A new working paper with results for 24 EU countries (few words, lots of charts) by Zsolt Darvas at Bruegel – a background document for his earlier paper on which Kevin O’Rourke stimulated a debate.
A new working paper with results for 24 EU countries (few words, lots of charts) by Zsolt Darvas at Bruegel – a background document for his earlier paper on which Kevin O’Rourke stimulated a debate.
43 replies on “Productivity, labour cost and export adjustment: Detailed results for 24 EU countries”
Wow…..
Productivity best performers graph is striking.
Its not so much a parabolic curve where we will decline but at a slower and slower rate never reaching zero but it looks very hyperbolic to me………
Indeed It looks like we are about to leave the Euro system of planets.
We should put memories of our experience on a Golden disc or something … just in case someone or something picks us up in interstellar space.
http://www.youtube.com/watch?v=7arv8z12VTA
Maybe those nice folks in Cern will capture us in their Gravitational field (for a fee) and embark us on a theoretical science journey that strangely has not produced any applied technology since the second world war.
Productivity is all about Capital orbiting technological space.
Less capital = less productivity.
But if all your remaining productivity is farmed to pay the rent…well there is no point paying the rent.
Its best to live under the stars as although you will have nothing as the above at least you are free.
The dork never fails to disappoint with his contributions
Ta for link. Will get to it …
David,
Happy Bastille Day! Let’s not mention the growth pact, paper revolutions nor women scorned!
Just a bit of news here on another hero from the FT today:
@ Philip
A big jump in chemical production without having to create any jobs makes a bad Irish situation look half-good — so much for keeping up appearances compared with the real world.
Still it’s better than those wartime days reflected in the ditty:
‘Bless de Valera and Seán McEntee,
They gave us black bread,
And a half-ounce of tea.’
Michael,
the same de Valera, having instigated the Economic War with Britain in the 1930s. fancied import substitution as a response to the consequent foreign currency famine. Informed that tea was a major import at the time, he suggested that Irish people could drink (Irish-produced) ale for breakfast instead. Now if the Euro collapses……..
….maybe you should look at the BofA analysis on Ireland leaving the Euro. It’s not as scary as it seems (as long as there’s decent debt write-down)
Regarding these stats the employment graphs are most important for me. And they don’t look good.
No matter what way you look at the data, the public services labour cost is way out of line with all other industries. Manufacturing labour costs remained broadly level throughout the boom but public service just rocketed upwards. p44 bottom left table.
The hourly labour compensation table immediatly above that is strange, financial services and public service labour compensation tracked each other at all times. Are they including very healthy pensions in public service.
The hours worked figures are very skewed by construction and although there is a drop, it does not look as bad when you look at every other sector. I refer to page 43 hours worked and the one immediately below it showing the total economy. The one higher up on the page shows a drop but not so dramatic in other sectors.
@Michael Hennigan
The Financial System deserves its Bastille Day ,,, to come
http://www.nakedcapitalism.com/2012/07/links-bastille-day.html
Herr Professor Un_sinn has been p1ssing me off now for quite some time .. he is a wrecking ball with a pathological hatred for the Euro and a throwback to the worst zeonophobic form of deutsche romanticism …
I hear that poor Nikki feeling very lonely in his tent in the Sahel ….. as if Mali didn’t have enought to worry about – and he is now also responsible for the destruction of the heritage of Timbuktu … I hear that you can get practically anything off the back of a sarkozian camel in the Sahel these days …
PLAN e!
Italy and Ireland have more incentive to quit the euro than Greece, while Germany may have limited room to prevent departures from the currency union, according to Bank of America Merrill Lynch.
…
The analysis is based on a framework which ranks eleven of the 17 euro-area nations on criteria such as how orderly their exit from the bloc would be and how it would affect economic growth, interest rates and balance sheets. Ireland and Italy received an average ranking of 3.5, while Greece was at 5.3 and Germany had the highest score at 8.5. The lower the number, the more there would be to gain from leaving.
http://www.bloomberg.com/news/2012-07-12/italy-exits-before-greece-in-bofa-game-theory-cutting-research.html
@ DOD
Unfortunately plan e requires some planning. And we cannot do that. Our Achilles heel is energy…fix that and you free up our ability to manoeuvre. Our new currency will have to by oil…..
Well it’s back to the bikes then!
I recall over in America in the early nineties a conversation with an american lady outside a church in Minneapolis. She told me that the poor people drive round the back to collect free meals..
Something illogical here, I thought. And then I managed to formulate it in words:
“how could they be poor if they have cars?”
And she told me that the last thing an american gives up is his car. House, TV washing machine all come before it because they have to drive to work. Giving up the car means giving up hope of a job. In ireland the house is last. Pity the poor people reliant on CIE and Bus Eireann and Dublin bus after more cuts.
Below is the link to the London School of Economics -European Politics and Policy blog which some people might find useful;
http://blogs.lse.ac.uk/europpblog/
Luddite politicos and unelected technocrats could bring it down ….
McCarthy on Sunday – Bootboys & the ECB
http://www.independent.ie/opinion/analysis/the-eurozone-is-still-at-risk-and-we-need-to-get-our-house-in-order-3168399.html
@eureka
wise to check out all scenarios but I’m still in the Euro_camp
Colm,
Another time of delusion and turmoil as reported by The Argus newspaper of Melbourne:
Just over a decade after igniting a civil war and at a time of economic turmoil across the land:
IRELAND TO-DAY
“Most Peaceful Country in World”
President de Valera’s Statement
DUBLIN, April 25, 1934.
Foreign trade had more than halved since 1925; Guinness had switched its hq to London in 1932 and Henry Ford & Son in Cork was producing only for the local market. The biggest FDI employer in the history of the State had a peak of over 6,700 employed in early 1930 and within months, 6,000 jobs were cut.
Irish Free State Trade
DUBLIN, March 31, 1934.
@ All
A bit off topic; a seeming difference of opinion has arisen between Regling and Schaeuble on the question of whether or not States will retain ultimate liability when the ESM aids banks directly.
http://www.focus.de/finanzen/news/staatsverschuldung/esm-chef-klaus-regling-in-der-euro-krise-staaten-koennten-haftung-fuer-eigene-banken-umgehen_aid_782090.html
Indeed, Schaeuble recommends that anyone who can read anything else into the communiqué of the Euro Group summit needs a visit to Specsavers.
Regling also comments on Ireland and Portugal’s situation.
” Ireland will be able to return next year on the market , which would without the bailouts not have been possible. This shows that liquidity support does support reform, but can not replace it. “It can only help to bridge the time until the markets believe that the reforms are real,” said Regling. “They must also be implemented consistently.”
CMc might usefully also have made this point more forcefully.
@DOCM
The crucial piece in CMcC article…
“Ireland’s bank-related debt has pushed the overall Exchequer burden to the limits of sustainability. Countries get relieved of debts that are not sustainable. This, in essence, is what happened in Greece. If the total Irish debt proves to be unsustainable, there will be a composition with creditors. This is what unsustainability means.”
Mr Regling might note the above. Colm says the debt is at the limits of sustainability. Others, like Rogoff and Reinhardt, might say it is over the limit . reform will not change that position.
I cannot see any return to markets unless we get substantial relief on the bank debt.
@DOD
As your still in the euro camp this might be worth looking at…
http://www.businessinsider.com/byron-wien-smartest-man-in-the-world-2012-7
re: Thread topic!
Does compositional effect = burden sharing index?
It seems to me that to a large degree it does. And guess how Ireland fares. Ireland and Estonia held the distinction of having shared the burden of adjustment most unequally. Table 1, composition effect without agriculture, construction or real estate activities.
Who would have guessed!
@ Joseph Ryan
A large salt cellar should be at hand when digesting the Irish data because of huge FDI sector data distortions.
@ All
When losses were forced on private investors in Greek bonds, there was a promise that it was a one-off.
There is no evidence that any government is willing to directly book writedowns by other countries or expand the ESM to provide for significant losses..
Jamil Baz, chief investment strategist at GLG Partners, part of the Man Group, said in the FT that after five years, we are in a worse place than when we started. One would have thought that the recent deleveraging caused debt ratios to collapse. Yet, after the financial maelstrom of the past five years, debt ballooned to a weighted average of 417 per cent of gross domestic product from 381 per cent in June 2007 in the 11 economies most under the market microscope.
Strikingly, in each of Canada, Germany, Greece, France, Ireland, Italy, Japan, Spain, Portugal, the UK and the US, the ratio of total (public and private) debt to gross domestic product is now higher than it was in 2007.
He said it will take a minimum of 15 years or so for the economy to reach escape velocity and attain a level consistent with healthy growth scenarios. This is because debt levels need to come down by at least 150 per cent of GDP in most countries. History suggests you cannot reduce debt by more than 10 percentage points a year without unleashing major social and political dislocation.
@ Fiatluxjnr
“Countries get relieved of debts that are not sustainable”.
By whom, how and in what circumstances? A bald statement such as this butters no bread.
There is no deus ex machina that is going to arrive on stage to save Kathleen Ni Houlihan, especially against the background sketched in by MH above. Rogoff is quoted in today’s German media as counselling Germany against even attempting such a role.
There is no alternative to “sticking to the programme” if the line with regard to sustainability is eventually be drawn. If Pat Leahy in today’s SBP is correct, this penny has finally dropped with the government. Any other approach is putting the cart before the horse.
With all due respect to CMc, talk about hauling Jean-Claude Trichet before the court of public opinion in Ireland to explain himself is not an element in any plausible scenario that one can imagine.
@ All
FYI on the changing pattern of car production in Europe since Enlargement and against the background of Hollande objecting to Peugeot losing 8,500 jobs.
http://blogs.ft.com/beyond-brics/2012/07/12/peugeot-frances-loss-is-cees-gain/#axzz20QacTbcT
@DOCM
Euro = little French Industry
Franc = French Industry of some kind.
The Euro is a Gigantic (global) wage arbitrage (Slave) system where the users of the overvalued currency hollow out all domestic Industry to farm global wealth.
Indeed EMU built the BRICs via a wave of wage deflation / capital export from the core outwards……to all four corners of the globe.
From a Holistic wealth perspective wages cost should have zero effect on where you put your factory – it should orbit around proximity to market(where people are payed a wage etc) , raw materials etc….
It is surely quite obvious to even the most naive person what the Euro & the european experiment truely is.
The externalties of the waste withen the system has possibly reached it max limits now , possibly not.
It depends on how much “austerity” people are willing to take I guess.
Perhaps more people will be thrown off the monetary cliff before we get a larger implosion – I have no idea.
Whats strange is the lack of recognition of slavery in its most modern and purest form.
DOCM: The court of public opinion matter not a whit. The acts of the ECB are judiciable elsewhere, specifically at the ECJ.
@DOCM
The hem of your silken spun pink financial slip is showing … pls tuck it in! Aoife and Anto are known to peruse the blog at times ….
CmcC,
In theory you are correct about the ECJ but I doubt that a european institution would find against another institution.
I agree with your call for a plan B. We need to plan for the end of the euro and the destruction of the EU. At all costs we must not appear to be aligned with a country that according to Axel Weber has destroyed Europe for the third time in a century.
@ CMc
By all means, fire ahead! The first step will be to find a plaintiff which, in this instance, can only sensibly be the Irish government. Good luck!
@ Tull
Are you sure you have the right guy there?
http://online.wsj.com/article/SB10001424052702304782404577491023640421632.html
Joschka Fischer, maybe? (Former FM to Schroeder in the SPD/Greens alliance). He did not say that Germany had actually done the deed but that it might do so.
@DOCM
“There is no alternative to “sticking to the programme” if the line with regard to sustainability is eventually be drawn.”
We haven’t heard from Tina in a long time. Thought that was an FF copyright line.
The debt is at the limit or over the limit of sustainability. We can’t grow out of it with current and projected growth rates.
And the latest brainwave as reported by the Sunday Times to get the ESM to buy Irish bank shares on a LFV basis is really clutching at straws.
Sticking to the programme and getting lots of kudos has got us nowhere.
DOCM,
Fischer said it on the record with regret. Weber is reported to be briefing UBS clients that the euro is a goner. According to recipients of the briefing it is vey matter of fact and without any emotion.
I think a section of the German elite has given up on the euro project and is going to do a solo run. In the end, Mgt Thatcher reluctance to countenance German reunification will prove to be well founded.
@ Fiatluxjnr
I am making no judgement on which option happens to be right. I am simply pointing out the one being chosen by those in a position to decide.
@ CMc
As far as I know, this is the only instance in which the ECB is being sued by a member state of the EU.
http://www.guardian.co.uk/business/2011/sep/14/european-central-bank-treasury-court-action
@ Tull
Chapter and verse please!
DOCM,
A gentleman always hints but never reveals.
@Colm mcc
Have you been briefed about the existence of actial evidence of coercion (as opposed to others expressing contrary preferences) which could be put before the Court?
@DOCM
I have to agree with C McCarty on this.
The ECB, a supposedly independent institution, made a decision to torpedo struggling ship of state.
At a minimum we are entitled to a clear exposition of how that policy decision was arrived at. We are also entitled in my view to know if Mr Honohan agreed with and endorsed that policy decision.
[IMHO it was very simple. Trichet was the right man in the right place at the right time for French and German banks. But that is just a personal opinion. If there was a banking ‘Croix De Guerre’ he would surely get it.]
@ Tull
Too easy! Anything that does not involve a direct verifiable quote by an identfiable major player is not worth bothering with. The only exceptions are German official spokepersons speaking on the basis of anonymity, a difficult trick to pull off as the press room is usually full. However, woe betide the journalist who breaches the rule as he or she will not be invited again.
@ Joseph Ryan
Again, I am not debating or, indeed, disputing the possible merits of such a case, simply drawing attention to (i) the practicalities associated with mounting it and (ii) the likelihood of it happening.
@DOCM / Tull MCadoo
The link to the Fischer quote from Die Welt was given by your good self. The Axel Weber is news to me. However German policy for the past four years has in effect been a well disciplined, organised and up to now very successful retreat from peripheral exposure.
http://www.irisheconomy.ie/index.php/2012/06/03/what-kind-of-banking-union/#comment-292304
“Es wäre eine Tragödie und Ironie zugleich, wenn jetzt, zu Beginn des 21. Jahrhunderts, das wiedervereinigte Deutschland, diesmal friedlich und mit den besten Absichten, die europäische Ordnung ein drittes Mal zugrunde richten würde.”
http://www.economic-undertow.com/
The Mad Men……
“The Spanish establishment does not understand symmetry. There is nothing to compel Spain to borrow under duress, to not repudiate the odious- and ill considered debts it has already taken on. If Spain had a real government it would behave the same as the mad men, to stand up to them, to put the bullies in their place. The establishment fails to understand the economic dynamic that is underway. The cost of submission is no different from the cost of not submitting: putting the costs of unrestricted capital back upon capital where it belongs. Spain would abandon its costly ‘prosperity’ but would maintain its sovereignty and the freedom if its citizens to act for themselves. By surrendering, the prosperity is gone and so is the sovereignty. The citizens are free to be paupers or emigres. Spain becomes a colony of Wall Street”
The Europeans and their economic ministers and economics do not understand what it underway. Europe is subject to an Anglo-American credit embargo similar to those implemented in Latin America in the 1980s and in S. Asia in the 1990s. The US gains more from Europe’s bankruptcy than it can gain as return on new credit.
Because the establishment does recognize the energy component to their economic troubles they cannot see the potential gains to others … from Europe’s collapse.
Europe consumes 15 million barrels of petroleum per day: by bankrupting the EU 10 millions of those barrels can be exported to the US instead. This is the equivalent to the production of Saudi Arabia, without all the drilling”
Now here’s a link you all might like to read:
http://online.wsj.com/article/SB10001424052702303612804577528663115746788.html?mod=djemalertEuropenews
A volte face by the ECB – but why? This could make a lot of European banks unfundable.
@DOCM
I think its a mistake to read DOCM too closely as his/her/their main intention is to distract from the main issues and specifically to discourage thinking about any any national policies that might negatively affect the financial sector or the current institutional balance of power in Europe.
However as a service to readers….
There is no alternative – Oh Maggie – we’ve missed you! There are of course always alternatives, anyone who says otherwise is trying to avoid quantifying the benefits and drawbacks of a given approach.
with regard to sustainability – Only the foolish or mendacious say that the Irish economy has a better than even chance of supporting the current level of debt and not going into a death spin. It is a huge gamble necessitated by having been forced, as much of Europe has been, to underwrite the losses of gamblers by the ECB (with partial German backing).
Any other approach is putting the cart before the horse. – Austerity may well kill the horse, it has certainly led to a spike in suicides in Ireland among the unconnected. Not, I imagine, that this bothers neoliberal Europe in any significant way – they were probably the undeserving poor.
There are alternatives, and as has been said on this blog many times we can only hope that the Irish government is studying ones other than hoping to be among the survivors of the EMU death march.
http://www.bbc.co.uk/news/uk-wales-18852955
“Theres no magic money” – Secretary of State for Wales
This is one of the Valley rail lines from the Industrial past
This line reopened merely 4 years ago and is now a great success
en.wikipedia.org/wiki/Ebbw_Valley_Railway
It seems to have reached capacity despite not terminating in Ebbw Vale town.(for the moment)
en.wikipedia.org/wiki/Ebbw_Vale_Parkway_railway_station (follow to stations down the line and witness the passenger increases on this little line)
So either extending stations to accommodate bigger trains or making faster electric trains seems the best option so as to increase capacity on these single rail lines.
But some of this is state propoganda – it will be two years at least before they get around to these busy little lines.
There is now evidence of too much monetary easing from the BoE to keep down yields and not enough relative fiscal production from the Treasuary as all of these lines begin to Jam up.
Almost All Fixed capital expenditure should be channeled into these projects.
Terminus stations for the other (4) Valley lines to be electrified.
en.wikipedia.org/wiki/Treherbert_railway_station
en.wikipedia.org/wiki/Aberdare_railway_station
en.wikipedia.org/wiki/Merthyr_Tydfil_railway_station
en.wikipedia.org/wiki/Rhymney_railway_station
Passenger number increase (look to the right) speaks for itself.
PS….and who says really short passenger lines don’t work ?
en.wikipedia.org/wiki/Butetown_Branch_Line ( One Mile)
Cardiff bay train station passenger numbers
en.wikipedia.org/wiki/Cardiff_Bay_railway_station (terminus)
2002/3 : 177,911
2010 /11 : 753,148
ACEA
Brussels, 17/07/2012 – In June, new passenger car registrations declined by 2.8% in the EU*, continuing the downward trend commenced in October last year. In total, 1,201,578 new cars were registered in the region in the month, which counted on average the same number of working days as in June 2011. In the first semester this year, demand for new cars was down 6.8%, compared to the first half of 2011, amounting to 6,644,829 units.
June results were diverse across the EU*, leading to an overall 2.8% downturn. Looking at the major markets, Germany (+2.9%) and the UK (+3.5%) posted growth, while Spain (-12.1%) and Italy (-24.4%) contracted. The French market remained stable (-0.6%).
From January to June, Germany (+0.7%) and the UK (+2.7%), the two largest markets, performed better than in the first six months of last year. Downturn prevailed in Spain (-8.2%), France (-14.4%) and Italy (-19.7%).
Dork – A huge divergence between Germany, Sovergin UK and most of the rest can be clearly seen.
If we compare Jan to June 2007 reg to Jan to June 2012(prov)
Germany Y2007 :1,576,999
Y2012 :1,634,401 (increase)
UK Y2007 :1,267,299
Y2012 :1,057,680 (structual decrease but stable to rising recently ?)
France Y2007 : 1,080,608
Y2012 : 1,048,982 (small decrease although larger number sold in 2008 ?)
Italy Y2007 :1,422,267
Y2012 : 814,179 (massive decrease)
Spain Y2007 : 851,960
Y2012 : 406,070 (market more the halved)
Greece Y2007 :159,529
Y2012 : 32,429 (market merely 1 fifth~ of what it was !)