others, not. You NO who you are.

Shay Begorrah wrote:

“One of the eye openers for me when visiting the Irish Economy was just how unreconstructed the Irish economics community was after the start of the collapse of the housing bubble and the bondholder bailout. It seemed that after the staggering market failure of the global financial crisis most economists held exactly the same positions as before. The world had changed but they remained they same people with same enthusiasms and hobby horses.”

+1

Well done to the NO side on this site. I’ve happily shared their views on many topics. Don’t underestimate how smart and capable you guys actually are and how closely you follow the road leading to “real” knowledge of the subject you are passionately interested in, I’m on the same road; keep up the good work. Thanks for all the interesting and informative posts.

As you can guess, I’ve come to have a very low opinion of standards in high places both on a political level and now regarding the profession of economics in academia in Ireland. Get yourselves a copy of the survey above and take it out in 12 months 🙁

Don’t know if the moratorium on the Treaty will close this site down after 12am today, I’m around here until that time. Tomorrow I move on. I don’t like posts being pulled and censored.

Of course, “skewed in the 99% highlighting in pull out boxes of statements favouring the No campaign” was meant to be,

“skewed in the 99% highlighting in pull out boxes of statements favouring the Yes campaign” sorry about the rush..

Of course that doesn’t alter the fact that the ECB can strangle the banks at will.

@ Bond,

“accusation that he was voting Yes in order to curry about with the government was over the line?”

Nope, a little more subtle than that, similar to other views eg Robert Browne critical of the self interest of academics above, what I did factually state was that it would do him no harm.

I’m not the only one to criticise any view he might have; nor do I live in a dreamworld where I remove myself from discussion and debate because someone has a different view to my own. I’m sure his reasons for vacating his role on Irisheconomy.ie have a little more depth than that 🙂

But, dude, its been fun crossing swords with you. You bring a knowledge on market matters to this site that is very valuable; occasionally I’ve seen terrific posts from yourself among the dross 🙂

What’s the story re Bloxham, Nessa Childers wants answers:

http://www.labour.ie/press/listing/13383061485386178.html

@CB
If you want a view on what happened at Bloxhams don’t bother reading the IT
http://www.irishtimes.com/newspaper/opinion/2012/0530/1224316915502.html

What was the Central Bank doing for the last two years?

If they can’t spot trouble in a tiny outfit god only knows what is going on down the docks.

@ Ceterisparibus

In the world of Irish Orwellian black/white propaganda one of the propaganda rules that is most favoured is the one where Questions are morphed into Answers:

Questions re Bloxham, IBRC or other scandals re IFSC remain as Questions, but go little further. Don’t expect to see anybody leaving Bloxham or Central Bank in handcuffs followed by a court appearance tomorrow or a public trial.

“Since 2010 the financial regulator has found that four of the country’s leading brokerages have failed to report transactions in the prescribed manner, and have been heavily fined for their failure.” There’ll be a fine and a coverup.

Not mentioned by IT but mentioned by Nessa is the role of financial auditors, how come they didn’t pick up the fraudulent accounting.

So next time you have a question, that’s your answer, get it (well, maybe a little fine per question)? 😉

Where’s the blue collar crime CAB investigation into IBRC at ? The question is the answer! No answers only questions that become answers. Simples 🙂

@ceteris

Since the K-Crusader might not get too much maistream coverage on that in Ireland:

http://news.bbc.co.uk/today/hi/listen_again/default.stm

about 6.30 in

On Bloxhams, just contrast with limited liability banking plcs the comparatively tiny exposure, and the fact that no public bailout was ‘required’. If you assume that either mistakes or fraud will occur because regulation and auditors will not spot or anticipate everything, would you rather have lots of small partnerships around the place or a couple of Anglos?

Which business model should be encouraged?

@Grumpy
You cannot compare apples with oranges!

That link again:

http://www.businesspost.ie/#!story/Home/News/Debt+Watch

Keugman must have bought into the Pearse Doherty analysis that we would be bailed out come what may. The former engineers assistant has been sent away with a flea in his ear and the Shinner bank a/c is depleted.
Zimmer do an excellent range of recon implants for the younger patient. I suppose that leave Mary Lou as next dear leader of our Nationalist Socialists.

@ Kevin Donoghue

“Of course that doesn’t alter the fact that the ECB can strangle the banks at will.”

AFAIK no EZ bank has been liquidated.

@ Tullmcadoo

All that happened was a closing of ranks and a kick to touch. The main objective here was to put this to bed without causing major embarrassment to the government, or collateral damage to the “Y” side, of course, there is the sensitivities of his former colleague to also consider. Instead of giving his erudite judgement today, we were told that this was not possible and would be delivered…..? “after the referendum”. No need to give these pesky and bothersome “No” types a lift going into the final furlong.

The commission itself came up with some obfuscatory form of words which they issued via Twitter a sort of “muddy the waters” apology. They then maintained, that what they said, via Twitter was substantially the same as what they they originally said.

Funny the way our Referendum Commission can say more using Twitter and be more definite about their considered, thoughtful, measured and legitimate arguments than a high court judge can be in open court.

@ceteris

Yes I can, having witnessed the ‘reward’ portion of the orange culture being inserted into the apples, without the ‘risk’ part.

Contrast the Bloxham partners with the chairmen, CEOs, CFOs etc of the banks.

The apples used to be apples. They aren’t any longer.

Cheers CP and Grumpy.

It was T.H. Huxley who said that there is nothing sadder than a beautiful hypothesis destroyed by an ugly fact.

http://ftalphaville.ft.com/blog/2012/05/30/1022361/spains-long-climb-to-the-liquidity-hospita

http://online.wsj.com/article/SB10001424052702303807404577434602798916414.html

U.S. officials are pressing Europe on several fronts, including a broader role for the Continent’s €700 billion ($878 billion) rescue fund, according to people familiar with the matter. Allowing the fund to directly recapitalize European banks—instead of forcing troubled nations to borrow from the fund for that purpose, potentially putting them under even more market pressure—could calm fears of cascading bank runs in Spain and other nations even before Greece’s June 17 election.

@eoin

“The ECB has given term liquidity which will be repaid in 3yrs time”

You want a bet!?

LTRO –> VLTRO quite likely. The key difference, it seems to me, is that the assets remain with the ECB, and they are far from worthless.

If the ECB did not have the insight to disbelieve the fantasy that unsecured senior bank credit was nothing more than high up in the credit structure, and bought in to the ‘Great Moderation’ craze, then they really should award themselves a minus Brownie points all round.

@seafoid

It seems entirely logical for the US position to be ‘never mind the details or the rights and wrongs – just stuff money into the banks’.

‘Irish voters to give Merkel rare boost’

Bloomberg

JHC!

Perhaps looking at the Household Debt alone is only one part of the story.

Household debt may be reducing, from 220% to 207% as per JM Keynes post above.

However if one’s salary is reducing at a greater rate than ones debt reduction, then proportionally the persons debt relative to their income is actually increasing, even though their debt may be less than that 4 years ago.

For example.

In 2005 I had a debt of 200K, salary income of 50K. My debt was 4 times my salary income.

In 2012, my debt is 6% less i.e. 188k, but my salary has reduced to 40K.

My debt is now 4.7 times my income.

As tax increases continue and other income sources dry up, my debt even though it has reduced from 4 years ago is approaching the stage where I am unable to service it.

@ceteris

That would be dorphing, surely.

@ Grumpy
Touché

The story of the day is Madam Lagarde pays no tax on her 450,000 salary and 83000 expenses. And she had the temerity to berate the Greeks for failing to pay their taxes.

10 yr Bunds at 1.26% and Swiss at .53%…time to panic?

@ceterisparibus

… time to panic? Too late ..

http://www.presseurop.eu/en/content/cartoon/2035321-beware-wave

Banks may require an extra €3-€4 billion, says Elderfield

http://www.irishtimes.com/newspaper/breaking/2012/0530/breaking40.html

Lovely day …

How is this for hubris….

“This is about stability, bringing confidence to the euro,” the premier said as he campaigned at Dublin railway station.
Kenny said a “yes” vote on the German-backed pact would show Europe that Ireland could lead by example.”

Just as the euro is going through the floor….good man Inda …….timing is everything.

@ CP

Bloxham- another stunner for Irish auditing

Lagarde must have been snitched on by an underling.
Mais quelle arrogance.

@DoD

And they are still paying out bonuses to auditors
…And you talk sh*t about it and they say oh we gotta retain the talent
What are you talking about talent you stupid ******
That’s the same ****** talent that ****** the whole thing up

‘Fellow central banker Andres Lipstok reinforced the message, saying European central banks are being pushed into functions that are alien to them and that the ESM bailout fund would be a more suitable vehicle for tackling the bloc’s debt crisis.’
– They’ve been rather willing to engage in actions outside their remit – witness our former ECB deputy pre-empt Lenihan with that phone call.
And they had the brass neck to criticise Hungary over CB impartiality !

A bit of sham by indecon. Talk about loading the dice.

Glad that I do not have a sub to the FT to read more back to the future stuff .

Have a read of Articles written by the same author on the 28 September 2008 and the 1 October 2008 on the Bank Guarantee.

If you live in LaLa Land you may believe anything in print………

@TRP

the 28 of Sept 2008 was not the major crime…the extension in 2010 would fill that slot exacerbated by a decsion to pay unsecured bondholders not envisaged by even the 2008 guarantee

@R Browne

Dont believe everything you read in the papers including “de paper” as you will often find ordinary people have a lot more cop on than the media take them for.

@ V Barrett

Do you want me to give embarrasing quotes from those articles of the 28 September 2008 and 1 October 2008. – “State Guarantees can avert depression” and ” Lenihan’s masterstroke……” I dont expect any “economist” to be advising Governments to be giving Guarantees to creditors of commercial entities. However, once give by a Sovereign they cannot be taken away which is why I dont agree with them in the first place.