To ungovern is to depopulate

There are costs and benefits to everything, even emigration at a time of economic crisis. We Irish have probably gotten so used to (silently) thanking our lucky stars that our young are not hanging around at home being unemployed (or at least, not to the same extent as the young in the Mediterranean), that we may have forgotten this. Indeed, I had forgotten that I wrote this back in 2010. But now Paul Krugman points us to this post (and see also this one) which brings up the issue, and it is worth thinking about it seriously.

Long run GDP and tax revenue may not suffer that much if people return home eventually, especially if they bring home new skills and contacts, but what if funding crises happen before then? And are we perhaps too optimistic about the prospects for return migration? My generation came home in droves because of the 1990s boom, but that sort of growth is obviously never going to be replicated: you can only catch up on the technological frontier once. And as I pointed out in that earlier post, there is scope for negative feedback loops here, related to the overhang of government debt.

All in all, another reason to think that debt restructuring is going to eventually have to take place around the Eurozone periphery.

(H/T Alan Taylor who suggested the title of the post. That is a clue as to what it refers to by the way.)

141 replies on “To ungovern is to depopulate”

“In the past four years, over 300,000 people have emigrated from Ireland; 40% were aged between 15 and 24”.- RTE News, 9 May2013″

I don’t need Paul Krugman to remind me, I think about this every single day and highlight, that it is entirely part of the governments plan. They barely stop short of standing at the airport and cheering as they get on planes.

They youth of this country when they wake up are going to be very disrespectful to their political masters.

In the US, this happens all the time e.g. high oil employment opportunity in the Dakotas is attracting skilled workers, etc. Mobility in the US is aided by a relatively uniform education system (although not of same quality everywhere), same high street configurations (but same stores ‘dumbs down’ the shopping experience, etc). In Europe, there has traditionally been a reluctance to emigrate based on nationality & related. As the peoples of Europe become more European, it is only to be expected that the migration patterns you allude to should emerge. It does however have significant and potentially negative social and cultural implications for those left behind and their economies. That’s for sure. No different though to the young leaving rural Ireland for the cities, etc. Inevitable I would say.

Others will point to the positives of foreign national immigration in Ireland. There are positives & negatives, but probably positives overall for Ireland. Helps slow the rot.

However, the truth is that few of the people who have left will return. My own children are now American. Love visiting Ireland, but are lost to Ireland’s economy….

I think that is true. The Govt is certainly ‘thankful’ for emigration. The downside consequences are more longterm…and will be on somebody else’s watch. There is certainly a prevalence of an attitude that “Ireland is too small for everyone to stay here”….In fact I have heard that from many (middle-aged) on various trips there over the last few years. The middle-aged + politicians of Ireland won’t do a thing about it….they are afterall products of previous emigration periods…’s part of the Irish psyche /expectation….normal. What’s a bit more worrying though is that, in this recession, the migration is becoming very large. Also, as we have seen in previous migrations, emigration lags the economy…so there’s probably much more to come.

However, hasn’t that always been the way? In certain remote sheep farming communities in Kerry for instance (e.g. above Dingle comes to mind), there are well known pockets of “insanity” in the population where in the past the best and brightest left to work elsewhere, leaving a lesser gene pool and inbreeding…..

I know many Irish in Toronto….good life, great city. Not too bad here in the NYC metro area either!

Hi Paul-yeah me too some Toronto is a great city this time of year…winter a little long for me.
Easter Long Island quite nice Fri/Mon too….i think you know where i mean,far eastern LI packed with Irish J1’sters.Chatting with them about home and the bitterness is striking,my generation did not have that.
from the CBC link above-they are some numbers WOW !

“Ziegler and Holt added in their note: “We don’t yet have colour on why the May hiring market was so much stronger than normal for youths, but we’ll take it. ‘Europe, send your youth to Canada’ may be the underlying message!”

As you know, the Canadians and Americans fly south to the Carribean during the dark winter breaks. DR, etc…..One of the many advantages of living here.

Have to say that the 4 seasons here, short (but ok at times severe) winter and beautiful climate rest of the year makes living here a pleasure…..I’m West from you across the LI Sound. Southern CT /New England.

Beats the greyness of the Ole Sod…Here’s a good one from my hometown of Cork…note however the gey skies (although the end of tropical storm Andrew is watering this place nicely today!).

Plus ca change ..
Many of these issues were discussed in the Reports of the Commission on Emigration published in 1954.

@Paul W-thats a fantastic piece-perhaps the gathering can utilise it…but i hear the weather has been outstanding in Irl lately-no really,its exam time !
One the unintended consequences of the recent senate hearings may be lack of support for “Irish” visa or backing in documenting the Irish illegals here.MH referenced the old boys network that helped/aided my generation,the Donnelly/Morrisson Visa’s etc.
An interesting piece in Indo recently…who dropped the ball here not Gilmore again…
‘Some Irish-Americans are surprised that the provisions ever made their way into the 800-page bill and are asking if those monitoring its progress in Washington or Dublin were “asleep at the wheel”

Lashing here-but some decent tennis on,no need tell you where im off too!

Quite some negative reaction to the Irish tax item…..a very senior exec of one of the large FI MNCs in Ireland indicated to me recently (at BBQ) that “This is very serious and isn’t going away”….They employ 2-3,000 in Ireland….

MH will get ‘validation’ yet!

Still, when it comes to investing in Europe, doing so via Ireland is the preferred route for corporate America. The traaditional links are strong. However, the world certainly has changed. I wonder whether those traditional links are capable of sheltering Ireland in the tax arena, etc. in the longer term….?

@Paul W completely agree,it’s the subject of jokes now..ah you have an “office” in Ireland…hear the taxes are great etc…MH does deserve some recognition on this he’s been the proverbial canary in the coal mine.The letter was pathetic,a report or right to reply live in front the committee perhaps !
A tad annoyed at the French today myself,Nadal was up first in the tennis…
But it will be very interesting regarding the post if any the new arrivals here,do return with enhanced skills,based on my discussions no chance but time will tell.
Catch up later…not exactly BBQ weather today…great day for a few..

Depopulation when the average Irish couple were producing 7-8 offspring was desirable and a much needed safety valve. Now we are close to the replacement rate of 2.1 so 300,000 emigrants results in 300,000 less people in Ireland. We have our banks still in over their heads desperately hoping for rising demand resulting in higher prices for residential properties. Back stopping the banks we have the Gov’t praying for the equivalent of hundreds of thousands of immaculate conceptions resulting in a widening of the tax base and fewer empty living units.

We were on a descending curve and now it is being glazed with ice as we come to the realisation that the Gov’t is overextended and quite incapable of taking the tough decisions required to stop the decline. Any hopes we might have had that the decline could be reversed are now out the window as more loans flow in from the ECB, IMF.

The times will get much more desperate before our desperados on Kildare St. do anything other than engage in re-election fantasies. We are in an Old West movie where the black hatted guys win.

If you look at the available options restructuring plus transfer plus a little bit of inflation are on the good side. The probability of these occurring is below 50% but rising. The odds still favour messy default, depression, fracturing of the EU, social upheaval etc. but maybe these are falling.
Everybody now is betting on a German volte face post the Election. That may not happen.


The 50 plus generation did blow it. Joining the euro against the advice of some of the better economists and inflating public spending to keep the voters sweet. Add in regulatory capture and a hint of corruption and you have a toxic mix. The penny dropped when Bertie took the Dunner to Westminster for his valedictory speech rather than Seamus Mallon. That told you who was respected most in the new Ireland.

House prices down. Historic GDP should be rescaled. Population down. Debt stable. Comme il faut.

I miss Aogan O Rathaille at times like these.

The problem of youth unemployment leading to emigration is a complex one. The reasons why the figures are so bad in certain countries is for internal reasons unrelated to overall macroeconomic management although aggravated by the euro crisis.

This report from an institute close to the SPD in Germany in relation to Spain illustrates the point.

The report is rightly critical of the “reforms” introduced by the Spanish government but fails to address the core problem i.e. lack of equality of employment conditions across the entire workforce. This is no real surprise as such equality does not exist outside a very limited number – mainly Scandinavian – countries.

The latest figures to gain public attention in Ireland are (a) one in five households has no one in gainful employment and (b) half the population, i.e. those that have the good fortune to be able to stay at home, is in receipt of some form of social assistance payment.

This is the outcome of an electoral system which sends local government representatives rather than legislators to the parliament under a multi-seater proportional representation system which guarantees pork barrel politics down to the parish level. The electorate seem to like it this way. Unfortunately, it is no longer tenable.

Many analysts spent the boom predicting everlasting growth with only the shortage of subprime mortgage products as a constraint. Now we are supposedly in perma-shrinkage when only bad things can happen – FOREVER.

Krugman transparently and tediously uses Ireland as a pawn to advance his view that monetary expansion is the best plan for the US. Ireland’s economy is unlike the US in every way imaginable so there is no reason to think that what fails here will fail there. Krugman clearly hopes that Ireland will suffer so that his prescription for America will be vindicated. Naturally there is a convoy of clown cars headed by former boomtime cheerleaders now chanting the new script of cynical Zeitgeist millennial apocalypse.

An alternative view would recognise that
* Ireland’s population is growing strongly and has been for the past 20 years. (CSO population and Labour Force, April 2013)
* We have 1 million more residents now than in 1991. (CSO, Census 2011)
* We have the highest youth population rate in the EU – one third above the average (Eurostat quarterly review, March 2013)
* Employment grew by 20,000 last year while the workforce fell by 10,000 (CSO QNHS, Q12013)
* Net migration is only a quarter of the headline gross figure and many of those are returning immigrants. (CSO migration report)
* Boom follows bust as day follows night (my grandfather who lived through at least ten cycles since the depression)

Default has been avoided in Ireland to date by the troika slipping us money round the back. Below cost loans, extended terms, cheap funding for state owned banks. Budgetary prudence is now enshrined in a law backed by plebiscite. THE ECB’s decision to purchase the bonds of policy-compliant nation states is seen as one of their first outright policy successes.

Transaction volumes for Irish property and vehicles are far below natural long run rates and obviously due for rebound – one hopes that prices don’t rise too. Traffic on the M50 has grown a quarter since 2008 (partly due to the abandonment of all major public transport projects by the current administration).

Technological advancement and associated growth has not halted last time I checked and techno giga-companies are hardly fleeing Ireland.

@ Ossian Smyth

+ 1

But there is a need to address the core problems with regard to the treatment of our youth, many of which are identical to those identified – lack of training etc. – in the report on Spain, the most significant being, nevertheless, the precarious nature of the employment offered to them. It is a problem common to all the economies in Europe that are performing badly.

That and misdirected social welfare payments.

@Ossian Smyth
We also are among the few European countries where the birth rate /net reproduction rate is high enough to ensure the replacement of the population. What a contrast with Spain, Portugal, and Greece.

The people who leave Ireland are the lucky ones.

They escape the “narrow vision, blinkered, immature, limited experience” of those who remain.

Ireland is a communist country, which can be summed up in two words…. FAILED STATE.

Those that get out “step into a much wider world”….. And good luck to them… That’s what I say.

I would have to disagree with anyone who says that joining the Euro Zone was a bad decision. It was the second greatest opportunity offered to Ireland after membership in the EEC (EU).

What we could be blamed for is underestimating the incompetence of our elected government and their selected public servants. Even today there is a marked reluctance to examine what we are voting for. It used to be the fekkin British, now it is the fekkin Euro, the outstanding fecker in all this is the Irish voter.

Things will get a lot worse before the Irish voter elects a Gov’t that understands the concept of common good. In the meantime we send hoors as cute as ourselves up to Dublin to make sure that we are getting our “fair share” which is much more than we are prepared to pay for.


” It used to be the fekkin British, now it is the fekkin Euro, the outstanding fecker in all this is the Irish voter.”

Blaming everybody else but ourselves…. That’s immaturity for ya!!!

Well said Mickey H.

Debt restructuring may well happen but there is a long road ahead to the closer level of European integration that would make it possible.

The bolshy reaction last week from President Hollande to some unsolicited economic advice from Brussels, a few weeks after calling for an “economic government” for the Eurozone that would have a president, its own budget and a coordinated tax system, illustrates how difficult this path will be.

“If Europe does not advance, it will fall or even be wiped off the world map,” Hollande said on the first anniversary of becoming president. “My duty is to bring Europe out of its lethargy.”

“The change of the times and the shifts of power have failed to change the condescending attitude of some Europeans,” China’s People’s Daily, the ruling Communist party’s mouthpiece, lectured on Thursday this week. In effect, get back in your box!

Wynne Godley, in the article linked to above by Stephen Kinsella, was prescient on the unbalanced euro structure.

The FT reports today on a study which claims the UK also has a long road ahead, despite a significant devaluation:

“We should expect not just 2015 but also 2020 to be an austerity election,” said the report by the Institute for Fiscal Affairs and the Institute for Government. “The real decisions about long-term spending allocations are being saved for after the next election.”

Spending cuts were set to be a “long-term feature” of UK public finances rather than a short experience, the report said.

The Irish clientist system gives people a feeling of an access to power but that is an illusion. Politicians respond to the demands of collective power eg the IFA and public sector unions.

It may well be that the young Irish will have to organise themselves to be heard from the streets – but similar movements elsewhere fizzled out.

Unlike the early 1990s when there was a big influx of FDI projects coinciding with billions in EU grants, there is no significant jobs engine today.

What is striking is that there really isn’t a clue about how the economy can be put on a sustainable basis.

Ossian Smyth is correct to point out that Ireland hasn’t just moved from feast to famine.

However, it’s too early to see glimmers of light on the employment front – a person working for 1 hour in the family farm or business can be termed as employed. The sectors in the household survey are a disaggregation of the total employment number rather than the total employment number being a sum of the individual sectors.

The prospect of a credible growth path is missing, which becomes reinforcing in terms of startups and investment: stagnation in Europe while inward services FDI, with significant numbers of foreign hires, provides the government’s spin machine with juice but will be far from sufficient.

The prospect is likely low Irish growth that in the real world is stagnation. Young people should go where there is hope.

Japan’s stagnation was particularly bad for young people and about 35% of the workforce are temporary workers, with few rights, in an ageing economy in need of babies; the government estimates 4.6m of the older permanent workforce or 10.5%, are retained by companies as they have no alternative work for them.

At least seven Japanese electronic manufacturers still produce flat-panel televisions, almost all at a loss.

Whether the Oireachtas has 216 members or 166, do not expect them to give hope to the young. How many have inspired during these times of crisis?

There is a campaign ahead for the conservative comfortable older folk to decide on spoils and bet on it, that in the real world, both sides will want their productive status quo kept intact.

The more conservative side is likely to win.

@ tull

‘The 50 plus generation did blow it. Joining the euro against the advice of some of the better economists and inflating public spending to keep the voters sweet. Add in regulatory capture and a hint of corruption and you have a toxic mix.’

Conflicts of interest bedevil all institutions, but they really are a feature, not a bug of governance in Ireland. Regulatory capture does not really describe,the process, which is much deeper and wider one. The state, and its senior officials, have been groomed by well organised special interests, and these abusive links are deeply embedded in our most respected family, institutional and social relations.

Dissent is not easy, but ceasing to respect ‘polite society’ is, IMHO, the first step to responsible governance.

Canada is a very good country. It’s the small things that make big differences.
Example: went for a job over there. 2 days of interviews formal and “informal” with a dinner out as well. Massive input into seeing was I the right fit for the particular organisation. Detailed approach to everything. Maybe that was sector specific – I don’t know.
Over here 40 minutes in front of untrained interviewers often with little background analysis. I think tends to favour spoofers. Result is that in many of our organisations we end up with “spoofers”. And people select people who are like them so spoofers select more spoofers. Ireland (and a lot of the world) has a lot of spoofers at the top.
Reform how people are selected for posts and then make those posts performance based

I think things will be worse in the UK over the longer term. Corruption , stagnation , RBS zombified and food banks and it’s only starting.

@Paul Quigley

inflating public spending to keep the voters sweet

Oh, please.

1) Where was Irish public spending before the boom? Allow me to quote the OECD from their 2008 report on Ireland’s public service:

Despite major spending increases over the past 10 years, expenditures in the public domain, i.e. services funded by government and provided by government or the private sector, are small as a percentage of total GDP, compared to other OECD countries. This is because Ireland has traditionally had a small public sector, and so recent increases have been part of a process of “catching up” to more typical OECD levels. For example, amongst 25 OECD countries for which data is available, Ireland ranked third to bottom in terms of public expenditure as a share of GDP in 2005 with 34.4%, above Korea (28.9%) and Mexico (19.5%) (Table 2.2), even when factoring in infrastructure investment.

[. . .]

Given Ireland’s strong economic performance, however, public expenditure as a percentage of both GDP and GNI has actually decreased over the past 10 years. Ireland’s real average annual growth rate in public expenditure between 1995 and 2005 was 5.1%, and was therefore actually growing slower than both GDP at 7.5% (Figure 2.5) and GNI at 6.6%. Although spending on education increased annually on average by 5.52% between 1995 and 2005, for example, its relative share of GDP decreased from respectively 5% to 4.3% of GDP and from 5.7% to 5.1% of GNI over the same period.

2) Explain how increases in public spending serve to “keep voters sweet.” My memory of the period in question was that, budget after budget, tax rates were lowered precisely to “keep voters sweet.”

Perhaps the idea of how we live and work is changing.

Many of us live and work in Ireland and another country, because the lack of full employment opportunities at home. Being ‘portable’ is a means of survival. Speaking one or two languages is essential. Flights within Europe are cheap and short. Some countries have lots of job opportunities

It’s a good way to live. It keeps the mind fit and opens all sorts of opportunities. If us ‘olds’ have been doing it for nigh on 30 years, the ‘youngs’ see it as part of life.

@ Ernie Ball

Interesting but the GDP included FDI sector profits and more importantly, a chunk of it was froth or fake, thanks to that ephemeral bubble.

So the OECD got hold of the wrong end of the stick.

There was no real world growth absent the property bubble from 2001.

In 2001 spending on social protection stood at €7.84bn; by last year this had grown to almost €21bn – an increase of 266%. Inflation increased by around 30% during the same period.

In 2001 the Irish public service pay and pensions net pay and pensions bill (ex local authorities) was €10.2bn; it was €16.2bn in 2006 (the peak year of the bubble); €17.6bn in 2007; €18.7 in 2008 and €17bn in 2012.

These figures are net of pension contributions (normal and emergency) and pay cuts that were made in 2009.

So to compare with 2007 when it was clear to those of us who weren’t afflicted with Walter Mitty syndrome, that the game was up, there is a saving of €600m.

However, we don’t know how much the current cost of €1.5bn in allowances paid to public sector staff, has risen in the period – which is an extra.

It is true that taxes were also cut to ridiculous levels while the Government was collecting 28% of the value of every new house sold, in taxes and charges.

Simon Johnson has an interesting article on the greek debacle here..

“It is the French and German governments that should be held responsible for the severity of the depression in Greece — and for the excessive degree of hardship imposed on vulnerable people throughout the troubled periphery. There is much rhetoric about solidarity, but the reality is that an unwise approach to banking has been allowed to drive macroeconomic policy decisions.

Unless and until the IMF is able to confront the Europeans directly and publicly on this point, we should expect more Greek-style disasters.”

From an Irish perspective waiting for a German u turn after the elections is clearly a head in the sand approach …meanwhile our debt continues to escalates to obviously unsustainable levels..but never mind, Enda won’t rock the boat. He is sticking to the last June EU statement.

@the sage of Kuala Lumpur

You write: Interesting but the GDP included FDI sector profits and more importantly, a chunk of it was froth or fake, thanks to that ephemeral bubble.

So the OECD got hold of the wrong end of the stick.

I guess you missed this part:

Given Ireland’s strong economic performance, however, public expenditure as a percentage of both GDP and GNI has actually decreased over the past 10 years.

As for this: “In 2001 spending on social protection stood at €7.84bn; by last year this had grown to almost €21bn – an increase of 266%. Inflation increased by around 30% during the same period.”

Perhaps you might be able to think of a reason why social protection spending might have increased…

In any case, none of what you write suggests that it was wrong to increase public spending during those years since, as the OECD pointed out, Ireland’s public service was perennially underfunded. What was clearly a mistake, given the composition of tax revenues was the fact that you acknowledge (begrudgingly, seemingly, and as an afterthought):

It is true that taxes were also cut to ridiculous levels while the Government was collecting 28% of the value of every new house sold, in taxes and charges.

And where are they now? What’s the top rate of income tax in Ireland today? What was it in 2007? Yet, strangely, we hear no clamour in the Independent newspapers or on the Irish Economy for taxes to be raised. 75% of the population would much prefer that the other 25% do all the sacrificing…

It is fine to compare public spending with 2007 and claim a small change, but the population of the State has increased by some 10% in that period and the volume of public services provided has increasing accordingly and by an even greater amount in some sectors. The per capita change in expenditure is significant.

There is a false analysis that in the boom that everything was put into public expenditure. Public expenditure did increase pro rata and while there was a disgraceful lack of interest in value for money, the increase did also fund things that were appropriate. The real problem was the failure to analyse the boom for what it was and determine the false nature of the growth. In the absence of such analysis, had the false resources not been spent on public services it would have been doled out in tax cuts. It has proved possible to reduce expenditure on public service salaries to 2006, it has not proved possible to return tax income to 2006 levels. The real problem lies in the tax system.

The sad thing is that after many years of this no proper data has emerged on what public expenditure changes did happen on a detailed sector by sector basis. Where were more staff deployed, where did increases occur? The government sees no need to produce or use such data, while most commentators are happy to use whatever average or total suits their argument without actually breaking down the components.

@Robert Browne

They youth of this country when they wake up are going to be very disrespectful to their political masters.

They’re not our masters. They’re German land agents, rewarded handsomely for selling the country in exchange for pensions. Their state is no longer represents the Irish nation. I’m not sure if it ever did.

@ernie, he drove the dearest milk cart, in the west

Ok, if indeed the public sector needed the adrenaline shot it has received over the past umpteen years, I guess your solution to lower the deficit is to increase taxes?
Put simply the rate of increase in social transfers and public pay since the late 90’s is the type of exponential explosion seen rarely in nature save perhaps in algal blooms or the 17 year emergence of eastern circadias

@ Ernie Ball / Dearg Doom

In 2000, the GNP per head was €28,042 and in 2011 it was at €28,317.

Adjusting for distortions identified by the ESRI’s John FitzGerald in respect of the shifting of big company headquarters to Ireland, the current GNP per capita would be lower than the 2000 level.

However, gross current expenditure was €27.5bn in 2000 and €60.5bn in 2012. Inflation was 30%+

In 2010, Rossa White, then chief economist at Davy, said one of the great misconceptions about Ireland is that it was a wealthy country. He said Ireland relentlessly climbed the income per capita table year after year from 1994 on, but it had slipped back below mid-division in the euro area following a savage recession. Yet it was never wealthy: those years of high income were largely wasted.

Probably the best way to compare the wealth of countries is to look at the capital stock. He said years of high income can be turned into physical wealth if invested properly and takes three small nations as an example: Belgium, Finland and Ireland. The three are closely matched in the euro-area income per capita table, albeit that Ireland slipped behind in 2009. But no Irish resident who has visited Belgium or Finland would have the audacity to claim that this country is wealthier. Transport infrastructure is vastly superior in those countries, as is the telecommunications network, and public services are delivered from higher-spec schools and hospitals.

Rossa White said the gain in human capital was not reflected in the data. He moved to the public sector from Davy – to the NTMA.

A web cached copy of his analysis is linked below as the Davy server is in slow motion.

For Ernie Ball, the social welfare data comes from your fellow socialist Joan Burton.

I have often written on taxes and the cost of the low employer security taxes – which results in poor pension coverage for private sector workers. I have also said in the past that domestic business was given a gift of more than 20% in corporate tax rates without trading it for pension coverage.

A lot of people pay health insurance including socialist TDs, which is similar to a tax – right or wrong, there is a perception that the public system isn’t good enough. I’m not an ideologue on this as it’s easy to see where a hybrid system will never be an optimum one as healthcare is not akin to competition between mobile phone companies.

In 2009, Brian Lenihan quoted a figure that the top 12.5% of earners paid half of all income tax.

What happens in Ireland when the income tax rate is high is that special exemptions are provided to foreigners.

@Michael Hennigan, you have a clear case to make about Irish public expenditure. THis being so, it is a pity that you chose to embellish that case with deliberate confusion between real and current values and per capita and absolute figures. Comparing per capita real GNP with spending figures unadjusted either for inflation or population increase is neither honest nor helpful. The most depressing thing about this country is people’s unwillingness to look at the actual details of the problem rather than spouting soundbites.

At current prices, GNP increased by almost 70% between 1999 and 2012. Now of course this mostly reflects inflation and population increase, with only a small real increase in living standards. However, this isn’t far off the increase in the PS pay bill in the same period, given that the GNP divisor is presently somewhat reduced and the PS pay bill is reducing.
@Pale Rider the rate of increase in the PS pay bill is also seen in the Irish GNP, the only difference being that GNP is now increasing and the PS pay bill is falling.

@Ernie Ball

I like the last paragraph of your 11:10am comment.

The behaviour of the newspapers, radio, TV and internet news reporting and analysis is no different in Ireland than in most other countries. That is to say they all attract eyes and ears by telling people what they want to hear rather than what they need to hear. Profitably is related to pleasing the public.

The Irish were once known as a hard bitten bunch of bastards who kept their eye on the ball and knew how their bread was buttered. Over a quarter century of prosperity put the kibosh on that. Now we are drifting gently down the river on a never ending sunny Sunday afternoon. About 25% of the population have it tough but the 75% still floating will hang on like grim death to what they have. The prospects of change going by the behaviour of the past century are not encouraging.

@ Flj

A very interesting comment by Simon Johnson. It is very kind of him to forget to mention that the US has a voting veto in the IMF i.e. nothing can effectively happen without, at the very least, its acquiescence. Nevertheless, it should help puncture the illusion – evidently widespread in economic circles in Ireland – that the IMF is some kind of ‘deus ex machina’ that can be summoned to resolve the world’s problems.

He also underlines where the boot really pinches viz. the precarious state of Europe’s banks, drawing attention to the fact that Germany’s only major bank, Deutsche Bank, is “the worst of the bunch”. It is, of course, also probably the foreign bank with the biggest level of interests in the US.

As to the spat between the IMF and the Commission, this is a diversion from the real content of what Rehn had to say in Helsinki.

Hollande has walked France, with evident prompting from Merkel, into being the main advocate of a position which is simply unaccepatble to the vast majority of member states, whether they are in the euro or not.

@ ernie ball 8.47

That’s tull mcadoo you are having a go at, not me. Don’t be making mass arrests 🙂


Deutsche Bank is the financial equivalent of Chernobyl. It is deeply intertwined with the Wall St shadow banking system and has drunk deep from the poisoned cheap credit bog bonus elixir. God knows what is on its balance sheet these days, but it ain’t pretty.
The equity has been extracted for the benefit of the global 1%, and there is no game other than extend and pretend. Deutsche is more of an existential threat to Germany than Greece, and maybe more than the entire periphery. Or even the Dresden floods.

@ Flj/Paul Quigley

Two other blog links that can be read together.

The choice for the “Continental powers”, especially France, is whether they wish to open the Pandora’s box of treaty amendment – effectively opening the castle gates to the eurosceptic demands of the UK – or abide by the adage “when all else fails, follow the instructions!”; these are in the treaty texts by which all countries in the EU are bound.

The Commission has finally come out of its corner and started filling its role as “guardian of the treaties” (Article 17.1 TEU “It [the Commission] shall ensure the application of the Treaties, and measures adopted by the institutions pursuant to them”).

@ Mickey Hickey 9:07hrs

“Things will get a lot worse before the Irish voter elects a Gov’t that understands the concept of the common good”.

Sadly, I’ve come to the conclusion over the years (from having once been an ardent nationalist) that, culturally, genetically, and politically, we Irish are incapable of grasping the concept of the “common good”. I don’t say that with bitterness – simply a realisation that while we have strengths as a people (e.g. the ability to blend in and make people feel comfortable – essential traits working in an international business environment), we are not capable of successful self-governance and we are doomed to endless boom-bust cycles. In my opinion our best hope in the coming years is to be taken over on a de-facto basis by ECB/European Commission bureaucrats. Ireland could easily sustain a population of 20-30 milion + with high urban density and provide a high quality of life to all in that population. If the Dutch can build a successful economy of 16million + on a flood plain of the Rhine and a land mass the size of Munster, just think what we should be able to do with our green fields. As the parent of three young children it is my hope that my children emigrate and are successful abroad. This is partly selfish as my hope is they will send me and Mrs B the money to visit them in exotic locations! First of all though I’d like to see them spending less time learning Irish and Religion in school and more time on Spanish and Cantonese (or even any time on the latter two languages) plus some philosophy and critical thinking.

@Bunbury,as a parent myself and a immigrant,I hope my kids are the best absolute best at what they do….it truly is not work if you that good.
If it involves international travel even better.

Well bunbury, if you went from being an ‘ardent nationalist’ to someone who imagines *we* have a genetic inability to grasp a pretty basic concept, then the problems on your side

John Gallagher, that’s an impossible aspiration for your kids to live up to (literally), why not just let them be who they are? and hopefully not pick up your spelling and sentence construction ; )

@rf there is no second g…..oh the courage and strength not to require anominity too….

Sadly, I’ve come to the conclusion over the years (from having once been an ardent nationalist) that, culturally, genetically, and politically, we Irish are incapable of grasping the concept of the “common good”.

The problem is with our leaders. Politics in Ireland, pre and post independence, was an organised exploitation of the population by a connected political class. The “common good” was for that class “my good”: What is good for the earls/the ascendancy/The church/business is good for the country. Ireland has no cultural memory of a common good because it never possessed leaders who paid more than lip service to it.

That is of course why Ireland is a failed state, and will continue to be a failed state, until such time as the criminal class which has seized it is made to realise that their actions have consequences.

At the core of the problem in Ireland are all the people who are pillars of society that would like you to think butter would not melt in their mouths.
They engage in lots of underhanded behaviour skating close the line that divides the borderline acceptable from outright criminality. At the slightest hint that you consider them less than honest they jump on their high horse and give you an impassioned lecture on how honest they are and the unfairness of it all. The closest I came to violent encounters in Ireland was with pillars of society protesting their innocence. Anti social behavior at the upper end of Irish society is fully acceptable to the wider population. A common justification is ” sure it’s only money and influence, isn’t he faithful to his wife and children and attends mass regular as clockwork”. No blood or broken bones, nor immediate evidence of child malnutrition so no harm really done. We are indeed unique.

On a bright note I do know one honest solicitor in Ireland a man who was held in high repute by all who dealt with him. As my mother used to say compared to the other chancers he is breath of fresh air. That is Bryan MacMahon now on the High Court. So we do have fine upstanding people but you have to look hard to find them.

Oh John I was only joking : ) (ronan fitzgerald – which is still anonymity, really!)

..although I’m sorry, it was a bit rude. Was just wound up by bunburys ‘genetic’ theories

@ Dearg Doom

you have a clear case to make about Irish public expenditure. THis being so, it is a pity that you chose to embellish that case with deliberate confusion between real and current values and per capita and absolute figures. 

I wasn’t answering one of your exam questions.

Within the confines of a few minutes on a Saturday night, I had used a previous calculation of GNP capita, I had made a few months ago. The current public spending data with an estimate of inflation for the past decade could easily have been checked against population data.

The population rose about 21% from 2000 to 2012; GNP per capita at market prices rose 16% and current spending per capita increased by 82%.

Gross current spending rose 15.5% in 2001; 10.4% in 2002; 9.9% in 2003, 7.8% in 2004; 10.2% in 2005, 10.3% in 2006; 10.6% in 2007 and 9.1% in 2008.

The party system has a lot to answer for Ireland’s current economic predicament. It’s more based on populism than “common good”.

A number of well known personalities have mentioned that our political system is “not fit for purpose”. I think der Kaiser was one of the most recent one.

Mr Jim Power had a most apt article in the SBP on line this week, basically pointing out at a very immature opposition which is more interested in bringing down the minister for Justice than presenting constructive ideas for growth / jobs.

What is truly staggering is FF comeback in the polls….Mr Martin is doing an excellent job at “Weather Vaning the Party” not actually standing for anything until he is sure what direction the populist wind is blowing.

Considering FF have destroyed the economy not once, not twice but THREE times, the current FF comeback says an awful lot about the quality of the other political parties in Irish politics.

Unless the ECB get their act together and sort out a new banking supervision mechanism which will control these destructive populist political parties on the fringes of Europe we are doomed to repeat the cycle of boom / bust.

While I agree with some of Bunbury’s sentiment regarding the difficulties of Irish self-government, it is absurd to attribute them to genetics (though I think that may just have been hyperbole on his/her part). But the Irish citizenry have a problem with the notion of “common good.” How many times have you seen some local gombeen or criminal take actions that are clearly against the common good only to see him applauded/lionised/reelected by his local group? It happens all the time.

I think this is a cultural problem that has everything to do with the colonial past. For generations, the authorities/government were always “them.” That mindset dies hard. It is difficult to adapt to a world in which the authorities/government are “us.” And the constant scapegoating of various parts of the population–“they” are doing this to “us”–is but the other side of the consistent championing of “our boy” against “them.” The war on the public sector is a perfect, self-destructive, example of this.

@ GK

A great interview with Barry Eichengreen! No hostages are given to fortune.

“Economic theory has no lessons; instead, it simply offers a way of systematically structuring how we think about the world. The same is true of history.”

Some other points.

International interlinkages, especially in the context of shadow banking, were overlooked. European countries must make the euro work or, if the don’t, “they will pay a heavy price”.

The interview also introduces the most apt description that I have read of the current political tug-of-war that is going on; “retrofitting” EMU.

Core challenge is the need for an adequate supply of “safe assets”.

And much more. Thanks for the link!

@ Michael Hennigan


And, as always, required reading on a Sunday.

I think it was FiatLuxJunior who referred to “a post-mortem being carried out while the patient is still alive”. Looking backwards rather forwards seems to have a particular hold in Ireland. Whatever happened – and a public enquiry would, indeed, be a sine qua non in any country other than Ireland and would already have reported – it is doubtful whether it would have provided many lessons for the future as the country simply placed itself as a cockleshell in unruly seas and these are getting choppier.

Keeping the boat afloat should be the main focus of interest.

@ GK

The article argues that if banks were banned from lending we would effectively eliminate bank failures. In a similar way if we banned motorised transport we would effectively eliminate road traffic accidents.

The maturity and risk transformatoin of modern banking is almost as potent an invention as the internal combustion engine but like the latter needs to be kept under control.

The control of the former by its nature resides with a handful of individuals and therefore capable of wilder variation than the latter which enjoys the benefits of the law of large numbers.

A couple of comments:

1. IMF “lessons learned” on Greece

I did follow up on the ekhatherimi link of fiatluxjnr and the report cr13156.pdf in detail. I see it as obvious, that the central point is, that the Greek politicians, specifically Papandreou, were just great at paying lip service, and then, for now like the 12th time, not doing what they promised. With the Cyprus template it is now clear, that this could result in a hard cut off. The fire walls are up and working.

I do recall, that I only in Spring 2011 become fully aware of the the systemic risk, delusional / out of control / ruthlessly criminal peripherals can inflict on the rest of the EuroArea (EA), and would be interested in folks here pointing to why / when they got triggered.

Beyond that I actually see the IMF Greece report as pretty reasonable. The IMF Greece crew points out, that the might have threatened Greece earlier, and that those who gave ca 85% of the loans, the EuroArea, insisted to protect the legitimate interest of avoiding financial havoc to the other 95%, namely also Ireland, Portugal, but also Spain and Italy.

They lament a little bit, that in contrast to situations, where the 10x larger( compared to the co-involved World Bank), IMF was in the driver seat, they did not have the power to rule over the 10x larger Euro resources, LOL, every bureaucracy has first their own interest and desire for more power in mind : – )

What irks me more and more are those insinuations, by that Simon Johnson, who has to sell his 13 banker book, but also here Paul Quigley, DOCM that something is strange with the private corporation Deutsche Bank (ticker: DB).

I have no personal beef in this matter and would be interested to hear about things, which might need to be fixed.

From my perspective, the DB did not need any bailout in 2008, and in fact resisted attempts by Steinbrück to force government loans onto them, with the very openly stated intent to be then used as pretext, to interfere in them.

The DB fulfils the BASEL 2.5 requirements, and it is the US banks, who resist that mechanisms.

I am not an experts on banks, and would be interested by more specific comments from folks here, and not completely unspecific allegations,

Especially I an interested to hear from John Gallagher, who has provided many very useful links here.

And now for some stuff, even somewhat more remote, but came to my mind as relevant:

1. FDI

A recent link to FDI in/outflows:
According to that Ireland seems to do just fine?
Point is just, is that investment in some real physical structures, which will stay, no matter what, or is it just hot money of nominal transfers of some IP, which can flow one day in, and the next day out?

Typical any investment wants some return, and to whom does this belong, and where is that then spent? The return of some Apple, Google IP will not belong to any Irishman, and it will not be spent in Dublin.

2. Microeconomics

If I can run a German factory during boom times with second and Saturday shifts, I don’t have to waste money on buying additional machines. This is good, but shows up in international statistics as a low investment rate, huuuugh, trouble ahead, ….. really?

3. Sticky wages
The conventional wisdom has it, that wages can not go down. If wages have some 10 – 20% profit sharing, like in many factories in Germany, Arbeitszeitkonten provide another 5% mid term income smoothing, and Kurzarbeit smoothes out < 1 year peak / troughs, companies have a lot more breathing space, and workers a lot more time to adjust to significant longer term changes.

4. Dishonest behavior
If somebody tries to push his bad debt onto others, by not recognizing it in his books and then pushing for risk mutualization, if it succeeds, the other is on the hook, if the bad faith is seen, you destroy trust and your credibility. And that is typically seen by a lot more folks than just the targeted victim. And you will certainly not get a KfW loan : – )

According to the Pew Survey, Germany is recognized as the most trustworthy country.

I think the contempt China is now more and more openly displaying for Europe in general comes from watching the behavior of the various European nations.

This is a bit unfair to the Govt. They are limited in how they can respond.

Back in the 1980s or even the 50s the Irish Govt. could have in the midst of a recovery worked to bring back the emigrated Irish. Even with a recovery the Govt. isn’t going to be able to now tackle the problem of emigration. Very little can be done to focus on bringing those people back. When the next boom comes repopulation will very rapid. In other words what you see as a problem is something that can and will be covered when it needs to be.

Return migration i the modern globalised world is not a state aim. Arguing it should be something to aim for is dangerous close to say we’d rather these people over those people, her over him. That’s the past. Depopulation can and will be solved when its necessary.

Expecting the Irish cabinet to somehow paddle against this mechanism is not fair to them (and at least be fair when its called for good or bad)

“Ireland could easily sustain a population of 20-30 million + with high urban density and provide a high quality of life to all in that population.”

But would you want 20 million? Switzerland has 8m and it isn’t looking great for the 16 million transition. Density in itself doesn’t solve anything.

Also , Holland is central. Ireland isn’t.

I think it would be better to reform Ireland as is and then think about increasing the population.

Resource constraints are going to hit the highly dense regions as well.


Breathnach sent a similar letter to The Irish Times last year as this Sunday Independent one on Colm McCarthy but he is the one who is making misleading claims.

There was NO growth in full-time employment in the FDI sector in 2001/2007.

Jobs in the pharmaceuticals/ medical devices sectors have been in the low 40,000 for a decade.

McCarthy’s statement that export services “have created few jobs for unemployed Irish workers” is misleading. Employment in this sector rose from less than 12,000 in 1990 to 120,000 last year. Where would these workers be if these jobs did not exist?

According to Forfás, permanent full time employment in services in both the FDI and indigenous sectors was 86k in 2002 and 110k in 2011.

The rise was mainly in financial and business services. It includes for example people who work on PC repairs, call centres and the mobile phone sectors.

The following was the IT related data:

Computer consultancy services: 27k in both 2002 and 2011
Computer facilities management activities: 9k in both 2002 and 2011
Computer programming: 18k in 2002 and 2011
Other Information and Communication: 5k in both 2002 and 2011
Other information and computer services activities: 3k in 2002 and 6k in 2011.

In FDI services, jobs rose from 54k to 63k in 2011; and 8k of the rise was in financial services. So there has been a big jump in headline IT services exports but no jobs added.

McCarthy states that inward investment to Europe by US multinationals has been weak for many years. However, in both 2011 and 2012, the IDA attracted more new jobs to Ireland (mostly from the US) than in any year since 2001.

Note the play on words without stating a figure. Colm says inward FDI has been weak for many years – this is a true statement – IDA Ireland supported a net 6,300 jobs in 2012, the best since 2002 but at least half of these jobs are likely to be foreign hires and while welcome is tiny compared with the need for 200,000 net jobs.

Maynooth can do better than this nonsense.

@rf it is perhaps genetic,thanks apols for jab about annonimity.
@francis on DB they just raised 3 billion quite easily….there is an understandable lack of trust in all big banks.Lots of research on Basel 111- some academic,Francis specifically on DB this came out other day.

“And to top it off, the bank also gave in to investor pressure to finally issue fresh equity worth €3 billion in late April. With the latest round of stock issuance, Deutsche Bank’s capital ratio jumped to 9.5% – hitting the minimum level mandated for it by the FSB (see The Basel III Challenge For Banks: Why Extra Capital Requirements?). The bank is now among the best capitalized G-SIB, along with UBS (UBS), BNP Paribas (BNPZY.OB), HSBC (HBC) and Morgan Stanley (MS). [2]”

On banks on general this is very good-but more on US banks.

The IMF report,as they say over here there is no I in Team,they have never before lost any members money..first time for everything!
Objective was to buy time…greater good and all that,mission accomplished.

@ John

thanks again for the quick reply.

The general distrust in banks I understand as well, LOL.

What wonders me more, is where this special hatred for the DB is coming from.

Is that just the usual nationalist slander, like with the other 99% of allegations, because chauvinist people feel the need to take it out on everything German, or is there anything special with DB, I need to wonder about?

@ John

I didnt read the second part of that “seeking” because they want name and email, and in like 95% of the cases one doesnt get anymore useful information, but spam mail.

So just in case, there is something, you found important …… tell us!

@francis they are very well respected here in NY-for a bank-no idea regarding anything specific,other than say….this,this oh and ….
Just having a bit of fun,there was some jingoistic noises over here when the list of those benefitting from the AIG bailout came out-but it passed quickly.
Oh this too:)

@francis seeking alpha is just a newsletter,broker lite report-in summary target 54 bucks a share no dividends-looks safe and sound for a bank…
Summary,maybe not for widows and orphans was just a quick snapshot on the “streets” view…
“Now coming to Deutsche Bank, the German banking giant was placed in “Bucket 4″ by the FSB as part of its classification of the G-SIBs, which means that the bank will be subject to an additional capital requirement of 2.5% over and above the minimum base requirement of 7% – a total of 9.5%. Once the Basel III norms kick in, Deutsche Bank will be allowed to hand out dividends only if its balance sheet shows a capital ratio of 9.6% or above. As Deutsche Bank’s current capital ratio of 9.5% is greatly subject to the underlying calculation of its risk-weighed assets value, any change implemented by the Basel committee in this regard could negatively impact the ratio figure.
In such an event (and also given the demand for an increase in capital by BaFin) Deutsche Bank will be forced to withhold dividends yet again in the future – choosing to retain all its earnings. This will show a marked impact on Deutsche Bank’s share value as can be understood by making changes to the chart below which captures the bank’s dividend payout ratio as adjusted for any share repurchases.”


I know, german humour doesnt travel well.

I smiled yesterday evening a little bit about paul refusing a mass arrest,going by him as a second individual : -)

Remember, when I reported on the fate of that Sachsen LB? We chopped everybody, chiefs, board, emplyoees, the entity doesnt exist anymore, in contrast to AIB and the likes

@ Francis
For once I agree with you on the need for proper reform of banks.
And I accept that German banks have done a reasonable job in clearing things up and we should learn from that.

German banks, however, have to take some blame for the crisis in the first instance

@francis there does appear to be some reluctance in Irl to conduct any inquiries.
Perhaps,it’s part of the Irish culture,getting one over on the man.They reelect dodgy politicians,embrace businessmen with colorful pasts and refuse conduct inquires- head shaking stuff.
Regarding DB,they teamed up with KW purchased a few distressed loans but have stayed out the home loan market as far as I know.Truly no idea why they are getting singled out-the banks buying poor financially illiterate people’s home loans at discounts,demanding payment in full are the ones to watch not DB.

@Kevin O’Rourke

“… debt restructuring is going to eventually have to take place around the Eurozone periphery.”


Ireland: 180%GNP = 2 x 90 = 3 x 60

… to be restructured sooner than ‘eventually’

@Mickey Hickey

CuteHoorIzm is the main impediment to progress in governance.


“… and misdirected social welfare payments.”

Absolutely – all those billlions to the financial system – all those tax breaks to the developers – all those billions to the landed – all those millions to the professoriat – all those under_taxed pensions to those such as yourself … do I need to go on? p.s. have you handed back the bus pass yet?

@ francis

On your reference to me regarding Deutsche Bank, I said no more than that it had one of the biggest involvements in the US. Subsequent contributions by John Gallaher were enlightening on the detail.

As I said in another post, categorisation, as in your most recent contributions, of countries into saints and sinners, I find to be not just absurd but positively damaging to constructive dialogue.

There are certain things that Germany has to do, not because it likes to do them, but that the circumstances of the situation compel it to do them. Barry Eichengreen has a really top-class interview linked to above by Gavin Kostick about the need to “retrofit” the euro. The botched efforts by Merkel/Schaeuble are not up to normal German engineering standards. Merkel has been the engineer of a series of ersatz treaties external to the European treaties because of internal German domestic difficulties with the BvfG. It is your constitutional court, not that of the European Union. You fix it!

@ francis

For Holland, read Hollande. On second thoughts, read Holland(e), given the fact that it has possibly been brought home to the Netherlands that a policy in financial matters independent of that of Germany might not be such a bad idea.

@wow,Ireland along with other countries in fact does exactly that it’s called,SARP,free trip home break on school fees etc.

“Arguing it should be something to aim for is dangerous close to say we’d rather these people over those people, her over him”

IDA pg 29,I think the Dutch for example offer something similar.
“A new, improved SARP was introduced in 2012 aimed at encouraging key overseas talent to come to Ireland”

@ BWII: “The control of the former by its nature resides with a handful of individuals and therefore capable of wilder variation than the latter which enjoys the benefits of the law of large numbers.”

Maybe Brian, but those handful of individuals are (or are not) subject to the Rule of Law. Its the RoL that has been deliberately diluted, openly flouted and subsequent criminal behaviour going unpunished that has brought about our current financial and economic troubles [cf: Prof William Black]. Re-instate the RoL and things will stabilize. And maybe improve as well. Its first and last a political problem.

Humans will obey the RoL if there is a high probability of detection and significant custodial penalties for those convicted. Machines obey the laws of physics, and are not subject to human control nor variation. You maltreat a machine and it WILL kill you!

@Colm McCarthy

“Donovan and Murphy write: “. . . it is difficult to see how a comprehensive guarantee of some sort covering all domestic institutions could have been avoided.”

It is not difficult at all. Countries unable to borrow in the sovereign bond market to support bust banks do not attempt to do so, and fail if they try. The thesis being advanced here is that the blanket bank guarantee was inevitable in all states of knowledge about bank insolvency.

Counter-factual history is a diverting parlour game at best, but this is a pretty implausible contribution.” (C. McCarthy)

+1 ‘ugly’ implausible due to its probable latent intent!

on UNgovernance – Yanis in good form …

The IMF’s Anger – and what it means for the Eurozone’s crashing Periphery6

The IMF’s recent report on Greece constitutes the culmination of the Fund’s Mea Culpa regarding its complicity in a series of toxic bailouts that have contributed to the unfolding Kossovisation of the Eurozone’s Periphery. Back in March 2012 this blog reported on a preemptive strike by the IMF the purpose of which was to cover-up another foretold program failure. The IMF’s next step was to confess to major errors in the computation of fiscal multipliers; a recognition that the fiscal consolidation program imposed upon our hapless countries was never going to produce anything other than an intensification of the debt-deflationary crisis. (See this post which explained the unholy alliance between economic illiteracy and political expediency that led to those ‘errors’ and this more recent interview for my assessment of the IMF’s strategy vis-a-vis Europe at large.)


From your link above…interesting.
“More importantly, the IMF was livid that Germany was proclaiming a banking union in order to ensure that it never actually happens. That it honours the idea of a Banking Union in the breach rather than in the observance.”


Germany has fought tooth and nail, thus far successfully, to get all german loans to periphery back [via bail_out dosh and sovereign debt] and to keep all internal little black holes [landesbanken] and the probable big derivatives black hole in deutschebanke, internal.

correction: ‘the alleged probable big derivatives black hole in deutschebanke …

@ francis/john Gallagher

According to David Stockman’s ‘Great Transformation’, Deutsche were one of the perpetrators of the subprime mortgage scandal. Behind the designer spectacles, their balance sheet is, like their ethics, as mysterious as the Secret of Fatima.

@DOCM thanks for the link to a nicely written German document on youth unemployment. It’snot the first decent English language policy document from the Germans that I’ve seen. There’s plenty of interesting stuff on the energiewende.

There are similarities between Ireland and Spain. Both of us have had construction sector booms that diverted young people from education. The young are now being discriminated against. New teachers in Ireland earn a third less than those who started in 2010. The SPD document does not mention that the trade unions are responsible for agreeing to discriminate in this way.

Let us return to the theme of this post. Ireland is not depopulating. This is not a matter of opinion, it is a measurable reality that the population is increasing.

Employment in Ireland is rising. How does this square with the theory that unemployed people are leaving Ireland in droves and greatly responsible for the reduction in unemployment numbers? Clearly some unemployed people are leaving. Clearly employed people are leaving too. The net emigration of Irish people last year was 26,000.

The whole “ba cosúil leis an bás an eisimirce” is emotive nonsense in the Ryanair era. Perhaps we should now desist from comparing every downturn to the potato blight. I doubt Kevin O’Rourke took a famine ship when extreme hardship compelled him to emigrate to Oxford. I don’t remember shedding any tears on my way to Cupertino – or Berlin or Paris or London.

Let us return to the theme of this post. Ireland is not depopulating. This is not a matter of opinion, it is a measurable reality that the population is increasing.

And I wonder who’s going to feed all of these new mouths and sun-tanned pensioners after thinking like this has driven out every working generation we have left?

Ossian Smyth / OMF

It is true that the population is still growing and those who can take up opportunities to emigrate are likely to be the lucky ones.

I once worked as a navvy in London and talking to emigrants who had arrived in the 1950s and 60s, the general picture was grim and the pub was the regular refuge from it and cause of more of it.

However, at home, a quarter of Irish women and a third of Irish men never married and rural Ireland had the highest rates of schizophrenia in Western Europe.

Today, the lot of the emigrant is likely to be a generally happy one while almost 200,000 people have been on the dole at home for a year or more. Many will never work again.

The most optimistic of us would be challenged to maintain hope when most job applications are simply ignored.

The collateral damage of reckless misgovernance is largely unseen but without doubt, it’s immense.

Near stabilisation should not be confused with a recovery.

If the 86,000 people who are in publicly-funded activation programmes (which can be important if administered well) were included on the Live Register, the total would be a stunning 507,000 — 24% of the workforce.

Part- time / casual employment has risen by 60,000 since 2007.

@ David O’Donnell

‘We were shocked,’ is a great refrain but I doubt if a banking inquiry will change the status quo.

The Central Bank is almost independent and its economists are allowed to publish some research relevant to current policy compared with their bubble counterparts.

Little has changed elsewhere.

More economists at the DoF but their output will be filtered at the top. TK Whitaker remains unique.

In 1957, in a memorandum to the minister for finance on the failure of economic policy and the general sense of hopelessness in the country, he warned that “without a sound and progressive economy, political independence would be a crumbling facade.”

Possibly, the case of alleged breaches of company law will reveal a lot more than a complicit Oireachtas could because much more is at stake.

@Michael Hennigan

Remember banana_gate? ODCE is seriously under_resourced.

@Limerick Hurlers, Boxers, & Junior rugby boys

Luvly hurlin!

Let’s hope the hostelries in Mullingar serve all of John Joe’s, EU boxer of the tournament, supporters. Paddy Barnes for Taoiseach anyone?

@ Michael

“I once worked as a navvy in London and talking to emigrants who had arrived in the 1950s and 60s, the general picture was grim and the pub was the regular refuge from it and cause of more of it.”

Did you ever see the film or read the book called “I could read the sky”

This was in the Ft at the weekend.

“We cannot forget that four or five years ago, when the discussions about the adjustment (in Greece) were taking place, the climate was, in general, much worse. There was a fear of contagion there and very high volatility. That is, in a sense, where the fragmentation of the euro area really started.”
When crises rage, restructuring government debt and forecasting a sharp contraction in economic activity could further undermine confidence and trigger the sort of contagion that Fund bailouts are supposed to stop.
Ousmène Mandeng, a former IMF economist, said: “There is a bias towards over-optimism. But how low can you be? It’s a confidence game . . . You have to be optimistic. You just can’t be unduly optimistic.”
“A better programme design could have been achieved,” he added. “But that is always the case . . . The IMF only comes in when everything has failed. When the Fund comes in, it’s a mess.”

the big question is how does Ireland avoid getting sucked into the next maelstrom. I think it’s like abuse. How do you ensure you aren’t a victim? how do you build resilience

That’s why I’m wondering about our own numbers. As michal Hennigan has repeatedly said our export numbers contain a lot of fake/ transfer pricing numbers. What is the effect of this in the real world?

Meanwhile the ECB are out with guns blazing…bit of the Clint Eastwood ..
“”When we announced the programme, the eurozone was nearing uncontrolled decomposition,” Mr Asmussen told German daily Bild.
“Serious business and banks began to prepare for it. At this time the ECB was the only European institution capable of acting fully and had to make clear to speculators: ‘Do not mess with the ECB’.”

should be a great show…Asmussen v. Weidmann

What is the difference between the national interest and the interests of powerful minorities in Irish organizations? Policies are implemented that suit the latter over the former on every occasion.

Who are the insiders and how do they operate in Irish society?
Its complex but here are some obvious examples.

The IFA.
THE EU is trying to bring in a new CAP policy that will increase the amount received by a majority of members. These are mainly smaller holders many of which are west of the Shannon. The result of increasing the cap subsidy would be a boost to the most rural communities in the country.
However The IFA held a march a few months ago to protest against this new policy. The larger farmers (in the minority) in Leinster and Munster would loose out.


Since 2008 Unions have sought to maintain the pay and conditions as far as possible of people who gained most from the large increases in pay and conditions seen between 2001-2008. It has since been shown that most of the extra growth in this time was a mirage.
The policies pursued have mainly been in the interest of Public sector workers and Union Leaders over 50. Their pension rights have been protected more. A reduction in staffing numbers has been agreed instead of modest pay cuts. This benefits them and beggars a younger generation. Union leaders over 50 don’t have to worry about the fact that the countries largest union saw its membership fall 10% last year. The long term future of the unions is someone else’s problem.
The INMO has suggested acceptance to the new Haddington road agreement. Some cuts were to be reversed that were in Croke park 2 however regrettably the pay reductions imposed on new entrant nurses was not an issue that the government were prepared to bend. According to a young nurse on Prime time last week Nurses who started in 2010 had an initial salary of 31K The new starting salary for nurses in 2013 is to be 23k
So the INMO is happy that the lowest paid people in its union are to face a pay cut of about 26% while those over 185k are to get a 10% cut that will be clawed back by 2018 (as well as any increments they receive in the meantime).

Private sector employers.

A study came out last week from the central bank stating that only 1 out of every 100 private businesses in Ireland introduced pay cuts. So much for the bluster about people in the private sector taking wage cuts. where were the cental bank when this line was being peddled? More firms in Germany implemented pay cuts than in Ireland in the last 5 years. It was reported that in Ireland employers prefer to let staff go in order to reduce wage bills. They resist wage cuts out of fear of loosing their best employees. It is unclear where these superstars would go to in a domestic economy that contracted about 20% over the period. The truth is far simpler. It is an accepted norm that wage cuts start from the Top. Employers were not prepared to reduce their own pay in an economy that no longer allows businesses to make a profit. Therefore politically those immediately below them could not be asked to reduce their pay. The solution was to make younger employees redundant and ask experienced workers to take up their work in exchange for wage stability.
This massively strong desire to hold what we have at all costs makes wage rates extremely sticky. A problem when you have your own currency. Catastrophic when you are unable to inflate your sins away.

Speaking about the patterns that she is observing in the European periphery Coppola in the link above observes the following.
“Older generations hold on to wealth rather than redistributing it to the young, because they need that wealth to support them in their old age. Meanwhile the young don’t see the need to support the old directly – and the old don’t expect to be supported directly – because the old have much more wealth and are extensively supported by the state.”

The obvious reaction for younger people in retaliation to this attack would be for those that have jobs to stop paying in to their ponzi pension schemes. Are the older people aware of this new agreement they have made with their kids?

The good news is that we have a very clear picture of what happened in the last 6 years in Ireland.
There are also some very simple policy changes that could be implemented if the right people were convinced. Granted they would take some convincing.
I believe that if we had implemented pay cuts in exchange for allowing people to remain in employment the size and depth of the contraction in GDP would have been about half of what it was. We also would have reduced the size of another exodus from the country.
So by keeping the same amount of money in circulation but making sure younger people got their hands on more of it would have led to a much smaller contraction in the domestic economy. Young people spend their money in the economy. This is tough arguement because the right thing to do for the economy is counter intuitive.
As was shown in another report all of the decrease in spending in the domestic economy came from the under 45s We also would have been much more able to put people into more innovative roles that encouraged companies to move quicker when green shoots emerge. Are there any economists on the site that think there might be something in this?
Why haven’t there been more calls by economists to encourage employers and the government to try to implement such policies?
This leads us nicely to another group of vested interests that have weathered the storm academic and industry economists.

@ Ossian Smyth

Long term unemployment fell 12% in the last year. Let’s hope this is the start of a trend.

Briefly, this appears to be a statistical adjustment as the QNHS is based on survey data, rather than 24,000 people finding jobs, emigrating or migrating to activation programs.

Last Thursday’s Live Register shows a rise of 3k in the number of long-term unemployed to 192k in May 2013 from May 2012.

The number rose by 7k in 2011/12

The above should read:

@ Ossian Smyth

Long term unemployment fell 12% in the last year. Let’s hope this is the start of a trend.

Briefly, this appears to be a statistical adjustment rather than 24,000 people finding jobs, emigrating or migrating to activation programs.

Last Thursday’s Live Register shows a rise of 3k in the number of long-term unemployed to 192k in May 2013 from May 2012.
The number rose by 7k in 2011/12

@ Fiatluxjnr.

I wouldnt include the construction sector in any of my analysis above. Apart from 3 bed semi’s in south Dublin I still see oversupply in everything else everywhere else. If you build half as much as your neighbour who has 12 times your population you may be in trouble for quite a while.

As for the expected latent demand in the economy I would not be so sure.
Many of the baby boomer generation (Popes children) got on the property ladder earlier than they would have if they didnt believe it was their last chance to get on the property ladder. If anything that would have reduced future demand. The next generation was smaller and many of the better educated that would have been the types to buy have been forced to leave. Also many of their grand parents houses were the first generation that were well built for working classes by the government in the 50-60s’. As this generation pass on they are leaving suitable accommodation in places people want to live so there is less need for new builds.

From the guardian
“Ireland, which is often commended for its recovery from the banking crash, has seen a sharp rise in its debt-to-revenue ratio in the last four years. In 2009 the ratio was 187%. A year later it had jumped to 262% before reaching 340% in 2012. However, the country appears to be in better shape when debt-to-GDP figures are used. It ranks fourth, with a 117.6% ratio, after Greece, Italy and Portugal.”

Apparently debt to revenue is a better metric than debt/GDP. Seems sensible.

@ gavin kostick

Thanks for linking the Barry Eicherngreen interview. Of course history matters. Any other approach is blind technocracy and ideology masquerading as science. The maintenance of disciplinary boundaries is sacred, and it is often justifiable, but what happens when inter-disciplinary barriers make it impossible to address the problem. In wartime they kick the physicists in with the accountants but it’s not so easy in peacetime.

Eichengreen says:

‘I think there was a tendency, when things were falling down around our ears in 2008, to refer instinctively to the Great Depression. What Munich was for Truman, the Great Depression is for monetary economists. It’s at least possible that the tendency to compare the two events and to frame the response to the current crisis in terms of the need “to avoid another Great Depression” was conducive to overreaction. In fairness, economic historians did point to other analogies. There was the 1907 financial crisis. There was the 1873 crisis. It would have been better, in any case, to have developed a fuller and more rounded portfolio of precedents and analogies and to have used it to inform the policy response. Of course, that would have required policy makers to have some training in economic history’

Barry is too kind to his fellow academic. Bernanke is an economic historian, but he is applies his knowledge in a blinkered, compliant manner. The problem with Helicopter Ben’s ‘depression scaremongering’ is that his unprecedented money printing perpetuates the mispricing of risk, transfers massive wealth to the leveraged speculating community, encourages massive extraction of corporate equity, and erodes the real economy.

The Dork has it right. We are being farmed.

@ seafóid

I didn’t come across the movie or novel.

Those who could afford the trip to America, with the exception of the Depression years, seem to have had greater opportunity than emigrants to England.

My mother lived 11 years in the London area, which included the blitz. It was a positive experience for her – not the bombings!

In the 1980s with educated Irish getting jobs in the City and the likes of Terry Wogan and Eamonn Andrews having popular appeal, the general attitude towards the Irish appeared to have changed despite IRA bombings.

@ eamonn moran

Well said.

At over 40%, Ireland has the highest level of owner-occupied houses without a mortgage, in Western Europe.

The old call the shots and they vote.

Older men make the decisions in government, the public service, the universities, the traditional media, in most of business and in the main lobbying groups in business, farming, trade unions and churches.

Some of them likely consider themselves liberal and they maybe on social issues, but the mindset is conservative.

Most of them were in positions of influence during the bubble and did well by going with the low.

It’s the same firms who were egging on fool politicians, rubber-stamping dodgy accounts and now are on call as undertakers or rescuers for firms or advisers to the Government.

Politics is a sort of sport and two well-off lawyers, Michael McDowell and Noel Whelan are in the leadership of the no campaign in the planned Seanad referendum.

Two years ago eight millionaire former attorney generals not noted for proposing change in the area they no best, the legal profession, called for a no vote in a referendum on Oireachtas inquiries.

The IFA forced a deal on land purchases on the government of the day in 2001 that gave farmers a bonanza.

However, IFA for example will never support making accessing to land easier for young people.

They have the craven rural TDs to do their bidding.


“At over 40%, Ireland has the highest level of owner-occupied houses without a mortgage, in Western Europe.”

I think that reflects the very low level of prices of Irish housing pre bubble. In some countries mortgages run over 100 years because prices are so far off the scale compared to incomes.

@ Flj

Dangerous is not adequate to describe the approach of the Bundesbank!

Open Europe has a good briefing note.

However, the current members of the Constitutional Court have no desire to enter history as the irresponsible actors that caused the euro to collapse (despite the views of the Court’s previous president!). This latest episode is likely to end as did earlier ones i.e. no dramatic veto but still more restrictions on the freedom of action of the German government.

Attention has also been drawn by one influential blogger to the fact that the Court has obviously packed its invited expert panel.

@ Flj

Interesting comment by Der Spiegel! The concept of “ultra vires” in this context is an invention of the German Constitutional Court. In the same way as the Bundesbank seems to think that it is the central bank responsible for the euro, the Constitutional Court seems likewise to consider that it is the arbiter of what is or what is not in accordance with the treaties, including actions of the institutions, a role explicitly and unequivocally assigned to the ECJ under the treaties. Pacta sunt servanda!

I’m inclined to think you are right but as the court, i understand, is evenly split(4:4) it could go either way. And those Germans love their Bundesbank. In any event OMT is wearing a bit thin and the world has moved on. US 10year are now over 2.20% and gilts 10 year are 2.17%. Spain at 4.6% and Italy at 4.29% with Portugal 10year at 6.22%. It looks like bond markets are correcting themselves.

Yours at 6.09

A Mexican standoff between the Constitutional Court and the ECJ?

NYT on Deutsche Bank Shareholder Meeting May 23 2013
Link at end.
Some insight into DB concerns.

FRANKFURT — Anshu Jain, co-chief executive of Deutsche Bank, had barely spoken two sentences to shareholders Thursday when he was interrupted by applause. It wasn’t what he said that pleased the audience so much as the language he used: German.

Mr. Jain, a native of India who has been criticized in the past for his lack of proficiency in the local language, surprised the audience of some 10,000 shareholders by delivering two pages of prepared remarks in somewhat halting, but comprehensible, German.

But shareholders’ attention quickly turned to the myriad problems that the bank has been trying to shake, including lawsuits and official investigations.

The allegations that Deutsche had participated in a conspiracy to rig international benchmark interest rates was ‘‘the biggest breach of trust one can imagine,’’ said Klaus Nieding, vice president of a German shareholder advocacy group. ‘‘It’s the same as if you were distributing counterfeit money.’’

Paul Achleitner, the chairman of the Deutsche Bank supervisory board, replied that the law firms hired to conduct an internal investigation had found ‘‘no grounds to doubt the integrity of senior management.’’

The bank’s annual meeting, held at Frankfurt convention center, is usually a polarizing event, reflecting Deutsche Bank’s status in Germany as a source of national pride for some and a symbol of capitalist greed for others. As in past years, numerous shareholders used the gathering to voice their dismay about bank policies.

Outside the meeting, protesters shouted into megaphones, handed out leaflets and waved placards in a cold, occasionally heavy rain. Some erected tents in the style of the Occupy movement. One shirtless man had painted his chest and back with the Deutsche Bank logo and an insulting slogan.

A few moments after Mr. Jain won applause over his speech in German, he was interrupted by hecklers who were escorted away by security guards. Mr. Jain later turned the podium over to Jürgen Fitschen, the other co-executive, a German who gave a longer speech in his native language.

Shareholders took issue with bonuses to its senior managers than dividends to shareholders. ‘‘Bonus payments are not understood by the public and damage the reputation of the bank,’’ said Ingo Speich, a fund manager at Union Investment, a Frankfurt firm. Mr. Fitschen acknowledged that the bank had made mistakes in the past and promised to instill a stronger sense of ethics among employees.

‘‘In some cases we have been pilloried justifiably,’’ Mr. Fitschen said, though he added, ‘‘We can’t give in to everyone who thinks they can skewer Deutsche Bank.’’

Hans-Christoph Hirt, director of Hermes Equity Ownership Services, which represents the interests of pension funds and other large investors, said he welcomed the push to raise ethical standards. But he added that he still needed to be convinced that the efforts ‘‘will lead to concrete changes in the behavior of employees.’’

Die Zeit on the ECB Bond Buying

Karlsruhe is biased.
By Mark Schieritz June 10 2013
On Tuesday starts before the Federal Constitutional Court hearing on the bond purchases by the ECB . That the German judges deal with it is legitimate – you have, in my view, the Basic Law be interpreted that emanates in international collaborations each state power by the German people. So it may not give carte blanche for European institutions, their actions must be derived from German constitutional principles. One can imagine other strands of legitimacy, but then you just have to change the constitution.

The scandal is the list of experts: Hans-Werner Sinn, Kai Konrad, Harald Uhlig, Franz-Christoph Zeitler, Clemens Fuest – all well-known critics of the bond program. To let any misunderstanding: meaning, Konrad, Uhlig and Fuest are renowned economists and luminaries in their fields.

The point is this: Economics is not an exact science, who has compiled this list, it would discredit. In addition, Zeitler is not an economist, and was noticed at the Bundesbank is not necessarily an expert in European monetary policy.

Obviously the judges have noticed that they have overdone it and so was Marcel Fratzscher by DIW-nominated. But the fact remains that with a fair and balanced process, this hearing has nothing to do.

@ Flj

It will not happen i.e. the Constitutional Court will huff and puff and, well after the elections, push around the only institution that its statute allows it to – the federal government – and retire to its tent having neither conceded to the ECJ nor clarified its position.

A bit like Ireland, really!

On the Deutsche Bank, I think it has become clear by the posts here, that it is just the usual unsubstantiated slander.

Since the UK repeatedly abused their veto rights to block useful things, these “ersatz treaties” have become standard operating procedure (SOP), see Schengen, ESM. This will continue, until the UK have made up their mind about the EU. Not perfect, but good engineering under constraints. No complaints from my side, and that certainly did not start with Merkel/Schäuble.

And there is of course nothing wrong with the BVerfG. It does it job, to protect the constitutional rights of Germans against the constant criminal attacks from outsiders. Many people here hope that it will smash OMT completely.

I think we had the discussion on nuclear power before. I hope we will go back to the original runtime of the existing plants, but building any new plants is out of the question. It would split the nation, and is not a real solution. With the EdF 10 cent demands in the UK, firing our own lignite is cheaper anyways.

And I agree with you, that the tactical implementation by Merkel was textbook quality, as so often : -).

On those pretty transparent blame games, why things in Greece did not work out as expected:

How can projections work, if

a) the underlying data were systematically fudged by the Greek Government, and

b) the other side , the various Greek governments, simply do not do, what they promised?

I would like to contrast that with the Republic of Ireland, which sticks with the agreements, and has therefore returned, on probation, to the league of civilized nations, 10-yr IE00B4S3JD47 is trading at < 4%


When some traditional conspiracy theorist like Yanis claims something about “livid”, does not mean that anything like this is true.
The Greek problem is 100% the consequence of the notorious criminality of ALL Greek governments, and nobody elses fault.

@ Paul

your youtube link is not available here. The Amazon reviews of Stockman do not show any DB specifics.
With the IMF and their ex-folks, like Simon Johnson, Mandeng, I see this more and more as attempts, to stir up some trouble, and then take that as pretext to exit. Asmussen has already given the answer. Next time they will not be involved, but now they will not get off the hook on the existing engagements.

To resist any attempts to force openly visible losses onto the German taxpayers, is of course the sworn duty of Angela Merkel “Schaden vom deutschen Volke abzuwehren”

Some final “editorial” comment. This kind of “sampler” comment is somewhat destructive for the flow of arguments, and should and will not become the norm from me. But after some comments yesterday, like eureka, I was thinking somewhat about what I am actually doing here and whether it would be more useful doing more sandbag shifts.

Flood update:

Dresden has come through with pretty limited damage. In most areas the defenses were up, public morale excellent, we had some help from Hessian, Hamburg, France, and were pretty early to sent most of our regular forces to help those more severely hit further down the stream. In some places, Laubegast, Gohlis, the built of defenses were held up by local greenies. I am sure they will have some lively discussions in their local councils in the coming months. What is more important, some rare species and a beautiful view, or defense of life and property.

I learned, how a proper sandbag defense is built, how spontaneous order emerges between good people, developed a swinging technique at the end of the chain, to remove sandbags, which are now removed mechanically into trash, and that I am still not too bad to motivate others to chip in : -)

Moving a few tons of sandbags is actually a good workout.

What we see further down, are floods larger than in recorded history, not just centurial, but more millenia. And we have to think about that.

@ Mickey

In France the experience 10 years ago was, that you will not survive at the 1st management level, if you do not speak French. Here, I would say, you get along up to the 3rd level with English only.
But the boss of a DAX30 corporation must be able to speak German at least at a level of Jain now.

The hecklers at that shareholder meeting are a small bunch of well known vultures. In the past they had to be paid off. Germany took appropriate action to not being vulnerable to alien criminals, like that Flowers at the HRE, and they need a few more years, to understand that their business model doesn’t exist anymore.

Fitch reports AIB and B of I will need capital injections.
The wonder would be if they did not.

Some ungovernment might be profitable when these chips are down.

Some of you will have noticed that banking is a blood sport in Germany and that is what keeps them from straying too far out of line. By comparison in Ireland we have banking claques like at La Scala in Milan.

funny piece today about vested interest………10 things economists …its a bit annoying the layout but rather amusing:)
“Many influential economists work in academic institutions, which can confer an aura of unbiased authority. But in reality, experts say, most economists have political — and economic — motives of their own. “Most economists are paid by financial institutions that have an agenda to keep you invested long-term,” says Schmansky, the financial adviser.
What’s more, around 70% of university economists have financial interests outside of academia, according to Gerald Epstein and Jessica Carrick-Hagenbarth’s 2010 study “Financial Economists, Financial Interests and Dark Corners of the Meltdown,” which analyzed media appearances, articles in the press and research published by economists from 2005 to 2009. But in spite of these ties to business and the private sector, economists rarely identified themselves as working in the private sphere, the researchers concluded.”

@Mickey Hickey heres the link…live and dangerous oh they were all involved in LIBOR,etc not just DB.

Constitutional convention and how not to govern.

Amazement and despair is about all I can utter at this time. How were they chosen? Nominees of plonkers perhaps?

@M. Hickey
Jim Power highlighted this. Maybe the solution is to distribute the shares to the citizens…all 500,000,000,000 of them…like proposed for UK banks.

Hi Paul-yeah me too some Toronto is a great city this time of year…winter a little long for me.
Easter Long Island quite nice Fri/Mon too….i think you know where i mean,far eastern LI packed with Irish J1’sters.Chatting with them about home and the bitterness is striking,my generation did not have that.
from the CBC link above-they are some numbers WOW !

@ Flj

Read all about it!

“The Convention is a decision-making forum of 100 people, made up of 66 citizens, randomly selected and broadly representative of Irish society; 33 parliamentarians, nominated by their respective political parties and including an elected representative from each of the political parties in the Northern Ireland Assembly which accepted an invitation from the Government; and myself as it’s an independent Chairman.”

I gather that the randomly chosen participants have been granted anonymity. Good move!

@ francis

‘Germany took appropriate action to not being vulnerable to alien criminals, like that Flowers at the HRE, and they need a few more years, to understand that their business model doesn’t exist anymore.’

It’s your native criminals you should really worry about. The shadow banking ‘business model’ still exists and DB are still up to their necks in it.

Good work in the floods. Now that you have given your body a workout, you can do the same for the mind by reading all 750 approx pages of Stockman’s ‘Great Transformation’.

Essential reading for those who embrace Reality Therapy.

I suspect the randomness of the selection process. It’s difficult to imagine that such would/could produce such an array of gobshites. They must be captured by the Pols. Probably understandable. We know best etc.

@Fiatluxjnr/DOCM great summary of German press coverage here,simple to translate in Chrome,Megan Greene has good piece this morning too.
Referenced a paper above,here is the link,unlikely to have many readers,doubt anything similar done in Europe but the recommendations make sense.Its not very technical,but a little dated….
“Epstein and Carrick-Hagenbarth analyze the conflict of interest that exists when academic financial economists, acting in their roles as presumed objective experts in the media and academia on topics, such as financial regulation, fail to report their private financial affiliations…..
The vast majority of the time, these economists did not identify these affiliations and possible conflicts of interest. In light of these and related findings the authors call for an economists’ code of ethics which would require academic economists to identify these connections in appropriate contexts.”

@ paul

My sentence with the Flowers / HRE went a little bit weird. The hecklers are still homegrown, and there are also a few people here, who believe in raw markets, not social market.

That the DB is engaged in the US in pretty much the same business like all other banks, some subprime, some LIBOR, I don’t doubt.

What I was concerned here, whether there is anything specific about the DB.

And what I see is just folks like Simon Johnson doing some slander about missing core capital, which is not true, …

What that Stockman writes, sounds pretty much like what most here are saying:

namely that this crisis was very predictable, in contrast to the marketwatch link,

John Gallagher provided.

The debt crisis is, like practically always, the bursting of a debt bubble which is most the time fueled by overhyped asset prices.

2000 stocks, 2007 houses. 1990 Japan, 1998 Asia, ….

Some Warren Brussee, a retired engineer,not an economist, wrote in 2004 “The Second Great Depression, 2007 – 2020”, where he based his prediction on private debt and the comparison with Japan 1990. He does not mention houses, just private debt, and of course not the then not existing sub prime. That was just the final icing on the cake, not the real problem.

Everybody later on solves the problem a little different, the Japanese with low visible unemployment, but still dragging on 2 dozen years later, the US with massive monetary interventions, on which the jury is still out.

I find this picture, which is essential Austrian, pretty convincing, and wait for proposals, where this does not fit, and the solution is: don’t produce (debt) bubbles.

After that, this MW is regurgitating a lot of the usual stereotypes, only 30% of economists are female. Jesus. Only 5% of physicists and engineers are female. Does that mean physics does not work?

That they disclose from whom they take money, should be self understood.


I find this picture, which is essential Austrian, pretty convincing, and wait for proposals, where this does not fit, and the solution is: don’t produce (debt) bubbles.

This is why the Austrian position is, when it is not dangerous, useless.

Shay, I read the thing, and some links.

It looks like these classical US strawman fights.

Krugman will find some crazy goldbug Ron Paul or so, who might be interpreted as “immediate hyperinflation”.

There are plenty of crazy folks there, in an outside economics.
And those libertarians are also not noted for warning or asking the government to rule into unfettered credit, do they ?

And now I stand here, and wonder, what that has to do with what people in Germany think and say, and the observation that some folks, and when you look at the blog of this Brussee, certainly not some US kind of austrian,

did make accurate predictions.

Since Cromwell, with Gombeen assistance, so that ultimately, voter power becomes diffuse and political power becomes the possession of those who actually provide jobs. Slaves are assets to be cared for. Without owners, there are merely workers and providers. No obligation on providers to “get jobs” for voters, workers must move to find work.

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