God Save the British Economy Post author By Philip Lane Post date December 20, 2012 here. Categories In Uncategorized 112 Comments on God Save the British Economy ← Ireland: Eighth Review Under the Extended Arrangement; Staff Report; Staff Supplements; and Press Release on the Executive Board discussion → Central Bank: Explaining Irish Inflation during the Financial Crisis 112 replies on “God Save the British Economy” Nothing will save the British economy. On second thoughts perhaps another Labour Gov’t might help. Here is a link to a transcript of a speech given by Jamie Galbraith at the IG-Metall Conferenz in Berlin Dec 6th. I found it well worth reading. economistsview.typepad.com/economistsview/2012/12/galbraith-change-of-direction.html Adam Davidson appears to have left out some inconvenient facts. Comparing the UK and France, the UK had a jobless rate of 7.8% in October; France’s was 10.7%. In the 3 months to Oct, UK employment rose to its highest level since records began in 1971. The number of people out of work fell by 82,000 between August and October, to 2.51 million, official figures have shown. It was the biggest quarterly fall in unemployment since 2001. Private sector job creation continued to outstrip public sector losses. Employment in the public sector fell for the 12th consecutive quarter, by 24,000 to 5.75m, the lowest since 2002. The private sector was up 65,000 at 23.9m, the highest since records began in 1999. The Office for Budget Responsibility expects the unemployment rate to rise slightly over the next two years, peaking at 8.3% at the end of 2013. Net jobs added since early 2010 are almost 800,000 according to the FT. Public spending in 2011-12 was £694.89bn – compared to £689.63bn in 2010-11 – – in real terms down 1.58%, or £10.8bn. The employment rate in the US in Sept was 67%; in Oct, it was 70% in UK; 64% in France; 59% in Ireland; 57% in Italy and 76% in Sweden. Eurozone average 64%. In Q3 2012 the employment level yoy rose 1.8% in the UK and fell 0.1% in France. Unemployment in France rose 1% and in the UK fell 0.5% Aug yoy. Just presenting facts; rationals and ranters can decide! @ MH I read the piece yesterday and what struck me also was the lack of very many assessable facts (particularly in relation to immigration, notably Polish, and its impact on UK employment cf. recent Sunday Times magazine article which, unfortunately, cannot be linked to). However, the article is a useful mirror of the fundamental dispute dividing the IMF and the US from Germany with, paradoxically, the UK under Cameron and Osborne – in the tradition of Thatcher and her admiration for Hayek – being largely on the wrong side of it. This is impacting mightily IMHO on the Irish case for debt relief as nothing much seems likely to happen until the stand-off between Berlin and Madrid is decided i.e. the chicken and egg argument of which comes first, debt relief or economic reform with Merkel clearly of the opinion that they must go hand in hand. Ireland was first into the melee and how to extract the country from it remains a bit of a conundrum. “But demonstrating that austerity has failed does not prove that stimulus fixes everything” Print money and give it to people to pay off their debts. It will work. God told me. @ DOCM: “… which comes first, debt relief or economic reform …” Which comes first? Well, how about the recognition (in principle) that western economies actually have a deeply dysfunctional political/economic paradigm. All the political parties in this country have to engage in a meaningful intellectual manner with a most unpleasant reality. They need to accept, and to agree, that they can no longer continue to promise more-and-more moolah to their voters other than by way of credit creation, since ‘wealth’ creation by way of transformative production (out of which folk get real, not faux incomes) has slipped past its limits; the surpluses are either too small or are gone. This is the ‘appalling vista’ – a stalled economic paradigm which cannot be re-started absent a new stream of credit creation. This is known, but cannot be acknowledged. If it were acknowledged the resulting political trauma would render serving politicians un-electable. Previous episodes of ‘debt overburden landslips’ that did occur were contained either locally or regionally (well not entirely) but did resolve themselves (well not entirely either) because credit contaigon was quarantined to some extent. Now it is a global, electronic phenomenon and cannot be politically restrained (though it could have been). Our politicians are ‘driving’ the Irish austerity bus whilst staring fixedly in the rere-view mirror. It would be funny if you were watching an episode of the Keystone Kops. We are not. So it is vulnerable Irish citizens who will be affected when that bus no longer has a paved tarmac surface under its wheels. Not long now. Term paper for all Irish political party politicians. Submission date … yesterday!!! Q: “Future debt can be used to pay current debt”: Discuss. @ Brian Woods I am simply posing the question and pointing out the answer the most influential player is giving. On the broader issue that you raise, it appears to boil down to getting the voting public to accept a lower standard of living. In my opinion, they are willing to do so but they wish to see the reduction equitably shared and the rentseekers that have prospered during the boom brought into line. Apart from what I suspect will increasingly become known as the “Spanish problem” in the New Year, there is also the paradox that the Irish economy may do better than the IMF expects (there is an “if” in its assessment) impacting on the case for early debt relief. Given the vehemence of the IMF’s language, one cannot avoid the impression that the Irish case is caught up in a much wider international dispute, the majority view in the IMF now being, without any doubt, that of the Canadian finance minister when he said that the Europeans were wealthy enough to sort out their own problems. That politicians put saving their political skins first is, undoubtedly, also a major factor. The Physical economy of the UK – for most purposes no longer exists. It blew the North Sea riches on its favourite Sons in the most dramatic of fashions. Its rich benefits from a extreme real goods trade deficit with Germany , China and now increasingly even Poland. However like the 30s (after the RN strike) it has fought a good monetary game protecting itself from the worst of the shocks from the eurozone. Whats striking is how much it continues to depend on its 19th century fixed capital – its monetary policy the real driver of the rail Renaissance and not the claimed benefits of privatization. However it is reaching its limits because of extreme lack of fiscal investment.. https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/34894/top-ten-overcrowded-trains-2011.pdf Its policy is the complete opposite of the French who are engaged in the biggest post war rail investment ever seen but because of monetary constraints cannot use their existing capacity. Behind it all is the North Sea oil shock which is slowly destroying the car centric Euro Soviet project bit by bit. The history of the UK economy over the last 30 years http://www.ft.com/intl/cms/s/2/b8d1b686-e51b-11e0-9aa8-00144feabdc0.html#axzz2FPW3flel @ Brian Woods The debate on growth absent the credit boom, ageing, and the rise of emerging economies, is being ducked but it will happen…sometime. In 2007 when Bank of Ireland Private Banking published its annual ‘Wealth of the Nation’ report which showed that Ireland was second only to Japan in the league of the wealthiest nations on earth, both countries appearred to have been in the wrong place. They are both in the wrong place 5 years later. http://www.guardian.co.uk/commentisfree/2012/dec/19/2012-year-of-the-food-bank Then there is the teenage girl who nursed her terminally ill father and was overwhelmed by funeral expenses. Her family could no longer afford to eat until they turned to a food bank. Is she a carer or a shirker? A young woman at college who worked two jobs in the evenings was made redundant from both of them. At 21 she did not qualify for benefits and had to choose between heating and eating until she could afford neither and ended up at a food bank. A student or a shirker? And so it goes on: women fleeing domestic abuse, children kept off school because everyone stays in bed all day to keep warm, the police taking young shoplifters to food banks as, indeed, the shoplifting of food is on the rise. We heard this week that when teachers in London were surveyed by the London Assembly, they said that on average five children in their class have had no food and cannot concentrate. Most of the teachers said that they had forked out from their own pockets to buy food for these kids. Meanwhile, Iain Duncan Smith has been telling his activists that he is seeing whether the law can be changed to specify how claimants spend their benefit money. Are we are entering the era of food stamps? Actually, it is clear that much of this food poverty is caused by extremely low wages. When the discretionary Social Fund is cut in 2013 the situation will worsen. A must see series @MH Ireland and Japan have different demographic profiles. Ageing wouldn’t be such a challenge for Ireland if jobs for young people were more important than things such as PS increments and tax breaks for pensions. The Polish / UK real goods trade relationship during the euro years says it all…….. Poland of all places is going into coal deficit !!!!! Polish coal was forever was it not. IEAs “energy balances of the OECD nations Y2011 Self suff. coal Poland Y2000 : 1.26 Y2010e : 0.997 Germany is further down this entropy road. Self suff. coal Y1990 : 0.9472 Y2010e : 0.5874 DB Schenker Rail launches second weekly rail freight service between UK and Poland Tuesday 09 October 2012 “DB Schenker Rail has strengthened trading links between the UK and Poland with the introduction of a second weekly rail freight service between the two countries http://www.youtube.com/watch?v=OooIxFg9xqQ Poland is now turning its coal into london consumer goods. Uk trade in Goods by area (Balance of payments, £ millions) Poland Y2002 : +50 Y2003 : – 84 Y2004 : -412 Y2005 : -664 Y2006 : -879 Y2007 : -1330 Y2008 : – 1307 Y2009 : -1870 Y2010 : -2309 Y2011 : -2768 Despite the hyperinflated claims on the tiny physical economies it still comes down to real goods in the end…….. The strange dynamics of a sov UK in a non Sov Euro Soviet soup is rarely discussed (except Dorks of course) In many ways the Eurozone is the modern UKs India (although they remain in surplus (oil & Gas) with respect to Ireland. Both the UK & France share a balanced trade relationship while remaining in goods deficit with the rest of those filthy animals. Real goods trade will tell you all that needs to be known about where the true power resides. A great article and a fantastic piece of journalism. Its a pity that none of our esteemed national papers sees fits to produce detailed, balanced and informative peices of this quality. @MH How are those facts you cite “inconvenient”? The phenomenon that the UK economy has not shed as many jobs as one would normally expect in such a prolonged recession/stagnation is a puzzle that has been well-known and debated over the last year or more. Just do a search on FTAlphaville on the topic to see what I mean. The fact that the UK has such a high employment rate (as you point out) is testament to that. Are you claiming that your eclectic mix of data refutes this? Just because something is true or factual doesn’t make it relevant. UK trade balance with Germany (£million) Y2011 Q2 : – 4,350 Y2011 Q3 : – 4,351 Y2011 Q4 : – 4,580 Y2012 Q1 : – 4,712 Y2012 Q2 : – 5,045 Y2012 Q3 : – 5,846 The final chapter ? http://www.youtube.com/watch?v=3D41fFshiLM The first crash of 1973 ? Banks create credit This burns through the capital base for a negative return. Inflation “comes from nowhere” The CB increases interest rates ” to combat inflation” which crush the remaining rump productive economy. Both the credit inflation (creating of deposits) And then the higher interest rates concentrate the claims on a non existent phyiscal economy. Germany especially since the Big bang supplied Londons credit note production There will always be demand for cars because the credit note production tells us so….. Why need to build a reactor when we can earn money to pay for oil by selling cars………………… Germany is very much a product of Londons games. @MH “Net jobs added since early 2010 are almost 800,000 according to the FT” How many of those are minimum wage ? the US has been creating new jobs at the rate of around 160,000 per month for a while but many of them are badly paid. The new jobs metric doesn’t say anything about the quality of the jobs. Mr H, Still waiting for the facts proving your contention on the GDP thread that the Irish domestic economy is closer to Albania than a developed economy. @ seafóid 1m British workers are underemployed. The jobs growth is concentrated towards the top of the pyramid and the bottom. It is an employers’ market. http://www.finfacts.ie/irishfinancenews/article_1025332.shtml @ Tullmcadoo You remind me of the individual in a pub debate who has little of substance to say but you spend your time trying to trip-up one of the protagonists with Twitter size comments. A guy called Karl Popper used to say that you can’t prove a theory. What can be done is disprove it. So rather than I giving you full chapter and verse, have a go yourself. Alternatively, there is a topical issue here: Surprise! The world did not end on December 21, 2012; Mayans were not the stupid ones http://www.finfacts.ie/irishfinancenews/article_1025363.shtml MH, I did not make that statement. Do I detect you are walking away as it is not supported by any evidence. I am willing to accept it as hyperbole on your part. @ seafóid As they say in the legal profession, “hard cases make bad law”. However, there can be no doubt about the growing gap between the haves and the have-nots in developed economies, with poverty on the rise. Germany is no exception and certainly not the model to be emulated, as Merkel would have the world believe. http://www.spiegel.de/wirtschaft/soziales/armutsgefaehrdung-in-berlin-und-dem-ruhrgebiet-steigt-dramatisch-a-874099.html (The Google Translate version is good!). @ All Let’s hear it for Jeffrey Sachs http://www.ft.com/intl/cms/s/0/369d77da-483f-11e2-a1c0-00144feab49a.html#axzz2FaRLcsyC Every EU country needs a Troika, but preferably one led by the IMF. As Brendan Keenan commented at midday (Newstalk), “one wonders if without it anything would be decided”. The very informative UK energy trend publication just out (December) http://www.decc.gov.uk/assets/decc/11/stats/publications/energy-trends/7343-energy-trends-december-2012.pdf If you want to look at real physical economies ( or whats remaining at least ) Look at their energy balance & production… “Total final energy consumption fell by 1.7 per cent between the third quarter of 2011 and the third quarter of 2012. Domestic sector energy consumption rose by 4.6 per cent, reflecting the colder weather compared to a year earlier. Industrial energy consumption fell by 2.3 per cent. Transport sector energy consumption fell by 1.6 per cent. Service sector energy consumption fell by 0.3 per cent.” @MH Any comparison between the British and the French unemployment rate has to take into account the difference between British and French unemployment benefits .The British system is a strong incentive to accept any job at any rate (or the French system a strong disincentive to do so ,depending upon your worldview) . History will not look kindly on Osborne http://www.ft.com/cms/s/0/2e74f94e-565e-11e1-b548-00144feabdc0.html http://www.guardian.co.uk/society/2012/feb/05/benefit-cuts-fuelling-abuse-disabled-people http://www.guardian.co.uk/business/2012/jul/25/britain-double-dip-recession-figures-catastrophic http://www.guardian.co.uk/society/2012/jun/09/renting-price-rise-young-families http://www.guardian.co.uk/politics/2012/aug/27/coalition-unlikely-hit-economic-goals http://www.guardian.co.uk/business/2012/sep/21/uk-government-borrowing-record-august-high http://www.voxeu.org/article/fact-checking-financial-recessions http://www.ft.com/cms/s/0/311a1a6c-179c-11e2-8cbe-00144feabdc0.html#ixzz2AIp4klNR http://www.ft.com/cms/s/0/5c23b486-3950-11e2-afa8-00144feabdc0.html#ixzz2DboCz15M http://www.guardian.co.uk/commentisfree/2012/aug/23/food-insecurity-workforce-cowed-poverty Smoke and mirrors with some numbers http://www.guardian.co.uk/politics/reality-check/2012/oct/10/conservative-conference-2012-davidcameron Section 4 Gas Overall UK gas demand fell by 18.0 per cent to around 133 TWh, the lowest third quarter demand since the third quarter of 1995, largely driven by a fall in gas demand for electricity generation. (Chart 4.6) Total indigenous UK production of natural gas in Q3 2012 was 11.3 per cent lower than in the same quarter a year earlier. At 92 TWh, this was the lowest third quarter production since the third quarter of 1992. Part of the reason for this was the significant amount of planned maintenance work that took place at the St Fergus associated gas terminal in September this year. In general terms UKCS production is continuing to decline year on year, and over the last ten years UKCS production has decreased by around 8 per cent on average per annum. Section 5 electricity In 2012 Q3, total electricity generated fell 2.8 per cent from 83.3 TWh in 2011 Q3 to 81.0 TWh, and the lowest level since prior to 1998 Q1. In 2012 Q3, coal fired generation rose by 49.9 per cent from 19.1 TWh to 28.7 TWh, its highest third quarter level for at least 14 years, due to low gas generation. In 2012 Q3, gas fired generation fell 40.9 per cent from 38.6 TWh to 22.8 TWh due to high gas prices, with several stations being run at very minimal (or zero) levels as a result.” Dork – please remember our wonderful ESB has a brand spanking new gas plant in the UK One problem ………No gas Coal (imports) is doing the heavy lifting as the UK gave up its Nuclear build post big bang. 2. Coal Total demand for coal in the third quarter of 2012, at 13.4 million tonnes, was 35.6 per cent higher than in the third quarter of 2011. Consumption by electricity generators was up by 49.6 per cent to 11.2 million tonnes, reflecting the switch from gas to coal for electricity generation. Electricity generators accounted for 83.3 per cent of total coal use in the third quarter of 2012; compared with 75.5 per cent a year earlier. Sales to industrial users increased by 4.2 per cent in quarter 3 2012 while sales to final consumers (as measured by disposals to final consumers) were down by 4.5 per cent. Coal consumption by generators over the three quarters of 2012 is already at 93 per cent of the level seen in 2011.Solid Fuels and Derived Gases Coal consumption by generators over the three quarters of 2012 is already at 93 per cent of the level seen in 2011″ “with several gas stations being run at very minimal (or zero) levels as a result.” http://www.decc.gov.uk/en/content/cms/news/esb/esb.aspx And who was running this Irish banking show ? RBS of course The spawn of Satan himself. “with several gas stations being run at very minimal (or zero) levels as a result.” http://www.decc.gov.uk/en/content/cms/news/esb/esb.aspx And who was running this Irish banking show ? RBS of course The spawn of Satan himself. “with several gas stations being run at very minimal (or zero) levels as a result.” http://www.decc.gov.uk/en/content/cms/news/esb/esb.aspx And who was running this Irish banking show ? RBS of course The spawn of Satan himself. RBS is a car crash. Very hard to see it returning to market ownership before Liverpool win the Premiership. god may not save it…but perhaps Mark Carney will,his speech was overshadowed by Bernanke’s.A bit of coverage in states,speech is linked and some reporting on it. And yes he is indeed an x GS partner! “This week, Mark Carney, who in July will become governor of Britain’s central bank, the Bank of England, let it be known that he, too, was considering abandoning the 2 percent inflation target put in place by Margaret Thatcher, who was a devotee of Friedman and Hayek.” http://blogs.reuters.com/nicholas-wapshott/2012/12/17/central-bankers-have-abandoned-milton-friedman/ http://www.bankofcanada.ca/wp-content/uploads/2012/12/remarks-111212.pdf @ john gallagher Interesting links! However, one can hardly imagine two economies more different than those of the UK and Canada. It is hard to avoid the image of two “posh boys” in trouble each thinking up a clever wheeze, in the case of Osborne, the appointment of Carney and in the case of Cameron floating, for the first time, the possibility of the UK leaving the EU. In the first instance, rents may be expensive in London but an allowance of £5,000 per week is likely to strike the average punter as a tad excessive. In the case of the second, it may be tied in with the surprise discovery that Merkel is reasonably like-minded and may actually be willing to make some concessions to prevent the UK from shooting itself in the foot. He is likely to be disappointed. @DOCM My gut tells me the UK will seek to shift global trade patterns – using the resources hidden within the Gulf of Saint Lawrence rather then going the long way around to China & Japan which burns a huge amount of Bunker fuel. It may not have a Navy but it still thinks like a country with a Navy…… http://www.youtube.com/watch?v=U15Fwo9tbJ4 It has always been about oil Ever since their Navy moved from coal to oil. The 1914 run on the BoE was a result of the US becoming a China & saudi arabia in one monster package. Having said that we will get a Shit load of coal from America and not much else. @DOCM I did read your comment at “3” above thought you may enjoy it. What really happens to a extreme neo liberal economy………….which uses oil & gas to bypass local labour. Well its Industrial capacity is outsourced which has both advantages (cleaner air & water?) and disadvantages.(loss of useful skills & wage income) You see a dramatic reduction of coal consumption & or new nuclear build. Also nat gas replaces coal consumption………as the fixed capital costs appear cheap until the fuel price rises. http://www.decc.gov.uk/assets/decc/11/stats/publications/energy-consumption/2327-factsheet-industrial-energy-consumption.pdf See chart 3 “The fall in consumption seen since 1970 primarily affected coal consumption, which fell 91 per cent to 1,111 thousand tonnes of oil equivalent. Additionally, coke and breeze consumption fell 97 percent down to 306 thousand tonnes of oil equivalent and petroleum consumption reduced by 84 per cent to 4,526 thousand tonnes of oil equivalent – instigated by high oil prices in the 1970’s. However, over this period, natural gas consumption increased from 1,788 to 10,701 thousand tonnes of oil equivalent and electricity use increased from 6,275 to 8,804 thousand tonnes of oil equivalent. Electricity and gas together accounted for 72 per cent of industrial energy in 2011, compared with 16 per cent in 1970 and 56 per cent in 1990.” This process is now beginning to reverse see above energy trends (December 2012 publication) The labour surplus value is eaten mainly by the transport sector (via bank credit) (especially private cars ,airline travel & truck distribution) http://www.decc.gov.uk/assets/decc/11/stats/publications/energy-consumption/2325-factsheet-transport-energy-consumption.pdf “Over the period 1970 to 2011, energy consumption in the: road transport sector increased by 86 per cent, from 21,409 thousand tonnes of oil equivalent to 39,775 thousand tonnes oil equivalent; much of the increase happened before 1990, as the rise since then was just 2 per cent. air transport more than tripled from 3,869 thousand tonnes oil equivalent to 12,802 thousand tonnes oil equivalent; since 1990 the increase was 13 per cent. rail transport sector fell 37 per cent from 1,611 thousand tonnes of oil equivalent to 1,012 thousand tonnes of oil equivalent; consumption in 2011 was 10 per cent lower than in 1990. The drop in consumption between 2003 and 2004 partially represents a change in methodology, where non-traction electricity consumption had been excluded. water transport sector increased by 24 per cent from 1,287 thousand tonnes oil equivalent to 1,597 thousand tonnes oil equivalent; there was a 17 per cent rise since 1990. 7. Chart 2 shows road transport energy consumption by different types of road vehicle in” Dork – see chart 2 60% of all road transport energy (oil) is eaten by the cars. This is capital wasted. The UK has used its sov nature in the Euro soup to increase its purchase of cars ( now overtaking France to be the number 2 in Europe) But the writing is on the wall The Age of cars is over either in a euro style deflation or inflation. The oil is simply not there in quantity. The cars are preventing fixed capital creation (rail) as they are eating all the capital. This post 1970 world can be explained in this sketch @Dork of Cork Your long held viewpoint wrt the rising cost of resources/energy and its knock on effect on transportation and standards of living are supported in paragraph 5 of the Jamie Galbraith transcript linked in the first comment. It is ranked as the first of three deep sources of the present malaise. You are ahead of the curve. @Mick Well there is more then enough to go round but such as event would involve the massive production of Greenbacks which would destroy the banks leverage power over us. They prefer somehow to watch the world go down the sinkhole of deflation. Their money system promotes now pointless competition rather then intelligent use of the remaining resource base. I can’t see global trade patterns continuing though….. The cheap coal & labour of China was fine at $30 oil………..now not so much. Although the deflation thingy seemed to have worked this week The above is a long term view but……. You never know what the future holds……. Can’t quite figure this market out. Its either deflation $$$$ Or the shiny stuff Why has the Euro risen ? What value has Europe ? Its nothing but a car circle jerk ……with nothing in the tank. Something deeper is happening under the surface me thinks. @ Dork What value has Europe ? Depends who is buying and what they perceive to be valuable. History is a very complex game. http://en.wikipedia.org/wiki/Cultural_capital @Paul Sure , but a lot of nice cultural stuff burns down when you get such titanic deflations As Steve says Its the cars or people It looks like Europe has chosen the cars. Which means Doom for most people. @ Dork: “Can’t quite figure this market out. Its either deflation $$$$ Or the shiny stuff Why has the Euro risen ?” Very dysfunctional ‘markets’. Lots of chicanery. Near enough a reprise of December 2011. Hubris on steroids and cocaine! One did not have to be all that bright to figure out that a major disruption would occur when food and energy commodities started to be used as speculative derivatives: its down to the ‘easy money’, outright frauds and blatant thievery in some commodity casinos (they are no longer regulated markets). Political will to impose control has evaporated. The statuatory regulators are gutless: impose miniscule ‘fines’. Gloomy outlook. The longer the financial chicanery continues, the less likely there will be any real economic uptick. Sure, we will have the odd easy-money fuelled puff-ball rally (equities and property are prime targets) but with static and declining incomes no re-growth is possible. There has been a massive increase in the money supply and interest rates are at all-time lows. And what? Economies are stagnating (albeit at a glacial pace). It is a ‘supply’ problem? Or a ‘demand’ problem? Or both? Probably the latter is closer to the mark. Varies depending on your situation and location. The salient issue is the inability to service a massive (and growing) debt overburden let alone re-pay what was borrowed. The lenders are playing a very hazardous game of ‘hard-ball’. So far our government parties have been supportive of the lenders, but this could change very quickly. Probably not until late autumn 2013. @ Dork Or maybe doom for most European culture. Civilisation in reverse. They say that you can’t inherit tradition. You have to work to acquire it. A cultural artefact is nothing without the mind to appreciate it. Why has the Euro risen? To me it speaks volumes about the strength/weakness of the $US. The $CAD is overvalued 5% to 15% against the $US. No doubt there is a similar over valuation of the Euro against the $US. The Mexican standoff in the US Congress is not inspiring confidence in the $US. Confidence or lack of confidence in the competency of Gov’ts’ is a major factor in determining the value of their currencies externally. As the Dork said the shiny stuff is strong and healthy and may have a bright future. That in itself indicates we are losing ground in our ability to make decisions that will ensure a bright future for ourselves and our children. By we I mean the collectivity of all the voters and elected personages in the advanced democratic countries around the globe. @Paul I know I Know I Know But someone should warn our brothers in Morocco -continental European traditions can be very dangerous. http://www.emigrant.ie/index.php?option=com_content&task=view&id=36669&Itemid=296 It looks like they are getting the Irish inflation treatment………nice “growth” inflation first and then when they are captured you can kick the stool from under them. By simply saying surprise lads………….No tokens today….sorry about that chaps. You have lost your traditions so you can’t go back to the Camel Just drive that Merc – even if it kills you. http://www.eib.org/projects/press/2012/2012-196-2012-annee-record-pour-le-partenariat-bei-royaume-du-maroc-avec-pres-d1-milliard-deuros-de-financements-nouveaux.htm http://www.arabnews.com/745-m-tramway-drives-morocco-new-heights More shiny new stuff that they must pay rent on To Paris Metro You want to scream at them and say ITS A TRAP. A EURO TRAP. @Dork / @Mickey Hickey “You are ahead of the curve.” No doubt it is an extraction process. But Ireland has options. Kill all purchases of cars up to three years old. Just double the VRT. That would send the message, home and abroad, that we are serious about getting ‘our’ house in order. It would also increase employment in car maintenance. It would also send a message to the (core) extractors that life is not entirely a one street. Irish Examiner Joe Walsh responding to Stephen Donnelly, re BOI on Debt/PIA. “”Then as we say in West Cork, you can’t get blood out of a turnip”” Indeed you can’t, Mr Walsh, but it seems pretty easy to get very good dosh from a bankrupt State. Dick Spring seems to have loads of lucrative offers, but he’s happy to sacrifice himself for Ireland at €1000 a day. How noble of you, Dick! Shure, aren’t we blessed to have them both. @ BW “The longer the financial chicanery continues, the less likely there will be any real economic uptick.” http://www.ft.com/intl/cms/s/0/818517a6-3a4a-11e2-a32f-00144feabdc0.html ..market prices have lost any real meaning. Prices suggest the world is a safer place. But is it really? @Seafoid Good the know the QE money travelled as far as the hedgies and speculators, even if it stopped there. They need to make a living, you know. The guy who made €500 million on his Greek bond bet needed the leg up of cheap funds to make that bet. Real businesses and consumers just need to deleverage!. And to get re-aquainted with their station in life. @Joe It would be a form of capital control ……. Capital controls = no eurozone. Besides the car lobby both local dealers and the international car companies are powerful in Ireland. (they also produce credit) Also the state is non sov Which means it depends on tax for money tokens. Tax depends on waste or “growth” as they like to call it. There would be a sort of dead air in the economy unless it was filled with Punts Samuel Brittan on neoliberalism http://www.ft.com/intl/cms/s/0/49235d2c-486f-11e2-a6b3-00144feab49a.html#axzz2FPW3flel The West’s pre-2008 economic world will not return; No plain sailing for emerging economies http://www.finfacts-blog.com/2012/12/the-wests-pre-2008-economic-world-will.html @ Tullmcadoo See Q3 National Accounts thread “The West’s pre-2008 economic world will not return” That would make a good exam question but as a statement of fact it surely is far too early to say @ seafóid A very good article, especially the closing paragraphs. One wonders, however, if this dispute is any longer of real interest as the luminaries on both sides seem to be under the illusion that economies function as a kind of machine in a sterile environment and it is only a question of pulling the right levers. Of more interest, surely, would be to turn to the neglected study in the field of “rent-seeking” of which we see egregious examples in the press every day of the week cf. the undisturbed Wikipedia page. http://en.wikipedia.org/wiki/Rent-seeking “Rent-seeking can also be quite costly to economic growth. This is due to the fact that high rent-seeking activity makes more rent-seeking attractive because of the natural and growing returns that one sees as a result of rent-seeking. Thus, rent-seeking is valued over productivity. In this case there are very high levels of rent-seeking with very low levels of output. Another reason rent-seeking may grow at the cost of economic growth is that public rent-seeking by the state can so easily hurt innovation. Ultimately, public rent-seeking hurts the economy the most because innovation is what drives economic growth.” The link to Mancur Olson is also of great interest. http://en.wikipedia.org/wiki/Mancur_Olson Question! Is the Troika acting as a “stationary bandit”. “”Of more interest, surely, would be to turn to the neglected study in the field of “rent-seeking …” ” The economic discussion of rent-seeking and its propensity to not only increase but to impose ‘hidden costs’ was conveniently interred (academically) a long while back. It was a very inconvenient matter. Luckily most folk have no idea what it actually means – after all, rent is what you pay to – well, rent a place. Yes? Price gouging might be more easily understood. The real beauty of rent-seeking is that much of the ‘income’ may be tax deductible. Make the waged-labour suckers pick up the tab for that – as well as having to fork out more for the service. Now how did that happen? Who made it happen? A Terrible Beauty indeed! I think first we need to define what economic growth means. Protectionist need not be anti-technology , indeed it is quite the opposite – it is more anti present technology which have a tendency to over power domestic energy / commerce systems. 19th century American Industrial Growth was a result of Protectionist measures against European (mainly British) imports. Sure you have domestic industrial monopolies – but in a extreme Manchester economics set up as in the UK external monopolies gain the same power over time but yet they have no skin in the game of the domestic systems they overpower. on the other hand technology may not increase wealth. Its now without doubt the input cost of our present technology (cars & stuff) is far too high to sustain. Europe has always sought to force feed us these input hungry machines….going so far as giving us fiscal funds to carry these oil suckers all over this bog. The early 1990s Albert chamberlain moment of cheques in our time comes to mind. Now its the worst of all situations – they will neither give us the credit to replace these wasteful machines yet at the same time we are forced to use these infernal machines as the Euro is a product of their waste also. Its a sort of Catch 22 . Ever since Euro entry (1960s ,1970s car boom) we have sought to run away from the Dev thingy But self sufficiency could not hope to work in the $ /oil inflation years post Great war. Now that the $ /oil is in deflation those euro boom dreams have been exposed as a mere offshoot of $ /oil expansion. Micheal Hudson has some interesting musings on this problem http://michael-hudson.com/wp-content/uploads/2012/12/6911813.pdf With the stark differences between American & British free trade thought given the continental & island trading status of these 2 sometimes at war nations. See page 65 1. Distinction between private & national interest. page 67 2. Distinction between profitability & productivity Without doubt both the very extreme Island and the slightly less extreme Britian are suffering from a extreme form of free tradeitus If we look back at the 19th century corn was a energy crop. Now oil & Gas serve this purpose. But the benefits of free trade are slim today This Modern corn has overpowered the domestic producers to the point that they can no longer replace this external flow of physical capital. So the suppliers of this corn have gained a total monopoly on its use. Therefore they are even worse then a domestic monopoly as such a monopolist must at least seek to work within the confines of domestic political structures. The UK at least via its sov currency can rebalance it type & quantity of modern corn coming into its domestic systems. We can’t do this within the euro cage. We must destroy our people so that we can consume cars. Try to imagine Industrial Britain without cheap grain. Its workers could not work Indeed they were always very poorly fed despite cheap inputs. The Boer war & Scots expedition to the Antarctic finally shocked their establishment into doing something. As the quality of the soldiers were so piss poor. http://www.youtube.com/watch?v=IDQ1ljlnSjU Well the machines do all the work now and they require oil Oil is no longer cheap. What would have happened to 19th century England if the external grain was expensive ? All coal and no food……..hmmmmm interesting They would have probably needed to remove another couple of million Irish. http://www.guardian.co.uk/law/2012/dec/20/redundancy-rights-amnesty-bad-employers What upsets me most about this government’s rhetoric is that unemployment is a recognised tool in its economic strategy designed to keep wages down. Most individual ministers and coalition members must be aware of this, meaning they are knowingly castigating and attacking the unemployed while simultaneously deliberately maintaining a level of unemployment and low pay that suits their neoliberal policies. It is hypocrisy and cruelty of the worst kind. Even worse, it need not be happening. It is a result of ideology and callousness in the face of the real human suffering being caused. Government by the rich, for the rich, and vicious with it. What have we come to? Dhevdhas Nair Chagford, Devon @ Dork Economic growth essentially entails faster destruction of raw materials. The more we consume stuff and throw it away the more “growth” there is. Consumption used to be the name of a disease. It still is. The inputs are infinite of course. One headline mentions Britian and we’re up to 60 comments already. Sometimes I think older people in this country have a complex about the UK. Personally I struggle to maintain an interest. @omf Dear old blighty is one of ireland’s most important trading partners and has tillage rights to the fourth green field and is a testament to the failure of thatcherism. ” I think first we need to define what economic growth means.” That’s simple. It means (1) transforming inanimate matter into something that has ‘use value’ – using energy! (2) with a currency (silver) to facilitate the exchange of goods and services. That’s the easy bit. It gets a tad more tricky! @ OFM: Its known as ‘Penis Envy’. Very tiresome! @ Seafóid: Its their economic Model-in-Use. And this model sure as hell did not come out of the middle of a Christmas Cracker. I used to have this quaint notion that folk in ‘high places’ were sophisticated and learned. Silly me! They are are bunch of mis-educated, ideologically driven bigots – in the best possible taste, you understand! They have never progressed beyond Junior Infant math where 1 – 1 = 2 😎 Its utterly frightening that such poorly and badly mis-educated persons with such diminished levels of intellect are actually making significant decisions about the life and well-being of our fellow citizens because they have the power (unaccountable mostly) to do so. Our government is a elected dictatorship and most voters are oblivious of this. It would not matter too much if our legislators had some moral and ethical principles. They (apart from a few honourable exceptions) do not. Its that bad. Best wishes to all for the holiday. See you all again (God willing!). @Brian Woods & Seafoid You can have nominal growth in the money supply At least you can use the machines you have around you in that context. No need to have more and more machines sitting in driveways doing nothing. But the euro needs some more human sacrifice for its useless machines. Which means we must buy more machines for nominal credit growth so as to have “real energy growth” Its not working however as the current crop of machines is eating the capital base at a higher and higher money rate. Something is wrong with our money. We need national credit , not silver , not gold We need interest free government fiat. @ seafóid at 5.05 + 1 @ DOCM ‘Another reason rent-seeking may grow at the cost of economic growth is that public rent-seeking by the state can so easily hurt innovation. Ultimately, public rent-seeking hurts the economy the most because innovation is what drives economic growth.” Our state has been captured by a variety of individual and corporate vested interests. So the Irish problem is not so much ‘rent seeking by the state’ as ‘the misuse of the state for private rent seeking activity’. That is to say, conflicts of interest in the PS are so endemic here that they are almost de rigeur. Horse trading behind closed doors is our modus operandi, so people are trusted only when their price is known. Of course one can point to the PSTUs as a major embedded vested interest. All they are doing, IMHO, however, is trying to stop the property, business and professional interests from grabbing the whole pie. @ BW Penis envy my eye. Keeping up to speed with UK developments is mandatory, because if they sneeze, we still catch a cold. @ BW Many happy returns @ Gavin John McHale had a piece in the IT in 2009 where he said using unemployment to drive adjustments is wasteful but it seems less decent heads are driving things in the UK. It really is vicious. Edinburgh trams testing ……with moving trams !! Shock horror !! http://www.youtube.com/watch?v=GFeafS-7akE The disaster movie that is Edinburgh tram might have a happy ending in 2014! I remember myself stuck Edinburgh in I think 2007 and they were working on this. The UK does not do Dirigisme Imagine they fought the Great war and then some in this time period…… Another two years though…… Something is very wrong with the Anglo world Remember this is a 19th century technology…….. The French would have this up and running 2 years ago , for a third of the cost. One catch ….. they charge a high rent. The contrast “December 18 FRANCE: Dijon’s second tram route entered service on December 8, running for 11·5 km from Valmy in the northern suburbs to Chenôve Centre in the south and serving a total of 21 stops. Three stops in the city centre are shared with the 8·5 km line T1 from the SNCF station to Quetigny Centre which opened on September 1 (RG 10.12 p14). Operated by Keolis as part of the Divia network, T1 has carried an average of 36 000 passengers a day during its first two months in service, 6 000 more than the highest forecasts according to the Greater Dijon Authority. Two extra cars are to be deployed to reduce peak headways from 6 m to 5 min on T1, while T2 services now also serve the busiest section between Gare and République. ‘The tram has changed the city – for the better – it has transformed our lives’, said François Rebsamen, President of the Greater Dijon Authority, who saw the new network as a tool for the development of Dijon as capital of the Bourgogne region.” http://www.youtube.com/watch?v=OySn-J2F4AM Dork : this is not quite the paris metro line 1 (725,000 passengers a day) But by next year France will have cut its oil imports by not extracting too much wealth from the French The wealth was extracted from the PIigs Both the UK & France dominate the dubious but now much smaller PPP market http://www.eib.org/epec/resources/epec_market_update_h1_2012_en.pdf With Dijon also going 102 expensive Hybrid buses “The transaction features a concession period of 16.5 year and an availability-based payment mechanism” I hope it works out for them……………the banks are all over it like a rash. “As Figure 2 below shows, in the first half of 2012 France remained the largest PPP market in value terms (EUR 2.9 billion), followed by the UK (EUR 1.7 billion). France and the UK alone accounted for 76% of the overall European market volume. − With 16 deals closed in the first half of 2012 (compared to 20 in the first half of 2011), the UK remained the most active market in terms of number of transactions. France closed 11 transactions, while no other country closed more than four PPP deals. − Only seven countries closed at least one PPP transaction over the period.” @ seafoid Just from the last few threads: This is from the recent “The Second Economic Adjustment Programme for Greece First Review December 2012” “Significant action has already been taken to reform the Greek labour market, and further efforts are being made. The perceptible downward pressure on wages reflects a long-overdue reaction to high unemployment, which in turn resulted from rigid wages often being substantially out of line with the productivity of workers, and to the severity of the recession. This correction was eventually possible thanks to the extensive labour market reforms taken earlier in 2012, comprising notably more opportunities for firm-level agreements, a limitation of the ‘after-effects’ on pay after the expiration of collective agreements, and reductions in minimum wages. The Omnibus Law adopted on November 7 contains further reforms. Collective agreements on remuneration will be binding only to signatories while the minimum wage as a general lower floor for wages and salaries throughout the economy will in the future be defined by the government. The severance payment schemes in Greece have been reduced, whilst ensuring protection for already acquired rights. The adaptability of working hours has been increased to facilitate efficiency and productivity gains, where more freedom will be given to adjust the working time to sector and firm specific needs. However, additional ways to foster compliance with labour law and contracts and to fighting undeclared work and informality need to be identified. Further action is also needed to limit long-term unemployment through active labour market policies.” Mass unemployment being used to break working class solidarity and drive down wages. And here is an assumption from “Explaining Irish Inﬂation during the Financial Crisis C. Bermingham, D. Coates, J. Larkin, D. O’ Brien and G. O’ Reilly” in the thread above. “The natural rate of unemployment is an equilibrium level of unemployment in the economy such that there is no upward or downward pressure on wages or prices. When the unemployment rate is higher than its natural rate (positive unemployment gap), all those willing to work at current wage rates cannot ﬁnd a job and this puts downward pressure on wages and prices in the economy.” I note that the ‘natural rate of unemployment’ link between inflation and employment assumption is deeply contested elsewhere, but somehow has become received wisdom. As in the letter you cite above, this assumption means that all the time a proportion of unemployment is used as deliberate state policy in a dubious attempt to control inflation, and that at times of crisis raised unemployment is a tool: yet the unemployed are seen as feckless scroungers who must lick the hand that won’t feed them. I’m not sure if it is in one of the links you put up the other day, but here’s one of the more eye-popping initiatives from the UK. “Unemployed to be forced to use government job website” “Claimants will face sanctions if site shows they are not looking for work, in scheme hailed as ‘labour market game-changer'” http://www.guardian.co.uk/politics/2012/dec/20/unemployed-forced-government-job-website @ All John Bruton had an interesting, indeed somewhat alarmist, article on the impact of a possible UK exit from the EU on Ireland in the IT recently which makes it an appropriate link for this thread. http://www.irishtimes.com/newspaper/opinion/2012/1221/1224328081282.html Were Germany to insist that a treaty change is required in connection with the current moves towards a “genuine EMU”, this would indeed open up a context where the issue Brexit (Brixit?), or at least that of negotiating a new relationship with the EU (which is the current position of the UK government insofar as that can be established), would arise. This possibility has now receded. The Lisbon Treaty (Article 50 Treaty on European Union) now allows for any member state to withdraw from the EU but sets out a pretty draconian exit procedure. There appears, however, to be a bit of confusion between free movement, which is one of the four freedoms underpinning the EU, and control of persons at borders. Because of the common travel area, Ireland joined the UK in maintaining passport controls. Countries outside the EU – Norway and Iceland – did the opposite because of the common travel area between Scandinavian countries when the latter joined the “Schengen” arrangements removing them in Europe. In short, the problem identified would only arise in the unlikely event of the UK banning immigration from Europe outright. A major speech on Europe by Cameron is promised for the New Year. @DOCM A characteristically superficial argument by Bruton ( this is not to be unexpected as the big farming lobby has betrayed this country ) No deep economic analysis of the effect of labour movements following free moving capital is considered. Its just a bunch of racist UKIP guys meme………… What really happens when labour movements are unrestricted ? Well it drives down unit labour costs The domestic working and lower middle class get the shaft. But something deeper happens also A country at any given moment of time produces a certain amount of wealth. To fill this demand hole the banks must create credit. Because there can be no real demand for houses and other stuff this credit is malinvested. The massive per capita declines in consumption & GNP per person in Ireland can be explained in this manner. To a lesser extent the UK as the migration was not as extreme. This video from 2 years ago now is instructive. http://www.youtube.com/watch?v=s5LxWwfyHyY Who can argue UKIP was not right ? The euro teddy bears of Clarke & Ashdown are nothing of the sort. They clearly wish to destroy the nation state. Not only that – they wish to drive countries into failed state status so as to preserve their Euro dream / nightmare. See the various Nazi / Euro commission papers on Greece and no doubt papers on Ireland. If I had a choice between dangerous men I would choose UKIP. Kenneth Clarke “this crisis is not caused by the Euro” We have been slowly entering the Euro since 1979 It either knows nothing about monetary matters or else……….. “It” Or He ? I am not so sure. Also listen to Paddy………… The man is either delusional or………… It was in fact Paddy who was talking bollox. The UKs internal energy systems are now changing as a result of their sov nature. Spain cannot do this…. It has a much better rail system for example then the UK and yet cannot use its own internal resources because it is not a sov state. See above – the UKs continued increase in coal consumption & rail usage both passenger & freight. Its adjusting its systems , however poor they are. dec 21 UK balance of payments 3rd quarter http://www.ons.gov.uk/ons/dcp171778_287129.pdf The trade in goods is down from the 2nd quarter record Its income from the rest of the world is positive again (1.2 billion vs -1.4 billion) @Phil Whats this “other investment” on the capital account. We have seen record outflows of this from Ireland during the crisis In the 3 rd quarter The UK Q3 “largest inflow ever recorded” 156.7 Billion !!!! Its goods trade deficit is down somewhat from the record Q2 but is still very high. They seemed to have dramatically revised revised their income deficit from Q2 In the Q2 statement they declared it was a record -5.2 Billion In the Q3 statement they declared it was now a mere – 1 billion They now state their income for Q3 was +1.2 billion Whats a real mystery to me is their financial account. In particular “other investment” Q3 : largest inflow ever recorded standing at 156 billion 2010 Q3 : 6,469m 2010 Q4 : 64,029m 2011Q1 : 51,462m 2011Q2 : 48,827m 2011Q3 : -10,485m 2011Q4 : – 451m 2012 Q1 : 49,709m 2012Q2 : -17,211m 2012Q3 : 156,673m ! What is this stuff ? Reading a IMF paper on Ireland this same ” other assets” stuff has been bleeding from Ireland since the start of the crisis. yes in table 5 of the Irish IMF paper http://www.imf.org/external/pubs/ft/scr/2012/cr12336.pdf Its goods trade deficit is down somewhat from the record Q2 but is still very high. They seemed to have dramatically revised revised their income deficit from Q2 In the Q2 statement they declared it was a record -5.2 Billion In the Q3 statement they declared it was now a mere – 1 billion They now state their income for Q3 was +1.2 billion What s mystery to me is their financial account. In particular “other investment” Q3 : largest inflow ever recorded standing at 156 billion 2010 Q3 : 6,469m 2010 Q4 : 64,029m 2011Q1 : 51,462m 2011Q2 : 48,827m 2011Q3 : -10,485m 2011Q4 : – 451m 2012 Q1 : 49,709m 2012Q2 : -17,211m 2012Q3 : 156,673m ! What is this stuff ? Reading a IMF paper in Ireland this same ” other assets” stuff has been bleeding from Ireland since the start of the crisis. under Finacial account (billion euro) other investment Y2008 : + 86.1 Y2009 : -23.1 y2010 : -32.2 Y2011 : -67.6 (-42.5% of GDP) Y2012 : -32.4 Y2013 : -23.7 This is the bank bonds I guess. @bond Could you confirm ? PS You get the impression of a vast parasitic beast sucking now tiny physical economies. Screaming that these claims are real , they are very real when you honour them I guess. @DOCM re: John Bruton article A diplomatic offensive to get the UK to stay in the EU! Mr Bruton may not have noticed, but our diplomatic offensives have not been too successful in recent times. He also seems to have deliberately overlooked the question as to whether it would be in Ireland’s best interests to leave the EU at the same time as the UK. Given the treatment meted out by the ECB to Ireland (aided and abetted by the EC and IMF), it is a question that should be aired in public discourse. @ Joseph Ryan This also struck me as a rather incongruous remark. The question that you pose is a very pertinent one. The answer, I would suggest, is twofold; it can only be decided on a cold consideration of the facts and, for the moment at least, as far as public opinion is concerned, it is; no! http://www.irishtimes.com/newspaper/ireland/2012/1222/1224328121205.html There is one comment, however, in the article by John Bruton that merits paticular attention. “British popular opinion sees “Europe” as a foreign country, with which Britain has a sort of treaty, and not as something of which the UK is a participating member with a vote on every decision. The role in EU decisions of British MEPs, British ministers, and a British commissioner is ignored. All decisions are presented as emanating from an “unelected” bureaucracy, and the role of “elected” British MEPs and “elected” British ministers in the whole process is passed over.” How close to this situation is popular opinion in Ireland? The eventual assessment will ultimately decide the answer to your question. JR, “the treatment meted out”. Would that include lending billions at favouanle interest rates to keep a ramshackle public sector afloat? Nontheless, there should be a debate on the continuance of our membership of the EU. I suspect we are well behind the curve. It won’t be only the Brits that contemplate leaving. I would think the Seedes and the Finns will also consider their options. @Tullmcadoo The ECB does nothing for my blood pressure so I will endeavour to respond calmly. Colm McCarthy (Sun In today) speaks of debts “improperly imposed” but that understates the issue considerably. There are the private bank bondholder debts “improperly imposed”, at the time of the bailout and significantly possibly in the month of Sept 2010, just before the ‘bailout’. This ‘improperly imposed’ policy still seems to be in vogue, as NAMA for no apparent reason continues to pay bank bonds before they are due. Then there are the overt costs of firesales of banking assets, directly as a result of ECB policy, the losses being dumped onto the Irish Taxpayer. Then there are the indirect costs of bank deleveraging which is the starving of credit from both consumer and businesses throughout the country. So yes, ‘meted out’ and continuing to be ‘meted out’. RE your point on favourable interest rates, the ECB needs to make up its mind if it is a central banks or not. The ECB could, on the one hand, stand over a policy of capital flight from one country to the next (as happened with Ireland), and simply refuse to provide the liquidity slack, thereby crashing the banking system of a country as Trichet threatened to do unless odious debts were settled on the country. Or it could do as Draghi has done and admit that the ‘monetary transmission system’ was broken and extend liquidity to all solvent banks and financial institutions. But I do agree with you on the issue of how any budgetary monies are used. I am not entirely against a balanced form of austerity which I believe would do far less damage than deleveraging has done or is doing. When one hears (via Namawinelake ) of two current State employees in a State, bankrupted with a strong assist from the ECB, paying €2.2M for a property in leafy D4, then one can only say that either the ECB or the State, or both, seems to have a certain blind spot when it comes to the levels of remuneration in the State financial sector. Perhaps all people who work in the financial sector worldwide, including regulators, have a L’Oreal view of their own worth and a Thatcherite view of who should pay for that worth. JR, The retired prof has a point on bank debts properly improperly imposed and we shall see in due course to what if any extent this is restructured in due course. However, the flip side of this has been cheap money provided to the exchequer to pay some of the highest levels of transfers , pay and pensions. We would undoubtedly have defaulted , been forced out of the euro and perhaps the EU. Now some people think that might have been no bad thing as it would have forced inevitable and necessary reform. @Tellmcadoo “However, the flip side of this has been cheap money provided to the exchequer to pay some of the highest levels of transfers , pay and pensions.” Agreed. I cannot understand why some of the loan conditions were not more specific in this area. Indeed I suspect that the ‘pay and pensions’ was contested more vigorously than any other area by ‘our’ negotiators, and was secured by throwing some other ‘sprats’ under the bus. But we will never know that!. But four years on, its good to know that tribunal barristers and the providers of legal services to the State, will not be too bothered about the extra euro on that special Yuletide bottle of wine! JR, Correct. Sir Humphrey has protected his position for the most part. @ JR I read the piece by Colm McCarthy. http://www.independent.ie/opinion/analysis/colm-mccarthy-look-at-the-numbers-hoping-for-the-best-is-an-exercise-in-futility-3334359.html Especially; “Macro forecasts are almost always wide of the mark. There is no known methodology in macroeconomics which offers acceptable forecast accuracy, and there are good reasons for expecting that none will ever be created. In these circumstances it is surely time to abandon the spurious precision of these number-crunching exercises. Why not produce a budget based on zero growth just to see what it looks like? Is it not prudent to plan on the basis of moderate expectations, leaving room to be surprised on the upside?” That will be the day! For politicians, hope springs eternal. However, if official forecasts cannot be relied upon, neither can those of anyone else, Colm McCarthy included. The weakness in the narrative as expounded by him over many months is that it fails to recognise that international organisations are simply a reflection of the nation states that make up their membership. Overlook this and any conclusions drawn as to future events are likely to be well wide of the mark. The fact is that the major economies of the EA – with the UK – constitute the most dominant force in the counsels of the IMF after the US. They are divided as to how to proceed, the major difference from the point of view of economic philosophy being between Germany and the rest of the developed world. The other members, notably the emerging economies, look on with increasing incredulity wondering how this dispute will turn out. As an international civil service, the IMF is, without doubt, the best in the world as its “nervous” but incisive report on Ireland illustrates. But the expression of the frustration on “European commitments” is possible because it knows that this is the overwhelming view within the organisation. This does not mean, however, that there will be any major change in the German position, at least this side of the of the federal elections and a recognition of economic reality in France. Ireland is bobbing around on these choppy waters. A refusal to admit their existence does not advance understanding of the issues. DOCM, Why not go even more conservative & produce a medium term plan based on prolonged EZ recession, no restructuring and an end game that involves EZ breakup. That is the road we are on if we assume the continuance of the Reparations strategy advanced by the core. However as that policy might just be on the point of being junked because its architects now know it has failed how do you plan? @tull The euro will be a muddle through. No fireworks. Will take a long time. More mariah carey than taylor swift. You will not be allowed to say we are never ever getting back together but you may sing hotel california if the mood hits you. @ All FYI http://www.guardian.co.uk/world/2012/dec/27/david-cameron-eu-herman-van-rompuy Cameron gets his cards marked by both Van Rompuy and Schaeuble. There is probably a tactical element in the positions being adopted not unrelated to the fact that the main capitals remain locked in a dispute over the EU’s long-term budget the complexity of which is such that only Van Rompuy – the EU’s “main fixer” – can hope to resolve it; with the essential technical aid of the Commission. @DOCM In the card marking, there is a hint of alarmist exhortation to ‘do the right thing’, particularly in the comments of Schaeuble. “The political stability and economic prosperity European integration has secured have benefited the UK as much as they have the continent. As an EU member, Britain has enjoyed unrestricted access to the world’s largest single market,” he said. “The EU has benefited tremendously from British membership. The UK is one of Europe’s strongest, most innovative economies. London is the financial capital of Europe.” The fact that the current economic malaise, mayhem may be a better word, emanating from Europe could well be having a profound effect on British attitudes goes unmentioned. The current euro crisis, not debt crisis, and the German mandated solution of economic depression is likely to have very far reaching and unforeseen consequences. Schaeuble and Van Rumpuy may argue that common logic should deter Britain from the self harm of exit from the EU. How true. But the same ‘avoid self harm’ argument has not deterred Schaeuble from imposing self harming policies on the entire continent. The European genie is well out of the bottle as a direct consequence, not of the crisis but, of the European response to the crisis. It will not be easily put back into the bottle. The only European who has broken ranks to achieve that resolution so far is Mario Draghi and he has been harried all the way by official Germany. One could even wonder, how the Irish situation, which will have been followed with interest by a large swathe of the UK opinion, including those of Irish descent, has shifted UK thinking further away from ‘Europe’. @ JR “One could even wonder, how the Irish situation, which will have been followed with interest by a large swathe of the UK opinion, including those of Irish descent, has shifted UK thinking further away from ‘Europe’.” I doubt very much if this is the case. Apart from UKIP, which seizes every chance to make mischief, there is little interest in Ireland in the UK (other than when it becomes a source of some bother or other). But both Labour and the Conservatives now seem genuinely spooked by UKIP in a UK context. And Germany has woken up to this fact or, rather, having seen how the two Young Turks, Cameron and Miliband, behave by way of reaction, they are spooked by the possibility of an accidental stumble of the UK out of the EU. The Germans are not alone. http://www.guardian.co.uk/commentisfree/2012/dec/28/isolation-europe-not-splendid-uk-eu This link on the author may also be of interest. http://articles.businessinsider.com/2012-01-24/europe/30658229_1_friend-relationship-lys-e-palace The next hurdle is the long-term budget. When the negotiations were interrupted, it was clear that the UK rebate would continue in its present form, in itself a major concession. But the UK net contribution will still have to rise simply because the EU – with soon 28 member states when Croatia joins on 1 July 2013 – is a different place. A difficult sell for Cameron when Miliband is trying to trip him up! The promised major speech on Europe by Cameron, and its timing, should both be of interest. @ JR Jacques Delors joins the fray; and not to beg the UK to stay! http://www.telegraph.co.uk/news/worldnews/europe/eu/9769458/Jacques-Delors-Britain-could-leave-the-European-Union.html @Joseph, docm Most Irish citizens who haven’t spent a lot of time in Blighty just cannot get their heads round the fact that it is a fact that there is, and even at the height of the ‘troubles’ was, almost no interest in the state the ordinary man in the street thinks of as “Southern Ireland”. When Charlie Haughey was re-elected, the majority of the minority that had enough patience to take a bit of an interest just decided to stop bothering. Bit of an ego popper I know, but that is the reality. @ grumpy Indeed! Delors is, of course, right. The EU has all kinds of contractual relations with third countries. I recently came across the new name for the UK; “Britzerland”! My own view is that, after a lot of huffing and puffing, some arrangement will be worked out, a lot depending on the deal that Cameron can agree on the long-term budget in early February. If Miliband repeats the stunt (of voting with the rebels on the Conservative back benches), it will show that the Labour Party has abandoned any concept of a bi-partisan approach in relation to Europe and also be a measure of its current leadership. @ grumpy Haughey, with his retro-gentry horsey-sailing charade, was a product of British history as much as Irish. It’s all a panto FGS. The ordinary man and woman in the British street was used, and abused, to build an empire. If s/he has little insight into Ireland’s history, it is because history was mistaught for generations, in HMs’ ‘advanced’ educational system. Not our sort you see. Yet so many intermarried happily despite the propaganda, inluding my own next door neighbours of childhood years. Thank God for shared common sense and decency. @Paul q I’d genuinely be interested to know what you think that propaganda was. The vast majority over there more or less got a one or two liner on Ireland in pre- O level history lessons that they weren’t even interested in. The first was that there was a famine because of potato blight and a callous, rather dim official response, the other that at some point quite a while ago Southern Ireland got fed up of waiting for independence, broke away and probably by way of follow-up, the state if not the people, made a bit of an arse of itself during WW2 by being unhelpful. The reason for the brevity (and no doubt you would contend, inaccuracy) was that the history and politics of Ireland was of little interest or significance to the rest of the world (excluding parts of Boston etc). The Romans, the Nazis, the World wars, the cold war and America were at least vaguely relevant to adolescents. Cuba was interesting and important, Ireland was not. All the stuff about the North wasn’t ‘taught’ but was learned as a series of events in real time from the news. The Republicans thought that their struggle would be viewed in a certain, sympathetic, historical context which simply didn’t exist over there. Unpalatable though it is in Irish-history-obsessed Ireland, the English view was of just of two opposing, unreasonable sets of ‘nutters’. There was a general (naive) assumption that the country “Ireland” generally shared that view and was a bystander. Haughey’s re-election undermined that somewhat. @ All FYI http://www.telegraph.co.uk/news/worldnews/europe/eu/9769526/David-Cameron-plan-to-opt-out-of-EU-policing-laws-will-allow-criminals-to-run-free.html The EU commissioner in question is not known for the moderation of her language. @ grumpy, paul quigley. I grew up in Chester and took a history o-level. There was a lot about the great war, generally of the donkey’s led by lions variety, a lot about the industrial revolution, agricultural revolution (‘Turnip’ Townshend), and on into social, political, economic history into the 20th century, with a chunk on the suffragettes. Also, now I think of it, roads, canals, railways and rather less about cars. A classic school trip was to Coalbrookdale and the mighty Iron bridge there. But Ireland: no. Nor indeed much about Britain’s colonial history elsewhere, except perhaps to note that at one point a quarter of the world was pink. And the famine, zero, I think. I would go so far as to say that if you had asked us what the political status of Ireland was, we would have thought it to be like Scotland but more so. I remember one boy being called out of class to be told that his uncle had been shot – his family had relocated from NI to avoid the troubles. We barely comprehended which faction was which, never mind sub-factions. Simon Hoggart of the Guardian for years had a line, which was that here were two tribes who basically hated each other and might as well be left to get on with it. Paul McCartney’s ‘Give Ireland Back to the Irish’, did impact on our minds – but in a befuddling way, surely the majority of NI wanted to be British, so what was he on about exactly? The hunger strikes and Thatcher’s involvement also impacted – she was widely hated by the working people of the North, and therefore anyone who ‘stood up’ to her was of interest. The fact to that people were prepared to die – and that a lot of people would vote for them – started to change our views, I think. Also, ‘Death on the Rock’ and other documentaries on Bloody Sunday made a difference. @ grumpy The reason why people were forced to learn, or more properly relearn, their history from the news was that they had been given a fabricated, ideological version of it in adolescence. One of the prime functions of the state school system is to inculcate ‘suitable’ attitudes and values in the population. That which is not spoken, but tacitly conveyed, is the most powerful message of all. Read Bourdieu. It was perceived as ‘safe’, say in the 70s, to put Cuba on the O level curriculum, because it was small and far away, but it wasn’t safe to put the twisted realities of northern ireland there. That subejct was somehow perceived as ‘marginal’ and ‘uninteresting’ even though it concerned the lives of a million and a half British/Irish subjects. The ‘Ireland’ narrative was still about the mouldy praties. When (northern) Ireland finally became ‘interesting’, and also deeply embarrassing to the British government, military and middle classes, it was deemed to be a ‘security matter’. It had become far too interesting, and much too likely to make Joe and Jane Bloggs wonder what was really going on behind all the flags and speeches. Such a thing could never be ‘appropriate’ for the curriculum. Dublin was split, as Haughey saw better than anyone, and splits can be exploited. End result, prolonged political paralysis and weaponing up all round. Ordinary Irish and British people, in the main, were left to slaughter each other, untli wearinress set in, as it always does in the end. I applaud the efforts of those who worked to recreate a peace, but the conflict did not need to reach the depths that it did. Compromise was delayed for far too long. This discussion began with BW’s comment, in my view, rather unbalanced, about a ‘mafia’. The record shows that, irrespective of paramilitary activity, power was abused by establishments on both sides of the water. Deeply undemocratic elements (aka mafias in my book) thrived inside and outside the state structures. ‘Respectable’ individuals and institutions defended the indefensible for decades. Some of it is coming out in the wash at last. One would have had to know Ireland and its history to be able to see why we Irish seem so determined to ‘make an ar5e’ of ourselves. Yes, people make choices, but they do not always get to choose the circumstances in which choices have to be made. As a nation which has fought, and still fights wars, Britian understands that very well. But it is not always politic to acknowledge that fact. As Palmerston said, nations have interests not friends’. Devalera knew that of course, hence his decisions in wartime. Absent the purblind stance taken by his British counterparts in more recent years, Haughey would have been found out by his own people long before his eventual fall. Irish republicanism, which he rode to power, is for the most part a product of, and a response to British imperalism. It is interesting that the ‘red white and blue’ meme became fashionable again under Thatcher. End result to date, we get property boom bust shambles. Britain gets boom bust financialised. So I suppose we all got screwed. The 1% are happy though 🙂 @paul q “The reason why people were forced to learn, or more properly relearn, their history from the news was that they had been given a fabricated, ideological version of it in adolescence.” Do you really know that many English educated ordinary Joes? The ‘O’ level & CSE system meant that History could be dropped at age 14 unless the pupil wanted to continue it. Those that did would often not study the period you are thinking of in relation to Ireland – not because of a state conspiracy, but because Ireland was frankly mundane and in a geopolitical sense, irrelevant. The news simply prompted the view that Ireland was complicated, messy and full of unreasonableness. A turn-off basically unless you wanted to be a history professor.. Interest in history and politics was fuelled mainly by issues like nuclear disarmament (or not). Ireland was nearby and lots of people were affected more directly, but it was regarded as a little local difficulty in the big picture that Irish politics tends to ignore. This difference in the way Irish commentators imagine the world views events pertaining to Ireland, and the reality of little more than disinterest is important because of the way the “forced to bail out the banks” line is being sold – ore rather not being. Ireland needs to do a lot more to get foreigners on-board. Op-eds preaching to pre-converted Vincent Browne viewers containing assertions by Irish commentators are not sufficient. Outsiders are not fascinated by Ireland. @ PQ et al What Palmerston said was “Nations have no permanent friends or allies, they only have permanent interests.” The question then is surely a definition of the permanent interests of the Irish nation (assuming that all are agreed that such exists)! All are also agreed that these interests are greatly impacted by the question; whither the UK? As no one knows the answer, only a rolling and qualified assessment can be made at this stage. The perception outsiders have of Ireland is not really that pertinent. The perception the Irish have of themselves and the view of where they want to go is. The Irish economy has fallen off a cliff. How it is to be stuck back together is the most important view that has to be decided. There is every reason to fear that it will be stuck back together more or less in the condition which caused the problem in the first place. @ PQ et al What Palmerston said was “Nations have no permanent friends or allies, they only have permanent interests.” The question then is surely a definition of the permanent interests of the Irish nation (assuming that all are agreed that such exists)! All are also agreed that these interests are greatly impacted by the question; whither the UK? As no one knows the answer, only a rolling and qualified assessment can be made at this stage. The perception outsiders have of Ireland is not really that pertinent. The perception the Irish have of themselves and the view of where they want to go is. The Irish economy has fallen off a cliff. How it is to be stuck back together is the most important view that has to be decided. There is every reason to fear that it will be stuck back together more or less in the condition which caused the problem in the first place. @ grumpy I lived in England for a few years, so I met a good few of the locals. As you say, Ireland was ‘mundane’ or it was ‘messy’, but it was not the proper subject of honest, intelligent analysis. We had mostly patronising stereotypes and shibboleths, with some very honourable exceptions. There was a profound unwillingness on the part of HMG to face the fact that a part of the UK (NI) was being governed in a manner which was absolutely incompatible with the norms of contemporary British democracy. That was very cynical. Education matters. Today’s sectarian Union Jack-wielding rioters are properly disowned by the Establishment. If that message had been sent from London forty years ago, a very great deal of Irish and British suffering could have been avoided. And BTW, British folk are not really ‘outsiders’ in Ireland. Last time I looked, we had about a million. @ All FYI http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/9771147/Banks-fear-risk-to-City-of-EU-exit.html Reality bites! GB has a well defined class structure which is firmly entrenched. It is not in your face like racism in America. GB is all about niceties and politeness, couched in plummy accents by the well upholstered in society. Never give the lager louts, yobs, chavs et al an even break. Sad to say we in Ireland have aped our betters to a lesser but still detectable extent. GB has about as good a chance as any other country that writes off 40% of its population as being untermenschen. India is another good example of a country crippled at the core. America is headed down the same drain pipe. Is it an Anglo thing or an Aryan thing. It may be the age of their regimes, GB started its downward trend immediately after WW1 with America following after WW2. We are now entering an age dominated by China and its trade partners in what used to be the 3rd world. In Ireland it would behoove us to attend to our knitting as the world we knew unravels around us. @grumpy I would agree that the world is not as RTE often portrays it and that there are many people over on the other island who aren’t particularly knowledgeable about Ireland or anywhere else for that matter. So many people in London can’t see beyond the m25 either. But education doesn’t end in school and English people who take an interest in the news tend to be better informed plus you have many with Irish links. And those who visit on hols. Mr Jancis Robinson ,the FT restaurant corr was in Dublin recently and asked his Polish waiter for some toast and a pot of Barry’s tea and was surprised to be provided with a herbal berry concoction. The rugby crowd tend to know their stuff as well. @ All Apart from not knowing his Magna Carta from his elbow, Cameron, on this eve of 2013, is making even the CBI nervous. http://www.telegraph.co.uk/finance/financialcrisis/9772519/Britain-must-embrace-EU-to-bang-drum-for-business-says-CBI.html Here’s the great Bob Hale from the normally excellent ‘Horrible Histories’ covering the English Civil War. Something of a gap from the Irish perspective. Comments are closed.