Notes from the continent where good times are always just around the corner

This post was written by Kevin O’Rourke

The markets are going into a minor tizzy this morning thanks to the news that Mario Monti is stepping down earlier than expected. And I can certainly understand why people like Beppe Grillo and Silvio Berlusconi might seem like a cause for alarm.

But what if Wolfgang Münchau is right, and the real problem in Italy right now is the austerity policies that Monti is pursuing, and that are being praised to the skies by the entire European establishment as we speak? Bang on cue, we learned this morning that Italian industrial output fell by 1.1% in October, much faster than expected. If Wolfgang is right, then what Europhiles (and the markets) should be devoutly hoping for is centrist, Europhile politicians willing to reject the status quo policies that are doing such damage. Why should Eurosceptics have all the best tunes?

One of the things that makes it possible for Europe’s politicians to persist with this nonsense is their conviction, like Mr Micawber, that something will turn up. There is no sign in Ireland that anything at all is turning up. The most important indicator of all, employment, is still falling, and you can see signs of strain all around if you care to look. At the panto last night, I was struck by the lack of sparkly fairy wands, light sabres, and all the rest compared with previous years: it really was very noticeable. And these were the people who could still afford to take their kids to the panto. Also noticeable was the almost complete absence of recession jokes, which were such a feature in 2008 and 2009. It just isn’t funny any more.

Colm McCarthy was in good form yesterday regarding this over-optimism in the Irish context. Of course, it is always possible that predictions of rapid growth just around the corner aren’t fuelled by optimism at all. It is at least theoretically possible that these growth predictions are whatever is required to make Ireland — the Eurozone’s supposed success story — seem solvent.

Mind you, you’d have to be a complete cynic to believe that such a thing was possible.

Update: Good Heavens Above. The corner appears to be receding from view in the Netherlands.

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171 Responses to “Notes from the continent where good times are always just around the corner”

  1. The Dork of Cork. Says:

    Well the diesel (work really) consumption figures were screaming this all year……..
    Terminal dive.

    http://omrpublic.iea.org/demand/it_dl_ov.pdf

    Its no surprise.

    Mario has done his job - he is a good German.
    He merely transfered resources to Germany and France where they can be burned more efficiently.
    Europe is just too efficient.

    It was set up to export capital to eastern plantations , now that it is dying the periphery must transfer resources to its cold dead heart.

    Europe has no political hinterland.
    Its a market state dummies.

    Meanwhile back in Ireland we talk about things………talking about DIS & DAT

    http://www.youtube.com/watch?v=XT5NwNiUW4o

  2. Paul W Says:

    I suppose the question is really whether Ireland should be maintaining the status quo while waiting for a solution to come from elsewhere /a bigger EU player such as Italy, or whether it should be taking action unilaterally on e.g. the PNs or internally e.g. on the PS, etc? Can Ireland itself really change anything?

    The Govt’s medium term plan (supported by the vested interests such aas the Unions, etc) envisages a continuing €19bn+ type current account deficit level. Even if one supports a non-unilateral approach by Ireland, is such a deficit approach responsible /feasible /moral? Official Ireland appears to accept that this is right and justified….the only way, the only game in town, on the basis that undoing this will collapse the economy. Damned if they do and damned if they don’t seems to be the thinking, so better no rocjk any boats and at least keep a minority of ‘haves’ afloat.

    Leadership via the path of least resistence.

  3. Shay Begorrah Says:

    @Kevin O’Rourke

    Bang on cue, we learned this morning that Italian industrial output fell by 1.1% in October, much faster than expected. If Wolfgang is right, then what Europhiles (and the markets) should be devoutly hoping for is centrist, Europhile politicians willing to reject the status quo policies that are doing such damage. Why should Eurosceptics have all the best tunes?

    Typical nationalist nonsense. Eurozone economic policies are no longer a la carte and Mario Monti has taken many difficult and brave decisions to reform Italy’s economy. The fact they these were the wrong decisions and damaged the economy instead is of no consequence.

    Let us not forget that Mario Monti has an impeccable pedigree, advisor to Goldman Sachs, cofounder of the pro EMU Bruegel think tank, former European Commissioner and so on. He holds all the approved beliefs and so his actual performance in the role of Italian premier has very little bearing on his suitability for it.

    In fact some day all Eurozone countries will hopefully be run by people of Mario’s calibre - or face penalties otherwise (overseen by an independent body of some kind situated somewhere close to Germany which has the stability of the financial sector as its guiding star).

    It is a sad but undeniable fact that the European Union is now being run by right wing ideologues and there is absolutely zero possibility of convincing Monti, Rehn or any other of the technocrats running non creditor nation Europe into the ground to change course because austerity is not a policy meant to achieve economic growth - it is an end in itself. Pain is the plan, as J W Mason has it. A binder full of fiscal rules stamping the European Union forever.

    Aidan Regan has some more observations on Monti here, just another stuffed shirt neoliberal of the kind that saturates the institutions of the European Union.

    http://aregan.wordpress.com/2012/09/20/the-monti-python-show/

  4. David O'Donnell Says:

    I have little sympathy for Mark Rutte - he was first to put the boot into the teeth of the Portugese and Irish post most recent Greek deal - and less for his previous finance minister [is he still in place?] (how can such a civilized people as the Dutch elect such people?)

    From the Reuters piece on Die Nederlands:

    ‘Rating agency Moody’s has warned of potential downgrades for the triple-A rated Netherlands, Germany and Luxembourg because of the debt crisis. It singled out the weak economic outlook, and high mortgage debts in the Netherlands.’

    Spose one could say that the core joins the periphery …. all in Oslo at the mo .. good time for a coup?

  5. seafóid Says:

    The mood was despondent in the markets at the end of 2011. 2012 turned out to be better than expectations. Now the mood is quite good again. 2013 will be a curse, I bet.

  6. Eureka Says:

    Good post. Seems to presume benign incompetence is the cause of misguided policies. It’s not.
    Austerity is the wrong word for a start - this is financialism. It is the overturning of democracy by banks. There has been a coup d’état in Europe where the frailties of imperfect union have been exploited to their max.

  7. Joseph Ryan Says:

    The FT link talks of an estimated 13% fall in consumption in Italy in the pre-Christmas period.
    It links the fall in consumption to to a property tax that ‘doubled’ the tax on families last month.
    The solution are getting a lot more scarry than the problem.
    Japan has a debt/GDP ration of ~200% and has managed not to fall into the pacific just yet.

    Woodrow Wilson wanted to make the World safe for democracy. At least his objective was laudable. Merkel and the EU elite want to make the world safe for banks, investors and creditors. Citizens don’t count.

  8. Joe Lawlor Says:

    Kevin,
    How would Ireland implement and finance a Keynesian stimulus under the current policy constraint?

  9. Gavin Kostick Says:

    @ Kevin O’Rourke

    Very good post. Perhaps eventually there will be a new economic ‘common sense’ consensus.

    Krugman is increasingly focussing (as M Hennigan does here) on the decreasing share of capital that has been going to labour over the last 40 years.

    http://krugman.blogs.nytimes.com/2012/12/08/rise-of-the-robots/

    “And these were the people who could still afford to take their kids to the panto.” - Talking to venue managers, parents hang on to going to shows where they can bring their children. It is the last thing they give up on in making a choice as to whether to go to the theatre.

  10. Gavin Kostick Says:

    Patrick Honohan reckons it would be beneficial for Ireland if the Prom Notes were restructured.

    http://www.guardian.co.uk/business/2012/dec/10/eurozone-crisis-monti-resignation-markets-italy

    (Original interview in FAZ)

  11. The Dork of Cork. Says:

    @Shay
    Its actually more of a left thingy……..

    The EEC was always a Soviet system of control.

    First they came for the small farmers & fishermen…………

    It wishes to push resources onwards and upwards but when it gave up on the nuclear thingy after the single european act it can no longer grow outward.

    It will now seek to strip resources from the proles at ever increasing rates….

    Its a very dangerous & evil beast.

    Italy needs a Bombolini
    http://www.youtube.com/watch?v=VaIdjUTa9yU

    The French & Italians need to give up their cars and drink more wine again.

  12. Fiatluxjnr Says:

    @Gavin
    Strange that the Gov should air his thoughts in a German newspaper yesterday and leave it to Pat and Leo to make the running in Ireland.

    Ambrose is in fine form and it is hard to argue with his take on the crisis ……
    http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/9733486/Europe-clings-to-scorched-earth-ideology-as-depression-deepens.html

  13. bazza Says:

    Great post.

    EZ politicians seem to be hypnotized by the Germanic narrative of the crisis and the idea that austerity is the only credible policy course.

    It is one thing for the Irish (and Spanish and Italian) Governments to stick to the terms and conditions specified by bailouts and agreements, but it is quite another to like them and defend them.

    Why don’t Noonan, Rajoy, Monti et al publicly criticize the policy stances of Merkel, Schauble and Rehn? Why does’t the Irish Government run an ad campaign on the Internet in German explaining the full and surreal story behind the unguaranteed Irish bank bondholders and the promissory notes?

    And, as I’ve said before, what on earth is P. Honohan doing? Why has he contented himself with writing the epitaph of the Irish economy, as per his recent speeches? Why isn’t he publicly question the effectiveness of the ECB’s Transmission Mechanism in Ireland (where the banks are raising rates)? Or the legality of the ECB forcing the payment of bank bondholders? Or why the ECB hasn’t cut rates further when most of the continent is in a recession and the periphery is in a depression?

    Why can’t he defend Ireland’s interests in the same way that Wiedmann defends Germany’s?

  14. Bond. Eoin Bond Says:

    @ Baz

    “Why don’t Noonan, Rajoy, Monti et al publicly criticize the policy stances of Merkel, Schauble and Rehn?”

    Im pretty sure thats exactly what Rajoy was doing this time last year. He was lauded as a hero around these parts back then. Not so much now, obviously.

  15. The Dork of Cork. Says:

    @Bazza
    Words mean nothing……….

    Except perhaps “there is no wine”

    http://www.youtube.com/watch?NR=1&feature=endscreen&v=qOs6RdO4H6A

    P. Honohan represents the banking system although he is the de facto Taoiseach since his infamous political noises on RTE radio that morning.

    So there is no longer a division of authority as under a nation state system.

    Banks don’t print.

  16. bazza Says:

    @eoin

    Actually, you’re right about Rajoy. While I can’t comment to much on his popularity, he has played a far better hand than Noonan and has resisted a full blown bailout and forced Frankfurt’s hand with regards to the Spanish bond market.

    However, the response from all peripheral governments has been disjointed at best. If the periphery including Italy presented a united front (as they almost did last June), it would be far more difficult to push the mindless policy mix that we have had to endure so far.

  17. Fiatluxjnr Says:

    @Bazza
    “Why can’t he defend Ireland’s interests in the same way that Wiedmann defends Germany’s?”
    Good point.
    As I said above…why give interviews to German newspapers or are our journalists asleep.

    Interestingly, the governor seemed to back up Draghi’s stance on the legality of monetary financing and merely called for the extend and pretend policy.

  18. seafóid Says:

    “Why can’t he defend Ireland’s interests in the same way that Wiedmann defends Germany’s?”

    He has zero negotiating power.

    There are some big elections coming up in 2013. It will be worth seeing who comes out on top. I wonder how much longer pure sadomonetarism has.

  19. bazza Says:

    @seafoid

    I think that should be “zero powers of negotiation” rather than zero negotiating power.

    Anyway, the transmission mechanism and the forced payment of bondholders are legitimate issues and don’t require vast powers to be pushed. In legal terms, honohan has the same powers as Weidmann.

  20. The Dork of Cork. Says:

    Lads yee are so naive.

    I seem to recall him praising the post 1986 Europe as it would put Labour in its place in some paper on the Irish economy and the celtic tiger thingy.

    Now that labour cannot buy any goods they wish to continue this entropy experiment to its final conclusion.

    Correct me If I am wrong in this - I can’t recall the paper but I will try to dig it up.

    But me thinks yee have Stockholm syndrome.

    Volcker played the nice grandfather thingy to perfection also - me thinks Patrick is following the masters lead.
    One can only try at least.

    A economy without demand………..
    Discuss

  21. grumpy Says:

    “At the panto last night, I was struck by the lack of sparkly fairy wands, light sabres, and all the rest compared with previous years”

    Sorry Kevin, I’ve not been bothering with much of it recently - are you referring just to Mick Wallace there or does the sparkly fairy wand sentiment series also gather data from the front benches?

  22. Gregory Connor Says:

    Kevin

    There are many powerful arguments in your post, but I do not see the main point from an Irish perspective, other than maybe painful regret for past errors. The Colm McCarthy piece from yesterday seems in direct opposition to your post rather than supporting it. Doesn’t Colm say that the cuts were not big enough and the tax increases were too small to credibly fill the gap? Or am I misunderstanding one or both of you? You are not suggesting (nor is Colm) that Ireland leaves the Euro, defaults and reflates. So what is plan B for Ireland other than that, I do not get it? Another, bigger bailout?

  23. The Dork of Cork. Says:

    Something really weird happened to Cork cities semi closed economy after 1986…….
    Why did McCarthys bread and then finally Donnellys bakery go bust leaving no decent bread in the town ?

    Was it EC regulations which wishes to standardize everything in the interests of its Gods Efficiency & Safety ?
    Or was it the Euro in the interests of the ECBs God Mammon.

    Or was it a bit of both ?

    A bland Euro economy which leaks real capital all over the shop.
    A economy without a adequate quantity of money tokens.
    Discuss.

  24. Kevin O’Rourke Says:

    Greg: I’m writing here as a European, and the policy implications are European. A failure to think systemically (i.e. a tendency to view this crisis as a series of country-specific crises, rather than as a Eurozone crisis, which is what it is) has been one of the key mistakes made by policy makers since 2008. Unless the eurozone gets its act together, then the sorts of drastic scenarios you mention are eventually going to get onto the agenda in lots of countries, including our own.

  25. PR Guy Says:

    Pantomime…… good word for it.

    Don’t worry. I have it on good authority (The Finance Minister no less) that the economy will ‘take off like a rocket’ any moment now. Hold on to your hats.

  26. otto Says:

    The light saber index!

    Your father wanted you to have one when you were old enough, but your uncle wouldn’t allow it.

  27. Gregory Connor Says:

    Kevin

    Yes, I can see your point that from a European perspective it would be great if the ECB could drastically change course and allow for some debt monetization and inflation, and perhaps also some fiscal stimulus in core countries.

    But I think Ireland acting on its own has no room to maneuver, or very little. Perhaps it could think of admitting the need for a second bailout, which would ease the fiscal constraint over the shorter term.

    Maybe in the upcoming EU presidency the Irish can make some loud noises about a change of direction?

  28. Kevin O’Rourke Says:

    @Greg, I think we all need to argue strongly for a change in direction.

  29. Michael Hennigan - Finfacts Says:

    Kevin, this post — a cocktail of soundbites and pantomime — of course says little about the challenges facing the country.

    Italians bought more bicycles than cars in 2011 for the first time in decades.

    In 2007 before the crash, the average age of cars registered in EU-15 countries (pre 2004 members) was 8.2 years, up from 5.8 years a decade earlier and I assume excluding Ireland. 

    Wolfgang Münchau: Two things need fixing in Italy, both of which are beyond the scope of the technocrats

    The first is to reverse austerity immediately – essentially to undo Mr Monti’s work…The second priority is to stand up to Angela Merkel

    It would be great to have no austerity anywhere. For a while at least, I would gain from it myself as I’m not an insider. Where is the giant tooth fairy?

    Münchau says Monti should have forced Merkel to introduce eurobonds.
    Just a while back, the Bank of Italy said the shadow and criminal economy accounted for more than 27% of GDP.

    Add in Google and Microsoft booking Italian revenues in Dublin, it all amounts to a fair few bob. Transfers should be made to the periphery, as long as Ireland can preempt their corporate taxes!.

    Italy’s heavy sovereign debt is about 120% of GDP, the same as 20 years ago (before the euro was launched); during the credit boom it grew at 0.3% annually.

    The IMF has said Italy is essentially a service-oriented economy; services represent over 70% of GDP. Estimates suggest that prices of services (nontradables) in Italy could be about 60% higher than in case of a perfect competition in the markets; this markup is estimated at about 35% elsewhere in the Eurozone.

    Was the very low growth because it couldn’t devalue?

    So when would these issues be tackled if at all, I wonder?

    The World Bank’s ‘Doing Business 2013′ on ease of starting, and doing business in the country gives Italy a rank of 73, behind Romania and just ahead of the Seychelles.

    May seem like a minor issue but over time it isn’t.

    Mario Draghi said in 2011: “Italian firms, on average, are 40% smaller than their Eurozone counterparts. The top 50 European corporations by sales include 15 German and 11 French but just 4 Italian firms. Italy’s industrial structure seems static; rarely do firms grow and move up to the next size class.

    In the early 1960s, plants with over 100 workers employed 43% of Italy’s manufacturing workers, as against over 60% in France and Germany. Since then the employment share of large plants has declined much more sharply in Italy than in France or Germany, to under 30%.”

    Isn’t it a reality that like Ireland, there would be no reform; no change in the power of vested interests etc without some external pressure?

    Why expect all the German taxpayers to pony up funds?

    Wonder how folks across the EMU earning say more than €100,000 would respond to a solidarity surtax to support the struggling countries? I guess it would give pause for thought at least.

    However, the horse can be brought to the water but if it doesn’t want to drink, that’s it. Who can make Greece more attarctive for FDI?

  30. rf Says:

    Astonishing that this

    “this post — a cocktail of soundbites and pantomime — of course says little about the challenges facing the country. “

    Should be immediately followed by this

    “Italians bought more bicycles than cars in 2011 for the first time in decades.”

    Pot kettle?

  31. Shay Begorrah Says:

    @Gregory Connor

    There are many powerful arguments in your post, but I do not see the main point from an Irish perspective, other than maybe painful regret for past errors.

    Perhaps I can help?

    The anti-historical fantasies of austerity led economic recovery in the EU are helping to obscure how the reactionary nature of mainstream European economic thinking and core Eurozone politics is incompatible with recovery from the European component of the global financial crisis.

    It need not surrender or death, it can be surrender and death.

    The longer we delay a public confrontation with the proponents of collective European austerity, both at home and abroad, the worse the eventual toll of this current vast and failing neoliberal experiment will be for Ireland and the EU. Worse still by buckling under we encourage the infliction of these lunatic policies on countries much less well off than ourselves.

    As for Colm McCarthy, though he has form on the “Privatize them all, let the market sort them out.” front it turns out his attachment to the Irish republic outweighs any centre right solidarity he might feel with his European economic brethren.

    Given that Krugman gave a hat tip to Marx recently I wonder is Mr McCarthy joining the great migration of the reality based community to the left of the political spectrum too? The General Theory… just looks better and better.

  32. Shay Begorrah Says:

    @rf on experiencing another discharge of Michael Hennigan’s fact blunderbuss

    Pot kettle?

    You will find that this noise making is a common reaction on the right whenever someone raises the indisputable fact that there is a tendency to view this crisis as a series of country-specific crises, rather than as a Eurozone crisis, which is what it is”.

    Now that I think of it, a “tendency to view this crisis as a series of country-specific crises, rather than as a Eurozone crisis, which is what it is”.

    Who does that remind me of?

  33. john gallaher Says:

    @MH just saying…same article,i know u like r facts……..i thought the recent eurostat math had it at a buck and a quarter.

    “it was hard to see that a country with a debt-to-GDP ratio of 130 per cent and virtually no growth could remain a member of the eurozone, and keep on rolling over its debts for ever..”

    http://www.ft.com/intl/cms/s/0/e0f245ac-4219-11e2-bb3a-00144feabdc0.html#axzz2Eff2mEQT

  34. john gallaher Says:

    here ya go MH just having some fun with ‘facts’ :)

    Government debt at the end of the second quarter 2012 by Member State

    “The highest ratios of government debt to GDP at the end of the second quarter of 2012 were recorded in Greece
    (150.3%), Italy (126.1%),”

    http://epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/2-24102012-AP/EN/2-24102012-AP-EN.PDF

  35. The Dork of Cork. Says:

    @RF
    Its of little Environmental Comfort when you realize your diesel ration will merely be burned elsewhere in the Eurozone or in the Asian colonies.

    http://omrpublic.iea.org/demand/ge_dl_ov.pdf

    These former countries cannot adjust their internal systems (as they have no local unit of account ) so must therefore stop rather then modify their activities.

    In Europe people simply run out of tokens and are thrown off monetary cliffs.

    Its very basic stuff so therefore this must be a very deliberate policy on the part of the Euro Soviet.

    The fiscal adjustment or structural adjustment the first Mario did to the Italian economy did not do anything for the physical economy - it merely adjusted who could use the tokens in the system.

    This Mario adjustment number II - the return , is merely a extension although must more severe adjustment.
    Over a long enough time period it is pointless.

    But people may not have got their heads around the fact that it is meant to be pointless.
    This is a consequence of the now fully privatized nature of the commons money system.

    Eventually they will declare there is a wine shortage in France just as there was a water shortage in Ireland……..
    They like taking the piss me thinks

    http://www.youtube.com/watch?v=ET35b9U9nWw

    What a load of bollox
    This is a dark dark farce.

  36. The Dork of Cork. Says:

    @RF
    Its of little Environmental Comfort when you realize your diesel ration will merely be burned elsewhere in the Eurozone or in the Asian colonies.

    http://omrpublic.iea.org/demand/ge_dl_ov.pdf

    These former countries cannot adjust their internal systems (as they have no local unit of account ) so must therefore stop rather then modify their activities.

    In Europe people simply run out of tokens and are thrown off monetary cliffs.

    Its very basic stuff so therefore this must be a very deliberate policy on the part of the Euro Soviet.

    The fiscal adjustment or structural adjustment the first Mario did to the Italian economy did not do anything for the physical economy - it merely adjusted who could use the tokens in the system.

    This Mario adjustment number II - the return , is merely a extension although must more severe adjustment.
    Over a long enough time period it is pointless.

    But people may not have got their heads around the fact that it is meant to be pointless.
    This is a consequence of the now fully privatized nature of the commons money system.

    Eventually they will declare there is a wine shortage in France just as there was a water shortage in Ireland……..
    They like taking the piss me thinks

    http://www.youtube.com/watch?v=ET35b9U9nWw

    What a load of bollox
    This is a dark dark farce.

  37. grumpy Says:

    @Kevin Or

    “I think we all need to argue strongly for a change in direction.”

    In Europe we currently have a set of countries who are weathering the economic context quite comfortably and another set that are not. The power in the EZ lies with that first group.

    If you take Ireland as an example of a member of the second group, you observe a fractal-like replication. From the start of the “internal devaluation” strategy, I have wheeled out Carers as a handy yardstick for the way society treats its vulnerable, economically and politically weak members. It was easy to predict that they would callously be pushed repeatedly to the front of the queue, and it was similarly easy to predict that other groups with politically guaranteed incremental salary rises and no compulsory redundancies and perhaps a so-cheap-they-can’t-believe-it tracker mortgage would tut-tut about the situation, but fail to man the barricades in support of the carers and home help recipients.

    This is human nature at work in Holy Catholic Ireland. To expect the additional dimension of nationality to do other than reinforce the dominant “I’m alright Jack” theme when the EZ or EU as a whole debate - or perhaps more accurately, waffle aimlessly about - economic strategy, is unrealistic.

    It is generally the case that there is no meaningful reaction to social problems in towns when it is only the council estates and cheap areas that are affected. The powerful don’t live there. Once in reaches the leafy suburbs with the big detached houses, suddenly it becomes ‘important’ that something is done.

    I often find cynicism wearing, but I can think of few occasions when I’ve made errors of analysis due to employing it in excess. Quite the reverse.

    It would be nice to be proved wrong about this, but there appear to be unsustainable practices and cultural attachments in the periphery (not only there) for whom the unemployed, weak and vulnerable are being employed as human shields. There is a game of ‘chicken’ going on with an economically over-simplistic and inflation-obsessed EZ core on the other side. It would not be surprising if this stalemate continues for some considerable time, via several more applications of boot to can, until at least one of the powerful groups is given reason to blink. Maybe China will send Germany into recession in the next couple of years. There are probably quite a few economists in the periphery that would like that to happen.

  38. Fiatluxjnr Says:

    Here is a useful suggestion from the leader of Syriza…
    http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_10/12/2012_473729

  39. Brian Woods Snr Says:

    Just occassionaly ….

    @ Eureka: “Austerity is the wrong word for a start - this is financialism. It is the overturning of democracy by banks.”

    A+

    Our contemporary economies are ‘money’ economies, where ‘money’ is a Candy Floss entity (CF is a mechanical suspension of a gas in a solid) and debt is wealth. The only income that is slated for taxing is waged-labour income. Non waged-labour incomes have become tax-deductable - to almost the zero bound. Funny that!

    Some very hard thinking - like straight, rather that Left hooks and Right fades - is needed.

  40. tullmcadoo Says:

    http://budget.gov.ie/Budgets/2013/Documents/Annex%20F%20-%20Progressivity.pdf

    Grumpy,
    I think you need to read this.

  41. The Dork of Cork. Says:

    @Tull

    Tull boy, tax has little to do with it….
    Its a question of the money supply

    Its simple positive reinforcement anyway - as the bottom have little wages to tax.

    Getting back to real politico economics - is it politically sustainable that the French politicos can claim a good job by simply stripping Greece of all its wealth…

    This is a form of Dark Farcism

    http://www.youtube.com/watch?v=iWYG_f0lqkY

    A lot of human sacrifice for a nice bridge……..

  42. Yields or Bust Says:

    @All

    Just a thought.

    What if Michael Noonan had come out last week and cut the top and bottom rates of tax by 2%, brought the VAT rate back to 18% had suggested nothing about PRSI changes or property taxes. Would such changes (and the like) have lifted the spirits enough to enable to the much famed growth fairy to raise her head? Just a thought.

  43. fiatluxjnr Says:

    @Tull

    Progressivity?

    “The Irish tax system is one of the most progressive in the world. Research by the OECD, the ESRI and the European Commission has shown that the income tax system is one of the most progressive in the OECD and that the overall fiscal adjustment has been progressive in nature.”
    I suppose thats why we cut carers allowance and further tax the lowest paid with additional PRSI…and by next year we will get even more progressive.

    Is there a Nobel Prize for crapology?

  44. The Dork of Cork. Says:

    More fanfare………..drums and stuff

    http://www.youtube.com/watch?v=g8Jpl_miH0c

    fr.wikipedia.org/wiki/Ligne_B_du_réseau_T2C_de_Clermont-Ferrand

    Two possibilities .

    Either the core wants to push more oil out the periphery so that they can earn a interest income from our oil waste / grot production as before or they are preparing for a change in flow patterns by stripping us of all wealth.

    Either way the country and its population is a mere conduit as it always was.
    Party Politics is so over anyway

    Lets have in your face farcism

  45. David O'Donnell Says:

    @bazza

    ‘Why does’t the Irish Government run an ad campaign on the Internet in German explaining the full and surreal story behind the unguaranteed Irish bank bondholders and the promissory notes?

    Precisely. EU Communications has been very poor. Most other key players have had at least one interview on Der Spiegel - not an Irishman or a Lucinda in sight ….

    To give the Guv’nor his due - he spose to a German newspaper - pity his strategyh is only focused on TIME.

    @all

    This is an EZ crisis: period.

  46. Joseph Ryan Says:

    There are many justifiably fatalistic views expressed above that Ireland or other peripheral countries cannot adopt policies to counter German mercantilism and to counter the current German stranglehold over European policy to its own narrow advantage. But there are policies can can counter mercantilism if countries have the guts to adopt them.

    German mercantilism is succeeding because better off people in the peripheries have sufficient disposable incomes to buy the higher value added engineering products that Germany exports.
    Solution. Increase marginal tax substantially in peripheral economies.
    Also increase VAT rates.

    The demand for lower taxes by our bail- out partners, is not a result of any desire to recognise and foster the undoubted ability of our South Dublin professional classes. It is simply a desire to leave money in the hands of those who are most likely to be able to afford their products.
    Conversely, our partners could not care less, if we reduce the minimum wage to zero, because those people on minimum wage are unlikely to have the wherewithal to feed themselves, let alone consider what new model car they would like from whatever Santa employs them.

    Recognising and adopting policies to confront mercantilism demands a degree of leadership and self-sacrifice that does appear on the horizon, not only in Ireland but in any of the peripheries. But it is possible to come up such policies.

    @Fiatluxjrn
    http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/9733486/Europe-clings-to-scorched-earth-ideology-as-depression-deepens.html

    Good article from Ambrose Evans Pritchard.
    But he is incorrect on capital controls. Capital has fled the peripherals. The controls are merely locking the capital into the core.

    “S&P’s Jean-Michel Six said EMU has degenerated into a “customs union”. The collapse of the interbank market has imposed de facto capital controls. “There are two eurozones, a northern one and a southern one,” he said. ”

    Ireland should force at least 25% private pension assets to be invested in Ireland or Irish bonds. It is a total nonsense that a country can be denuded of its private capital and then forced to replenish that capital from public resources, with no ability to call on the capital that has flown the coup.

    People need to realise that we are in a war for survival and we are losing badly. We need to start identifying enemies at home and abroad and we need to start taking them on.

  47. The Dork of Cork. Says:

    But David
    If they knew their claims on wealth was being spent on the core…..

    All so that domestic Pig politicos and the upper class in each PIg country can have their claims on the domestic economy remain in Euros…..

    A high price to pay and a very dangerous one at that.

    This happy clappy event was disrupted by a strike

    http://www.youtube.com/watch?v=vMBHcW8Skg8

    Politics has detached from its hinterland but the politicos don’t care.

    This is what happens when you get this form of extreme Manchester economics where huge energy flows into and out of jurisdictions with non connection to domestic Industrial monopolies that must at least adjust to the political atmosphere of their host.

    The only monopoly remaining is the money monopoly whose extreme oil based nature is completely divorced from its hosts now constant convulsions.

  48. DOCM Says:

    @ All

    The fundamental question is that posed by Joe Lawlor and it has not been answered.

    “Thinking as a European” is not a luxury that we can afford at this juncture (with or without light sabres).

  49. rf Says:

    Dork - I hear you brother, the whole world hears you, and pretty soon the people that knocked down these towers ruined the global economy will hear you

    BWS - have you seen this http://physics.ucsd.edu/do-the-math/2012/04/economist-meets-physicist/

    Shay- “another discharge of Michael Hennigan’s fact blunderbuss” chuckle

  50. DOCM Says:

    @ All

    FYI

    Some comments from Alan Ahearne at the start of this farming item.

    20121210_rteradio1-patkenny-farming_c20124232_20124240_232_.mp3

    P.S. Really belongs on the other thread.

  51. Joseph Ryan Says:

    @DOCM

    “The fundamental question is that posed by Joe Lawlor and it has not been answered.”

    The question posed by @Joe Lawlor was

    “How would Ireland implement and finance a Keynesian stimulus under the current policy constraint?”
    So what policy constraint is he referring to:
    The greatest policy restraint in Ireland right now, is the policy that we must accept, as policy, whatever is requested by the Troika.

  52. DOCM Says:

    @ Joseph Ryan

    The constraint in question is that we have no money to implement such a stimulus.

    This link should work. Well worth a listen!

    http://www.rte.ie/radio1/podcast/podcast_patkenny.xml

  53. Joseph Ryan Says:

    @DOCM

    I will reply with the benefit of the link, if I may. I must acquaint myself with the news.

    There is approx €75 billion of private pension assets of Irish citizens, virtually all it contributed to by the State in tax reliefs, and continuing to avail of tax reliefs in CGT and income.

    I cannot accept that this money can go where it will, and that the Irish State must make up the deficit in capital / deposits in banks etc.
    That makes no national sense.

    Personally I would only agree to pay the PN on condition that an equivalent amount €31 billion of pensions assets were compulsory repatriated.

    That should be a good base to start a modest Keynesian stimulus package.

  54. The Dork of Cork. Says:

    @DOCM
    No - we have no surplus energy credits…….as the euro prefers to burn energy on consumption rather then jobs.

    No money tokens is a very funny concept.

    @Joseph
    Capital control like taxes (VRT) on private cars will free up energy /capital to be burned on rail construction…….
    Although capital controls = no eurozone

    People are not asking themselves what happens to the Cork working class when they cannot go to Malaga for their holidays.
    They will not sit at home forever (or at least I don’t think so)

    http://www.geograph.ie/photo/3166159

  55. The Dork of Cork. Says:

    I agree.

    http://www.cso.ie/en/media/csoie/releasespublications/documents/agriculture/2012/oiiadv_2012.pdf

    Intermediate consumption is a monetary problem if you have spare people to transfer stuff from trucks to rail……

    But forklift drivers are too “expensive” to employ in this monetary envoirment………….
    Retarded.

  56. fiatluxjnr Says:

    @Joseph
    ” The Latin alliance could force an end to German-imposed contraction policies at any time by marshalling their inherent majority on the EU Council and at the ECB. They could turn the tables, compelling Berlin to yield or to withdraw from EMU. But that would require an entirely new leadership in France, willing to sacrifice the illusion of Franco-German condominium and the foreign policy catechism of the last half century. Francois Hollande dipped his toe in such waters, but recoiled.

    So an odd fatalism prevails, an acceptance that Germany cannot be resisted. It falls to Italy’s Silvio Berlusconi to fulminate from the sidelines. “I can’t allow my country to plunge into an endless recessionary spiral,” he said last week. He is the court clown, the only who dares to tell the truth that EMU itself is the problem, or mocklingly suggests that Berlin should go back to the D-Mark and let the rest of Europe recover. The others bite their tongues. ”

    AEP sums it up well…odd fatalism seems to pervade our political masters.

  57. Joe Lawlor Says:

    DOCM,
    Kevin’s post at 4 55 answers most of my question.
    I remember the same exhortations were made to the Germans in the early 1980s. These were ignored which resulted in a series of devaluations by the periphery within the ERM. It cannot happen now of couse unless there is a break up of the euro and a raft of defaults etc.

  58. The Dork of Cork. Says:

    Alan has got that Greenspan pox thing me thinks

    Bank credit (”growth”) pays the interest on sov debt.
    If not the money is taken out of the economy….

    We cannot grow with the Euro as a monetary unit of account as we cannot use labour with the Euro………..

    He wants growth………….
    But wants domestic jobs growth…………
    How ?

    Sweet Jesus

    See above - the euro is not a national currency (reserve currency) and is overvalued
    This means that capital (diesel) must be burned through rather then jobs…..

    See Trucks trucks and more trucks until they go bankrupt because of lack of tokens in the economy.

    And yet they wonder why ?

    Whats important is the mindless export of hard currency out of this economy when we have so much spare labour…….

  59. The Dork of Cork. Says:

    We need to go back to this.

    http://www.youtube.com/watch?v=t8OlST8kEBg

    And we can only do this with the Punt.

  60. Brian Woods Snr Says:

    @rf: Yep, Murphy is someone who has a good fix on things.

    @ JR. A K Stimulus only works if you have a robust Production/Consumption economy (which is suffering from a slight hangover). What we actually have is a FIRE economy and any stims will go to raise asset prices and improve the rates of extraction. I thought this was obvious by now.

    What we need is a drastic re-balancing of our taxation system; burden is shifted off production and consumption (waged-labour) incomes toward asset value gains, rental and interest incomes (all of which have some tax-deductible element to avoid or reduce tax).

    The surplusus from asset value gain, rentals and interest are NOT invested back into the PC economy, but are collateralized into new credit instruments which - suprise, suprise, raise asset values (gains!!) and enhance rental and interest incomes.

    When will a Critical Mass of folk comprehend and internalize this reality? And refuse to believe the PR sh*te which promotes ‘competitiveness’ (aka: wage depression, higher taxes on waged-labour and reduced state services and welfare transfers) - all of which result in less state revenue income, which …. …

    Anyone have data for the proportion of Irish waged-labour income which goes to service debts (mortgages, etc.)? Should be less than 40%. Above this you effectively have an extractive economy where many folk have to borrow to pay their debts.

  61. DOCM Says:

    @ Joe Lawlor

    “@Greg, I think we all need to argue strongly for a change in direction.”

    Is this the post you are referring to?

    If so, it is a remarkable exercise in concision into which I was unable to read the answer to the fundamental point that you raised.

  62. DOCM Says:

    @ All

    FYI

    http://www.daft.ie/discussions.daft?dcn%5Bdiscussion_id%5D=114319&dcn%5Bforum_id%5D=4

  63. Joe Lawlor Says:

    DOCM,
    Sorry, his previous post which I understand to be a call for a stimulus from the core to offset the fiscal tightening required in the periphery. I could be wrong though in interpreting him & am open to correction.

  64. Kevin O’Rourke Says:

    @Joe: I thank you. Yes, my view is that austerity in one half of the eurozone without any countervailing stimulus elsewhere, and especially without substantial monetary easing and debt forgiveness, isn’t going to work even on its own terms, and is going to cause immense and unnecessary hardship, with predictable and negative consequences (for those who don’t care about immense and unnecessary hardship, and it seems that there are plenty of those around) for the European project.

  65. Joe Lawlor Says:

    Kevin,
    I would agree with pretty much all of that. I doubt it will happen in as logical or timely manner due to politics. This leads to an obvious end game for the EU.,

  66. Carolus Galviensis Says:

    @Kevin O’Rourke
    “immense and unnecessary hardships” equals: living standards as in, say, 1995
    Chuckle, chuckle
    Read Brian Woods Snr and rf.
    Spoilt rotten, all of us.

  67. rf Says:

    “Read Brian Woods Snr and rf.
    Spoilt rotten, all of us.”

    Whoa. Just to clarify, I’m from the fine wine and caviar school of growth and distribution, (everyone gets fine wine and….), although I’m sympathetic to BWS on the limits to growth I don’t see how it’s in any way politically feasible to usher in the changes that are needed to build and maintain this sustainable Utopia. I am, most certainly, not prepared to return to even a 1995 standard of living.

  68. David O'Donnell Says:

    Kenny’s dead words fail to convince

    FINTAN O’TOOLE

    At 9.16 pm on the night of the budget, the Dear Leader appeared on television. He knew, presumably, that people were in deep distress, that many of them would not be able to sleep that night because they were churned up with fear, anger and despair.

    Enda Kenny stood in a wood-panelled office with the national flag at his shoulder. He squared up to address the citizens who were hoping to hear something to give them hope – or even just some comfort. And out of his tight little mouth came a stream of banal inanities.

    Here are five things said by the Taoiseach in less than six minutes:

    http://www.irishtimes.com/newspaper/opinion/2012/1211/1224327730554.html

    @Kevin O’Rourke 10.59

    +1 other European

  69. Michael Hennigan - Finfacts Says:

    The solutions that are dependent on others, in particular foreign ones, are always the easiest to propose.

    Last month Colm McCarthy wrote on the transfer of €1.1bn to its pension fund by a State-owned bank “to pay out enormous pensions to former executives, many of whom can reasonably be held responsible for the company’s insolvency, unless you believe it was an act of God.” Colm is a rare academic venturing into this minefield. Maybe it is because he had to earn a crust in the market.

    http://www.independent.ie/opinion/analysis/colm-mccarthy-the-country-is-bust-we-cannot-keep-this-gravy-train-on-the-tracks-3290533.html

    The gravy train remains on the tracks and while Fintan O’Toole is right to take Enda Kenny to task for a vapid speech, the more thorny issue to handle is why the political leadership is making cowardly decisions that may not even win the support of the people they are trying to protect.

    I have seen that Fintan has dipped a toe in the market economy with his ‘angry men’ tour. He should dip deeper and see what it’s like for those who have no protections and are not in the business of seeking public grants for moonbeams.

    François Hollande, French president, was the great hope a few months ago and growth package of €130bn was announced comprising EIB financing, project bonds and structural funds.

    More recently, he has threatened to nationalise a steel mill where over 600 jobs are at risk from a company’s total French payroll of over 20,000. However, a butterfly flapping its wings where about 50% of global steel is produced will have the biggest impact on this particular market as China is slowing down its capital investment programme and is likely to increase steel exports.

    The key problem for France is that it has run out of fiscal road.

    Germany could ramp up spending on infrastructure but the power of the nimbies means it would take years to have an impact. With the planned closure of nuclear plants, the new ”energy autobahns” are facing resistance from all sides. Der Spiegel said in 2011 that even in Baden-Württemberg, which has the lowest percentage of wind power of any state — at just 0.9% of net electricity consumption — people seem to have protested against virtually every wind turbine installed there.

    Olli Rehn says today in the FT: “a 1% increase in German domestic demand would improve the trade balance of Spain, Portugal and Greece by less than 0.05% of gross domestic product.”

    Mass debt forgiveness — again a good thing when someone else is paying - - here again private sector pensions are on the line.

    No need for reforms, having some harmonisation of tax, pensions etc?

    A return in Europe to the years to 2007 when prosperity was built on credit and property booms, is unlikely.

    Cutting debt would help a country’s public finances but it will not generate non-public sector jobs engines unless many other conditions are in sync.

    So there are many things that can be done but no guarantee of a return to the taken-for-granted ‘permanent prosperity.’

    Denial is not only an affliction of policymakers!

  70. Gavin Kostick Says:

    @ Michael Hennigan

    “The solutions that are dependent on others, in particular foreign ones, are always the easiest to propose.”

    Lost track there: you mean as in Germany proposing that Greece must default whilst no other EZ country should? Or the ECB proposing that countries must follow their economic instructions or their banking system wil be imploded?

    Not sure which prespective I’m looking at it to know who is the ‘other’ and who is the ‘foreigner’.

  71. PR Guy Says:

    I would say we should all stop buying Mercs and other German goods and we might see a change in the German position…. but the people who do buy them are not the ones being overly affected by what’s going on…. so they won’t.

    As for why Irish people and others for that matter aren’t out in the streets…. this is what the interweb was actually created for by TPTB so people could vent their spleen online and not endanger their good selves. Simples.

  72. PR Guy Says:

    Oops

    http://www.irishtimes.com/newspaper/breaking/2012/1211/breaking2.html

    Misery index in Ireland continues its upward trend.

    Merry Christmas.

  73. Gavin Kostick Says:

    ‘Robots and robber barons changing face of society’

    Krugman returns to labour’s decreasing share of capital in his sydicated column.

    ‘Increasingly, profits have been rising at the expense of workers in general, including workers with the skills that were supposed to lead to success in today’s economy.’

    http://www.irishtimes.com/newspaper/finance/2012/1211/1224327731088.html

    He doesn’t really mention the weakening of trade union power which I would have thought would be a contributory factor.

  74. Brian Woods Snr Says:

    @ Carolus Galviensis: Yeah, chuckle, chuckle, chuckle indeed!!! We ARE back in 1990s - and ‘falling’. It may take one (or perhaps several) generations to repair the social and economic mayhem being ‘forced’ on us. A steady demographic decline (reduced birth-rate) would also assist.

    @ GC: Haven’t read the latest PK epistles. If what you report is correct, then I would opine that Dr Krugman is a bit late with his diagnosis (see below). Patient is on verge of multi-organ failure. Radical surgery* required immediately. But has the patient sufficient insurance to cover the cost? Nope! Not good!

    *A general amnesty (as in Jubillee) on all debts. Bad outcome for sure. Its the economic equivalent of the choice of being in Rehab strapped into a revolving bed (continuing with the current programme), or being seated in your self-propelled wheel-chair (unconditional defaults). Who will make the decision? Patient or Doctor?

    [This issue of the difference between a PC and a FIRE economy is very important. You must understand it carefully. A PC economy is subject to slow, arithmetic expansion (finite physical resources and energy dependency) with reducing surpluses. Whereas the FIRE economy is a rapid, geometrically expanding, credit and debt economy where most surpluses are re-invested in financial, not productive activities. This difference was described several decades ago. - together with the known, known outcomes.] That is a quick-and-dirty explanation. There are other critical issues that I have left out.

    Some folk had better do some speed-reading to up-date themselves. I could recommend some useful reading, but I shall desist. Its generally regarded as being maternalistic: un-welcome and un-helpful.

  75. DOCM Says:

    @ Joe Lawlor

    Your original question

    “Kevin,

    How would Ireland implement and finance a Keynesian stimulus under the current policy constraint?”

    The answer (with which KOR concurs), it seems, is to a different question viz. “a call for a stimulus from the core to offset the fiscal tightening required in the periphery”.

    MH gives the view of Ollie Rehn as to how this might work.

    That there is pain in consolidation following a borrowing splurge is undeniable. How it is to be shared out is a political rather than an economic question and it has to be resolved mainly at a national level in the EU because the responsibilty remains with the nation states concerned. There is no federal authority to bail them out indirectly through social welfare transfers etc.

    Ireland, under the current government, is making a singularly bad job of it.

    One can easily say that there should be debt forgiveness; but by whom?

    With regard to the necessary structural reforms in Ireland, the surface has been barely scratched. What we have is a tinkering around the edges of the existing distorted structures e.g. the unjustified premium of public sector pay relative to pay rates in the private sector, ditto pension entitlements; a dysfunctional social welfare system; a public service still functioning on the basis of a discredited and outdated piece of legislation; a confusion, which is increasing, between the role of public representatives and public servants etc. etc.

    These are the matters that must be addressed if the country is to emerge from the crisis i.e. measures sufficiently radical to deal with the radical nature of the crisis.

    The euro will take care of itself.

  76. seafóid Says:

    “The solutions that are dependent on others, in particular foreign ones, are always the easiest to propose.”

    Is ar scáth a chéile a mhaireann na daoine. There is no way to get out of the crisis unless the EZ as a whole works together.

  77. rf Says:

    “The solutions that are dependent on others, in particular foreign ones, are always the easiest to propose.”

    When you are a tiny insignificant country in the global economy, your solutions are always dependent on others. It would be wonderful if we could do it all ourselves, by breaking up the sheltered class, saving 5p on the pound in energy reform and cutting the number of TDs by 20%, but sadly it just aint so

  78. Gavin Kostick Says:

    Ambrose returns to the fray this morning.

    ‘Mario Monti’s exit is only way to save Italy’

    “Mr Monti has rammed through fiscal tightening of 3.2pc of GDP this year, three times the therapeutic dose. There is no economic reason to do this. Italy has had a budget near primary balance over the past six years. It has been, and was under Berlusconi, a rare model of rectitude.

    “The primary surplus will reach 3.6pc of GDP this year and 4.9pc next year. You could not be more virtuous. Yet the pain has been worse than useless. Fiscal tightening itself has pushed Italy’s public debt from a stable equilibrium into the danger zone. The IMF says the debt ratio is rising much faster than before, jumping from 120pc last year to 126pc this year and to 128pc in 2013.

    “The economy has been contracting for five quarters. Citigroup says this will grind on, with falls of 1.2pc in 2013 and 1.5pc in 2014, with near zero growth thereafter as far as 2017, and debt restructuring along the way.”

    http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/9735757/Mario-Montis-exit-is-only-way-to-save-Italy.html

    (Morning Mr Woods - it’s a ‘K’ you know)

  79. Joe Lawlor Says:

    DOCM,
    Apologies for shortcut. The answer to my question is, I think, Ireland cannot run a successful … Stimulus under current constraint.
    However, it will not successfully implement all that it is required to do in the absence of the measures advocated by the good prof at 10 59 last night. That is my take anyway.
    Also my take, if the EZ does not act collectively then some should act in their own interest as they see fit. Some will leave, some will not. ” the falcon cannot hear the falconer etc.”

  80. Brian Woods Snr Says:

    @DOCM: “One can easily say that there should be debt forgiveness; but by whom?”

    Every creditor ‘forgives’ their debtors - unconditionally. The debts are increasing geometrically and are/will be unpayable; so the creditors demand assets and an increasing share of disposable incomes. That is ‘fine’ in theory but the practical outcome is disasterous (in political, social and economic terms). Cancelling the debt (much of which may have resulted from fiat credit creation anyway) stops the de-leveraging spiral in its tracks and folk go back to ye-olde form of living with only very modest incomes and levels of credit (which cannot be issued absent a real cash balance to match it). Not funny! “And no, you won’t have to give up your iPads!”

    Do folk want a genuine solution, or what? As I have said before, some very hard, very uncomfortable straight thinking - and action, is required.
    And it is not ’structural reform’ we need - its a complete refurbishment of the antique and creaking ruin of our political and economic Ark. A Dry-dock job!

    And I disagree (gently) with those who suggest that the ‘answer’ lies without ourselves. It most certainly does not. Ireland is a sovereign. We are not Utah. Our present political leaders are a bunch of sh*tless chickens tending a flock of gutless sheeple. Anyone know an emporium where they serve Intestinal and Testicular Fortitude - of the political variety? “Blind Biddy’s” in Reykjavik?

  81. El Leader Maximo Says:

    Ring any bells ? this deserves a thread of its own. Remarkable similarities with our own benchmarking bonanza and how it led to structural deficit.

    (from Bloomberg)
    —–

    An $822,000 Worker Shows How California Leads U.S. Pay Giveaway
    2012-12-11 05:54:09.775 GMT

    (For more on public employee compensation, see EXT5.)

    By Mark Niquette, Michael B. Marois and Rodney Yap
    Dec. 11 (Bloomberg) — Nine years ago, California Democrat Gray Davis became the first U.S. governor in 82 years to be recalled by voters. The state’s 20 million taxpayers still bear the cost of his four years and 10 months on the job.
    Davis escalated salaries and benefits for 164,000 state workers, including a 34 percent raise for prison guards, the first of a series of steps in which he and successors saddled California with a legacy of dysfunction. Today, the state’s highest-paid employees make far more than comparable workers elsewhere in almost all job and wage categories, from public safety to health care, base pay to overtime.
    Payroll data compiled by Bloomberg on 1.4 million public employees in the 12 most-populous states show that California has set a pattern of lax management, inefficient operations and out-of-control costs. From coast to coast, states are cutting funding for schools, public safety and the poor as they struggle with fallout left by politicians who made pay-and-pension promises that taxpayers couldn’t afford.
    “It was completely avoidable,” said David Crane, a public-policy lecturer at Stanford University.
    “All it took was for political leaders to think more about the general population and the future, rather than their political futures,” said Crane, a Democrat who worked as an economic adviser to former Governor Arnold Schwarzenegger, a Republican. “Citizens should be mad as hell, and they shouldn’t take it anymore.”

    Billions Short

    Across the U.S., such compensation policies have contributed to state budget shortfalls of $500 billion in the past four years and prompted some governors, including Republican Scott Walker of Wisconsin, to strip most government employees of collective-bargaining rights and take other steps to limit payroll spending.
    In California, Governor Jerry Brown hasn’t curbed overtime expenses that lead the 12 largest states or limited payments for accumulated vacation time that allowed one employee to collect
    $609,000 at retirement in 2011. The 74-year-old Democrat has continued requiring workers to take an unpaid day off each month, which could burden the state with new costs in the future.
    Last year, Brown waived a cap on accrued leave for prison guards while granting them additional paid days off.
    California’s liability for the unused leave of its state workers has more than doubled in eight years, to $3.9 billion in 2011, from $1.4 billion in 2003, according to the state’s annual financial reports.

    ‘It’s Outrageous’

    “It’s outrageous what public employees in California receive in compensation and benefits,” said Lanny Ebenstein, who heads the California Center for Public Policy, a Santa Barbara-based research institution critical of public payrolls.
    “Until public employee compensation and benefits are brought in line, there will be no answer to the fiscal shortfalls that California governments at every level face,” he said.
    Among the largest states, almost every category of worker has participated in the pay bonanza. Britt Harris, chief investment officer at the Teacher Retirement System of Texas, last year collected $1 million — including his $480,000 salary and two years of bonuses — more than four times what Republican Governor Rick Perry received. Pension managers in Ohio and Virginia made up to $678,000 and $660,000, respectively, according to the data, which Bloomberg obtained using public- record requests. In an interview, Harris said public pension pay must be competitive with the private sector to attract top investment talent.

    Psychiatrists Lead

    Psychiatrists were among the highest-paid employees in Pennsylvania, Ohio, Michigan and New Jersey, with total compensation $270,000 to $327,000 for top earners. State police officers in Pennsylvania collected checks as big as $190,000 for unused vacation and personal leave as they retired young enough to start second careers, while Virginia paid active officers as much as $109,000 in overtime alone, the data show.
    The numbers are even larger in California, where a state psychiatrist was paid $822,000, a highway patrol officer collected $484,000 in pay and pension benefits and 17 employees got checks of more than $200,000 for unused vacation and leave.
    The best-paid staff in other states earned far less for the same work, according to the data.
    Rising employee expenses are crowding out other priorities for state and local governments and draining resources for college tuition, health care, public safety, schools and other services, Schwarzenegger said in an e-mailed response to questions.

    Salaries, Retirement

    “California spends most of its money on salaries, retirement payments, health care benefits for government workers, and other compensation,” said Schwarzenegger, 65, who replaced Davis as governor. “State revenues are up more than 50 percent over the past 10 years, but still we’ve had to cut spending on services because so much of that revenue increase went to increases in compensation and benefits.”
    Brown, who granted state workers collective-bargaining rights during his first tenure as governor more than three decades ago, has reduced pension costs for new employees while leaving most retirement benefits for current workers intact.
    Last year, to balance the budget, he used a policy set by Schwarzenegger, his predecessor, to save $400 million through the forced monthly day off. He persuaded voters to back a tax increase, imposed a hiring freeze as his predecessors did and told as many as 26,000 prison employees they might lose their jobs as thousands of criminals are shifted to county jails.

    Inherited Problems

    “Governor Brown is busy fixing the many problems that he inherited from past administrations,” said Gareth Lacy, a spokesman for the governor. “California’s $26 billion budget deficit, and the decades-old structural imbalance, was eliminated in large part by cutting waste and slashing costs.
    The governor also achieved historic reforms to public pensions and workers’ compensation that will save the state billions of dollars.”
    Former governor Davis, in a telephone interview, said he now believes state employee compensation is too high.
    “I find it offensive that people who work for the state try to turn around and abuse the state through inflated overtime claims and lump-sum payouts,” Davis said. “We have high salaries, they have to come down. There was a time when we could afford them, but we can’t now.”
    Brown, who took office in January 2011, had plenty of incentive to crack down. The per-worker costs of delivering services in California vastly exceed those even in New York, New Jersey, Illinois and Ohio, where unions have the same right to bargain collectively for the best pay packages, according to data compiled by Bloomberg.

    Sinking Schools

    The result isn’t only a heavier burden on California taxpayers. As higher expenses competed for fewer dollars, per- pupil funding of the state’s public schools dropped to 35th nationally in 2009-2010 from 22nd in 2001-2002. Californians have endured recurring budget deficits throughout the past decade and now face the country’s highest debt and Standard & Poor’s lowest credit rating for a U.S. state.
    The story of one prison psychiatrist shows how pay largesse has spread.
    Mohammad Safi, graduate of a medical school in Afghanistan, collected $822,302 last year, up from $90,682 when he started in 2006, the data show. Safi was placed on administrative leave in July and is under investigation by the Department of State Hospitals, formerly the Department of Mental Health.

    Long Hours

    The doctor was paid for an average of almost 17 hours each day, including on-call time and Saturdays and Sundays, although he did take time off, said David O’Brien, a spokesman for the department. In a brief interview outside his home in Newark, California, Safi said he’d been placed on leave for working too many hours and declined further comment. An increase in the number of beds at the facility where Safi worked forced him to cover more shifts, and he was allowed to do some of the work from home, said his lawyer, Ed Caden.
    Safi and other psychiatrists employed by the state benefited from what amounted to a 2007 bidding war between California’s prisons and mental health departments, after a series of federal court orders forced the state to improve its inmate care. Higher pay in the prison system was matched by mental health, and as psychiatrists followed larger salaries, the state’s cost to provide the care soared.
    Last year, 16 psychiatrists on California’s payroll, including Safi, made more than $400,000. Only one did in any other state in the data compiled by Bloomberg, a doctor in Texas. Safi earned more than twice as much as any state psychiatrist elsewhere, the data show.

    Accumulated Vacation

    The disparity with other states is also evident in payments for accumulated vacation time when employees leave public service. No other state covered by the data compiled by Bloomberg paid a worker more than $200,000 for accrued leave last year, while 17 people got such payments in California.
    There were 240 employees who received at least $100,000 in California, compared with 42 in the other 11 states, the data show. New Jersey Governor Chris Christie calls such payments “boat checks” because they can be large enough to buy a yacht.
    Topping the list was $608,821 paid to psychiatrist Gertrudis Agcaoili, 79, who retired last year from the Napa state mental hospital after a 30-year career. Agcaoili said in a telephone interview that it was her right to take the payment.

    ‘Against Rules’

    “Those payouts are payouts of accumulated salary that it’s against the rules to allow people to accumulate, and it shouldn’t have been done, and shouldn’t be done,” said Marty Morgenstern, California’s labor secretary, who served as state personnel director under Davis. “They didn’t accumulate that kind of leave time in one year. It’s something that went on and on.”
    Lacy, the governor’s spokesman, said hiring freezes and furloughs, or the unpaid time Schwarzenegger forced employees to take, combined to inflate accruals of vacation and leave. Lacy said the expiration of Brown’s version of the furloughs at the end of June will help reduce the balances.
    Employees are told they must take unpaid furlough days before using paid vacation. That has boosted the backlog of unused leave, especially at agencies with round-the-clock operations.
    Other states have taken steps to limit vacation payouts.
    New Jersey caps checks for departing state employees at $15,000, and New York limits payment of accrued time to 30 vacation days.
    Most New York employees may accrue 200 sick days, which can be used to offset retiree health-care premiums.

    Overtime Millions

    California also leads in overtime expenses, data compiled by Bloomberg show. Last year, it paid $964 million in overtime to 110,000 workers, an average of $8,741 per employee. That was more than twice the $415 million New York paid in overtime to
    80,000 staff members, for an average of $5,199, and almost as much as all the other states in the database combined. In Georgia, total overtime for 8,935 workers last year was $12.3 million, an average $1,378.
    California employees generally make at least 1.5 times their regular pay to work overtime. The state’s overtime costs show mismanagement by the officials who run state departments, said former Georgia Governor Roy E. Barnes, a Democrat.
    “Government is no different from business; you have to have good leaders,” Barnes said in a telephone interview.
    “When you have somebody having that amount of overtime, then there’s not good management control, there’s not good leadership.”

    Highway Patrol

    The California Highway Patrol, whose brown-and-tan uniforms and weekly adventures in the 1970s and 1980s lit up television screens in the series “CHiPs,” also boasts leading pay and benefits.
    The best-paid among the patrol’s sworn and uniformed employees make far more than those in other states, with overtime and lump-sum payouts that enlarge earnings, data compiled by Bloomberg show.
    Former division chief Jeff Talbott retired last year from the California Highway Patrol as the best-paid trooper in the 12 largest U.S. states, with $483,581 in salary, pension and other compensation. Talbott declined a request to be interviewed.
    While California’s cost of living and relatively high private-sector pay account for some of the disparities in public payrolls, special circumstances in the Golden State combined to drive wages and benefits to levels far beyond other states, data show.

    ‘Arduous Duty’

    Unions pressed for every perk they could squeeze out of governors and their department managers — including “arduous- duty” pay for office workers and special bonuses for call- center employees “in recognition of the complex workload and level and knowledge required to receive and respond to consumer calls,” state documents show.
    Most public employees aren’t overpaid, and differences in compensation can be tied to regional labor markets, whether some states prefer delivering services at the local level and whether they have adequate staffing, said Steven Kreisberg, director of collective bargaining for the American Federation of State, County and Municipal Employees.
    “I don’t think there’s this kind of huge disparity as if somehow they’re being overpaid and taking advantage of the systems,” Kreisberg said in a telephone interview from Washington. “This is earned money.”
    California has one of the leanest public workforces in the country in terms of the number of state employees per resident, said Lacy, Brown’s spokesman. Measuring the payroll of its state workers per capita, excluding university employees, California ranks third-highest among the 12 largest states, according to data compiled by Bloomberg and the U.S. Census Bureau.
    The California payroll totals reflected in the Bloomberg data have their roots in wage negotiations carried out during Davis’s time as governor.

    Pension Limits

    One of the first goals of state employee unions when Davis took over in 1999 after 16 years of Republican governors was to unwind curbs on pensions put in place by Governor Pete Wilson in 1991. Workers also wanted broad wage increases.
    Unions persuaded the California Public Employees’
    Retirement System to sponsor legislation called Senate Bill 400, which sweetened state and local pensions and gave retroactive increases for tens of thousands of retirees. Highway-patrol officers were granted the right to retire after 30 years of service with 90 percent of their top salaries, a benefit that was copied by police agencies across the state.
    California’s annual payment toward pension obligations ballooned to $3.7 billion in the current fiscal year from $300 million when the bill was enacted. Some cities that adopted the highway-patrol pension plan later cited those costs for contributing to their bankruptcy filings.

    Pay Increases

    Davis and the Legislature also agreed to labor contracts that gave 164,000 state workers pay increases of 4 percent in
    1999 and again in 2000. Those contracts cost the state an extra
    $1.3 billion within a year, according to the state’s independent Legislative Analyst’s Office.
    There were more to come.
    After technology stocks plummeted in 2000, cutting tax revenue, Davis asked state workers to postpone additional raises.
    In lieu of immediate increases, Davis and the California Legislature agreed to link highway patrol pay to an average of the five biggest law enforcement agencies in the state. The
    result: escalating raises that came due after Davis left office.
    Officers’ pay rose 2.7 percent in fiscal 2004, 12.1 percent in fiscal 2005 and 5.6 percent and 5.7 percent in the following years, according the Legislative Analyst’s Office.

    Aiding Recruitment

    The pay boosts were needed to help bring more officers to the agency at a time it couldn’t fill all its cadet positions, said Jon Hamm, chief executive officer of the California Association of Highway Patrolmen, the union for CHP officers.
    “At the time we accomplished our biggest gains, I actually felt I was losing the recruitment war,” Hamm said in an e- mailed statement. “I think it is clear that when our biggest gains were negotiated I did not feel they were ‘excessive;’ in fact, almost the opposite was true.”
    The wage increases help explain disparities in the data compiled by Bloomberg in which many California highway patrol officers now earn much more than counterparts in other states.
    For example, 45 California officers earned at least $200,000 in 2011, compared with nine in other states — five in Pennsylvania and four in Illinois, according to the data. While more than
    5,000 California troopers made $100,000 or more in 2011, only three in North Carolina did, the data show.

    Guards Follow

    The pay deal for the California Highway Patrol got the attention of the state’s politically potent prison guards’
    union, which successfully lobbied to have its compensation tied to that of state troopers.
    The result was a pay increase of more than 30 percent for members of the union over the five-year contract. The state’s auditor, Elaine Howle, in July 2002 estimated the contract cost taxpayers an extra $500 million a year.
    The prison guards’ union gave Davis more than $3 million for his various elections, including $250,000 a few weeks after the pay increase was negotiated, campaign records show.
    California had almost 11,000 workers in the Department of Corrections and Rehabilitation who made $100,000 or more in 2011, and about 900 prison employees earning more than $200,000 a year, data compiled by Bloomberg show. New York had none. Its top-paid officer is a sergeant at Sing Sing Correctional Facility who made $170,000 last year.

    Deficit Balloons

    Davis had taken office in 1999 with a $12 billion budget surplus. Four years later, he began his second term by reporting a $35 billion budget deficit — about $1,000 for every man, woman and child in the state.
    Davis was recalled in October 2003 amid criticism of the deficit, his handling of an energy crisis that saw power prices soar and political contributions from public-employee unions, technology companies and others.
    After Davis left, lawsuits over the quality of care for prison inmates and patients of state mental-health hospitals rapidly elevated pay for doctors, dentists, nurses and psychiatrists.
    In 2005 and the years that followed, a federal court took over prison health care and took steps that included reducing the time inmates had to wait for treatment.
    That, combined with a crowded prison population, increased the workload and demand for nurses even as a shortage nationwide left the state with vacancies.

    Union Rules

    Union-negotiated rules required state departments to handle the extra work by offering overtime to California nurses before bringing in contract nurses from private companies. The requirement led to a greater reliance on overtime for nursing in California than in any other state, one that persists to this day.
    Nurses in California last year made $673 million in total pay, including $103 million in overtime, or 15.3 percent. By contrast, those in New York made $561 million in total pay, of which almost $40 million was in overtime, or 7.1 percent.
    Forty-two nurses in California’s prisons and mental hospitals have reaped especially rich overtime payouts. They made an average of $1.3 million each during the seven years, including $674,000 in overtime.
    The highest-paid nurse in the seven years was Lina Manglicmot, who worked at a state prison in Soledad, about 130 miles (209 kilometers) south of San Francisco. She collected
    $1.7 million from 2005 through 2011, including $1 million in overtime, the data show. Manglicmot declined to comment.

    Wage Concessions

    Curbing the compensation of California employees eluded Schwarzenegger through two terms as he tried to pry wage concessions back from their unions.
    In 2009, he responded to a growing financial crisis by imposing furloughs, or a mandatory unpaid day off each month, for all state workers. The forced time off later grew to three days a month.
    Furloughs depressed regular wages while increasing overtime compensation for employees, such as prison guards, who had to work through them. The first six months of the furloughs, for instance, cost California $52 million in accrued vacation time for prison guards alone, according to findings by the state Senate Office of Oversight and Outcomes.
    The furloughs led to backlogs of vacation time for other state workers as well, in violation of state rules. California stipulates that workers shouldn’t accumulate more than 640 hours of vacation or personal leave.

    Forced Furloughs

    “Furloughs were never meant to solve the state’s structural budget problem or save money in the long run,”
    Schwarzenegger said. “We had to do what was necessary to keep paying the bills and keep the lights on.”
    More than 111,000 government employees working for the 12 most populous states collected $710 million in leave payouts last year, the data show. California workers accounted for almost 40 percent and have collected about $1.4 billion since 2005. The payouts have more than doubled in California in the past seven years.
    “Those kinds of payments, they are absolutely inappropriate and we are doing everything we can to make sure it doesn’t recur,” said Morgenstern, the state’s labor secretary.
    Public employee unions have made some concessions at the bargaining table, such as contributing as much as 5 percent more of their earnings toward pensions, and forgoing overtime pay for some holidays. State worker furloughs under Schwarzenegger amounted to a 15 percent pay cut; under Brown, they’ve been about 5 percent.
    Yet the legacy of California’s collective bargaining, budget battles and court struggles over inmate care continue to elevate its payroll, data compiled by Bloomberg show.
    Allowing that to happen was a mistake, and taxpayers will be dealing with it for years, said Bob Stern, president of the nonpartisan Center for Governmental Studies in Los Angeles.
    “The labor unions really called in their chits, and Davis went along with it,” Stern said by telephone. “In hindsight, they should not have done it, because they made future generations pay for the benefits they approved.”

  82. El Leader Maximo Says:

    Says it all really….

    From coast to coast, states are cutting funding for schools, public safety and the poor as they struggle with fallout left by politicians who made pay-and-pension promises that taxpayers couldn’t afford.
    “It was completely avoidable,” said David Crane, a public-policy lecturer at Stanford University.
    “All it took was for political leaders to think more about the general population and the future, rather than their political futures,”

  83. zhou_enlai Says:

    Word search results on this thread:
    “inflation” - 2 occurences
    “fiscal compact” - zero occurences
    “treaty” or “treaties” - zero occurences
    “law” - zero occurences
    Whatever the name is of the council which sets the target inflation rate for the ECB - zero occureence (I think)

    Are we all missing the point? Does our commentariat, our politicians or our public know how to achieve the changes in law and policy needed to allow us to break this European death spiral?

  84. Shay Begorrah Says:

    @El Leader Maximo long, long, in line quote on the dangers of paying public servants.

    Firstly can a moderator delete or edit the post which can be found at the following url if anyone really wants to read it?

    http://www.bloomberg.com/news/2012-12-11/-822-000-worker-shows-california-leads-u-s-pay-giveaway.html

    The post is more or less a selection of Republican talking points and a few instances of what might be fraud (though not banking sector scale fraud) conflated into one false narrative meant to bolster the position of conservative “fiscal hawks”.

    The public policy expert quoted (David Crane) is a former advisor to Arnold Schwarzenegger and the “California Center for Public Policy” referenced is a Republican wingnut welfare style think tank. Bloomberg is just singing its masters tune here, this is propaganda and not news.

    It is also totally unrelated to California’s real problem, Proposition 13 which stopped increases in property taxes. California’s budget is broken because of anti-tax privateers like Grover Norquist.

    Its also more or less unrelated to our problem, recovering from the steps taken to bail out the financial sector and ECB/German behaviour in siding with the agents of financial capital against the peripheral countries of Europe.

  85. David O'Donnell Says:

    The Irish TImes joins the spin on reporting on The Guvnor’s Time crusade ….

    Fails to note Pearse Doherty’s realist rebuttal to Minister Pat’s ‘We didn’t pay ploy’ …. what’s journalism coming to? Has DOCM taken over?

    Central Bank Governor Patrick Honohan said while the State will make good on the Anglo Irish bailout, it needs more time than it currently has to repay.

    [...]
    Minister for Communications Pat Rabbitte said over the weekend the Government would not pay the instalment.

    “[The Government] didn’t pay the promissory note this year and as far as I’m concerned we’re not going to pay it next year. It’s as simple as that,” he said.

    “We can’t pay. This was an IOU entered into by the previous government when the Anglo Irish Bank collapsed and the notion of us paying it next March doesn’t arise.”

    Mr Rabbitte was speaking on RTÉ’s The Week in Politics on Sunday night, where he said a comprehensive deal on bank debt next year would have the effect of reducing the target for Ireland’s current deficit in 2014 from about 7.5 per cent to 6.4 per cent.

    http://www.irishtimes.com/newspaper/breaking/2012/1211/breaking11.html

    V. poor one sided reporting here …..

  86. Brian Woods Snr Says:

    @ zhou: “Are we all missing the point?”

    I’m not (I hope!). Sovereign’s only do law if it suits. If not, you tell outlander’s to “stick it!” - in the best possible taste - you understand. Its known as Realism (in the Political Science trade). Abba Eban (former Israeli Foreign minister) had a nifty quote about Realism. Basically its about the choice: our ass or their’s. And guess what?

  87. David O'Donnell Says:

    They appear to have all bent over without even a whimper!

  88. The Dork of Cork. Says:

    The story of Youghal follows the Irish story very closely…..

    We now import more oil then food………..

    The multinational sector completely distorts what is really happening and happened to the domestic Irish economy….

    Oil was its opiate

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

  89. zhou_enlai Says:

    @BW Sr

    The fact that socvereigns only do law when it suits them is the reason we have the EU and the ECB. The other sovereigns are only part of our problem. Many of them sympathise or are on our side. The bete noir in a lot of this is the ECB, or perhaps more importantly, the law which governs the ECB. If the ECB behaved like the Fed with more omportance placed on employment and economic development (which price stability is supposed to support!) and more flexibility to vary its target interest rate and more flexibility to take losses, then one could at least hope to persuade them of one’s case.

  90. Shay Begorrah Says:

    @Kevin O’Rourke

    A friend pointed out to me that those lovely Dutch conservatives were significant benefactors of the UK’s misfortune when the UK government ended up effectively picking up sixteen billion pounds (not euros) of losses on the former Dutch banks books when Royal Bank of Scotland was part nationalised.

    Rutte might have been a little less gung ho on punishing those profligate peripherals if he had been facing a rolling collapse of the Dutch banking system.

  91. Michael Hennigan - Finfacts Says:

    @ Gavin Kostick / seafóid

    Domestic reform usually only happens in a crisis situation because vested interests who have a grip on the political process do not give up advantages without a fight. In Ireland it appears that the crisis has to become dire.

    People often blather on about a democratic deficit in Brussels when collective power is what politicians in Dublin react to.

    The Unionists used to say: not an inch; Republicans in the US Congress up to now say they would never support tax increases. We’ll soon see.

    There have been some victories: the State paid €1.6bn annually for drugs that had a factory gate price of €1bn; the pharmacists kicked up a dust but losing some of their bonanza but were seen off.

    Political courage is a rare commodity in a culture where advocacy of prudence in public spending is unlikely ever to be a winner.

    In the multi-seat constituencies, the vested interests exploit this reality.

    In the universities for example, it’s rare for staff to publicly challenge the status quo of the operations. Why should retribution be feared?

    So the point about “the solutions that are dependent on others, in particular foreign ones, are always the easiest to propose,” is that vision and political courage is often expected from foreign capitals but it is not often evident where there is domestic Irish control.

    @ rf

    When you are a tiny insignificant country in the global economy, your solutions are always dependent on others. It would be wonderful if we could do it all ourselves, by breaking up the sheltered class, saving 5p on the pound in energy reform and cutting the number of TDs by 20%, but sadly it just aint so

    This is either a joke or you’re an idiot or a selfish individual defending what you have.

    It’s sometime since the state blatantly recognised different classes of citizen even though that was often the reality.

    Why not have the highest paid in Europe if they can get away with it? The victims usually live elsewhere.

    The little people should be left at the mercy of the gougers.

    We’re helpless…

    Commercial litigation in Ireland carries a heavy burden of cost relative to other jurisdictions  — an average of €53,800 (27%) on a €200,000 claim compared to €25,337 (13%) in the rest of Europe. Besides cost, the average Irish court case takes 515 days to resolve.

    The NCC said last summer that legal costs remain more than 12% higher than they were in 2006.

  92. rf Says:

    “This is either a joke or you’re an idiot or a selfish individual defending what you have.”

    Well it’s not a joke, and I’m not really trying to protect my on and of, basically minimum wage job in London, so…. I’ll have to go with idiot.
    But in reality a small country is mostly at the mercy of global forces. By all means try and ‘reform’ our way into prosperity, but it aint going to happen

  93. Shay Begorrah Says:

    As if on cue “Less than Comical” Olli Rehn appears in the Financial Times more or less confirming Kevin O’Rourke’s thesis in the first paragraph:

    Europe must stay the austerity course.

    The eurozone is living through lean times, but there is light at the end of the tunnel. On the one hand the short-term economic outlook remains weak. On the other hand, there are signs that confidence is returning.

    So the economy of Europe is weak and getting weaker but there are signs that peoples optimism may be returning.

    It is almost unbelievable and leaves me feeling nauseous - we now have the European Commissioner for Economic and Monetary Affairs invoking the confidence fairy at one remove (signs of it, not its actual presence, and thus not its magical benefits).

    It is an appalling article and needs to be read - pure faith. Stay the course. Ignore the results so far.

    Ireland badly needs a plan B and a Danish/Swedish distance from the EU seems like something we should be aiming to achieve.

  94. Bleeding Europe - NYTimes.com Says:

    [...] Kevin O’Rourke has it right: Europe has become the continent where good times are always just around the corner. [...]

  95. Fiatluxjnr Says:

    @Shay
    Amen. Here’s another report from the telegraph…
    “07.50 European Commission Vice President Olli Rehn wrote in the Financial Times this morning that austerity is working. He pointed to some successes over the last few months - Ireland returning to the debt markets, Spain seeing more private capital come into the country than is leaving for the first time in more than a year, and Italy’s borrowing costs reaching a two year low (before the announcement of Prime Minister Mario Monti’s resignation). He cheered structural reform and said the case for fiscal stimulus is weak.”

    Austerity is working alright. Millions unemployed in Spain,Italy, Ireland and Greece and no growth forecast in the EU next year.

    @DOD
    Curious how the times and Indo only get around to reporting the speech by Dr. Honohan on Tuesday. Journalists must be partying for Christmas.
    As for the government line that we didn’t pay last year….this would appear to be an outright untruth. What was that convoluted deal with BOI?

  96. seafóid Says:

    @ MH

    Everyone has to get a grip. That applies at the Irish level and the Euro level. If nothing changes and the weak (whether that is the unemployed at the Irish level or the periphery at the Euro level) continue to absorb the adjustments then everyone will ultimately lose. There will be a massive problem in Ireland in 3 years time when the Minister realises the capital budget can’t be cut below zero and there are no non salary expenses left to cut in the Health Service but things are not ideal either in the core countries. They are just a few years behind the periphery in the whole mess. Holland will be downgraded and afterwards it’ll be Germany and no matter how fleissig German workers are- if their customers have no money they won’t be able to export.

  97. Brian Woods Snr Says:

    @ zhou: OK, I’ll take a rain check. But a sovereign is no longer a sovereign if its political leadership agree to accept Outlander Law as binding. Bad outcomes are inevitable.

    In the Bad Olde Days you saddled up, invaded, raped and pillaged then commanded tribute. Romans were very good at this. Raised it into an art form they did. Now? Manchurian Candidate-like (the b+w one with Harvey and Sinatra) at the sound of the cue-word - “MARKET” - we bend over, proffer the vaseline, clamp a piece of wood between our teeth and … …!

  98. The Dork of Cork. Says:

    More French rail expansion……this week.

    http://www.rail.co/2012/12/10/official-opening-for-new-western-lyon-tramway/

    http://www.youtube.com/watch?v=13-jT95secY

    If people understood the real capital expenditure was bigger then the previous 1970s /80s French nuclear build they would be very surprised me thinks.

    But whose money are they spending ?

  99. The Dork of Cork. Says:

    See sign to the right…….

    “the French are killing our jobs”

    http://www.rail.co/2012/12/11/alstom-dublin-tram-maintenance-contracts-extended/

  100. Hal Says:

    @Joe Lawlor,

    You have to leave the euro, default on debts and allow banks to fail. Then you can start again in charge of your own economic destiny.

    There’s no solution otherwise. The euro core is never going for a stimulus to help your economy.

  101. Fiatluxjnr Says:

    Seems all is not well on the greek front..
    From the telegraph..
    “16.06 BREAKING: Although the Greek buyback plan exceeded its target of €30bn, attracting €31.8bn worth of tenders by midday today, the higher than expected cost of buying the bonds mean Athens will not manage to bring its debt down to the IMF goal of 124pc of GDP, according to reports by Reuters citing a eurozone source. Instead the bond buyback programme will erode debt to 126.6pc of GDP, and would require a further €450m to make up the shortfall.”

  102. fiatluxjnr Says:

    Seems Enda cannot make up his mind…IT report on Dail exchanges

    “Mr Kenny said he knew the difficulties people were experiencing. “There is no easy solution to the range of problems this Government faces,’’ he added.

    “In fact, with respect to all of those who went before me, there are few who have ever had to face the scale of the economic challenge we now face here.’

    I thought we were back in the bond market and things were wonderful.

  103. John Corcoran Says:

    In a democracy power comes from the ballott box. The greatest bank crash and property crash in the history of mankind started with one house—Leinster House.

  104. Bond. Eoin Bond Says:

    @ Fiat

    the Telegraph information is wrong. The debt buyback got exactly what was required. The gap from 126.6% to 124% will be plugged by EFSF loan increase, and these figs were always part of the plan.

  105. Fiatluxjnr Says:

    @Bond Eoin Bond
    Thanks. I suppose the moral is…if at first you don’t succeed….try again and again and again.

    Here’s an interesting commentary on the greek tragedy..
    http://www.ekathimerini.com/4dcgi/_w_articles_wsite3_1_11/12/2012_473792

  106. Fiatluxjnr Says:

    @Bond Eoin Bond
    Looks like the Telegraph are sticking with the story…
    http://www.telegraph.co.uk/finance/economics/9738125/Uncertainty-in-Greece-as-buyback-programme-misses-target.html

    It appears the German bad bank might tender a few more bonds to get it over the line.

  107. Joseph Ryan Says:

    @Fiat

    re: Greek Buy Back
    “”The amount could be tapped from German bad banks — they have not tendered all of their holdings,” he said. ”

    Who owns the German bad banks at this point? I wonder is Schaeuble the biggest shareholder?

  108. Fiatluxjnr Says:

    @Joseph
    I seem to remember some convoluted scheme by the Germans to keep the bad banks off the books…somewhat like our very own Nama.
    So much water has passed under the bridge..we tend to forget that the German banks were one of the bigger victims of the toxic asset purchases from the US.
    Btw, I see the US government today sold the last of its holdings in AIG and have reaped a 22b gain on their 180b investment. If only we could replicate that. Maybe MN should talk to Timothy.

  109. Fiatluxjnr Says:

    Here’s a good story about Van Roumpy going on solo runs about bank recaps. No wonder there is confusion. The Germans are not amused.
    http://www.spiegel.de/international/europe/berlin-refuses-to-relent-as-banking-union-summit-approaches-a-872021.html

  110. Brian Says:

    @MH
    “Domestic reform usually only happens in a crisis situation because vested interests who have a grip on the political process do not give up advantages without a fight. In Ireland it appears that the crisis has to become dire”

    Only too true; in N. Ireland the IRA waged a 30 year war to gain equality for northern catholics at a very significant cost to that community. No way will the Dublin political establishment sacrifice more than a token, unless, they are pushed into a corner.

  111. Joe Lawlor Says:

    who are these vested interests?

  112. David O'Donnell Says:

    fyi

    12/11/2012
    Banking Union
    Berlin Refuses to Relent as Summit Approaches

    By Martin Hesse, Christoph Pauly and Christian Reiermann

    European leaders meet again this week to negotiate the structure of a proposed banking union, and in all but the most superficial areas, German Finance Minister Wolfgang Schäuble still appears unwilling to compromise. Thoroughness and ample power for Germany are his main priorities.

    [...] Schäuble remains determined only to agree to a European banking union under the following four conditions: The independence of monetary policy may not be compromised. Conflicts of interest between monetary policy and bank supervision must be avoided. Countries that don’t belong to the euro zone, and are thus not members of the ECB Governing Council, must be able to equally participate in banking supervision. And the banking supervisory body should be independent of the ECB Governing Council.

    http://www.spiegel.de/international/europe/berlin-refuses-to-relent-as-banking-union-summit-approaches-a-872021.html

  113. David O'Donnell Says:

    CARTOON OF THE DAY [A MUST]

    Nobel Peace Prize:
    Well earned prize
    11 December 2012 L’Hebdo Lausanne

    http://www.presseurop.eu/en/content/cartoon/3147271-well-earned-prize

  114. Brian Says:

    The idea that Frau Merkel after her great reelection as party leader is about to do Ireland any favours is ludicrous. I very much doubt she has forgotten the 50 billion (not sure on that figure) the German state had to cough up for Depfa Bank’s Dublin branch. We were lucky the EU was up for the peace prize. We are paying a price anyway you can be sure of that.

  115. Aiman Says:

    @Fiatlux - “Here’s a good story about Van Roumpy ”

    The man’s name, though you’d not know it by listening to RTE, is Van Rompuy. Pronounced Van Rom-Pee, and not Van Rum-Poy.

    The man’s job is both thankless and meaningless enough that he doesn’t need the added annoyance of being treated as an anagram.

  116. Fiatluxjnr Says:

    @Aiman
    Rather unfortunate name…as is his reputation according to Der Spiegal.
    “European Council President Herman Van Rompuy has a reputation for being headstrong. The Belgian with the mischievous smile and protruding ears tends to have his own unique way of interpreting joint decisions by Europe’s heads of state and government.”

    Useless might be appropriate. Schauble calls the shots. Trying to bounce him into an arrangement not agreed would appear to be stupid.

  117. Fiatluxjnr Says:

    @Bond Eoin Bond

    Looks like the Telegraph story was substantially correct. The shortage is 1.12b about double the amount suggested in the telegraph article.
    http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_11/12/2012_474003
    I suppose they will find it somewhere!

  118. chris Says:

    What we have learnt from the crisis is - large financial institutions and corporaitions run the world and can say what they want even if its directly conflicting, such as raising government debt doesnt matter one minute and is catastrophic the next. The very same people who advocated pushing up government debt drastically by bailing out private investors (such as financial instituions and the majority of fortune 500 CEOs) are the one who are now saying pushing up government debt in a small way is very dangerous and harmful. Even Germanys debt to GDP shot up from around 60% to 80% because of bailouts of private investors.
    Financial Institutions and Corporations are global entities and policy makers and regulators are not. The solution is much better global co-operation by at least the G-20 on these issues.
    Kevin can you offer any multimillion dollar jobs for retired politicans or their families? You might get their ear a little more if you did.
    http://dealbook.nytimes.com/2012/11/06/wall-street-offers-a-second-career-for-former-politicians/?emc=eta1

  119. Michael Hennigan - Finfacts Says:

    Following over 40 years of discussions, the European unitary patent is going to become a reality in 2014.

    The European Parliament on Tuesday supported laws to create a single regime to protect intellectual property across 25 EU countries, which is claimed will cut administrative costs by up to 80%.

    However, the economically challenged countries of Spain and Italy are not participating, because the official languages of the common patent are English, German and French.

    The European Commission estimates that in the future , the cost for applicants will be about €5,000, down from the current pan-European cost of €36,000 - - about 18 times the cost of a typical US patent and 60 times more than a Chinese equivalent - - results from translation costs and other fees.

    PSA Peugeot Citroën is to cut another 1,400 jobs while Volkswagen is heading for another record year. Group sales rose 15% in 2011.

    Losses in the Eurozone have been counterbalanced by gains in Eastern Europe and Russia to give flat European market.

    GM’s Opel is to end car production in Germany while Siemens employ more in the US than Microsoft.

    As in much else, the companies that are the winners tend to take the lion’s share of the gains in a globalised world.

  120. Michael Hennigan - Finfacts Says:

    Germany is Europe’s biggest patent filer.

  121. Colman Says:

    My sense of it (from the trenches running a small business) is that the Irish economy would love to recover, if only the government would stop cutting its legs off every time they regrow. Business is being done, which hasn’t been true throughout the disaster - there have been some times when nothing was happening at all as people froze in fear. A little bit of stimulus might very well have sent the Irish economy onto a growth path. Instead, what we’re going to get is a freeze as the budget measures hit and either another six months lost time or the start of another nosedive.

    What is it now? Four years of throwing virgins into volcanoes and the argument is still that either they weren’t virgin enough, handsome enough or we just didn’t throw enough in. Never that placating the volcano god wasn’t the right solution.

  122. Bond. Eoin Bond Says:

    @ Fiat

    the Telegraph story is correct in that there’s a shortfall. Its incorrect in that the Troika and the Greeks always knew there’d be a shortfall, and so its not really “news” and certainly not unexpected. The bond buyback was as successful as hoped and expected.

  123. The Dork of Cork. Says:

    @Micheal
    Its just wage arbitrage boy - the supply chains have no logic unless you factor this in.
    Germany is making & inventing stuff we cannot afford to buy.
    The frilly skirts of engineering

    So it must try to stuff our mouths with credit rather then money.

    Having said that its logical for a individual to buy a diesel Merc which may last 20 years while he still can.
    But in a real world of inputs and outputs rather then credit one needs to keep it simple stupid.

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

  124. DOCM Says:

    @ All

    “Fog on the Channel, Continent isolated”. Or maybe not!

    http://www.ft.com/intl/cms/s/0/93d6306e-4384-11e2-a48c-00144feabdc0.html#axzz2Em62xS3Y

    The signals on banking union are mixed. Reuters is reporting that German media are reporting that there is agreement between Berlin and Paris with the ECB supervisory machinery to be based in Paris (!).

    The game being played between Merkel and Schaeuble is the most intriguing, if a little tiresome at this stage given its constant repetition. The former is repeating her performance prior to the last European Council, down-playing the possibility of an agreement.

  125. Michael Hennigan - Finfacts Says:

    @ The Dork of Cork

    Standard & Poor’s reported in 2009 that in 2007, the average age of cars registered in EU-15 countries was 8.2 years, up from 5.8 years a decade earlier. This increase was in part because of the improved overall quality of cars.

    In Ireland in 2007, a driver of an 8-year old ‘banger’ would have been viewed as a loser by losers!

    Also in 2007, the German ambassador to Ireland, Christian Pauls, raised hackles when he made some disparaging comments to visiting German businessmen on the host country including citing junior medical consultants’ rejection of €200,000 a year posts on the basis that this sum was ‘Mickey Mouse’ money.

    He said that he was at the National Concert Hall when an announcer appealed for the owner of a 1993-registered car to move the vehicle because it was blocking an entrance.

    ‘Of course no one moved,’ said Pauls. ‘All the Irish are driving 2006 and 2007 cars. For all I know the car is still there.’

    There is also some evidence from the US unrelated to the recession that the appeal of buying a car has waned amongst young people.

  126. Gavin Kostick Says:

    From the Olli Rehn article linked by Shay B.

    “It is true that the correction of current account imbalances has so far come predominantly in deficit countries, but this is no surprise given the scale of the challenges they face. As John Maynard Keynes noted before the Bretton Woods talks, such adjustment is “compulsory for the debtor and voluntary for the creditor”.

    “This does not invalidate the case for a more symmetrical external rebalancing within the eurozone, involving creditor as well as debtor countries. The European Commission has said surplus countries should implement reforms to strengthen domestic demand. Germany could do this by opening up its services market and by encouraging wages to rise in line with productivity, two of the recommendations made to Berlin by the EU Council last July.”

    I was trying to decifer this - but I’d much appreciate the input of some one knowledgable on Keynes, such as a Kevin Donoghue.

    Anyway, looking up ‘Return of the Master’, it looks like Keynes did say that and regarded it as something to be overcome, not something to be left engaraved in stone. So Rehn’s sentence opening the second para - if he really is channelling Keynes - might read: “This therefore validates the case”, rather than the double negative offered. He seems to be misrepresenting Keynes a bit.

    So what is happening here? I think there is an element of dog whistling: ‘look, I’ve mentioned, Keynes’, but it is coming out of each side of his mouth. To one side, yes I know it is a demand problem, to the other, look Keynes more-or-less validates asymetrical adjustment.

    Certainly it is possible to poke fun at Rehn: This from Sept., 2010.

    “As for the developed world, the European Union has recently revised its economic forecasts upward, as growth has revived and the job situation has slowly started to improve. Meanwhile, economic forecasts for the United States have been downgraded owing to flagging growth during the second half of 2010. A combination of high employment, which is widely threatening to become structural, and continued gloom on the housing market does not hold out the promise of any rapid spurt of growth for the U.S. economy.”

    He does hedge these things arond with warnings of what needs to be done if things are to go well. But it is never on the lines of, watch out for excessive austerity as this destroy growth. In fact his advice is usually to front load consolidation and reforms in countries at risk, whilst gesturing at Germany to off-set this, but with real stick in the case of the former and handwringing towards the latter.

    And certainly the tricky bit I have, is that while he bangs on about jobs, he doesn’t explicitly pick up on Keynes’s observation (I think I have it right) that internal devaluation inevitably leads to high unemployment. That it is an intrinsic part of the ‘cure’, not just something unlucky to be waved away.

    Further, if the cure is to make an army of unemployed to lower wage levels all round, surely that leads to decreased demand and a lower share of capital for labour, pretty much making the vast majority of people poorer. As well as being, oh yes, immoral.

    I can’t make out whether the ‘Rehn’ position on employment is wrong-headed, cynical or deluded.

    So, whilst I continue to read and think about supply side issues for improving employment possibilities im Ireland, I can’t see there being any real chance of serious improvement under the current policis. Which is not to say one shouldn’t try.

    http://ec.europa.eu/commission_2010-2014/rehn/documents/national_defense_training_association_en.pdf

  127. The Dork of Cork. Says:

    @Micheal
    Sure but they still want to give us credit (now once we have a large deposit)

    Which is why we are seeing a stratification of the car market between the haves (with deposits) and the have nots (with no deposits who normally bought cheaper smaller petrol cars.)

    Travel to Morocco and you will find almost all of the taxi drivers drive 1980s Mercs.
    It works when the tram drivers go on a wildcat strike anyhow……

    http://www.youtube.com/watch?v=5LwxbE8lHew

    Not so much if the oil runs low.

  128. The Dork of Cork. Says:

    http://www.youtube.com/watch?v=95mgTwBHAZI

  129. The Dork of Cork. Says:

    @Gavin
    Ollie is a funny guy …………

    There is no debtor and credit countries in the eurozone………

    They are all bankrupts as the credit inflation has destroyed their collective capital base…

    What has happened is very simple…
    The core has managed to strip what little capital remained in the periphery and sent it to its cold dead heart.

    Whats Germany surplus in ? Cars ?

    What do cars eat ?

    CAPITAL AND LOTS OF IT.

  130. David O'Donnell Says:

    Europe’s 2013 will bring more of the same

    http://www.macrobusiness.com.au/2012/12/europes-2013-will-bring-more-of-the-same/

  131. DOCM Says:

    @ Gavin Kostick

    Rehn has to move cautiously because of the ingrained unwillingness in Germany to see anything wrong with its approach to economic policy. Ralph Atkins of the FT has an interesting commentary in September which explains the debate with regard to “Ordnungspolitik”.

    http://www.ft.com/intl/cms/s/0/4d3c0b1e-e38c-11e0-8f47-00144feabdc0.html#axzz2Em62xS3Y

    The relevant EU legislation adopted with regard to imbalances sets the barrier for excessive surpluses conveniently just at or below the German level of 6%.

    Keynes was, of course, right. One could describe the situation as regrettable. But the political forces in Germany maintaining it - an entrepreneurial class in close collaboration with well organised highly skilled labour - have no intention of killing the goose that is laying the golden egg; at least for them. Great Britain did not behave any differently when it was the “workshop of the world”. It was overtaken by other countries, notably by the creation of an entirely new chemical industry in Germany. The argument most often advanced by Germans - most recently by the German Ambassador on the PK show - is that all most compete, Germany included, if it is not to be overtaken in its turn, China being the most likely candidate to do so.

  132. The Dork of Cork. Says:

    @DOCM
    The answer is simple

    Cut the core off from peripheral capital……….

    The French & Germans can then go and love bomb each other as they embrace , they are so alike - they will love each other to bits I reckon -

    especially when no more nice fresh PIG capital is on the table.
    There will be some interesting discussions around the fireside I imagine.

    http://www.railwaygazette.com/news/passenger/single-view/view/mulhouse-muellheim-reopens-to-passengers.html

    http://www.rff.fr/IMG/pdf/4p-RFF-BD-2.pdf

  133. paul quigley Says:

    @ DOCM

    Fron the FT article:

    ‘Germany rebuilt its economy from the rubble of the second world war by setting rules on how market forces should work – and sticking to them. Short-term intervention and discretionary government action were rejected. What followed was a Wirtschaftswunder, an “economic miracle” that recreated Europe’s industrial powerhouse.

    With respect, that opening para is barefaced historical revisionism. My understanding is that the west German economy was put back on its feet by the US, so as to act as a bulwark against communism. Unilke post WW1, there was massive debt forgiveness.

    The constitutional framework was also imposed. Government intervention is government intervention, even if its of a different variety, or if it caried out by a foreign governement. None of that is to denigrate the effort and achievements of the Germans themselves, but merely to prick the currently fashionable ‘free markets’ ballon.

  134. The Dork of Cork. Says:

    @Paul
    Volks factory : “within 4 years of the end of the war Volks was producing 45 % of total industrial output……..

    Exports were essential.”

    Cars and the Euro project go hand in hand.
    Cars no longer work (they extract too much capital) = Euro project no longer works………

    http://www.youtube.com/watch?v=8GOdLncnMPk

    The EU is a Nazi kind of thing

    Just saying like

  135. Michael Hennigan - Finfacts Says:

    No new dawn to declare but just in case Kevin O’Rourke misses this glimmer of positive news:

    UK employment rose to its highest level since records began in 1971 in the three months to October. The quarterly fall was the biggest dip in unemployment since 2001.

  136. Fiatluxjnr Says:

    @Kevin O’Rourke

    Here is a forecast by someone with his finger on the pulse…
    “Unilever (UNA) Chief Executive Officer Paul Polman said Europe is facing 10 years of economic stagnation while the U.S. grapples with the rise of an “emerging poor” class dependent on government benefits.

    “We are in for at least 10 years of slow economic growth in Europe, and I don’t see that changing,” Polman said in an interview Tuesday at Bloomberg’s New York office. “If you run a business like mine and don’t assume that, you are fooling yourself. I hope for the benefit of Europe I am proven wrong, but even then we are in a better position by taking that as our starting point. The key thing is to see reality in the eye.”

  137. grumpy Says:

    Careful now Michael, next you’ll be trying to persuade Kevin that even the mild 15% or so devaluation (ignoring peaks and troughs) of sterling has been useful to the UK economy!

  138. Brian Woods Snr Says:

    “is that all must compete, Germany included, if it is not to be overtaken in its turn, China being the most likely candidate to do so.”

    No! China can only be overtaken by itself - as it slips backwards. Lacks the necessary (cheap and cheerful) energy! Lots of coal, but that is a tad more tricky than oil. OK, so they ramp up and produce … what? And sell … to whom?

    Overtaking Germany (economically) is not a viable career move for any existing industrialized state. Since by ‘competition’ is meant ‘productivity’ - yes? Workforces (in so far as is possible) will be robotized until the smart asses realize that robots do not riot and cause anarchy. The unemployed (un-housed and hungry) do!

  139. Fiatluxjnr Says:

    Positive sign?
    http://www.irishtimes.com/newspaper/breaking/2012/1212/breaking45.html
    We thought we’d never see this species again…only for the brave.

  140. grumpy Says:

    @fiat

    Not necessarily that brave. Big yield for first-movers and the risk could be hedged indirectly because of its correlation to other EZ markets.

    These are subbies though, so its a bit of a marketing coupe.

  141. DOCM Says:

    @ All

    Where is Jesper when we need him!

    http://www.gp.se/nyheter/ledare/1.1161658-bankunionen-bra-for-sverige

  142. DOCM Says:

    @ All

    Hallelujah!

    Schaeuble - it seems - heads his nemesis off at the pass.

    http://www.ft.com/intl/cms/s/0/6563e42e-447e-11e2-8fd7-00144feabdc0.html#axzz2Em62xS3Y

  143. john gallaher Says:

    they already have a monitoring trustee’ at IBRC implications for other irish banks…
    “According to the Süddeutsche, German and French officials agreed that the ECB should supervise all banks deemed system-relevant, in addition to those being propped up with public money”
    http://www.spiegel.de/international/europe/french-german-agreement-on-bank-oversight-boosts-hopes-for-eu-deal-a-872428.html

  144. Jesper Says:

    The gist of the article that DOCM linked to:

    EBA? No need to monitor Swedish banks as closely as we currently do as the cost of a failure to regulate will no longer be paid for solely by us, the cost will be spread out over all of Europe….
    It may or may not be what is intended but it is still the likeliest outcome.

    A long time ago, during my time in the military service, I was taught that spreading responsibility meant that no-one ends up being responsible. So, even in a two man group, one man was always told that if things go wrong then YOU will suffer the consequences. The one who happened to be the ‘you’ then knew he’d be in trouble if there were to be problems, so he made sure he did everything he could to stop things from going wrong.
    An Irish example : It is said that everyone in Ireland partied and as a result not a single person in Ireland is responsible for anything that happened in the banking crisis. Whatever is happening with the investigation of possible wrongdoings in what used to be INBS and Anglo?

    Laxer regulation of the banking industry does seem to be very beneficial for some. But for the rest of us who are not making out as bandits during good times and sticking others with the bill afterwards it is something else entirely.

    EBA is a bad idea. Problem in banking was excessive risk-taking and the EBA does not address that problem at all.

  145. john gallaher Says:

    linked it on other tread the new sheriff at conference yesterday..
    “Similarly, on the criminal front, despite the efforts of the Gardaí, DPP and ODCE, we are still some way from the start of criminal proceedings, never mind their successful conclusion, of the cases arising from the financial crisis.”

  146. john gallaher Says:

    papers available here
    http://www.centralbank.ie/Pages/home.aspx

  147. DOCM Says:

    @ All

    More dirty linen being washed in Deutsche Bank.

    http://www.sueddeutsche.de/wirtschaft/verdacht-auf-geldwaesche-bei-der-deutschen-bank-im-kreis-drehen-und-dabei-reich-werden-1.1549115

    The oldest trick in the book! A VAT carousel! Exports within the EU are “zero-rated” i.e. there is no genuine internal market when it comes value added taxes.

    The domestic Irish version can be heard at many petrol stations; “Would you like a receipt with that?”.

    Alway say yes!

  148. DOCM Says:

    @ Jesper

    Unfortunately, your finance minister appears to agree with you.

    http://sverigesradio.se/sida/gruppsida.aspx?programid=3304&grupp=6240&artikel=5378859

  149. Jesper Says:

    The only ones surprised are the ones who are not listening:

    Sweden still against EU banking union
    http://sverigesradio.se/sida/gruppsida.aspx?programid=2054&grupp=3575&artikel=5377412

  150. DOCM Says:

    @ All

    The spirit of compromise seems to be breaking out all over.

    http://www.ft.com/intl/cms/s/0/fd51e37a-4489-11e2-8fd7-00144feabdc0.html#axzz2Em62xS3Y

  151. DOCM Says:

    @ Jesper

    Riding on the UK’s coattails has its limitations!

  152. David O'Donnell Says:

    Angela: A Portrait (worth reading …

    12/12/2012
    A Cold Heart for Europe
    Merkel’s Dispassionate Approach to the Euro Crisis
    By Konstantin von Hammerstein and René Pfister

    Chancellor Merkel has more power in Europe than any of her postwar predecessors. Yet there is little passion in her relationship with the EU, preferring instead a strategy of what can only be described as pedagogical imperialism. She sees the bloc primarily in terms of euros and cents — and worries that it is rapidly losing relevance.

    http://www.spiegel.de/international/europe/analysis-of-chancellor-merkel-euro-crisis-approach-a-872195.html

    Now where did I put Wittgenstein’s Poker? (the one he brandished at Popper!

  153. The Dork of Cork. Says:

    Me think all hell is going to break loose.

    Silver trade balance UK (£ millions)

    Y2002 : -165
    Y2003 : -3
    Y2004 : -80
    Y2005 : +87
    Y2006 :-577
    Y2007 :+232
    Y2008 :+1,169
    Y2009 : -1,560
    Y2010 : -108
    Y2011 : -451

    Ok now look at Y2012 so far – a different beast, so far at least.
    Q1 : -473
    Q2 :-1,372
    Q3 : – 1,256
    October : -440

    http://www.ons.gov.uk/ons/rel/uktrade/monthly-review-of-external-trade-statistics/october-2012/index.html

  154. Fiatluxjnr Says:

    @DOD
    Forget Angela …here’s where the real power resides. It’s kind of frightening.
    Article entitled “inside the risky bets of central bankers” in today’s WSJ. (inside pay wall)
    This link seems to have all of the article…
    http://fbkfinanzwirtschaft.wordpress.com/2012/12/12/inside-the-risky-bets-of-central-banks/

  155. The Dork of Cork. Says:

    @Fiat]
    Maybe some bankers think they produce money but I doubt it……….

    They produce credit

    There is a mountain of credit chasing yield where there is none……….

    Their free trade schemes used to bypass labour on a local & global scale has really produced a mountain of externalties.

    Its about to blow me thinks

  156. Fiatluxjnr Says:

    @Dork
    I hope you are wrong dork…it’s about to blow….especially after our esteemed leader Eamon declares victory…from IT
    “Tánaiste Eamon Gilmore said “we know that the sharp end of this crisis is being felt every day in households in every town, village and suburb. We will not exaggerate our achievements but the end is in sight. When we win this fight, say goodbye to the troika, when our economy is sound and healthy and we have created more jobs and more opportunities, it will be the men and women of this Government alone who have said that we stood shoulder to shoulder with the Irish people.”

    HSJ.

  157. The Dork of Cork. Says:

    @FIat
    Who knows with silver ! - its only a firework
    Its such a small market (I think)

    They might keep it together for another Christmas….

    The French are getting a bit desperate with their celebrations though…….

    http://www.youtube.com/watch?v=Exvq97gYQD4

    Still they now have more useful stuff (for the other side of this monetary event) then us poor Irish.
    We made the ultimate sacrifice to keep Europe from imploding……….

    Hold on , I think I am going to cry………

    Eamon Eamon EAMON

  158. John Gallaher Says:

    @The Dork here ya go a ,central bank producing “money” and a explanation for the fluctuations in British silver balances..maybe you can explain how a 15 euro coin costs you 46 euros to buy,nice that it is and all that.
    http://www.centralbank.ie/press-area/press-releases/Pages/CentralBankofIrelandissues15silverproofcollectorcoin.aspx

  159. Shay Begorrah Says:

    @Gavin Kostick on Olli Rehn’s latest FT emission.

    I think there is an element of dog whistling: ‘look, I’ve mentioned, Keynes’, but it is coming out of each side of his mouth

    The speech writer was quoting scripture to suit the devil’s needs and Yanis Varofakis noticed it too.

    It is doubtful that Rehn is a big Keynes reader and that misleading and dishonest quote is a warning to progressives that the reactionaries are still ascendant and still strongly determined. Distasteful and boorish but also a helpful reminder of who is in charge.

    @DOCM

    Rehn has to move cautiously because of the ingrained unwillingness in Germany to see anything wrong with its approach to economic policy.

    Olli Rehn meant what he said and what he said could have come out of the mouth of Merkel, Schäuble or any other Christian Democrat blowhard in the Eurozone’s creditor bloc (or any banker).

    Of course “Pacta Sunt Servanda” Rehn parroted the German line verbatim because he believes it and intends to enforce it, the Commissioner for Economic and Monetary Affairs and the Euro is every bit as radically right wing (and wrong) as Merkel.

    @David O’Donnell

    Angela: A Portrait (worth reading …

    That article on Merkel is indeed worth reading.

    I like to refer to her as our Teutonic Thatcher and I think that because of the affection most Irish feel for the Germans we have tended to misjudge just how radical (and dangerous) the politics of their premier are for Ireland.

    And as for her approach being “pedagogical imperialism” I am not sure the pedagogical is required…..

  160. The Dork of Cork. Says:

    @John
    I was thinking of Treasury stuff , or pure fiat as I like to call it.

    The CB like all banks does its double entry credit thingy turning it into debt or something.

    Commercial banks do their credit money poison thingy & afterwards try to hoover up all that nice fiscal debt until you run out of tokens
    Pumping & dumping you into infinity.

    And then you can have commodity money……which is not good for paying the tax thingy but is nice & shiny.

    Think of pure fiat as a King who waps his wad on the counter…….and then incrediabily wants it back again.

    http://www.youtube.com/watch?v=ON-7v4qnHP8

  161. John Gallaher Says:

    @The Dork I “get” your comments and thoroughly enjoy the links,catching up on Savage Eye especially.
    Thought you may enjoy a “central bank” minting silver coins with a face value of 15 but charging 46 for them.
    Was it for this…

  162. The Dork of Cork. Says:

    @John
    Well the face value of silver maple leafs is low (5 canadian to a troy ounce I think)

    I am too tired now to do the numbers but sterling silver at how many grams ?

    I bet its a handy profit.

    But it looks a nice coin - those Numismatics serve a different function anyway……

    I am gone off the shiny stuff since 2011 , I hold some and forget about it.

    It looks more and more like a deflation of titanic size……which means silver will most likely get hammered.

    Who knows though ?

  163. Fulcrum Says:

    Olli Rehn:
    “It is true that the correction of current account imbalances has so far come predominantly in deficit countries, but this is no surprise given the scale of the challenges they face. As John Maynard Keynes noted before the Bretton Woods talks, such adjustment is “compulsory for the debtor and voluntary for the creditor”.

    Oh my god.

    You may bet on illiteracy. I do on intentional misquotation.

    Sheesh. We are governed by either total idiots or cynical career bureaucrats who basically don’t give a toss.

  164. Michael Hennigan - Finfacts Says:

    Stephen Kinsella presents a schizophrenic take on the economy in an article in ‘Foreign Affairs,’ for a mainly American audience

    How Ireland Got Its Groove Back

    First a reprise of the official line, reminiscent of bubbletime propaganda for international audiences:

    The country’s prime minister, Enda Kenny, recently graced the cover of Time, accompanied by the headline “The Celtic Comeback,” and the Financial Times called Ireland’s finance minister one of the best in Europe. The nation’s largest banks can borrow again on the open market.

    The interest rates on Ireland’s sovereign bonds — seen as key indicators of the probability of default — are rapidly falling. Rating agencies such as Moody’s and Fitch have upgraded their outlooks on the country and some of its banks.

    The turnaround seemed nearly complete last summer, when the government held two successful sovereign bond auctions and planned many more for the next year. By late 2013 or early 2014, Ireland should no longer need the assistance it has received from the EU and the IMF. The economy is still growing slowly in terms of GDP, but it is far from collapsing. Exports have driven most of this growth, thanks to unit labor costs that have fallen faster than those of any other country in Europe. Irish banks are deleveraging — dumping bad loans, basically — in order to shrink their balance sheets down to a more manageable size. Ireland is still a haven for multinational corporations searching for low taxes and a flexible, young, skilled labor force.

    The line on exports and unit labour costs is simply nonsense. The fantasy that Dell can fire 2,000 workers in Limerick and remain Ireland’s biggest goods exporter on paper, speaks for itself; Google’s Irish payroll in 2011 was €218m and the almost 20% jump in sales revenues to €12.4bn results from ‘falling’ unit labour costs? The real facts are that what is seen here is reverse causality.

    Kinsella adds that domestic demand has flatlined:

    All this suggests that the prospects for a robust recovery seem slim. Even if demand somehow bounced back tomorrow, Ireland would still have enormous amounts of debt to repay, which will hamper growth for the foreseeable future. Ireland, in other words, may have reached only the halfway marker in its lost decade.

    http://www.foreignaffairs.com/articles/138490/stephen-kinsella/how-ireland-got-its-groove-back

  165. Michael Hennigan - Finfacts Says:

    @ grumpy

    Conventional wisdom soundbites should always be viewed with caution!
    The trade figures to not support the devaluationists. Of course the impact of the collapse of the financial soufflé on the trade figures can overstate the actual effect on the economy.

    Looking behind the jobs data, reveals an interesting economic trend that is also evident in the US:

    UK underemployment rises by 1m; Most new jobs growth at top and bottom of economic pyramid

    http://www.finfacts.ie/irishfinancenews/article_1025332.shtml

  166. David O'Donnell Says:

    @Shay

    Imperialist is sufficient.

  167. David O'Donnell Says:

    @Michael Hennigan

    ‘The line on exports and unit labour costs is simply nonsense

    +1 Total nonsense. I had/may still have hopes for Stephen … slipping …

  168. Monti, agenda o libro dei morti? - Michele Carugi - Il Fatto Quotidiano Says:

    [...] che ci mancheranno all’emergere chiaro di segni di ripresa”. Come causticamente scrive Kevin OʼRourke, professore di storia dellʼeconomia all’Università di Oxford “per gli eurofili i tempi buoni sono sempre dietro lʼangolo”. Per essere un “tecnico”, [...]

  169. Tullmcadoo Says:

    Eureka,
    Fine , default on the PN. There is a good chance that nothing really bad will happen. There is probably a similar chance that something really bad will happen. The ATM might not spew out euros, tax rates would go to 70% or something and the carers would not get paid.

    Do you feel lucky?
    Robt,
    PN were a stroke of genius. If we had to raise really money we would be in real trouble. There is a slim chance we negotiate a deal on these.

  170. Fiatluxjnr Says:

    @Tull
    Methinks the chances just got better if equality of treatment of bailout participants is implemented. It appears the Greeks are to be given even more money by way of debt forgiveness.
    http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_13/12/2012_474302

  171. EU Citizens Says:

    Recently, Paul Krugman said that “The Euro is a shaky construction” – and no one can deny this statement. The Euro has been designed – by Delors et al – as a “single currency” instead of a (much more realistic) “common currency”, and now it is very clear that this was a very bad choice. It is quite obvious that the “bad romance” between France and Germany must come to an end and be replaced by a solid, long lasting friendship:

    http://www.marianne.net/Un-appel-franco-allemand-d-economistes-pour-une-...

    Twenty years after the Maastricht Treaty, a “Maastricht 2.0″ Treaty is required, as soon as possible, so as to avoid a sad situation, in the near future, where the foreseen “European common home” becomes replaced by a true “European house of correction”. We need to build a true European Union through a cooperative European disunion:

    http://building-a-true-european-union.blogspot.com

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