IMF Seventh Review

The 2012 Article IV Report on Ireland and the Seventh Review of the Extended Arrangement with Ireland are available together in this document

The IMF has also published a Selected Issues Report on Ireland.

80 replies on “IMF Seventh Review”

Pay cuts in preference to cutting essential services. Seems like a no-brainer to me.

Some pay=back from Europe on odious financial system debt. Seems like a no-brainer to me.

… and many others.


Public Information Notice: IMF Executive Board Concludes 2012 Article IV Consultation with Ireland
On September 5, 2012, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Ireland.1


Since the last Article IV consultation in mid-2010, the Irish government has faced a loss of access to market financing resulting in a need to draw on financial support from the EU-IMF from late 2010. This development was the culmination of an exceptionally deep banking crisis associated with the bursting of a commercial and residential property bubble. The economic impact was severe, with real GDP contracting 8 percent during 2008-10, the CPI deflating by 5½ percent, unemployment jumping sharply to recently approach 15 percent, and house prices falling to half of their peak levels. Slumping revenues resulted in the fiscal deficit widening to over 10 percent of GDP in 2009-10, and large loan losses in the banking system required public support of some 40 percent of GDP, contributing substantially to the dramatic rise in public debt from 25 percent of GDP in 2007 to about 118 percent in 2012.

@ PR Guy

No, it’s just like that girl from Cork after the Phoenix Park gig. The whole nation went looking for her when she was only on a mad bender/getting the shift. I expect Xi is in a purple haze in Macau.

Whatever about that girl from Cork we’re definitely scr***d.
The message is stark. This years budget will be more benign than next years – each year you cut the same from a lower base.
Real poverty and suffering are all on the agenda.
It’s an odd odd situation

@ Eureka

Indeed. The dress rehearsal €130 m health farce doesn’t bode well for the €3,500 main event.

Sections 16-19 are depressing, but at least these reports are starting to become a little more realistic.

I remember a while back being ridiculed on this site for saying that nominal growth in 2015 of 4.5% (as assumed by almost everyone in the run up to the fiscal compact treaty) was unachievable. Now the IMF are forecasting 2.75% growth from 2014-17. I still assert that even 2.75% is unachievable and their low growth scenario of 0.5% real growth (which, given we will have lower inflation than EZ average, will amount to about 2% nominal growth) is more like a central, or even optimistic scenario.

With the low-hanging fruit already picked and eaten, closing the deficit is going to have a devastating impact on the domestic economy. In addition, the banks will have to raise variable rates even further and the ECB may well eventually starting raising rates to appease the Germans during the OMT programme. All of which will have a disastorous effect on over-indebted households. Debt to GDP of 130% (or 150% of GNP) will mean that default will be inevitable.

I very much doubt the ECB/EU will give us real debt relief as part of the current renegotiations (so-called “robust implementation” of the June summit). If we do not get a meaningful relief, I genuinely cannot see any end game other than a Euro exit.

A few points;
Section D Conclusion Page 9:

An IMF ‘desk’ forecast of .2% per year until 2017????????????. Is that the latest forecast in the MOU document / Irish Government projections??

“As the debt overhang will take time to unwind, household consumption is expected to remain subdued in the medium term. Empirical estimates suggest that household‘s preference for saving will taper off, in particular in response to a tighter fiscal stance and under the assumption of sufficient mortgage lending to normalize the real estate market. Informed by empirical estimates, the savings rate is forecasted to decline gradually from 14 percent currently to about 12 percent in 2017. Given the desk forecast for 0.2 percent of annual average real growth in disposable income during 2012–17, consumption is expected to grow at 0.7 percent per year in real terms on average. At the same time, the savings rate remains sufficiently high to sustain a steady decline in household debt burden over time.”

As for the language ‘household preference’ for savings. Would that preference be the result of bank threats etc. Preference suggests a choice.

Unemployment ;Note 3 , Page 60;

“At the height of the boom, construction sector employed almost 13 percent of workers. During the crisis, this share shrank by more than half. If the share of construction in total employment increased to the EU average of 8 percent, and employment grew by 10 percent in the next medium-term, around 55,000 new construction jobs would be created.”

Summary of the above two points in layman’s language;

Money that flowed willingly and unregulated into Ireland during the boom, is now being systematically extracted to the point, whereby capital formation has all but disappeared in Ireland. This deleveraging policy, dictated from the EZ core financial system is costing Ireland 55,000 jobs, or three full percentage points in employment.


“Why would you ask that?”

It would have some serious economic (and other) consequences….. but what triggered it was I knew he (Xi Jinping) had ‘cancelled’ a number of big deal meetings in the past week……… but I only just found out one of those meetings was with H Clinton so that’a pretty big cancel….. then there’s all that mess with Bo and Xi possibly being implicated… and I wondered if anyone on here had picked up anything….. and some clients have an interest in what’s happening in China in the run up to Xi supposedly becoming the next leader…. and and and

How far do you want me to take the answer?

However, my mouthpiece in the PRC tells me ‘Xi Jinping has a bad back.’ So that’s alright then.

Page 50, 50, Item 37. Ireland is pipped by Portugal for highest public pay as % of GNP. Netherlands picked up the bronze.

They have noticed the way CPA and pension costs interacts, see:

Table 8. Rationale for Targeting Reforms in Selected Expenditure Items

“The net paybill/GNP ratio at end-2011 was still above 2008 levels.
Average public pay/GNP per worker is one of the highest among
advanced European economies, which is suggestive of a public wage
premium over private pay (OECD surveys document high salaries in
Ireland’s public health and education sectors, which account for threefourth
of public employment and compensation). It may be possible to
achieve paybill reductions within the framework of the Croke Park
Agrement through allowances, sick pay and reduction in premium/overtime
payments. However, if significant progress within the CPA
framework proves elusive, pay rate adjustments may be necessary.

The 4 percent average levy on public pensions in 2011 appears to have
generated relatively small savings in the public pension bill. With a
53 percent increase in pensioner numbers between 2008 and 2011,
including partly due to early retirements and redundancies, the net
public service pension bill has risen by 49 percent since 2008, offsetting
one-third of the savings in the net pay bill. Moreover, the single public
pension scheme reforms currently in train will apply only to new
entrants and will not help contain the rising public service pension
burden for almost 30 years. The need to rein in this burden (given
population ageing) as well as equity considerations (the average public
service pension is roughly double the state pension) warrant a review of
the scope for further savings in the pension bill, and the
appropriateness of the extent of grandfathering allowed under the
single pension scheme reforms.”

Is it OK for Irish economists to openly discuss the rights and wrongs of this now that the IMF have focussed on it?

This is a very depressing read. Even Grumpys comment is depressing (it would be given his moniker I suppose) – could you imagine 3 more different economies in the top 3 – Portugal is hardly rich and The Netherlands is hardly profligate.
There is NO chance of stimulus or growth wharsoever. Every Euro out of a public sector wage packet is a Euro into the hands of the bond markets and out of the real economy.
Ireland is being wound down.
The writing is on the wall. This is the roadmap to poverty. F*** the IMF and to hell with this.


Why Irish economist are not rioting on the streets demanding pragmatic change in the public interest is quite simply beyond me!

The last trace I see of The Dork of Cork was on a website called Kaldor on August 17th.

I miss him.

What happened?

@IMF, RTE Primetime

Just in case the government claim they are bound by the Croke Park Agreement, here is a reminder that they are not:

From the IMPACT trade union in March 2010:

” Q Is there a ‘get out’ clause that would let the Government introduce more pay cuts even if we co-operate with change?

A No. Clause 1.28 of the agreement says: “the implementation of the agreement is subject to no currently unforeseen budgetary deterioration.” There were similar clauses in all previous national agreements. The Croke Park clause reflects the reality that an unforeseen shock to the economy – like the collapse of the banks around the world in 2008 – would create a new economic and budgetary situation.

The clarifications IMPACT got from the Labour Relations Commission confirm that the implementation of paragraph 1.28 “will be applied in a bona fide manner by the Government side” and that “it is not envisaged that, on the basis of any currently known facts, that the clause would be utilised.”

The Agreement was signed in April 2010 and ” an unforeseen shock to the economy – like the collapse of the banks around the world in 2008″ did indeed occur following that. Anglo Irish Bank was found to be bust, the state was shut out of the bond market because of a budgetary deterioration, and about six months later an IMF / EU bailout had to be requested.

Just for the record.

@ pr guy
Re China
The telegraph has an article about that chap rumoured to be knocking off sick by armageddon evans pritchard. anecdotal based but nonetheless alarming.

And if the Government procrastinates the Troika will send in a technocrat to do it.

It’s the Monti/Python dilemma


“Is it OK for Irish economists to openly discuss the rights and wrongs of this now that the IMF have focussed on it?”

No. The government has said no. You have to remember that the individual members of the both government and senior PS has a very personal stake in the CPA.
The country comes a very distant second place, or is it third place, or fourth!

Perhaps economists can also discuss increased taxation to fund investment. Or is that ruled out too for similar reasons.

“Ireland is being wound down.”

McWilliams, a few years ago, argued that the banks would be turned in giant collection agencies. That is what happened and will continue to happen.

It is only when real pain is experienced at high income levels, through much higher taxes, that the reality of Ireland’s economic situation will be brought home to decision makers. The Troika has a big stake in making sure that this does not happen.

I have heard the word ‘tough decisions’ several times from elected reps on RTE this morning. One small ‘not so tough’ decision certainly needs to be made.
Reduce the monthly Katmandu mileage allowance paid to TDs, ~€5,000 per month; in the news again recently when paid to a Sligo/Leitrim TD. Is this necessary expenditure? Is it a priority over home help hours for disabled people?
It seems it is!

@ anewdawn
CPA serves no-one. From the union perspective every sacrifice they make in terms of conditions or numbers is for the difference in one years pay between now and post CPA levels. I suspect that it averages out at about 10% of salary for everyone.

With CPA you will have a pay cut in 2014 of 10% with a major loss in service quality and numbers. Without CPA you will have a very similar (maybe less because unions retain the threat of strike) pay cut without the major cuts in service quality.

CPA no longer serves the unions’ interests either. CPA is a grubby bribe of PS unions that serves nobody but the govt and the few at the top in the PS

@ All


The question is whether the IMF intervention is a help or a hindrance?

The other rather obvious point is the “sequencing” one, not in terms of the link to the situation of Spain but between any decision in October on the “Irish question” and the contents of the December budget.

The “official lenders” must be highly impressed with the resolution and clarity of the government’s position as expressed just now on RTE.

End-2011 current primary spending was 47% of GNP, 17 percentage points higher than in 2000…the simple metric of average public pay/GNP per worker appears quite elevated for Ireland relative to advanced European standards.. By 2020, Ireland’s population of over-65 year olds will rise by about one-third, and there will be about 15% more primary school age children than in 2012.

What’s new about not liking facts? Today is no different to the bubble.

There will always be misplaced ‘victims’ who will use diversions to avoid the truth. The facts should however be presented despite the negativity.

Bill Clinton in his stunning tour de force last week showed that there is still a market for facts. It helps of course when they’re delivered with the charm of the self-styled ‘country boy from Arkansas.’

In an Irish Times letter yesterday, an academic delivered some facts to me. Unfortunately for him, he had misread a comment I had made.

Last year, research published by the German Macroeconomic Policy Institute (IMK) shows that in 2010, the average hourly labour costs (including social security costs paid by private sector employers) were €28 for the Irish private sector and €34 for the Irish public sector.

The rates for Germany were €29 per hour in both sectors; Finland’s rate was also €29 in both sectors and the UK was €20 per hour in the private sector and €21 per hour in the public sector.

So the Irish public sector had a premium of 21% before accounting for the benefits of State-guaranteed job security, the special pension scheme and the €1.5bn in allowances.

Pay accounts for 75% of the Irish higher education budget compared with about 66% in other European universities.


I have no doubt that the Irish public sector is overpaid and the CPA is a cover for all kinds of excess. However, a blanket reduction in public sector salaries is not going to help anyone. The fact is that household liabilities matter.

In a debt crisis like the one we are in, it is not really that relevant if a nurse or teacher in Ireland gets paid 21% more than a those in the private sector. If they have a massive mortgage with little discretionary income, cutting their pay now while simulateously imposing property taxes is going to be counterproductive.

Not only would such a move increase mortgage delinquency and exacerbate the banking crisis, it would also lead to a depression in the local economy.

Of course, the above argument doesn’t hold when it comes to incremental pay rises, which should be suspended immediately. I also think that pay and pensions at the upper end of the scale (for the likes of consultants and senior civil servants), should be slashed. But cutting basic rates of pay for the average public employee should wait until after the crisis has past.

“So the Irish public sector had a premium of 21% before accounting for the benefits of State-guaranteed job security, the special pension scheme”

if the pension levy is taken off the pay then it must be regarded as going a long way to bridging the gap in pension provision.

“Pay accounts for 75% of the Irish higher education budget compared with about 66% in other European universities”

Really? Sez who. The OECD published their education statistics today and lo and behold in 2009 (i.e. before paycuts) pay was 65% of third level current expenditure, the exact same proportion as in the Reich and below OECD and EU averages. This could be compared with Denmark where 83% of current expenditure was on pay or the Uk with 79.9% on pay. One might usefully mention Austria also where they manage to spend 53% of current expenditure on teaching staff, while Ireland only manages 38%. Who’d be a university administrator in Austria!

@PR GUY / Others
re Gurdgiev Analysis

“So, in other words: NOTHING can be done on the scale required. We are boxed into the corner with SMEs debt overhang too. All state resources and economy’s resources wasted on rescuing the banks bondholdres, folks. No powder left for the rest of the economy. Sit tight and pray for a miracle.”

Some sitting tight and sitting pretty, while other sit and pray.

Gurdgiev and others need to do better in terms of coming up with some kind of path out of this crisis. The SME debt nightmare should not have been a surprise to anybody.
Sticking to the status quo and praying will sink the country completely. I had a distant in-law that did just that when she acquired a lump on her breast.
We need ‘state of emergency’ thinking, action and self sacrifice.
There is no other way, other than a path to societal and national disintegration.

@ All

I would suggest that international pay comparisons are neither here nor there. What matters is (i) the level of pay that the country can now afford and (ii) how the cake is to be equitably divided.

The government is simply floundering around with no minister from the Taoiseach down being capable of speaking in a manner that is convincing with regard to the immediate future not to mind the medium or long term.

It used to be a case of “driving Miss Daisy” but now it is that of “driving change” in the public sector. This, apparently, is to be made even more “integrated” than it already is, in direct contradiction with the obvious fact that its tasks are mult-faceted and varied and that this should be reflected in the staffing and organisational structures (assuming, and this is a big assumption, that these tasks should be carried out with the status of public service in the first place, education being an obvious example).

Order is being brough to the sharing of rations in the lifeboat while the rest of the working population is being left to sink or swim. But it is still a lifeboat and there is no sign of rescue in sight.

@ MH

Thanks for the German export figures. They are truly astonisihing.

@ dearg doom

Really? Sez who.

So you think I plucked a figure of 75% from the air?

Maybe it’s all propaganda!

I was familiar with that line during the bubble.

On the 21% premium, you say the pension levy reduces that. Your VIP scheme is linked to earnings (rare….very rare; every increment adds to pensions) and payout is guaranteed. I bet you haven’t a clue how much it costs?

Even after the pension levy, the annual funding cost for most staff is over 20%; Brian Lenihan said in 2009 that the post levy funding cost for a new entrant was 19%.

The ‘75%’ came from an Irish government report published in 2011:

Modest levels of investment in higher education, combined with pay levels that are high by international standards, albeit with recent reductions, have resulted in inadequate investment in learning resources and system development infrastructure. Salaries account for three-quarters of total current expenditure on higher education in Ireland – compared with an international average of two-thirds.

This means that Irish higher education operates with lower (nonpay) recurrent expenditure than is typical in other countries.. .In the university sector, there is a lack of transparency regarding staff workloads, and no specific provision is made in relation to overall hours of work. In other countries, the contracts of academic staff can vary from inclusive contracts (where the contract specifies the total number of hours during which an academic is required to be on campus) to contracts that specify the total number of hours an academic is required. In Ireland, the transparency and content of academic contracts needs to be addressed to ensure that productivity is optimized.

In the institutes of technology, the academic contract provides for an annual teaching commitment of 560 hours (equivalent to a weekly norm of 16 hours per week for 35 weeks) for an academic year.

16 hours per week teaching — maybe that seems excessive?

How about this from the IMF on Monday (yesterday):

Although cross-country comparisons of public wage premia are complicated by definitional issues, the simple metric of average public pay/GNP per worker appears quite elevated for Ireland relative to advanced European standards. This is consistent with findings in recent OECD surveys on health and education, which document above average pay levels in education (esp. secondary school teachers), and health (nurses and consultants), which together account for three-fourths of the public service.

Ireland was spending “significantly more” than the OECD average on health and education but that performance in the sector remained only about the OECD average.

In the health sector, the IMF said potential reforms could include new working models to minimise premium and overtime payments, greater use of primary care rather than hospital stays, and substantially increasing the low share of generic drug use.

The ‘powerful interests that must not be touched’ must be delighted with the focus on CPA …. as they keep their heads down and avoid making a decent contribution, which they can well afford, to getting the deficit under control … you know who they are …

I am opposed to the CPA. Why? Because the Unions p1ssed on the private sector workers; a strategic move that has split the Irish labour movement.

This allowed neoliberal Minister Dick Bruton to downgrade 4 yr apprentice trades to to a buck above minimum wage – effecting 250,000 workers … and the ICTU remained silent ….. this will result in further de-skilling as opposed to upskilling which a modern economy demands as many will now not bother with the 4 yr road to these trades …. madness in economic and human capital terms.

In previous agreeements there existed some semblance of support for the least powerful in society – disabled, special needs students in schools, etc and witness the recent silence as the parolympians protested outside the gates of the Dáil and so on.

A selfish move by the public sector unions – to protect themselves and to hell with the rest of the workforce. Where is The Principle of Solidarity here? [rhetorical]

“So you think I plucked a figure of 75% from the air?
Maybe it’s all propaganda!
I was familiar with that line during the bubble.”

Figures are knocked around, it is legitimate for me to post an another figure from a reputable source and wonder where your figure originated from. It is now legitimate to wonder where the HEA got their figures from. I also wonder if the HEA would like to comment on the higher expenditure proportion on non teaching staff in Ireland, something they are aggravating with further useless bureaucracy.

Actually the debate now is very reminiscent of the bubble, people with very little concern with an accurate overall picture, but plugging away at their own agenda.

There are enough real issues to talk about with trying to create issues.

@ Anewdawn

In Finland, a comparable economy to Ireland where a master’s degree is a minimum qualiification for teaching, a teacher with 15 years experience in junior secondary earned in 2010 (post Irish budget cuts) was payed €40,800 and at senior level €43,200 according to the OECD.

The Irish teacher earned €53,200 at both levels. In France the pay was €32,500. in Spain it was €37,800 and €38,600.

The basic pay for an Irish TD is 28% above that of Swedish counterparts.

The expenses are a joke in a bankrupt country. Party allowances and €205,000 as a tax free gift over five years for ‘independents’ and on the litany could go.

Is it any wonder that the scroungers target the disabled?

Why is there going to be a dual workforce, 40 years after the battle for equal pay?

Why are the traditional trade unions in cahoots with the well-heeled of the professional groups?

Back in the day when Sylvia Ostry was heading up the OECD I became aware that country reports were a joint production and that rarely would a report be issued if the country involved disagreed with it.

When I read the IMF report on Ireland it appears to me that it brings up issues that the Gov’t wishes to deal with. Some TDs’ are ranting about being “forced” while Ministers are saying they have received “advice”. The IMF report provides useful cover for the politicians. If they adopt unpopular items from the report it will be because of “pressure” and if they do not it will be because they are “courageous”. PR Guy should be able to deconstruct the more Machaevillain aspects in a professional manner. There was a time when spin was skillfully employed and barely detectable in Irish politics. Now they adhere closely to the Madison Ave playbook.

The Telegraph are picking up on the Jesuit connection of Draghi and Monti. Do we have any overlooked Clongowes Wood alumni in politics or the Civil Service.

bit off thread

European Luminaries Reflect on Euro
‘Seventeen Countries Were Far Too Many’

Former German Chancellor Helmut Schmidt and former French President Valéry Giscard d’Estaing are two of the leading architects of the European Union. In a SPIEGEL interview, the veteran statesmen discuss the causes of the euro crisis and the lack of vision among today’s European politicians.


Mr Xi is on a bit of a bender with Blind Biddy in Macau. Relax!

@Mickey Hickey

One of the Jesuit educated destroyed the country – Mick McDowell (who was not informed of the concept of collective cabinet responisbility) and his randite neoliberal ideas – spare us from any more please.

[McVerry excepted]

@David O’Donnell

“I am opposed to the CPA. Why? Because the Unions p1ssed on the private sector workers; ”

Well done on being honest enough to articulate the truth.

Some people on this board would drive you mad.
Banks and developers were private sector workers.
You don’t want a public service – fine – go live in Rwanda!


Which contributors on this thread who don’t want a public service, and how do you come to that conclusion?

That man from Kuala Lumpar. Spends 98% of his time thrashing nurses, teachers and guards and never mentions the banks. Drives me bonkers

Now now eureka. He also throws in random data on how poor exports are, how bad universities are at creating jobs, and how wonderful Germany is. That’s almost who rth his sneering (oh, I can see the outraged lengthy rant with indents and random data now) but tbh he is a classic example of the Irish abroad with never a good word to say.
KL must be wonderful..


I have worked for three foreign governments and I can assure you that Civil Servants come under attack when times get tough. Most Gov’ts have a policy of paying their Civil Servants the “going rate”. The last one I worked for paid the average for equivalent jobs in the 27 largest cities. In tough times there are hiring freezes, pay increase freezes, voluntary (with inducement) and involuntary (rare) layoffs. In addition I worked for 14 private and quasi private enterprises all abroad.

I have never heard anyone say the CS deserve their pensions because they contribute 15%-17% of their pay to the pension fund. In good times the perception is that CSs work at a comparable pace to private sector workers. In bad times they are a lazy bunch of malingerers.

I would ignore the criticism as it is temporary. I would advise the unions to play ball and not provoke a public reaction that saddles the country with a Gov’t of self righteous right wing zealots.

Always keep in mind that Gov’ts come and Gov’ts go but the Civil Service rolls on forever. Apologies to that African-American singer with the deep voice who sang “Old Man River”. Also keep in mind that the Minister is in a temporary position.

Cheer up.


As this is a cheer you up evening. Consider the lot of others.

Company of 70 people, struggling for the past few years. Half are told go home. No Pay, no notice, no redundancy. No work. That’s it.
By some unusual twist of the legislation, which entirely escapes me, the workers as preferential creditors of the company must wait for the Dept of Soc Welfare to pay whatever the law says is the minimum, while other creditors, namely banks continue to extract whatever they can.

That company is in Ireland, not somewhere else.

The real problem with the CPA etc, is that PS workers on moderate incomes have been thrown into the front line, to defend an agreement that has made many other people rich. People who took the borrowed dosh and ran or people who are still raking it in.

Ireland has lost its raison d’etre, if it ever had one. There is no sense of common purpose, common objective or national solidarity. There has been and is too much deference to authority; an authority whose only success has been in looking after their own interests, at the expense of all others, both in the PS and in the Private sector.

Final point on deference:

@ IMF (I’m sure they will respond to me!)

Why do you not produce a table of your own IMF forecast growth and other statistics for Ireland, starting in 2008, and show us each revision up to this last one in 2012.

We need to know, that you know what you are doing.
I would like to see that table.

No disrespect, but I think the results would show, that your analyses and forecasts have been way off the mark. In other words you do not know what you are doing. [That is the benign interpretation]

And if, as mooted by some economists or as spun by yourselves, you did not support making bank bondholders whole, why did you not have the courage of your convictions and refuse to go along with it?
How do we know that today, for instance, you are not forcing policies on this country that believe will not work?
All we know, is that you have not got the courage to say no, to what is wrong.

@Joseph Ryan

Yes, I’m surprised at this stage that this fact does not get more of an airing!


The man from Kuala Lumpur has also worked out Fermat’s Last Theorem – when it comes to data and facts he is 99% on the ball!


People who criticised the unsustainable behaviour of Ireland’s property developers and bankers used to be lampooned as “people who just don’t want a successful entrepreneurial culture in this country”.

Ah thanks guys! Never knew you cared!
That link was just great DOCM – and on YouTube they have links to jack lynch singing it too. Reminded me of the days when we had politicians who embodied hope and ideals and weren’t just bankers henchmen – ah those great ideals of cherishing our young, building a fair society – now all replaced by Gilmores ideal of return to the bond markets……the patriots would love those ideals
Actually I am on a bit of a downer tonight. I’m off to bed


Transcript of a Press Conference Call on the International Monetary Fund’s 2012 Article IV Consultation and the Seventh Review of the Extended Arrangement with Ireland

…The report discusses a range of risks to this economic recovery. These risks also threaten Ireland’s debt sustainability and, therefore, the feasibility of retaining the access to market funding that was recently regained by the government. In this context it’s very important to move forward with implementing the June 29 commitments by the euro area leaders to further improve the sustainability of Ireland’s program. As we note in the report, a key step would be for the ESM to invest in the equity of Irish banks.

….To conclude, the Seventh Review also emphasizes the importance of timely approval of a strengthening of European support, including the ESM equity investments I mentioned, to help put the program on a clear path to successful completion.

Appreciate the continuing pragmatic support on the ‘odious debt’ issue with Eirope.

Any possibility of a loan deal for Ajai to head up the new Department of “Taking on the Vested Interests”; as you know we are broke but a substantial promissory note is available for Ajai to take up the position of Minister with plenipotentiary powers for 18 months. Blind Biddy will provide ample security gratis. Sincerely, the hard pressed Irish Citizenry, etc., Dublin.

@Joseph Ryan

“..Gurdgiev and others need to do better in terms of coming up with some kind of path out of this crisis. The SME debt nightmare should not have been a surprise to anybody.
Sticking to the status quo and praying will sink the country completely..”

I respectfully disagree – the single biggest issue is the manner in which the Govt has gone about fixing the current economic malasie is precisley what Gurdgiev et al have repeatedly requested that they do not do namely; put the Govts balance sheet problems ahead of the households.

The Govt has decided it needs to fix itself and to hell with the consequences – this is a failed strategy. Some bright spark surely should have realised that fixing the balance sheets of households first might actually deliver additional taxes and dare I say it economic growth sooner than the current plan. But it seems not. The Govt depts are not flush with bright people and we’ve ended up in a very dark place as a result.

What Gurdgiev has been saying for a long long time is what Reinhart and Rogoff have been preaching for a decade namely debt write offs are the only long term solution when debts get to the size that both housholds and the State now finds them. The austerity journey, no matter how tough and painful always comes up short. Always.

Gurdgiev has consistiently suggested a debt write off scheme is our only long term deliverance. If Govt are not prepared to listen to him when he has been proven correct at nearly every turn in this disaster, their loss I’d say.

It is quite galling that the Govt now seeks to walk away from its own bank debt obligations by November and yet somehow believes the debts which the average household finds itself are somehow manageable (to quote Prof. Honohan) and if you can’t raise your game sure the deeply flawed revised personal insolvency route is always there – what a joke.

@ Eureka

That man from Kuala Lumpar. Spends 98% of his time thrashing nurses, teachers and guards and never mentions the banks. Drives me bonkers

Bitter truths are of course distasteful and rather than argue the facts, it’s indeed more common to demonise and misrepresent.

I mention a lot more beyond this blog, including highlighting that the most successful companies tend to pay the best and be the best places in which to work e.g. “in January 1914, Irish-American Henry Ford startled the world by announcing that Ford Motor Company would pay $5 a day to its workers…”

I assume that you haven’t read my analysis of ‘The Wealth of Nations’ (1776), highlighting Adam Smith’s progressive streak?

When masters combine together in order to reduce the wages of their workmen, they commonly enter into a private bond or agreement, not to give more than a certain wage under a certain penalty. Were the workmen to enter into a contrary combination of the same kind, not to accept of a certain wage under a certain penalty, the law would punish them very severely.

As regards, ‘thrashing’ any category of worker, I neither look up or down on any workers, nor do I tug the forelock to anyone.

When I was in charge of a Swedish company in Jeddah, a manger demanded that I fire a salesman for showing ‘disrespect.’ My view is that a manager should earn respect and I gave the salesman a paid week’s holiday.

My interest is in a Fair Ireland, which of course might impinge on the current benefits of some. It is what Joseph Ryan and David O’Donnell alluded to.

The title of Daniel Corkery’s ‘The Hidden Ireland’ (1924) could be used for this other Ireland where long-term unemployment, basic redundancy and likely pensioner poverty are the new/old normal.

Experience the fear in a failing company – – desperation writ large but the majority are still comfortable and this world is very remote.

It’s ‘The Hidden Ireland,’ one in which traditional trade unionism has been largely silent in the first bust since their formation and where the media reports on a ministerial announcement of 30 new jobs but the loss of 30 old jobs is not news.

Should it be taboo to ask why a garda should retire on full pension at 50 and be able to pick the best 3 earnings years while fellow citizens face penury?

There were of course other interests when for example I highlighted how €600m was added on to the State’s drugs’ bill that had a factory gate price of €1bn.

Maybe I hate pharmacists too? Maybe I should vie for popularity and join the anti-bankster chorus (including remorseful bubble cheerleaders)?

The knowledge economy gravy train has many riders from both sectors to antagonise. Drown out the bad news: patent applications at the Irish Patent
Office in 2011 were at the lowest since 1982.

So, wonder why the default mode in Ireland is to keep the head down, go with the flow and grab what one can.

Wonder why from a group of hundreds of Irish academics (including ones with tenure), during this brutal recession, that it’s very rare for one to break ranks and highlight issues overdue for reform in the area they know best — their workplace?

@ grumpy

This is a classic from March 2007 of the typical reaction to those who dared question the common belief that the the free lunch had been invented:

“Why do we allow scaremongers and doomsayers with unfounded pessimism and unbridled negativity dictate our thinking and blunt consumer confidence? The Irish economy is the envy of the world. Job creation is phenomenal with more than 7,000 new jobs being created each month – despite the gloomy attention given to periodic job losses in some sectors.”

@ Gtfaway

I see that Liam Cahill is shutting his ‘An Fear Rua’ GAA site, partly because of Internet cowards like you.

You appear to be a racist as well, which anonymity also promotes.

from the Der Spiegel link above:

[Helmut] Schmidt: If I may, I would like to make a basic observation: The reconstruction of postwar Germany was possible at first thanks to the Americans and, to an increasing extent after 1950, to the Europeans, primarily the French. The European Coal and Steel Community was established in 1952, and the Élysée Treaty on German-French cooperation was signed 11 years later. Both came about as the result of French initiatives. The Germans benefited from the global situation and from their neighbors’ solidarity, which was not granted out of selflessness, but rather out of necessity. After 1945, they could not allow the formation of areas of extreme poverty in the heart of Europe. And today the Germans, for their part, are in a position where they can — and must — pay. And they should embrace this. It first needs to be explained to the German people, however. But this is not happening — at least not to a sufficient extent.

SPIEGEL: Who has to explain it?

Schmidt: The chancellor, the German president and the governing parties in the Bundestag.

SPIEGEL: They would respond that they are making every possible effort. And that includes Sigmar Gabriel, the chairman of your own center-left Social Democratic Party (SPD).

Schmidt: Some of them are doing it a bit, including Mr Gabriel, who you mentioned. The chancellor is doing very little (to explain the situation to the German people). The conservative group in the Bundestag is hardly doing it. The (influential mass-circulation) Bild newspaper is not doing it at all.

@ All

The FT explans the looming battle between the UK government (AKA the City of London) and the EA on the proposed Banking Union (BU).

cf. leaked text linked to above.

The subject is not, despite appearances, off topic as the BU has to be in place if the direct re-capitalisation of banks by the ESM is to be permitted, the step most needed by Ireland. Unfortunately, it is also the step needed by other debtor EA countries, notably Spain.

@Yield or Bust

re: C. Gurdgiev remarks.

“So, in other words: NOTHING can be done on the scale required. ……. Sit tight and pray for a miracle.”

My remarks:
“Gurdgiev and others need to do better in terms of coming up with some kind of path out of this crisis. ”

I merely reacted to the despairing, perhaps tongue in cheek, comment that C. Gurdgiev made. I am not fully aware of C. Gurdgiev’s position. The fact that I was not aware of his position is my fault. No offence intended to C. Gurdgiev.

In fact I am not aware of any published alternatives to the current government/Troika plan for Ireland, which many concede is not working and will not work. No detailed full plans from the main opposition parties or no published full plan alternatives from various economists.

We could do with some published alternatives to the current orthodoxy.

@Michael Hennigan

I am a tenured academic, while one of those nasty anonymous ones. I work in a place which conducts teaching and research. One reform I would propose is to ask everyone what teaching and research they do. For the increasing number that never did teaching nor research but rather administrate, I would ask them how their job contributes to teaching and research and how it is informed by those who teach and research. If this smoked out the highly paid “managers” whose “contribution” was to impede teaching and research and create cushy jobs for themselves then the ratio of expenditure on people who do to people who do not could be restored to 2000 levels (say) and a contribution to the nation would have made.

The default mode everywhere is keep a low profile, carry a big stick, go with the flow and hang on like grim death to what you have. This is particularly true in impoverished countries where the downside risk is starvation.

Irish political culture has led to the accumulation of customs, laws, rules, regulations and policies that are highly dysfunctional in totality. These have accreted like barnacles on a hull since 1922. The emigration safety valve has not allowed the pressure for change to build up within the country. Every one of us is responsible for the present state of affairs. A list of what is wrong in Ireland with one issue per single spaced line would take up tens of pages.

I would not single out a few groups for opprobium, we should all look in the mirror and ask ourselves why we dozed through life. Some people would say it is due to looking through the lens of Celtic mythology and smothering religion as we fantasised magical images with untold rewards in an afterlife. Reality has now intruded and we will soon be forced to deal with problems that cannot be papered over. We have had a quarter century of prosperity after centuries of poverty. I am quite confident that we will start to vote for politicians who can get things done to benefit the country as a whole including everyone living here. Up until now we voted for people who we thought would be more than a match for all the chancers in Dublin. Our boy would bring home the bacon and we would all applaud and show our gratitude by voting him back in.

Hopefully ten years from now we will look back and marvel at how we wised up.

@ dearg doom

I was at a plant and flower show in Mallow in late June or early July largely because one of my nieces wanted her face painted and flowers woven into her hair.

I was surprised to find a tenured full prof and a lecturer from UCC out in the open and available for anyone to talk to. I met these two before in Schull where they operated a green house and plastic tunnel plant growing operation as well as a landscaping operation. To me this is evidence that people with useful knowledge both academic and commercial are making themselves available to the community at large. There are signs of hope in Ireland.

@ dearg doom

The question of “research” in academia is one that has always puzzled me. Why is it automatically assumed that a particular discipline requires further research?


Presumably a discipline where everything is known and fully understood does not require further research. I can’t think of one though.

@ Dearg Doom

I put the point badly. What I had in mind is the apparent widespread assumption that those teaching in a particular discipline must also undertake research. Cannot a case be made that the two may not necessarily sit well with one another?

It’s possible to teach effectively at up to around ordinary bachelor degree level – what used to be National Diploma – without doing research. The quality of teaching at honours bachelor degree level suffers without research to freshen up the teacher’s grasp of, and interest in, their discipline. It’s really difficult to deliver good courses at masters level and up without doing research.

Presumably we want people to teach to a level “below” where they are. If people are not doing something to press the boundaries of k owl edge forward (research) then I imagine they would become fairly obsolete sooner or later.

@ DOCM and Dearg Doom.

I am a former academic whose specialism (scholarship if you may) was the psychology of learning by ‘adults’ in a third-level setting (chemistry, biology and math). So I have some very trenchant well-informed opinions on the non-existent nexus between research and teaching at third-level (undergrad-levels)

Basically (in the sciences) third-level teaching encourages a ‘research’ ethic in the undergrads. The examinations systems encourage rote learning and discourages ‘problem solving’. The principle causal factor are the academics themselves – they know no other way to instruct. The quality of some third-level teaching is absymal (personal experiences). Some is fantastic. The majority ranges from poor to useful. In the sciences the quality of laboratory-based instruction needs drastic change.

What I encountered from academic and administrative colleagues was a complete indifference (even hostility) to the idea that all third-level undergrad-level instructors attend mandatory training courses (throughout their careers) and should concentrate on being subject scholars. Afterall you cannot obtain an academic position without a reasonable ‘research’ portfolio, so why should you be permitted to teach novices without an appropriate period of training and qualification both in basic instructional technique and your specialism subject.

My professional advice to any aspiring academic. Research like mad. Build the most impressive (a pretentious muddle is best) portfolio you can and avoid any teaching like the plague. Such advice is truely pathetic, but its realistic.

“Research is about learning more and more about less and less. You end up being an ignorant expert” [Trueman Shwartz]. Siloization of knowledge. The little illumination that is available comes from the portholes.

Teaching requires you to becoming a subject scholar – you learn more and more about more and more. Walking in the breezy sunshine! Exciting and exhilarating. Been there!

@ Brian Woods Snr

Never having laboured in this field, I bow to your knowledge in the matter. My curiosity was, in fact, piqued in another context; that of international think tanks that seem to take for granted that “research” has a meaning – and a life of its own – independent of the subject matter or topic to be researched.

@ DOCM: Missed your reply – Day job and all!!!

I tend to agree with you. Most research is not amenable to any sort of genuine, objective measurement so the practitioners can escape scrutiny. Its only when someone ‘cheats’ that you observe the ‘rightous umbrage’.

Teaching on the other hand can be validly assessed; its tricky and timeconsuming, but feasible. Having someone in your lecture, class or lab assessing you is a tad unpleasant. But its the only way for you to be sure you are being effective.

Next time you see or hear some high-level academic waffling on about ‘world-class’ research and teaching, you know they are on a PR binge. If thge truth about research emerged, many programmes would be shut-down.

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