The Irish Economy
Commentary, information, and intelligent discourse about the Irish economy
I had a bet with a banker in Dublin who is not former GS’er that a former GS guy would be appointed. That’s Christmas dinner taken care of. We settled on a turkey as payment.
Even if you think his praise of the central banker in question is overdone, consider: would you rather be an ordinary worker in her country, or in, say, Ireland, Latvia, or Spain right now?
By Randy Wray, Professor of Economics at the University of Missouri-Kansas City and Senior Scholar at the Levy Economics Institute of Bard College, New York. Cross posted from Economonitor
Well, here’s the deal. The head of the Argentine Central Bank—Mercedes Marco del Pont–has been awarded the distinction as “the world’s worst central banker”. By whom, you might ask? Well, by Wall Street’s sycophantic press. Wall Street hates Mercedes. The woman, not the car.
Ms. Marco del Pont kicked off the conference with a rousing talk, defending her central bank’s recent move away from a single mandate (inflation target) to pursuit of multiple mandates: financial stability, employment creation, and economic development with social equity.
Boy does Wall Street hate that.
@ PR Guy
“We settled on a turkey as payment”
There’s a lot of non-edible turkey’s available as settlement options within the Irish economy…
CARTOON OF THE DAY [Van Rompuy takes the Aesthetic Turn]
Wall street would love that. Witness the credibility that the Ben Bernank has and the performance of US asset markets. The problem is credibilty. Under the Peronist policies that Argentina has implemented the country has gone from hero to zero in a hundred years.
Germany becoming ‘unreliable’ (due to Sept 2013!)
Germany’s Ongoing Refusal to Forgive Greek Debt
The International Monetary Fund believes that the only way to reduce Greek debt to a sustainable level is by way of a debt haircut involving the country’s government creditors. But with an election approaching, Germany has refused to consider the proposal. Reality is on the IMF’s side. By SPIEGEL Staff
Interview with Iceland’s Economy Minister
‘We Reacted Immediately to Symptoms of Crisis’
In late 2008 and early 2009, all three of Iceland’s major banks collapsed amid the financial crisis. Now, the country is experiencing economic growth once again and unemployment is falling. Economy Minister Steingrimur Sigfusson explains to SPIEGEL how it was done.
Fascinating Der Spiegel article on Greece that you linked to above, even if the last two paragraphs were somewhat ambiguous, at least to me.
“Nevertheless, Lagarde has already made it clear that the IMF will not leave the negotiating table. A balance of terror is in place. If the IMF were to exit, the entire euro rescue would be a failure, because it would mean that other players, like the ECB, would also have to get out. And because everyone knows this, it won’t happen.
But whatever the Euro Group decides to do now, it will not last until the German parliamentary election in September 2013, as Merkel and Schäuble would like. One senior official involved in the talks ventured a sober prognosis: “In the spring, we’ll have to revisit this junk again.”
Is it the “negotiating table” concerning Greece that is being referred to?
The last paragraph seems to indicate that another band-aid will be applied until the Spring.
But the central import of the article that ‘Germany is becoming ‘unreliable’, is not before its time. Within days of the June 29th summit agreement, Schaeuble was interpreting it as he would liked to have written it, not as it was written.
That is delusional.
They didn’t react in August 2007 when the writing was on the wall, nor when there were queues outside Northern rock or a bank run on the Icelandic banks
After the banks went bust, quite a while later, I suppose you could say they ‘reacted’.
FYI the view of Daniel Gros on Greece.
You do realise the Icelandic economy is operating under enormous capital controls, and it’s “growth” is somewhat based on the inability for private wealth to leave the economy, right?
The links this evening get better and better.
“Greece does not need debt forgiveness” Daniel Gros in the FT.
If that is the case then debt/GDP ratios are irrelevant, provided the country is paying interest and if the growth rate exceeds the interest rate being paid.
200% Debt/GDP is now no problem (when one needs to get out of a bigger problem).
Not that I entirely disagree. I always thought the 60% SGP had little logic to stand it up.
The mobility which should be of interest is how many are alumni of Goldman Sachs, and their attitudes to debt. QEmore.
From your Spiegal link…
“Nevertheless, Lagarde has already made it clear that the IMF will not leave the negotiating table. A balance of terror is in place. If the IMF were to exit, the entire euro rescue would be a failure, because it would mean that other players, like the ECB, would also have to get out. And because everyone knows this, it won’t happen.”
Over ten hours of talks at time of writing and no resolution?
It seems to me that Goldman Sach’s is the Clongowes of the finance world. It doesn’t matter how incompetent you are; if you’re an alumni you’re all set for a plum job.
Greece to get 40 billion write off? Details not worked out yet?
What is the unemployment rate in Iceland compared to Ireland?
China has had “enormous” capital controls for years without anyone feeling the need to refer to its “growth” with inverted commas.
Eurogroup statement on Greece
110 is the new 120
2022 is the new 2020
Not wanting to derail this thread, but if Brian Woods Sr is out there, I was reading this and thought it might be of interest
The sting in the tail…
“Greece will transfer all privatizations revenues, the targeted primary surpluses as well as 30% of the excess primary surplus to this account, to meet debt service payment on a quarterly forward-looking basis. Greece will also increase transparency and provide full ex ante and ex post information to the EFSF/ESM on transactions on the segregated account.”
They don’t trust the Greeks.
Sell the family silver and hock all future ordinary revenue to service your debt.
A lesson for Ireland?
Btw, 120% debt/GDP and continuing borrowings of 15b to pay the wages…..
On the other hand..a lot of interesting possibilities for Ireland…
“- A plan to reduce Greece’s debt level to 124% of its gross domestic product by 2020 and below 110% by 2022. The IMF had originally insisted on a debt-to-GDP ratio of 120 percent by 2020.
-A cut of 100 basis points on the interest rate charged to Greece by other eurozone member states, excluding those that are also receiving bailouts.
-A 15-year extension of the maturities of loans from other countries and the eurozone’s bailout fund, the European Financial Stability Facility, and a deferral of interest payments by Greece on EFSF loans by 10 years.
“This is not just about money,” Mr Juncker said. “It is the promise of a better future for the Greek people and for the euro area as a whole.”
Not about money? … Junkerbullsh1t
Witness Bernanke and the performance of the US and credibility….it all depends on how you measure things innit. Measured in gold, US equities are around 50% off their historic peak. Bernanke looks good in dollars but not in any strong currency. It is still a very serious crisis even in the states.
To get back to Mark Carney. A very bright man with international experience at the highest levels. Picked and groomed by David Dodge Governor of the Bank of Canada with experience in the upper levels of the Dept of Finance and the Bank of Canada, finishing up as Governor. He is a smooth operator in a business and political sense. He will change the culture in the Bank of England but he will not “shake it up” as predicted by FT.
His parents were Irish and were heavily involved in education in NorthWestern Canada. I would describe Mark as more of an academic and public policy person than what one would expect out of Goldman Sachs. All the evidence points to brilliance, caring, rational with little ideological leanings. He was equeally at home in Canadian Liberal (centrist) and Conservative political circles. Very well respected by even those opposed to his policies.
It’s good to see a talented outsider get the BoE job. Nobody will have to wonder what’s his club.
It helps of course to run a central bank during a commodity boom. Mark Carney’s successor may have a more difficult task.
The enduring impact of groupthink remains strong in Ireland and likely elsewhere.
Conventional wisdom is of course nurtured in a bureaucracy — who wants to admit being wrong? — and when it is supported generally, it can be impossible to change.
Dissenters can also be guilty of groupthink.
Martin Wolf says in the FT today:
Unlike Canada, the UK has fallen into a dire economic condition. Despite exceptional monetary easing, the economy is stagnant. Coalition fiscal policy is controversial. The sources of future growth are obscure, while the challenges of needed economic rebalancing are daunting.
That should seem strange to those who view devaluation as a panacea; Sterling has been down on a trade-weighted basis against other currencies in recent years by as much as 25%, So where’s the export boom?
The Japanese yen is up 34% against the USD in the past 5 years. Does
that explain the collapse of Japan’s electronics industry?
One commentator recently said that three of Japan’s once-mighty electronics giants today look like dinosaurs stumbling around after the asteroid hit. Sharp has said it may not survive. Meanwhile, Samsung and LG, companies in the former colony of Korea, now control almost 40% of global flat panel TV sales while Sony, the inventor of mobile music, can only look on in bewilderment at the stunning success of Apple — the most valuable public company on the planet.
Then for those who hanker for a painless default, there’s is the little problem of the Argentinean navy ship that is still impounded in Ghana.
That of course is a small issue compared with what to do about ponying up $1.3bn by Dec 15, which would trigger further problems.
an Ex Squid wallah is hardly an outsider
Pettifor had an interesting piece in the Grauniad
The focus on the City has a cost beyond bailouts
Key constraint here has nothing to do with Greece – but with the Sept 2013 elections in Germany – and it looks like Weidman’s comment last week ‘that Greece could expect write down on official in ten yrs time’ has filtered in to the eventual deal! One suspects sisterly relations between Angela and Christine have cooled somewhat.
points noted. that said we can still learn something from Iceland: protection of the social fabric; taxation; maintaining demand amongst the lower and mid echelons; and employment
Insulting a hard working politician such as Jean-Claude might be a step too far for a newby such as yourself ….
Ta for update on Mark Carney
canadian banking has earned its own chapter on all those text books that need to be rewritten [or not as appears to be the case in the EU]
What I cannot understand is how a company such as Toyota has so many recalls in recent years – they invented TQM and revolutionised car production and production processes in general – maybe it is because these are not built by Japanese?
Fintan supports my hypothesis on Corporate Governance
CorpGov precrash = CorpGov postcrash
Ireland still great place for shysters and scam merchants
The Jolly Professor on the Wireless roight now ….
“China has had “enormous” capital controls for years without anyone feeling the need to refer to its “growth” with inverted commas.”
Eh, you obviously haven’t looked hard enough, there’s a small industry out there which earns its keep querying China’s statistics vs reality. And, as way of an example, communist China’s capital controls are way more relaxed than Iceland’s. Its pretty difficult to import a can of coke into Iceland.
Marc Coleman has been dealing in recent weeks with the one characteristic we share with Greece and the other Mediterranean countries; a level of public sector – universities included – pay and pensions that is out of line with developed Northern economies – with the probable exception of the UK – and incompatible with running a successful economy.
Dr. Gurdgiev beat him to it by one year.
It is understandable that many would like to see this situation continue. It does not, unfortunately, include the members of the Troika.
It is also understandable that there will be a wall of comment asking why Ireland cannot get a deal matching that of Greece when (i) the sting in the tail adverted to above by Flj is ignored (ii) no regard will be had to the fact that the reforms being sought are in the interest of the country itself.
Dan O’Brien of The Irish Times made the point sometime ago that while there are a very large number of Irish groups of different size pleading for more public funds, there is no national group/ watchdog advocating prudence in public spending and highlighting waste.
In a culture where everyone who can is perceived as plundering the public purse – remember the beggar on horseback ministers with their €50,000 limit credit cards – the person who doesn’t jump on the bandwagon, is viewed as a fool.
The facts about the public pay premium have been confirmed over a decade but the trade unions get away with denying them. Two monumental crashes in a generation could hardly be expected to change the culture.
Even when journalists like Vincent Browne and Fintan O’Toole make valid arguments about the lot of people at the bottom of the economic pyramid, some people say ahem; others would question their own insider earnings levels.
that story simply won’t fit with the preferred narrative that this dude is an ex Goldman alumni insider intent on enriching the banking system. Your story simply won’t do.
The ECB could learn from this open recruitment process used by the BOE. Currently it is only a citizen of Germany, France or Italy who can be president of the ECB, and the executive board positions are also divided politically. Of course non of this is in the charter of the ECB – rather a ‘gentlemans arrangement’. Much like the IMF and World Bank.
Dr. Hohanhan with all his qualifications could barely hope to make the executive board and never president of his own central bank, while Dr. Carney can get the English one.
These positions should be given to the best candidate and the UK must be applauded for their openess.
A side point, a top 50 world education system ranking based on a 2006-2010 data was released by the Economist Intelligence Unit.
4 of the top 5 countries are Asian – South Korea, Hong Kong, Japan and Singapore. Certainly bodes well for their economies longer term on an increasingly global playing feild.
The US/Germany and France are mid level.
The problem with “a national group/ watchdog advocating prudence in public spending and highlighting waste” is that the US and Canadian ones tend to attract people with a combination of OCD and “I’m all right Jack” rather than a sharp pencil and an eye for efficiency.
Two Moves Made During The Crisis Showed Why Mark Carney Is One Of The Shrewdest Central Bankers In The World
Steve Bell’s view
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