The measured rise in Irish inequality

I have been meaning to comment on the results of the Survey of Income and Living Conditions (SILC) 2010, but hadn’t got around to it with all the excitement on fiscal matters.   As has been widely reported, the survey showed a dramatic increase in income inequality, with the quintile ratio (the ratio of the incomes of the highest income quintile to the lowest income quintile) rising to 5.5 from 4.3 in 2009.   The Gini coefficient also jumped dramatically, from 29.3 to 33.9.   (A Gini of 0 represent perfect equality; a Gini of 100 represents perfect inequality – i.e. one household having all the income.)  These increases more than reversed the measured declines since the middle of the decade.  

Although these increases took place at a time of wrenching adjustment in the Irish economy, the magnitude of the increases in measured inequality is still surprising.  All the more so since the ESRI’s analysis of the 2010 budget indicated that the changes were progressive (see here for an analysis of the period 2008 to 2012).  (See also page 17 of this European Commission report on Ireland.)

The SILC is an extremely carefully constructed survey.    However, as noted in the survery report, sampling variation is unavoidable, and results must be always be interpreted carefully.   One indication that sampling variation may be an issue is the fact that the number of “household heads” with a third-level qualification or higher increased to 1,830 from 1,505 (p. 83).   This increase occurred despite the total number being surveyed falling to 11,587 from 12,641.   Thus the proportion of survey respondents with a household head with a third-level education or higher – a fraction that changes relatively slowly over time – increased to 15.8 percent from 11.9 percent.  This suggests that sampling variation may explain part of the measured increase. 

My purpose here is most certainly not to diminish the importance of inequality as an issue – quite the contrary.  And it may well be true that inequality will turn out to have risen over this recession after balancing market and post-market factors.   But those concerned with inequality might be unwise to put too much emphasis on one year’s survey results.   To the extent that the increase in inequality partly reflects sampling variation, there is a greater likelihood that it will fall again in the next survey release.   This could too easily be interpreted as indicating that recession-related inequality effects are not an issue.   Perhaps of greater concern than the results in SILC 2010 is the breaking of the recent trend of progressive budgets in Budget 2012 (see Figure 1 here).   However, we will need to see more than one budget to accurately gauge the distributional implications of Government policies. 

65 thoughts on “The measured rise in Irish inequality”

  1. “To the extent that the increase in inequality partly reflects sampling variation, there is a greater likelihood that it will fall again in the next survey release.”

    The variation will level out, or the income inequality will shrink?

    Surely the latter phenomenon coming to pass is implausible? One would assume that as those in financial distress consume their savings, income inequality (and Croke Park was designed to shore up the massive public sector wage bill) will increase between those in the public sector and the rest?

    Am I missing something?

  2. Although these increases took place at a time of wrenching adjustment in the Irish economy, the magnitude of the increases in measured inequality is still surprising.

    I would consider this sentence an academic Freudian slip. In short, you seem to have expected a rise in inequality as a result of “adjustments” in the economy. Are these the kind of outcomes that economists are advising the government to target or expect?

    Unsurprising really. Austerity is little more than a euphemism for “cut discretionary spending without touching incomes taxes”. It’s a doctrine of squeezing the poorest to pay for the profligacy and fecklessness of the richest. Inequality is not a side effect of austerity, it is a direct consequence.

    This is destabilising Ireland. For the first time, a referendum on the constitution was divided on class lines. We are witnessing the emergence of class warfare which the country had so far managed to avoid throughout independence.

    Moreover, the longer the squeeze of austerity continues alongside the largesse salaries and super pensions of incompetent public servants, subsidised bankers, and bankruptcy tourists developers, the more the rule of law and the authority of the state itself will be undermined.

    I hope that economists are also advising the government to expect these outcomes as well.

  3. After Bilderberg, Noonan could usefully visit Moyross

    ‘But this Bilderberg conference of important people will have confirmed Michael Noonan in those convictions, perhaps by the way of a rebirth, and will have won him admiration and applause for so splendidly exemplifying, as Minister for Finance, his commitment to same – maybe they spoke of the “courage” of his convictions. They may not have been quite so crass as to congratulate him on the payment of unsecured bondholders in our banks but, unspoken, that will have won him further warmth and assurance.

    Just think of the difference there might be to his perspective had he opted instead to spend the weekend with community workers, activists and other citizens from Moyross, Southill and Ballinacurra Weston in his Limerick constituency and heard from them the effects on those communities of the politics that the Bilderberg elite espouse.

    Had he gone from one of the about-to-be-disestablished community employment schemes to another and got reminded of the devastation the expenditure cuts – his expenditure cuts – are doing to those enterprises and the communities they serve, he might have a different perspective.

    I am talking not just of a visit to these areas for an hour or two on Saturday afternoon but absorption in the lives, the misery, the perspectives and the hopelessness of people in Moyross, Southill and Ballinacurra Weston for an entire weekend – the same time as it took him to travel to and from Washington DC and the time spent at the Bilderberg meeting.

    The people of Moyross, Southill and Ballinacurra Weston should matter more to him than the Bilderberg “elites”, for these are his constituents, the people whose needs and interests he supposedly represents, needs and interests he has reflected hardly at all throughout his political career.

    But, then, he is a busy man.’

    http://www.irishtimes.com/newspaper/opinion/2012/0606/1224317369315.html

    As to the previous admin & X-Minister William O’Dea – they promised €1.7 Billion to re-generate these neglected areas; then dropped the commitment due to pressure of paying off Anglo_Irish and INBS bondholders …. achieved to date – 100 or so buildings demolished; none built; and Ireland’s leading Growth Industry in control of most areas …. Hope demolished … then again, in Ireland’s unspoken class system when have the underclass and the lower classes ever really mattered?

    @The Labour Party

    Pull out now; let FG join up with FF/pd; and join with Sinn Fein to form the next Irish Government and place social democracy on a government agenda for the first time ever. Tea Party Wisconsin or/and Waterloo?_ your choice. What would Connolly do?[rhetorical]

    @John McHale

    Main determinant of skill/human capital outcomes in Ireland? CLASS.

  4. @John McHale

    Although these increases took place at a time of wrenching adjustment in the Irish economy, the magnitude of the increases in measured inequality is still surprising.

    Without being facetious does it seem to you that the word surprising might be used a little too freely when describing the apparently negative consequences of austerity (even with budgets that are nominally progressive)?

    eg: Our growth has been surprisingly low, the banks have been surprisingly slow to start lending again, GDP to debt has increased surprisingly fast and so on and so forth.

    As for this particular surprise voluntary organizations like the Saint Vincent de Paul have indicated that the levels of people in desperate need has increased substantially over the last three years (~20%PA) while the incomes of the top sections of Irish society have taken a very small hit (anyone got figures for the top decile?). Economic uncertainty in Angela’s Austerity themed Europe is not evenly spread.

    It certainly sounds like a recipe for significantly increased inequality to me and those figures might be correct after all. We will be paying the price for increased inequality for longer than the bank bailout.

  5. @me fails the word order tense.

    GDP to debt has increased surprisingly fast… should have been Debt to GDP has increased surprisingly fast…

  6. John you manage to say the exact opposite of what you claim to be saying. You say that you dint mean to dimnish the importance of inequality but then raise doubts about the survey doing the exact opposite of what you claim to be doing. You compliment the survey for being carefully constructed but then raise the red herring of sampling variation designed precisely to undermine the validity of the survey.

    Also shouldn’t the increase in household heads with third degree Or higher actually overstate income and thus reduce the Gini coefficient? So one could argue that this survey actually understates inequality.

  7. @John McHale

    Guess what quintile the budget decisions makers and advisers fall into.

    But why the surprise?

    Who were the first group of people to be made unemployed? Those at the top?
    The first people catapulted into the lowest quintile were building workers in the private sector, temporary and contract workers in the PS, banks and other organizations. They were discarded like tissue paper.
    And who were best placed to resist cuts? Five years into a banking crisis how many permanent bank staff have had pay cuts?
    The very first group to escape the axe were the Secretaries of Govt Departments. Because they were worth it. They stood silent sentinel while the country was being ransacked from within and without. Yet they were exempted.
    And who were the people able to demand exhorbitant salaires even during the crisis. Legal, accounting, economic, financial and ‘political’ ‘advisers’. A list of NAMA beneficiaries would be a good representative sample.

    “All the more so since the ESRI’s analysis of the 2010 budget indicated that the changes were progressive (see here for an analysis of the period 2008 to 2012). (See also page 17 of this European Commission report on Ireland.)”

    I presume the ESRI’s budget analysis takes no account of movement from one quintile to another due to non budgetary factors. Like losing a job. It happens out there.

    There should be no surprise at the above results.

  8. Some of you have mentioned the idea that a class cleavage may becoming a factor in Irish party politics. A class cleavage did not happen on the classic Left-Right scale when universal suffrage was granted. After independence the major political cleavage was over the international situation of the Free State. The Civil War froze that cleavage and it still exists. Bit raggedy, but still there. The Left-Right cleavage we have was quite strange – its a hybrid of different political beliefs. Sinn Fein (the original) was a polpulist hegemon – and who was the FF parent then? Gallagher and Marsh have published on the 2011 election. I have not had opportunity to read it but I suggest anyone who wishes to comment on the ‘maybe’ emergence of a Right-Left cleavage in modern Ireland (if this is in fact what you mean) should do some homework. Referenda (when held on their own) are poor indicators. Maybe this one WAS ‘different’. We’ll see.

    What we are enduring is a massive experiment in social engineering. Folk are not robots. This ends badly. But for whom?

  9. (II) “Many weaker credit unions are being encouraged by the Central Bank to merge with stronger ones.”

    Ask yourself what this statement is hiding underneath it. Think Bankia.

    Impaired credit union loans. Some banks are more ‘inequality’ than others. So are some customers.

    I see Noonan was at Bilderberg. Perhaps they’re planning to make the Punt the global currency….. (that’s a joke btw). Not much ‘inequality’ at that meeting…. unless of course billionaires treat mere multi-millionaires like something they just trod on.

  10. A wonderfully crafted commentary on an extremely carefully crafted survey….

    and ending in a sentence so welcomed by bureaucrats everywhere… A call for more time/research/money before conclusions can be drawn, recommendations made, or god forbid action taken or reputations put on the line

    However, we will need to see more than one budget to accurately gauge the distributional implications of Government policies.

    no rush lads, take your time….

  11. The problem with the quintile analysis is that with such a high unemployment rate the majority of people in the bottom quintile will be unemployed. Many with serious debts they have no hope of paying. And adrift of the rest of society.

    It would be interesting to compare health outcomes by quintile – I can see a large number of early deaths for the bottom 20% given the way the situation is developing.

  12. @John

    Excellent post, this phenomenon had perplexed me as I could see nothing in fiscal policy to produce a change of this magnitude. Well done for spotting the change in the share of heads of household with greater qualifications in the survey.

    The CSO are of course in the measurement business, not in the speculation business. Still, it would be useful if their releases had more idiosyncratic information contained especially when odd results such as this come up.

  13. “… as I could see nothing in fiscal policy to produce a change of this magnitude. ”

    Heres a hint… none of the documents mention formerly self employed …

  14. @ Garry
    +1

    @ John McHale

    This report presents a partial snapshot of inequality.

    You are more likely to die of boredom than fear of unemployment and the latter of course cannot be measured in common with other collateral damage from reckless misrule.

    Pensions aren’t a priority for those with good or excellent ones led by the political elite and relative coverage of occupational pensions or the lack of them, is not covered in the survey. Ireland and the UK have the lowest state pensions in Europe and also low occupational coverage.

    The CSO reported in April 2001 that pension coverage among self-employed workers fell considerably from 47% in Quarter 1 2008 to 36% in Quarter 4 2009. In comparison, coverage among employees fell only slightly from 55% to 54% over the same period.

    The self employed coverage is now much lower.

    I made the point recently about the contrast between the jailing of an importer of garlic for 6 years and the blind eye turned to billions worth of dubious tax-related measures — not only depriving foreign treasuries of taxes but also the Irish one.

    I recently received a letter from the representatives of a big European multinational, in existence since the 1870s and in a strong financial state.

    It said in respect of a defined benefit pension scheme that I was a member of when I was employed by the group: “The Scheme was in deficit under the Pensions Act Minimum Funding Standard on wind up. As a result your benefit entitlement from the Scheme has been reduced.”

    Elsewhere it noted: “The company were (sic) not in a position to pay sufficient contributions to fully secure your benefits on wind up.”

    The scheme was in existence for many years of difficult trading times and then boom. Now that the goose is dead, the Irish company can declare that it cannot afford to pay contracted benefits because it’s good timing. It’s a 100% owned unit.

    Whatever about inequality, Ireland certainly isn’t a fair society.

  15. Should that not read “the rise in measured Irish inequality”

    sorry!

    @Michael Hennigan

    I still cant believe the government wont legislate to protect against that. It is the great unreported issue in Ireland today. I recently dealt with a similar wind up where the Company had made profits of 10x the cost of making good the deficit.

    Dont even get me started on the fact that “securing your benefits” would still have left you with a shortfall.

    Unfortunately the Company is acting logically in the best interests of its shareholders by not paying the benefits – the government have to force people to pay or it wont happen.

  16. @Michael Hennigan

    It would be worthwhile if someone did a separate post on the pension topic.

    As a member of the statutory body charged with regulating pensions (the Pensions Board), John McHale should be the ideal candidate.

    Sponsor default on promises unchecked by government or regulator
    Sovereign Annuities (aka screw Irish pensioners in order to present positive spin to financial markets)
    New funding regulations (coming soon we promise!)
    €50bn funding gap for DB
    €100bn funding gap for non DB members
    €100bn funding gap for public sector

    Other than that world of pensions is fine

  17. Put the content of the original post aside for a moment, and just “listen” to this language, like others here before pointed out already, it is a fascinating piece and prime example for a particular style and “diplomacy”, and I would not call it diplomacy but…. I spare you my style.

    @Shay: Surprised? hehehe NOT!

  18. @Omf:

    I would consider this sentence an academic Freudian slip.

    Naw, it isn’t, it is economics, starting always with…. Under the assumption that… and always ending with…. No one could have predicted that!….

    Or in other words it is precisely expressed vagueness, or definite evasiveness.

  19. I met a former school mate to-day. Self-employed most of his adult working life. Frugal, cautious, middle-class, conservative. Lost 90% plus (sorry, had 90% plus stolen) of his savings and pension. He is quite literally income insecure. Very angry man. Life-long FG supporter. Not any more. Voted No like myself. The op poll support for FG could sink very fast if FF could just get their s**t together. Have they emigrated to La-la Land as well? Labour were sunk by the likes of Micky D. FF have deV-lite to contend with. So who’s going to move into the policy spaces?

  20. “My purpose here is most certainly not to diminish the importance of inequality as an issue – quite the contrary. And it may well be true that inequality will turn out to have risen over this recession after balancing market and post-market factors.”

    Well you most certainly have diminished it despite your protestations.

    May I respectfully suggest that “inequality” is not an issue, it is a reality, and one that is is getting worse and only the most obtuse would care to suggest otherwise or offer theories based on percentiles when the reality is staring them in the face.

    John, if you have to use a word like “may” they you are a hopeless case. This recession is creating grinding inequality, how else could it produce anything else? Furthermore, the professionals and senior public servants most responsible are shamelessly extracting their pound of flesh from bailouts rather than from the failed economy they have presided over. Regling/Watson and Nyberg all spoke in about “group think”. I think you may have the bug.

  21. @Brian Woods Snr

    “So who’s going to move into the policy spaces?”

    SF?

    You can bet they are going to play the inequality card big time at any future election whether local or national.

    Irish politics is looking like a vacuum just now. No doubt when they go off on their 3 month summer holidays there’ll be nobody at home when tshtf in Q3.

    I feel for your mate’s pension loss. Given the industry sector I work in, I should have known better. Mine is looking like some tattered remnant where once were investments. “Spread your risk and don’t put all your eggs in one basket,” seems to translate to “Have a greater number of incompetent fools ‘manage your money’ and charge you through the nose for losing it.” I am now in the process of ‘saving for retirement’ outside of the usual suspect pension providers. It’s a shark pool. What’s even worse is that it’s largely policed by people on gold-plated DB pensions who have no idea what really goes on in the industry. I’m kind of hoping that when RDR (retail distribution review) is implemented in the UK at the end of this year and then eventually finds its way over here that it is such a paradigm shift it actually destroys the IFA broker businesses and ends up giving customers a fairer deal with less charges once commission goes for good.

  22. From: The Ballyhea/Charleville bank bondholder bailout protest group To: Mr Mario Draghi, President of the European Central Bank. Dear Mr Draghi, For several years the ECB has been abusing its financial muscle and forcing a weak Irish government to assume for the Irish people a debt burden that is not ours. In doing so the ECB has interrupted the current of commerce and has corrupted the normal process of capitalism. When the Irish economy went up in flames in 2008 it burned everyone, with one glaring exception – those whose billions had fuelled those flames. The banks and financial institutions who had so recklessly loaned their excess funds into a rapidly-inflating economy, their judgement clouded by their greed, have so far not even been singed. The ECB are the ones who have dictated that those bondholders in the failed Irish banks shouldn’t suffer their own losses, that instead we – the Irish people – should assume all that debt. We are here to say otherwise and unlike our elected representatives, we are not here to beg. In all natural justice, we are here to DEMAND the following: An immediate end to all the forced payments of bank bonds, those bonds then to be treated as they should have been treated from the beginning using the normal rules of capitalism and commerce under which they were first negotiated. The immediate destruction of all remaining Promissory Notes and the money printed by the Irish Central Bank to facilitate the payment of those failed bonds in those failed banks to be left in circulation. Permission granted to the Irish Central Bank to reprint the two instalments of those Promissory Notes already paid, totalling over €6bn. The ECB to make good the €17bn that was taken from our National Pension Reserve Fund at your behest and used to ‘recapitalise’ our bust banks. The ECB to make good the €5bn that was taken from NAMA for like purpose. The write-down of all money borrowed from you, the ECB, by the Irish Exchequer to fund those bust banks and pay off the failed bonds. The return of all interest paid to date on those bank-debt borrowings. We are a proud people, Mr Draghi, we WILL pay – in full – all our own sovereign debt. But that bank debt is not ours, was never ours, will never rightfully be ours. We demand now that you end this imposition and allow our country and its people to properly and quickly recover. SIGNED: Diarmuid O’Flynn Fiona Buckley-Fitzpatrick Rob Fitzpatrick Cathleen Queally-Moloney Pat Moloney Phil Ryan Frances O’Brien Pat O’Brien Diarmaid O Cadhla Donncha O Briain Vicky Donnelly Richard Chapman Damian Moylan Hugh Mellerick Lynette O’Farrell

    Given to Honohan outside the ECB in Frankfurt, to which it was also delivered.
    They should have added reparations due.

  23. PR Guy – safer than gold is art that is not overinflated – anything that has kept a relatively constant value.
    Anything desired by the Russians is probably a good bet, too.

  24. @Mark re the bailout protest letter

    I’m not sure if your last comment was sarcastic or serious – but in the event it was the former, its a sign of how polluted and skewed our thinking has got that one might think there is a single unreasonable demand in what they have outlined.

    If you were serious however, there is certainly opportunity costs associated with the damage already done to our economy with the promissory notes repaymetns that were extracted from the wider economy….a commercial court would have no hestitation taking account of this in a lawsuit for say anti-competitive behaviour…so some form of reparation is certainly justifiable…but there is of course no prospect of justice in this.

  25. According to the document (p7) year to year changes reported are statistically significant (unless otherwise noted) so that would seem to take care of the sampling variability question. I would be surprised if the recent increase in the Gini was just due to sampling.
    In general a statistic like a Gini coefficient or poverty measures based on a random sample should be reported with confidence intervals. There are various ways of doing this. The bootstrap is commonly used.

  26. @Mark

    “safer than gold is art that is not overinflated “”

    I’ve been doing OK with wine too in what’s been a relatively long period of low inflation. Stuff that costs €100 a bottle recently pressed can go for quite a good markup after 5-10 years laying down (there are a couple of added side benefits as well that bring a whole new meaning to the term “taking profits” -hic!).

    I’d like to breed a racehorse next. Buy a black type dam for 350-500k, an outstanding sire can be found for less than 100k nfnf and flog resultant foal for over a million in the USA, watch it win the Derby, Arc, etc…… that’s the roadmap level plan anyway 😉 The small problem is finding the initial investment. Where’s that lotto ticket gone?

    Draghi was a drag. Dealers now telling me it’s not a problem coz UK and USA are going to hit ctl-alt-P. I hope those young lads are not getting their hopes up too high only to be dashed again. MPC decision tomorrow and doesn’t Bernanke have to testify somewhere this week? Friday and/or Monday could be a miserable day in the markets then if they don’t do what’s “priced in”? What a bunch of tankers.

  27. “So far, emergency European funding has been impossible to exit, like a “roach motel”. Rather than act as a catalyst for crowding in private capital needed to restore growth, and financial viability, public money has provided the private sector with the possibility to exit programme countries at a much lower cost; and exit it did. As a result, governments have become highly dependent on official aid to cover their budget needs, meet interest obligations and roll over maturing debt; and domestic companies have been starved of the oxygen that is so critical for investment and job creation.”

  28. No debate about Rory Banks pet project

    http://www.eib.org/projects/pipeline/2011/20110628.htm

    200 million can buy you a hell of a lot of continuously welded steel rails

    http://www.fpmccann.co.uk/civil_engineering/coleraine_portrush

    What little EIB investment that went into this sod over the years did absolutely nothing to solve our liquid fuel transport energy problem.
    http://www.eib.org/attachments/country/factsheet_ireland_2010_en.pdf

    Just roads ,Airports and Gas /wind fired power stations …. all catostrophic investments with a huge sensitivity to liquid fuel prices.

    Its best the kids went out into the Hedges and did a bit of Gerret van Gelderen don’t yee think ?

    What makes the Coleraine university somewhat sustainable is the effiecent use of housing by students outside of the holiday season.

    en.wikipedia.org/wiki/Portrush (pop 6,372)

    One of the few examples of Intelligent design or planning on this island although it was perhaps by accident.

    Never the less these DMUs are now bombing the track.

    http://www.youtube.com/watch?v=L6d3PanZoLc

    Eventually yee lads will figure this out but by then it will probally be too late.

  29. @ V Barrett / All

    Didn’t our government guarantee a large chunk of that bank debt? A guarantee that was a natural extension of our clientelism ‘chute whore’ system and associated throw away style democracy. Remember it was ‘the cheapest bailout in the world’ remember how pissed London was…

    An attitude the electorate still buy in to. ‘Vote yes, how else will we overpay our politicians, nurses and guards’. No discussion of the merits or otherwise of what we were voting on, no one cares, we could have been voting on giving away the right to speak Irish, it would have still passed.

    Europe is thought of as a one way street of handouts, the elected are doing exactly what they were elected to do, keep the gravy train moving. We’re just shocked that Europe are making us ly in a mess that was in our power to prevent, were pissed as hell, how dare they. I don’t understand why anyone’s surprised, our leverage is zero, we have a series of represented groups, flexing their muscle to be the last touched, not a society, definitely not a republic. For instance Its basically public policy to force our young to immigrate.

    Government is taking the path of least resistance, doing everything the troika and Europe say and if things still turn out bad we don’t get any concessions we can blame everything on them. Who could blame them, it’s worked with public opionion so far, no ones talking about the rent seekers, the energy sector, tesco digging treasure on treasure island, our overpaid docters, lawyers, professional classes, civil servants and other things within our power to change. The problem is it appears to those with the power to forgive this debt as transparent, weak and sad.

  30. http://www.npr.org/blogs/money/2012/06/04/154282337/the-crisis-in-europe-explained

    Soros’ portend that the Germans will do what it takes to keep the euro alive….but “just” alive is precisely what we should be concerned about in the periphery. We are far better out of a euro that simply trundles along while we are held under the thumb of the type of constraints that managed to extract a Yes vote in the fiscal treaty.

    As noted by the Meltzer Commission in 2002 in a report to US congress in a highly critical review on the machinations of the IMF and World Bank:

    “a crisis country is motivated primarily by acquiring liquidity rather than the terms thereof”…

    Doing enough to “just” keep the euro alive keeps Germany in its strongest position vis-a-vis the crisis countries as identified by Meltzer. The drug dealer/addict analogy fits very well with what i will see as our future realisationship with Germany under such a regime.

  31. @ John Foody
    200bn in debt is not “zero leverage” in my book.

    I note the way people use words like bailout/debt/handout interchangeably as if they were all the same thing….define what you mean by handout in relation to Anglo promissory notes…who got the handouts?

  32. From http://www.rte.ie/news/2012/0606/kenny-wants-political-solution-to-euro-crisis.html

    ECB head Mario Draghi rules out banking debt relief after fiscal treaty approval

    Updated: 15:41, Wednesday, 6 June 2012

    President of the European Central Bank Mario Draghi appears to have ruled out debt relief for Ireland’s banking burden, because the country approved the fiscal treaty.
    …..
    Mr Draghi said he “warmly welcomed” Ireland’s vote to approve the fiscal treaty.

    It showed the Irish believed fiscal stability was a “basic pillar for growth,” he added.

    wonder how long that will stay on rte.ie, government wont be happy

  33. @V Barrett
    “I note the way people use words like bailout/debt/handout interchangeably ”

    I was thinking about that recently. The Irish translation of bailout programme is “pocaiste tarrthála” which means “rescue package” and says more than “bailout” does. But what was the Troika deal? Was it a rescue package ? Or was it a push into a roach motel ?
    Translation is interesting because meanings of words are important and in the original language the words are often used without consideration of what they mean.

  34. @seafoid

    Former editor of the Morning Star Mohamed el Erian on why Ireland is a roach motel

    That old Trot El Erian – listen to to kind of radical leftist propaganda he is spouting for Reason’s sake:

    This involves not only avoiding the mistake that Greece made in agreeing to a series of unrealistically-designed and technically-flawed programmes but also enabled to make difficult upfront decisions about the best form of burden sharing (something that Ireland was not allowed to do by its European partners).

    He clearly understands neither the institutional framework the EU works in or the incrementalism which characterises those workings.

    Just another damn American butting into the affairs that Europe clearly has under control.

    Oh, and the Croke Park Agreement caused the European component of the global financial crisis.

  35. “The euro zone is ready to “mobilise very rapidly” to come to Spain’s financial assistance “if the Spanish government wishes,” French Finance Minister Pierre Moscovici said today.
    “We also respect the sovereignty of a great country like Spain in relation to what request it expresses,” he said at a press conference, implying that Madrid had not yet made such a request.
    The use of the euro zone’s future ESM rescue fund to directly recapitalise struggling Spanish banks would require imposing conditionality in terms of banking supervision, Mr Moscovici added.”

    So Spain can get a bank bailout without ceding sovereignty.

    It’s apparent size matter…little old Ireland is just too small so it has to have a programme of austerity monitored by others.

  36. @ VB

    That is how Europe is thought off, not what Europe is, or was designed to be. We are currently in receipt of loans at a reasonable rate of interest, as a result of a mess that was 100% within our own power to prevent.
    We may have 200 biliion in debt, a fair chunk off which is as a result of the laughable guarantee our elected representatives gave. The gravy train I speak off is the continued adding to that debt via overpaying our our public sector and protecting the protected. It was running on cheap credit from German/French/UK banks before now.

    Perhaps we do have leverage in the amount of debt we’ve foolishly accumulated, it wont be used though as that’d mean the train might come off the tracks for a bit.

  37. Little old Ireland posed a systemic risk but choose to fall on it’s own sword, rather than leverage the system. Why? Because it did not want to be branded “a trouble maker” in the class. Consequently, we have played the role of snitch and serial volunteer for punishment. In Edna Kenny and Luscinda Creigton we have found the country has found the perfect ‘prefects’.

    Now, it appears we are trapped in the “roach motel” with these two waffling aggressively at every opportunity. But on who’s advice were we originally booked into this “hotel California”?

  38. @ Shay

    Those left wing whiners like El Erian have no clue

    If the Shinners had any cop they would ensure that everyone in the country was familiar with that quote even though it is deluded in the extreme.

  39. Thanks for the comments.

    @Kevin Denny

    It is true that the null of no change in inequality can be rejected at conventional significance levels. But that doesn’t mean that sampling variation is not a factor in the size of the measured change in inequality. Looking at Figure 1d (p. 11) it is hard not to suspect sampling variation lies behind the increase at the top end, especially given the large increase in the fraction of the sample accounted for by household heads with a third-level degree or above.

    It may well be that the large reduction in incomes in the lowest-income decile is real. Indeed, many of the comments above relate to the reality of major falls in income — including many self employed and previously self employed — at the lower end. This gets support from the fact that the over 65s were found to have moved up the distribution, which is best explained by others passing them on the way down. I should have made it more explicit that my post related to measured inequality, which has got most of the attention. The implied increase in absolute poverty as a result of the recession is likely to be all too real.

  40. Time is ticking……. 5 years saving a stock of worthless debt destroys real capital via the certain process of entropy.

    http://www.youtube.com/watch?v=EtyT2TQri4M

    When the European based car industry grew again in 2010 (Europes biggest industry) it subtracted wealth from us via higher oil prices….. oil prices are falling now only because people are getting poorer – they are not replacing the capital lost…….
    The European bank credit based “growth” has been a dramatic failure…. the higher the leverage the harder the fall as it is a naked shorting of the currency and wealth of a unit or juristiction.

    Money must flow into the ironic 19th century malinvestments to save the rational sub ~10,000 market towns of the Hinterland.

    It is little understood but France has a very sparse railway network when compared to the UK….. most of the small lines were closed to finance the sexy inter city routes.
    But these lines remained intact & uncut for the most part because of good planning – they can be brought back on line with much less resourses then what goes into making personnel transport vehicles.
    Much more capital needs to be directed towards these ancient routes as we now have a choice of 19th century like energy densities or 9th century stuff – me thinks most of these Euro boys are fans of Charlemagne and all that lark but peoples lives (with the exception of Ireland) were far more brutish and short back in the 9th rather then the 19th century.

    The motherlode lies not below ground in some fossil fuel well but in the now greening former industrial pathways of Europe.
    fr.m.wikipedia.org/wiki/Ligne_du_Havre-Graville_à_Tourville-les-Ifs

  41. On that sampling issue, one point that struck me is that perhaps there was actually a big increase in the percentage of households headed by a degree level graduate between 2009 and 2010. After all, quite a lot of construction workers left the country around then, and anecdotally quite a lot of graduates moved out of their family homes into newly-affordable rented accomodation. That would have increased the share of graduate-headed households among new households added to the sample, and possibly also reduced what may have been a lag in the response of the survey to changes in the population of households through increased attrition among longitudinal households.

  42. Steve from Hicksville

    “Everyone on Planet Earth stuck with euros will want them changed into d-marks.

    This is a laughable farce of an idea. If Germany repudiates all of its trans-Europe responsibilities denominated in euros, it will certainly not accept the same responsibilities denominated in d-marks.

    What about people with euros in German accounts? Won’t they be entitled to d-marks? NO! The Germans will convert non-citizen currency accounts to domicile states’ currencies. The euro itself might vanish with in a cloud of dust but all the EU instruments of finance repression will remain in place. A Greek with a German account you will be given worthless drachmas. Spanish will be giving pesetas, Irish given punts and a kick in the pants: everyone else in the ex-eurozone will be frantically bidding for dollars with whatever they have in their fists. Gold is good but nobody buys groceries with gold.”

    http://www.economic-undertow.com

    What was the only good thing the Irish did in Y2011 ?
    We bought 9and a Half million euros worth of good quality rail steel from Tata.
    http://www.dgmarket.com/tenders/np-notice.do~6239258

    We need to buy 200 million worth of the stuff Pronto , 100 million from the EIB or whatever.
    Not Friggin schools …. we are in the middle of a dramatic bank credit created energy crisis.(aren’t they all)
    But this is the mother of them all.

  43. Anyone interested in estimating how the GINI will look in 5 years’ time ? Clearly the trend is in the wrong direction. And things will probably get a lot worse before they get worse.

  44. @Ceterisparibus

    “It’s apparent size matter…little old Ireland is just too small so it has to have a programme of austerity monitored by others.”

    Ireland: TSTM (too small to matter). TART (toss at referendum treaties)!
    I’ll stop there before I get onto TWAT.

  45. @John, a lot would depend on how they weighted the data. From the census you know the population proportion, at least roughly. So you should be able to correct for over/under-sampling. I haven’t read the report closely enough to see how they handle this but yes its potentially an important point.

  46. @john mchale

    but that doesn’t mean that sampling variation is not a factor in the size of the measured change in inequality.

    Can you advance evidence to justify your suspicion? Look at my opening question on this matter.

    If inequality is measured purely as a function of income/wealth, surely even common sense – notably for being singularly uncommon – points towards increasing inequality over the next while to come for the unemployed and the indigenous private sector?

  47. @Dork

    Steve from Hicksville has his finger on the pulse. It only takes a little common sense.

    “What about people with euros in German accounts? Won’t they be entitled to d-marks? NO! The Germans will convert non-citizen currency accounts to domicile states’ currencies.”

  48. @The Alchemist

    The point about sampling variation is that the particular sample drawn can effect the result. We don’t usually worry about this too much in large, carefully chosen samples like this one, but the notable increase in the proportion of high-education individuals in the sample suggests it might be an issue for the change between 2009 and 2010. I don’t disagree with you that there are significant factors forcing down incomes, and to the extent that the proportionate declines are largely for lower-income individuals, measured inequality will rise.

    Kevin Denny raises an important question on weighting, but since the distribution of educational attainment in the population is one of the factors affecting the evolution of inequality over time, I can’t see how this could be fully adjusted for using constant education-attainment weights. I will dig deeper on this.

  49. @all

    Pity we did not experience as much attention on the infamous Indekon survey of the highly influential 44 – I failed to even get a response to “N” let alone get around to sampling abberations … let alone a response rate

    On SILC – we need to get intoto the ‘HOW? of fiscal adjustment – what is included and excluded, who is included and excluded, whose interests count or don’t count, and who controls the agenda …. at the mo we heading for Wisconsin and I’d much prefer civilized Copenhagen … (boston or berlin is so noughties don’tcha think?)

  50. @Brian… well its a good store of value but a medium of exchange ?

    @Joseph – yea people don’t seem to understand what a renationalisation of the system means in real terms.
    Although I have read you could cash Sterling in Berlin up to 1916…. the CBers will always maintain connections.

    Anyway Ruairi Quinn (are you watching ?)this is a real socialist President (of Aquaitaine) who knows there is a energy / political crisis and yet wants to maintain connections across the border.
    http://www.youtube.com/watch?v=ptpAcOkNrX4

    http://www.youtube.com/watch?v=dFslKxlYnq8

    aquitaine.fr

    Although he has the benefit of a rising budget YoY every year.(see above )
    Prelim. Budget Y2005 : 794 million
    Budget Y2012 :1,352 million.

    Now go to Infrastructures de transport also on the left.
    Its all rail baby
    Including the 7.8 billion Tours to Bordeaux thingy…. but the stuff withen his more direct control – local rail is getting massive infusion of funds from both local and state resourses.

    Go to TER Aquaitaine
    Infrastructures de transport
    ◦Projets ferroviaires (rail projects)
    & (PDF 8.1 Ko)
    Including
    Tram tain Medoc 70 million (2014)
    http://www.eltis.org/index.php?ID1=5&id=60&news_id=3399

    Libourne Bergerac Sarlet 70 million
    aquitaine.fr/IMG/pdf/03c_-_RFF_Modernisation_Bergerac-Sarlat.pdf

    Pau – Oloron 35 million (2011)

    St Jean Pied de Port -(pilgrims route) (2010) – 18.5 million

    + various other upgrades…….
    And we will spend 200 Million + on schools ???

    Also They are now spending 100 million + on bringing back the Oloron to Bedous route…… next stop Canfranc.

  51. @ PR Guy

    Regarding CH – there was a quote about central bankers making decisions that unleash forces over which they have very little control but I can’t find it

    This will have to do, from John Plender

    “But what is beyond argument is that economic and financial circumstances are so extraordinary that experts everywhere will be making monumental misjudgments on crucial issues for the foreseeable future.”

    Switz will do very well to stay out of trouble. And the franc is way out of line . I had to laugh at how much more expensive a bar of Lindt is in Zurich duty free compared to downtown Galway.

  52. @john mchale

    Thank you for your response.

    On the matter of credentials, the incidence of more credentialed people (assuming that the increase spotted in the survey can be so characterized) is a function of government investment in higher education.

    i am skeptical about the merits of policies promoting a credential infused society. The state of the indigenous economy, especially today’s unemployment figures, suggest the the Smart Economy initiative is not working.

  53. re- V Barrett;

    I was serious.
    The results of the last few years, without being melodramatic, have been costed in people’s lives.

  54. My purpose here is most certainly not to diminish the importance of inequality as an issue – quite the contrary. And it may well be true that inequality will turn out to have risen over this recession after balancing market and post-market factors. But those concerned with inequality might be unwise to put too much emphasis on one year’s survey results.

    The first statement, alas, doesn’t match too well with the rest of the paragraph. Imagine!

Comments are closed.