Ireland’s (and Britain’s, and Italy’s…) long recession

Jeff Frankel has a terrific piece here on the unsatisfactory way in which recessions and recoveries are called in Europe.

The current European definition of a recession (two successive quarters of declining GDP) is particularly unsuitable in Ireland, given its dodgy and volatile GDP statistics — looking at a broader range of indicators over a longer period of time would surely make more sense here.

There is an additional cost to the two-quarter rule of thumb in the Irish and Eurozone context: it implies that Ireland is periodically proclaimed to be out of recession. This then allows Eurozone politicians and central bankers to defend the status quo monetary and fiscal policies prolonging the economic crisis in Ireland and elsewhere. (And to express “surprise” when Ireland tips into recession “again”, despite its model pupil status.)

Update: the CEPR’s Euro area business cycle dating committee does not use the “two-quarter GDP decline” rule of thumb. Details of their methodology are available here.

135 replies on “Ireland’s (and Britain’s, and Italy’s…) long recession”

An excellent article, with a conclusion that fits in nicely with the “reality based community” synthesis that Ireland’s (and the EU’s) problem has been that of a global crisis of financial capitalism intensified by five years of the creditor states of the EU trying to pretend the issue was instead a set of simultaneous but unconnected national crises of economic policy and governance in the countries they want to recover capital from.

There is also a potentially more far-reaching and serious disadvantage <.. of the current criteria in the EU for defining when a recession ends… >. Citizens in Ireland and Italy have been given the impression that they have entered new recessions. Voters are likely to draw the conclusion that their political leaders must have done something wrong recently. More likely, these countries have been in the same recession for five years. The implication may be that the leaders have been doing the same wrong things throughout that period. It’s not an unimportant difference.

Brian the story in the qtly macro data is really very simple.

The peak was around Q4 2007, the decline stopped somewhere in mid-2010, since which point the real changes have been pure noise, mean zero. Call this whatever you wish, just don’t call it a recovery.

Oh I dont Colm.. I dont! Tis far from a recovery. The quarterly data show the absurdity of the 2 quarter rule – if we are in a recession 4 times then we never really left it.

@DOCM: Do you mean this paragraph? – I have deleted the US specific details and subbed in some Irish ones instead.

“For decades, in Ireland, national leaders ran up tabs for future taxpayers; they promised pensions and other benefits for public employees that have strong legal protection. That has been a great source of patronage for elected representatives: they can promise all sorts of future perks to loyal supporters with very little accountability on the delivery of those promises.”

“Decisions have consequences” – bad ones! We have had a ‘long’ recession? Its relative, as Einstein might have said. Japan has had a ‘better’ recession than us.

If the current econometric metrics-in-use are so poor, why not propose some replacements?

So, let me get this straight: As long as you get even one quarter of a bump in GDP, you’re out of recession for the next two at least, regardless of whether your unemployment stays at 14% or 25% or whatever.

So you could have the following situation run indefinitely across quarters without ever technically being in recession:

-2%, +0.01%, -2%, +0.01%, -2%, +0.01%, -2%, +0.01%, etc, etc

This is what we call in the mathematical business “absurd”. We usually say that right before we prove something wrong by contradiction. I think you guys need a new definition.

In a time of low growth or none, transactions in the foreign-owned multinational sector, that may not reflect underlying underlying economic activity, can swing the Irish growth story either way.

Earlier this year, reported GDP growth of 0.9% in 2012 was of course applauded by ministers, the Central Bank, the ESRI, commercial economists, IBEC and so on.

Services exports had overtaken merchandise for the first time – surely confirmation to the chirpers of moving up the value chain, that the knowledge economy peak was in view. More recently, despite some fantasy, the number was cut to 0.2% – effectively no growth in the headline GDP data in 2012.

However, in May the quarterly household survey showed that 20,500 part-time jobs had been added in the 12 months to the to the end of March. The CSO warned about the data because reweightings related to Census 2011 are being fed-in over four quarters.

If we ignore an anomalous dip of 23,000 in employment in Q1 2012, and take the 20,500 in the period April 2012-March 2013 as representing people who may work for at least 1 hour a week, 19,500 are either in self-employment/freelancers, including in farming or ‘Assisting relative’ category.

It is simply too early to say how many real jobs are reflected in the data.

Nevertheless, since May the taoiseach, finance and jobs ministers have used the talking point: “The private sector is adding 2,000 jobs per month.” several times.

The IMF said in June that the broad level of unemployment was 24% and at the end of June 499,000 were on the Live Register or in publicly funded activation/ back to work programs. The 76,000 in the latter are treated as employed (ie not on the Live Register).

The addiction to what can be termed spin, economy with the truth and lies (usually termed falsehoods in the US media) at Irish official level is feebly countered by Oireachtas members who are either out of their depth or not interested. In two weeks, it will be 6 years since the onset of the credit crunch and whether it’s the Dáil or Seanad, how many members have inspired a bewildered people?

What to believe?

The spin is aided by a generally weak media. Not all journalists are fact challenged but many are, in particular in the broadcast media, where ministerial talking points are seldom taken apart.

Richard Bruton is in China and Japan this week and The Irish Times reported last Friday:

In early 2012, the Government’s Asian trade strategy looked like it was going awry. Sales by Irish firms to China were falling, and the Irish Exporters Association was screaming for a new Asian trade strategy. Bruton knocked heads at Forfás, and got it to help draft a grand plan to beef up Irish-Chinese trade.

If only it was that easy…

Intel and a chemical company account for two-thirds of Israel’s exports to China; Unlike its Israeli counterpart, Intel Ireland does not disclose data but we can assume that it heads the foreign companies responsible for 94% of Irish exports to China. The Asian strategy makes for good spin but it’s misleading.

We have a surreal situation at a time when the economic outlook remains grim and there is no credible jobs strategy, enterprise policy appears to be an adjunct to a permanent publicity campaign.

Overnight, Bruton’s department issued a press release titled: ‘50% increase in number of spin-outs from publicly-funded research as part of new Government plan’; no data is supplied on various new targets. Most of these spin-outs remain small and survive on public subsidies. Who cares and the announcement is just one of this week’s actionless actions.

My calculation is that the number of gross jobs would increase from 130 to 200.

While some actual data is distorted, policy makers appear to to not want inconvenient data that employment in the big high tech firms is mainly in administration.

Less than a third of foreign-owned firms engage in even minimal level R&D.

@ DOCM: Thanks. This final para (from Krugman) caught my attention: –

“There are influential people out there who would like you to believe that Detroit’s (Ireland’s) demise is fundamentally a tale of fiscal irresponsibility and/or greedy public employees. It isn’t. For the most part it’s just one of those things that happens now and then in an ever-changing economy.”

I am unable to ‘see’ into Krugman’s head to understand more fully what he is on about, but that last sentence has a bad chill about it. I hope he is not of the opinion that with a Permagrowth economic paradigm, such events (insolvencies, bankruptcies, decreased waged-labour opportunities, urban blight, etc.) are avoidable outcomes, when the mathematics of the thing show that these sort of bad outcomes are inevitable.

The Detroit situation is indeed fraught – but its also mighty complex. And so is our economic situation. You just do not read, see or hear much honest commentary about the complex part. Bit inconvenient that!

Definitions of economic phenomena are invariably arbitrary to some extent and therefore should always be used with care, or as Theil said of economics models, used but not believed. Common features of such definitions include a threshold and some measure of the “extent” of the problem: 0 growth for 2 quarters. Why 0 if economies trend up? Because its simple. Why 2 quarters? Why does it not matter how far below the threshold you are? Long term unemployment is usually defined as one year+ but you could easily think of situations that would not be well served by this. The situation with regard to defining poverty is more complicated still. Definitions of skill levels are also somewhat arbitrary.
A way forward might be to develop a nomenclature that categorises recessions by several criteria, at least two. Hopefully journalists and politicians will catch on, with time.


As they say in the States; “stuff happens”. Readers can come to their own view of the contrast in the two contributions.

I agree with your point in relation to complexity. There is no standard problem and therefore no standard explanation.

The statistical debate leaves me cold; except in relation to figures which are not easily disputed e.g. tax returns, unemployment data, now house prices, and similar.

The spin is aided by a generally weak media. Not all journalists are fact challenged but many are, in particular in the broadcast media, where ministerial talking points are seldom taken apart.

You make it sounds like it’s the job of journalists to challenge the status quo. Their job is in fact to support it and they are giving it 110% right now.

We’ve had two seperate, but related, geographically broad-based recessions – the initial credit-crunch/liquidity, bank-shock recession in 2008-2009 (which impacted almost everywhere), and the sovereign-austerity/default, balance-sheet-deleveraging recession of 2011-2013 (which is far more a European-led issue).

The first one was extremely acute given the shock to the banking system from Lehman et al, but not all that long in terms of actual timeline (4 or 5 x Qs), with a growth and activity rebound seen in 2010. The secondary recession has been less acute, but far more embedded in the economy in terms of tenor, lasting at least 18 months (ie 6 or 7 x Qs), although it in all likelihood came to an end in Q2 2013 given the data we have seen over the last few weeks. However, it could fairly be argued that the 2011-2013 recession is simply morphing into a low growth/stagnation style “recovery” which is going to last another 3-4 x Qs before we see any significant return to growth.

Really interesting (and worrying) from Citi on unemployment in EU…

We believe unemployment in the euro area will peak in 2014 versus estimates by the European Commission expecting the peak to probably come at some time this year. But the point is not so much whether unemployment will peak this year, next year or in 2015. Rather, the issue is that unemployment will likely stay high for a long time. Some simple calculations are instructive (and sobering). The evolution of unemployment can be derived from the change in the ‘output gap’ (i.e. the difference between output growth and potential output) and the effect of falling output gaps on (un)employment. The latter is usually referred to as ‘Okun’s law’. Estimates exist for both.

The European Central Bank (ECB) estimates the Okun’s law coefficient for the euro area to be 0.3, meaning that a 1 percentage point reduction in the output gap would lower the unemployment rate by 0.3 percentage points. The International Monetary Fund (IMF) also produces forecasts for the output gap which imply that the euro area output gap would fall by roughly 0.5 percentage points each year in 2015-18. If we put the two together, the implication is that unemployment in the euro area would only fall by less than 1 percentage point until the end of the decade.
There is some reason to believe that this is probably a little too pessimistic and that employment may react more strongly to output than historically — this is where the labour market reforms and more flexibility would presumably make a difference — and emigration could also help. In fact, the IMF’s actual forecasts imply that unemployment would be three times as responsive to changes in the output gap. Although that implies that unemployment should fall faster if and when (above-potential) output growth resumes (the IMF thinks in 2014, we think it might be a year later), it still expects unemployment to be above 10% in the euro area even in 2018

FT homepage at the minute

Eurozone edges back into growth in July
Currency bloc PMI data suggest recession is ending

“We have a surreal situation at a time when the economic outlook remains grim and there is no credible jobs strategy, enterprise policy appears to be an adjunct to a permanent publicity campaign.”
+1 MH

I noted a jobs announcement in recent days where 75 jobs in three foreign companies was announced but the worst example was where 100 jobs in petrol stations was announced to great fanfare.
I makes us look foolish.

@ frank Galton
Flash PMI is volatile.

@ BEB: “… it could fairly be argued that the 2011-2013 recession is simply morphing into a low growth/stagnation style “recovery” …”

It could and is being so argued – except. Low-growth (less than 3%) = Stagnation (ie: 3% over any inflation). So recovery has to be over 3% pa. Ain’t gonna happen – well not this side of Christmas anyway! My opinion is that our economy has regressed (permanently) to a mid-1990s level. And absent some real action on the political front, it will continue its steady backward regress until it meets resistance at 1970s levels.

Anyone know what ‘inflation’ is actually running at?

@ Bond. Eoin Bond

In the 1990s, it took Europe a long time to recover from the early 1990s recessions and currency upheavals, despite high German reunification spending.

Today, outside the Nordics and a few Eastern European countries, the condition of the banks remain dire.

The cost-income ratios of the banks in the biggest markets, Germany, the UK and France, exceed 70%; non-performing loans in the 5 bailout countries plus Italy and Slovenia are at double digit rates.

Between 1995 and 2007, the overall stock of household debt in the EU expanded almost three times, while in countries with significant property expansion, such as in Ireland or Spain, the debt expanded as much as six-fold.

The global economy remains fragile on all continents.

just saying………
“Stronger data challenge our no recovery scenario for the euro area. Today’s outcome is significant. It confirms that the early signs of stabilisation apparent in business cycle indicators in the past two months are now turning into what could be a nascent recovery”.

There is a hint of desperation about this thread. What if growth is back? UK and US look to be flying again, Eurozone is on the way back. Does that mean the neo-Keynesians have lost for once and all? No doubt the likes of Ed Balls will move the goalposts again. But it won’t save Labour at the next election.

@Johnny Foreigner

There is a hint of desperation about this thread. What if growth is back?

The “That which does not kill us makes us stronger” school of economics holds that any economic policy set that the economy eventually recovers from must have been the right one, eh?

This goes nicely with Kevin O’Rourke’s previous post What would it take to make the EU admit the strategy isn’t working?

How bad would the results of the last five years of economic policy have had to have been for a right wing economist to say they were a mistake?

Clue: They have bigger things to think about than mere results.

Amazing that A good ol fashion lefty does not understand that a deficit in excess of 20% of NAtional income is not fundable in EMU.

@ KO’R
You are right to ID that it matters in the political context. Reality remains the same. Not many (in the US anyway) are buying into a recovery of Ireland’s fundamentals’ story. Obviously however there are trading shops like Templeton that are trading the macro EU proxy risk on Irish bonds.

That said, it’s not uniformly bad e.g. commercial real estate in Ireland is now seen as “fair value”, but at circa 20 cents /euro type of levels. What that points to is the possibility of recovery of real market clearing levels are allowed to work….new capital replaces old (over) leverage, and life goes on (new employers). Far more “pernicious” is the fact that NAMA for instance is trying to get the market up by restricting supply. While there have been some takers despite that, the real money is staying away. Nobody is fooled. Recently, private equity’s attention has shifted to other jurisdictions in Europe, away from Ireland. That was reported by the IDA and in the newspapers. I see it from the PE side and it is real. While the Govt will argue that it is protecting the taxpayer, looking to recoup taxpayer monies, what has actually happened is that the Irish CRE market simply declined further over the last number of years. Another example of this is some of the foreign banks in Ireland. They considered disposal in 2010 /2011 but were not provisioned enough so decided to kick-the-can. They (at HQ) now openly admit that they should have disposed back then…would have done better. Clearly, those employed in Ireland by those banks have a different viewpoint. However, the overall economic point is that the kicking of the can has only benefitted some of the population, and the resultant stagnation due to the wider kick-the-can policy has clearly made things worse, not better overall, over time.

Very good post. Thanks.

@ Fiat: Much obliged. 1.6% is a tad on the low side!

@ Johnny Foreigner: “There is a hint of desperation about this thread. What if growth is back? UK and US look to be flying again …”

The UK and US are indeed flying. Its known as a Controlled Descent into Terrain. Please just don’t tell the passengers. They have just been served a small plastic container of water and a pack of mini-pretzels. Let them enjoy!

@ John Gallagher: You see those ‘nice results’ from the Richmond Fed?

@ Fiat
Your average German, Dutchman and Finn, etc will ask why they should suffer a haircut while Ireland spends more than its means…..?
David McW is off track in my view…..but his argument reflects Irish sentiment i.e. the wish for debt forgiveness (without any more reduction in pay, perks, etc). Again, the creditor nations see Ireland as a relatively rich country (which it is) that can pay much more….This therefore is classic debtor wishful thinking. That is not to say that I for one see the sense in debt restructuring to rebase the country. However, there will now have to be a European-wide solution if that is to happen for Ireland. Unlikely anytime soon.

@Paul W
Is he that daft. With the debt ever rising and no growth we are on the road to nowhere. Maybe a deal parking some of the debt pile is what is needed. But who knows what will happen when Angela is reflected in september. Personally I don’t believe she will change much and in any event will probably be constrained by the constitutional court in its forthcoming judgement. October could be a wicked month.
In the meantime another source of concern…

@Paul W

However, there will now have to be a European-wide solution if that is to happen for Ireland.

It seems odd to dismiss McWilliam’s call for a change in strategy as wishful thinking and then suggest that we really, really, need to do is wait for a European wide solution to emerge and keep with the internal devaluation. It’s Beckett meets Eucken for a big helping of increasing debt to GDP ratio.

Remember that the current slow death by austerity and banking debt is the preferred final “European-wide solution” of the dominant countries and institutions in the EU. Why would they change without pressure?

The German bloc may not change even with pressure leaving the peripherals with the job of trying to unilaterally put the Euro out of our misery so as to be able to exit it without vastly expensive chunks of expensive foreign debt.

@ Fiat
Your average creditor doesn’t see it that way. In the absence of some bigger /pan European resolution mechanism where the debtor may seek relief, the creditor will just keep squeezing to get its money back. It is clear that much of Europe beyond Southern Europe and Ireland is now suffering and declining. Only Germany is holding it together, but it too isn’t having a great time…..all sorts of problems. However, a bit like in Ireland, in the PS Brussells cocoon, the players lose nothing if they get it wrong. The institutionalized lack of consequence for policy and decision makers undermines reform….certainly keeps it on a path of least resistance. That could continue for a long, long time. That would appear to be how things will be, unfortunately.

@ Shay
I didn’t suggest waiting. In the past here, I have advocated a more aggressive negotiating and restructuring stance. However, reality also says that I am in the minority. With a majority in Ireland favouring the status quo, I am nowadays reduced to “observing”. Despite the intellectual intercourse, the John McH’s, Seamus’, BEB, etc. don’t really care…they are in the Club House.

In fairness, it is only in the last year that I have come to understand how bad the situation is for the German, Dutch, French, etc. Their banking systems are in a shambles, with their economies also struggling hard. Their priorities are elsewhere at present, focused on their own problems. In the midst of that, Ireland is inconsequential, except in the “good pupil” propaganda context. If the ball bounces well for the creditors, they may be more generous ultimately…but don’t hold your breath…..highly unlikely. I am with Soros on that…minimal concessions will be the norm.

So Ireland’s “insiders” will continue to make an industry out of the crisis (advisers will advise, economic managers will measure and try to prove, politicians will spin, etc), maintain the status quo to the extent possible….It’s everyone for themselves and tough if you haven’t got access to the public purse in some direct or indirect way.

It’s ironic that Morgan Kelly’s predictions are still the most accurate, and haven’t required revisions.

@ John G: Sorry about the Richmond. It gave me a bit of a jerk. Thanks for the link. See you!

@ Paul W: “It’s ironic that Morgan Kelly’s predictions are still the most accurate, and haven’t required revisions.”

Ironic maybe, but he just did the math. It was that simple. Why is it that we put more trust in complexity and less in simplicity? Bizarre!

@ Paul W

“Despite the intellectual intercourse, the John McH’s, Seamus’, BEB, etc. don’t really care…they are in the Club House.”

Brilliant. We’re just posting on here, individually, for four years or so for the craic? You’re an idiot.


It won’t be more or you that makes the final call on who was right or wrong, it will be the electorate. In the UK they are the people who had to suffer 10 years of Government splurge under Labour and 5 years of belt-tightening under the coalition. The wisdom of the crowd will tell us which policy was right. Same thing will play out here – the electorate can vote for Sinn Fein and the ULA if they really buy what the Keynesians are selling. I guess all these threads are just hand-waving exercises till the votes are counted.


As I said on the previous thread, you may be a competent technician, on your way to a bright future. Your incomplete, lacking analysis of the cash flows on the PPNs many many months ago sticks in my mind for some reason. When I sat on the credit committees of a major international institution that I worked with for many years, I would not have tolerated such lack of attention to detail. Keep going and grow. Believe me, as some of us move on, in knowledge, experience, seniority, etc, the more we realize how little we know. Hopefully I gain some true knowledge before decline and senility sets in. In the meantime, don’t get fired (worse – sidelined and complaining that it was someone else’s fault) for shooting from the hip. Although, if you are PS, it seems you can say and do / not do what you wish without meaningful consequence (in private sector terms).



BeB as a civil servant. …Paul Ws monomanic attempts to drag the PS into every thread plus some attempts at bigging himself up suggests he is probably Marc Coleman in Radley

No point in going to the ad homs, unless it is funny. This is a shared problem.

People of consequence will sit around a table today. Person A is a senior PS official, who has all the job security and pension protections which have been negotiated over the years. Person B is an exec from a company which is negotiating cozy cartel or licencing arrangements. Person C is a self employed consultant who leverages his/her academic, business family or political networks to extract inflated fees and valued insider information from state sources.

These folk recognise each other, and co-operate, on the basis of what Pierre Bourdieu calls a ‘homology of position’, and they are all equally protected protected from the effects of the crisis. The returns come in different forms, but they are substantial. A lump sum gain can be invested to deliver the same result as a state pension, etc.

So while Paul W’s general point about folk being ‘in the Club’ is, IMHO, absolutely correct, that club is by no means restricted to PS officials. Senior PS ‘players’ have little in common with most public servants, who have a moderate level of security. It shouldn’t matter to the argument whether BEB, or anyone else is PS, because that is not a relevant criterion in this context.

The core issue is power, what forms it takes, and how it is managed.

@ Johnny Foreigner: ” The wisdom of the crowd will tell us which policy was right.”

It will indeed! Even though The Crowd are invariably deluded, having being led ‘astray’ by some well meaning (they are always well meaning) politicians promising a “Better Way”. It was ever thus with ‘crowds’.

Hand-waving maybe. But remaining silent also, is no longer an option. Anyways, there is neither a ‘right’ nor ‘wrong’ option available, despite the many suggestions and proposals. Its the one(s) that prevent our economy regressing backwards any further that matter. So far, we have had none of these.

Our politicians have become a cartel of mendacious party folk, desirous of ‘office’ so they can ‘wet their beaks’ with taxpayer monies. Ominously, they no longer ‘compete’ with each other. They have accepted that hegemonic political rule is no longer available, so a government-in-office is merely the opposition-to-be. And so on. The best us voters can hope for is that those bozoes do not behave treacherously – like the previous administration. It may come down to the situation of whether our patience or our disposable incomes become exhausted first. We’ll see. In the meantime, “Go fish, or remain on the pier and cut the bait.”

@ Paul W

“When I sat on the credit committees of a major international institution that I worked with for many years, I would not have tolerated such lack of attention to detail. Keep going and grow. Believe me, as some of us move on, in knowledge, experience, seniority, etc, the more we realize how little we know.”

Jesus christ, we’ve created an (ego) monster. It’s a rare day indeed when u get myself and Lucey on the same page. For the record, im firmly private sector, which would be incredibly obvious for anyone who’s been frequenting these parts over the last few years. This lack of attention to detail by you would not be tolerated over here, i can tell you that for nothing…

The PPN (the CoCo i assume) comments were that in broad, simplistic, laymans/political terms, Noonan was not wrong to claim a “10% profit” (or whatever it was he claimed), and thats who the comments were aimed at – the average guy on the street. He was simply trying to inform the public that the govt put X amount of money in, and they got more than X back out.

Obviously in economioc/financial/markets terminology it was at best ‘incomplete’, and most likely irrelevant to any real analysis, but you’ll note that the “profit” comment was not included in any of the official press releases or statements, and none of the comments contained any specifics about IRRs etc, just a bland “profit” term which can mean everything and anything depending on what context you’re using it in. Some people on here seem to have difficulty in understanding the difference between comments aimed at Joe Public and comments aimed at the Markets. Sometimes politicians are actually allowed to act like politicians. Sometimes they dont have to make comments designed to be understood by people on here.

“t’s a rare day indeed when u get myself and Lucey on the same page.”
its happened before… dont worry Eoin. We will soon be back to normal
BTW – good post.

I see that Minister Joan Burton is worried that a 2% or €400m cut in the €20bn welfare budget would be deflationary.

Burton also has responsibility for the banjaxed private sector pension system but there isn’t a comparable urgency here.

This month another amount of about €450m has been taken from private pension funds as part of a €2bn raid. Last year Burton was given a report which she commissioned and told her that annual fees can take about a third of a pension pot, negating tax relief, but again why would there be urgency to change?

Her own pension entitlement has jumped since March 2011 while some of the little people have lost theirs.

This is what Burton said 18 months ago:

“In 2001 spending on social protection stood at €7.84 billion; by last year this had grown to almost €21 billion – an increase of 266%. Inflation increased by around 30% during the same period. So while some of the expenditure increase is clearly due to the dramatic rise in unemployment since 2007, the most significant factor is a surge in both rates and the number and size of schemes over a very long period of Fianna Fail government.

Frankly, the increases in social protection payments were often cynically timed to help Fianna Fail win elections. They were funded by tax revenues from the unsustainable property bubble. As a result, we have inherited a level of social expenditure that is completely out of sync with the funding base of the state. It is clear that we need to put it on a more sustainable footing.”

“It is clear…” until it can be put on the long finger.

David McWilliams wants a démarche issued to the Germans to mutualise debt.

The French could support it as long as it would come with no strings attached.

Oh, for those days of beggars on horseback when menus without prices could be called for with aclarity!

@ MH

“David McWilliams wants a démarche issued to the Germans to mutualise debt”

Ask and you shall receive! Or at least a receive a story on such…

German SPD Adviser Says Joint Euro Debt Inevitable After Crisis
By Patrick Donahue

July 24 (Bloomberg) — German Social Democratic candidate
for chancellor Peer Steinbrueck’s top economic policy adviser
said there’s no way around introducing some form of joint
European debt liability to resolve the euro-area crisis.
Jointly issued euro-region debt is a possibility, while
pooling sovereign debt into a redemption fund is inevitable,
Christiane Krajewski, a former finance minister for the city-
state of Berlin whom Steinbrueck appointed his chief economic
policy maker last month, told reporters today.
“Sooner or later one won’t be able to avoid some form of a
legacy-debt redemption fund,” Krajewski said at SPD
headquarters in Berlin. Asked about so-called euro bonds, she
said “it depends on how it’s structured, but I wouldn’t rule it

German SPD is only telling the truth and as such they will experience on of the biggest electoral reverses since our electorate threw out the opposition in 2002.

You should cherish PW little homily to you. Well connected insider to Hedge Funds complaining about being out bid by other hedge funds for Irish RE. He walks and talks with Kings you know.

@ All


The interesting aspect of this report is not so much its content as the extent to which the troika is willing to drill down, and to hold its ground, until it gets its way.

Amazingly, even after years of crisis bailout conditions, the body politic in Ireland has seemingly not yet fully taken in the loss of sovereignty implicit in the situation.

@ Tull

saw his comment on the other (wrong) thread. Would you tolerate such mis-posting of comments in your two-bit Irish private sector shop? I know i wouldn’t.

Good GDP figures from the UK this morning and the index of services is in excellent shape. What will the losing side complain about now? Oh yeah, we already had a taste of it in the Guardian yesterday – ‘the wrong kind of growth’.

To all the neo-Keynesians:

“Your revolution is over, Mr. Lebowski. Condolences. The bums lost. My advice is to do what your parents did; get a job, sir. The bums will always lose. Do you hear me, Lebowski?”

@ BEB et al

There may be method in the SPD’s madness! Signs of life – finally – in the European economies and the opposite direction now evidently being taken by the BRICs, must be suggesting to the leadership of the party that public opinion may be open to more soundly based arguments than the monologue pursued by Merkel/Schaeuble.

It must also be becoming rather obvious that it is a logical impossibility for all countries to pursue the export-driven model of Germany at the same time and that the calculation that exports outside Europe would compensate for any fall in exports within Europe may not be quite the safety net once imagined.

The party’s situation is so dire that it must, at least, appear worthwhile to take the risk.


A little bit of caution is merited here.

Just over a year ago, there was common naiveté about what a Hollande presidency would bring to France. What happened his growth pact?

Wolfgang Schäuble may not have changed the charm level at the German finance ministry when he succeeded Peer Steinbrück – Angela Merkel’s first finance minister. However, Schäuble has displayed a lot more tact and less arrogance than Steinbrück.

The SPD candidate for chancellor had a very poor reputation and Gideon Rachman of the FT remarked: [the German finance minister, wins a special booby prize for premature triumphalism. Suggesting last month that “the crisis originated in the US and is mainly hitting the US.”]

Another report said:

Steinbrück even seems to have exhausted the patience of his allies. Luxembourg Foreign Minister Jean Asselborn, a personal friend and party colleague of Steinbrück, told SPIEGEL ONLINE on Wednesday that Steinbrück’s rhetoric had descended to the level of bar room banter and that his statements smack of “a rarely exceeded level of arrogance.”

“No Socialist, no supporter and no voter of our party appreciates, let alone accepts, these belittling comments,” said Asselborn. “Every Luxembourger remembers with horror a time in which Germany, initially through word and speech, poured humiliation and fear into their lives. The slightest hint of arrogance coming from a German high official rekindles the kind of feelings that Luxembourgers would prefer to forget.”

It would be unlikely that a Steinbrück-led government would agree to euro-bonds without concessions on such issues as taxes and retirement issues.

Campaign in poetry and govern in prose.

@ Michael Hennigan

I am certainly not an admirer of Steinbrueck and cannot, for the life of me, understand why the party failed to choose Steinmeier, the leader in the Bundestag.

Despite the poll numbers, there is no way of knowing how the election will turn out, given the complexities of the federal election system. Hence, as you know, the use of the traffic light system to identify the possible combinations. But the ground may well shifting. The US spying scandal has certainly changed the manner in which Merkel is viewed.

To my mind, however, the growing income inequality in Germany is becoming so obvious that the reaction of voters is wholly unpredictable cf. the latest study on the increase in low-paid workers relative to other European countries.

The author is careful not to make a direct link with the Schroeder (Hartz IV) reforms as the sole reason. However, trying to run high cost and low cost policies in the one economy may well be reaching its limits even if a majority of voters still like it this way.

Steinbrueck’s dilemma is the same as that for all SPD leaders; this majority includes organised skilled labour which he cannot afford to alienate.

@ Michael Henningan

Der Spiegel Online has a good summary.

Again, for the record, I emphasise that as matters stand in relation to the commitments that EU governments have accepted, Germany is under no obligation to coordinate – still less to match – either its economic or social policies with others countries of the EU except to the extent that has been agreed in the context of the so-called Six-Pack and Two-pack legislation (the content of which does not match its technical complexity).

The question is whether a continued failure on the part of all to do so is compatible with a single market for all and a single currency for 18.

This is an issue from which any academic discussion of the impact of austerity policies cannot be divorced.

Kevin O’Rourke, I am sure you are a busy person but this blog would really benefit from some moderator intervention.

We were five posts in before someone went wildly off topic (a serial offender) and past thirty posts most contributors had either not read the OP (two quarters of growth – the recession has clearly ended!) or preferred that the topic was not discussed and we returned to the issue of how public servants caused the global financial crisis.

Your OPs here often got Twitter mentions and it is a damn shame that when someone following Paul De Grauwe (for example) gets to the Irish Economy they get the impression from the discussion that Ireland is dominated by pompous neoliberal know nothings (Statistics leave me cold you know, I am more of a press kit talking points man.).

Self regulation just never works.


There is always someone whinging and demanding censorship when their bs gets exposed.

@ Shay: Topic ‘drift’ is annoying, but inevitable. I think it is something to do with attention span and one’s closeness to the nearest salient piece of gossip or their ‘favourite’ hate figures or whatever – facts can be a tad inconvenient! Analysis being a step to far for many. And heaven help us if evaluation was actually required.

The idea that 2 Qs of economic data = a trend is so absurd that it beggars belief that it is actually used to decide on recession/no recession. So how do we get a metric that would be valid? No one broached that question. Why? The G*P metrics for Ireland are also heavily criticized as being unreliable. Yet they continue in use. Its unbelievable.

Maybe if we had true and fair economic metrics they would prove most unpopular with politicians seeking to curry favour with voters. Or perhaps show up the folly of some current economic policies. Who knows?

You are correct to complain about this ‘drift’. But I believe its here to stay – as they say. But it should not be tolerated. If a thread is going seriously ‘off topic’ comments should be closed.

@BW Snr

That works on sites where there are open threads, but this isn’t such a site. There is a smallish community of people who enjoy posting here on a variety of topical issues and don’t like to be completely restrained by whatever the academics who run the site decide is fit for debate. The site would die a quick death of it is was just academic economists nattering to each other about statistical definitions. Surely the egos of the people who do the original posts aren’t so fragile that they can’t tolerate anything less than 100% attention to their pearls of wisdom.

@ JF: You make some inarguable points. I’ll concede. I do not know why. But, there it is!

The TASC site operates a ‘closed’ system – its comment counts have a mean of zero! Its very sad.


Real sores (socially) from BEB’s and others’ reactions to my recent posts. Interesting. Worthy of discussion, but the moderators here will no doubt ignore. Ireland doesn’t easily face reality or real problems, without being coerced. It’s a national characteristic.

Good post.

You should try London, New York or HK some time…..get out of the parish for awhile. @BEB…..still learning. Nothing wrong with that.

1. Shay has a point, that the discussions very often go to something completely different.

But I think a little more self control, or some friendly reminder from co commenters works much better and with much less effort and controversy.

And just to avoid misunderstandings, I have gone here also on some long tangents, of which some never found the way back, …. , because the discussion moved on to something more hot.

2a) This 2 quarter “rule” was invented 1975 in the US, to be called by the NBER, when it had about 250 Mio people, largely a relatively closed society (10% trade/ GDP, and a lot of it (oil), ineleastic), and with 6 ingredients, and not only GDP !!! see wiki /Recession. They even put weights on the factors.

Ireland is a lot more like Singapore, and they have wild swings of +/- 10%, without anybody getting a sweat.

2b) Furthermore, this rule came up at a time were 4 real growth was normal, and <0 therefore a 2 or more sigma event.

In the future real average GDP growth will be more like +1%, and therefore <0 happening about 1/3 of the time.

Significant will be only some 3 or 4 quarters < minus 1 %.

3) One reason I stopped posting here, was that I got the impression, that nearly every time then somebody came up with some unrelated german topic, by my impression often DOCM coming with some spiegel article or more obscure sources, and then the whole discussion went about Germany in every aspect, which becomes annoying after a few weeks.

And quite frankly, I find the statements of several folks here significantly more reasonable, as long as I am not showing up.

@ Paul W

“Real sores (socially) from BEB’s and others’ reactions to my recent posts. Interesting.”

Socially sore? This is slapstick stuff. You’re the one complaining you can’t close deals…You really need to take yourself a whole lot less seriously. Or at least learn to do it with style like John G does…

A weekly open thread would be a good idea, particularly if moderators moved most of the European Commission DG Verite bulletins to it.

If I never have to read another post on the failed European Union response to the global financial crisis that boils down to “Say what you like about the Troika, they made the trains run on time…” it will be too soon.

@francis,hi francis you were missed,whats the numbers looking like I think DOCM is correct in that SPD is polling around 25%?
Is this reliable?
“Germany – Infratest dimap poll: CDU/CSU 42%, SPD 25%, Greens 14%, The Left 7%, FDP 4%, Pirates 2%, AfD 2%”
h/t electionsa

Good edotioral in FT other day about US/Euro regulators and banks.
francis just a heads up on Saturday,irishbusinessblog will be running a summary off the major news stories this week in the German press,regarding capital shortfalls,if there is any of course,in German banks!
And yes a shameless plug..for DJ-no pressure Dorothy!

I would hope most commentators have their own metrics for a recession,mine is quite simple,it’s WalMarts same store sales,ok a few other too but…
They used to say as General Motors goes so goes the US,now it’s WalMart scary stuff.

@John Gallaher
Where GM goes…..I see today that they are No.1 in the world beating Toyota….impressive turnaround for a company hopelessly insolvent a few years ago. The Y anks do restructuring well.

Klause the new economic guru. Where you can’t devalue…as in the Eurozone…you simply cut everyone’s income…and bobs your uncle. Works everywhere. Depressing.

Hi Fiatluxjnr, they still make crap cars…….their trucks are ok but agreed a taxpayer bailout that worked oh secured a few votes too

Regarding,restructuring,Detroit is worth keeping an eye on-some ill informed Irish investors have a few bob up there,invested in housing what were they thinking….go visit the place but very early in the morning or heavily armed and drive fast,we call it a drive by inspection.
NEVER NEVER invest or buy RE that you have not inspected -unless you would also get a mail order bride,the go for it….
Probably not the correct forum and its also sub judice…..
For those curios Debbie Schlussel is the site to view- a bit controversial..but hey its Friday-caveat empor guys.

Same store sales may be a bit yank,basically its the sales from stores open at least a year as new stores distort the picture.Great metric as WalMart has stores from dry heave in the south to middle nowheresville in the midwest.


Klause the new economic guru. Where you can’t devalue…as in the Eurozone…you simply cut everyone’s income…and bobs your uncle. Works everywhere. Depressing.

Depressing and willfully ignorant, so standard operating procedure for the EU.

The IMF is trying to turn its back on the policies it followed during Regling’s tenure there (against much resistance from treasury view knuckle draggers) but not even someone as dogmatic and reactionary as Regling still believes that internal devaluation is a good way for the peripheral countries to recover from the global financial crisis. It is just the approach that best suits the European center right creditor nation caucus politically.

Expect, as per the Irish Central Bank today, official Ireland to begin working up documents of surrender immediately.


There are also special arrangements with the ECB that have been found, where the Irish banking sector benefits greatly.

What are these special arrangements that Irish banks have at the ECB?

The linked article is rather pointless. The conclusion towards the end is that “Citizens in Ireland and Italy have been given the impression that they have entered new recessions.” Does anyone here think that’s the man in the street had this impression? I haven’t met a single person who believes we ever recovered from the late-2007 recession.

1. Free style forum (FSF)

I support Shay’s idea of a kind of free style topic, since this is taking up about 40 % of the talking here anyways.

And, Shay, I would give the Troika less than 20% of the blame, but the Fed 20%, and at least 60% to the individual countries in trouble now, and this with the larger part the people themselves, you get the politicians you vote for.

2. German elections forum (GEF)
This will be a running topic here until end of September, no matter what you do, unless you ban DOCM, some others, possibly me : – ). my volume estimate is 25%, or more
A very good overview about the latest numbers is
the latest, long term time series, timed events, actually, what would one of you improve there?

@ John,
25% for the SPD is median, and I am looking forward for Dorothy’s piece.
I try to put my thoughts together, hopefully a more compact piece, soon.

3. Technical paper discussion (TPD)
This was originally one of my hopes in participating in economics blogs, to discuss papers in significant technical detail. I have brought that up here, and in some other places, so far there was eerie silence, but I am not giving up that easily : – )
Recent example would be that INSEAD Fatas blog, with “China hitting the Great wall”, which from my analysis is pretty much nonsense, but where I would love to talk about with some other folks, who are somewhat interested, who I can’t find here locally in Dresden.

4. recession calling
To John’s Walmart call, I would add for Germany, I know that the labor market is getting really tight, when I hit more than one time a week a cashier, who is not able to do elementary change money calculations in their head, and refuse to take my appropriate coins. This happens actually since about half a year more and more often. Idiots, and inpolite.
A more detailed view planned as a compact view, to look at this primarily from an engineer’s perspective as a Statistical Process Control topic.
I have seen so many special indicators come and go, GM, Walmart, Baltic dry index (BDIY in Bloomberg lingo)

The Walmart same store index (WSSI, or … ?) has its merits, typically yankee, just like Case/Shiller (CS), no other country has its data in the necessary detail.

But WSSI is in private hands, and would miss out completely on long term changes, like people moving back into high density cities with smaller stores, or ….

CS is not robust against settlement changes and things like that as well, also an index “with everything else held equal”

I remember some Gallup analysis (“biggest ever”. 400 stores, 37000 interviews, about worker motiviation and store performance), and when you took a closer statistical look, it was just clever exploitation of noise and short term expectations, would be worth a TPD topic as well)

@ Frank Galton
A 1.5% interest rate, as Klaus Regling stated, on loans with a 19 year maturity (that was that statement from the April talks), represents a haircut of 50% in net present value (NPV), calculated with a more realistic rate of 4.5%. If these special arrangements are not “great”, I don’t know what.


A 1.5% interest rate, as Klaus Regling stated, on loans with a 19 year maturity (that was that statement from the April talks), represents a haircut of 50% in net present value (NPV), calculated with a more realistic rate of 4.5%. If these special arrangements are not “great”, I don’t know what.

What’s that got to do with the ECB, which is what the Regling quote mentioned?

Could maybe John G or one of the bond folks here explain the concept of NPV to Frank in Irish?

@francis can you ask Stark has he lost the plot,ruining my weekend with his scaremongering.Frank I’m sure is well aware off net present value,and the impact off a reduction in the interest/discount rate applied,Francis point is that the rate has been reduced.You be nice francis or i start linking horrid press stories about German banks and capital shortfalls 🙂
Regarding,WalMarts small footprint in urban areas,great point but you have Starbucks,awesome numbers out this week.
@Fiatluxjnr just finished morning papers,finally got too FT-yes a bit of a surprise their cars are awful.


Let’s wait for Karl Whelan or similar to notice the quote and you’ll see the issue. Regling is saying something very specific.

@ Frank and Francis

1.5% interest rate relates to what?
19 year maturity relates to what?

Promissory note was essentially extended for 27 years, from an average 7 year structure into an average 34 year bond. Average ECB over that 27yr extension would be around 2.4% per market right now. But the bonds will be sold down into the market, so the ECB rate is only relevant during that average holding period, which is 14 years i think. Average ECB over that period expected to be more of the order of 2.2%.

EFSF loans are indeed for an average of 19.5 years, but i dont think they’ll come out with a 1.5% average rate. I’d reckon it’ll end up being closer to 2.5-2.75% (if properly extrapolated – dont think the final “master” rate has been calculated yet).

Frank – Regling comment on ECB would i assume relate to promissory note.

Since we are completely off topic anyways

B E B, thanks for your help,
could you write down a revenue stream, as you assume it,

in order to help Frank then with doing his own calculations, and why Klaus is right with “a lot of help”.

I have said it before, but apparently it needs repitition. Germany is only 27% of the Euro, and Italy, Spain, France, and of course all the other countries have to pay for those very generous loans too.

The antidote to Regling…

“Public debt is very high and rising, leaving little room to invest in growth-generating policies, despite record levels of unemployment especially among the young, and this, the report warns, poses a danger to political support for reforms, and to the future of the euro itself.

It warned that any sneeze across the Atlantic in the US, for instance related to fears of early exit from monetary easing there, could aggravate and complicate the situation further. This would be further exacerbated by eurozone countries failing to take the reforms they have committed to. “Over the medium term, there is a high risk of stagnation, especially in the periphery,” the report warns. ”

@ JG
Hope your not catching a cold over there!

Hello Boys

Shameless plug alert! Tomorrow on Talking Point (Newstalk 1pm)

Renting vs Buying, today and every day.

In 100 years we transformed from a rentier class to a property owning class. What are the personal, social and political consequences of owning vs renting?

Featuring Owen Callan Dankse Bank!

@ francis

The key sentence in the FAZ report is the following;

Allerdings stellt sich die Frage, ob solche Berechnungen überhaupt nötig sind, denn eine Mehrheit der Griechen – 65 Prozent laut einer dieser Tage veröffentlichten Umfrage des seriösen Athener Meinungsforschungsinstituts „Kapa Research“ – ist trotz jahrelanger Rezession für einen Verbleib ihres Landes in der Eurozone.

By the way, your firm belief in “Hamlet without the Prince” (in this instance, staging the play while the principal character is allowed to be absent while holding an election), reminded me of this Voxeu article.

If I had a manifesto, as a non-economist, this would be it!

maybe a Brian Lucey or a Kevin O Rourke try to explain their fellow Irish country men, how extremely generous the loans to Ireland are,

given by mainland Europe folks like Italy,

who pay an effective coupon of 4.985% for a 30 year bond like ISIN IT0004923998 issued May 2013

and compare this to the revenue streams B E B could provide.

Is the NPV above or below 50% ?

Sarah, huugh

a language problem?

rentier vs property owning

I am renting (sigh, I am so poor, would anybody please donate : – )

of course the Greeks want to stay in the Euro, outside they would drop immediately to where they came from in mid 1980ties, 23% of the level of France

Originally, it was the 26 who paid for the 1 then the numbers started to shift from one side to the other. Ultimately, Germany will have to decide, with one or two allies whether it wishes to pay for the 20plus. Alternatively, it can chose to allow a series,of sovereign defaults to destroy the Euroepan project and cause a global meltdown. At that. Point, you get blamed for destroying civilisation …..again. Your choice!

tull, lucey

you can continue to live in a dream world,

where some strongly worded entries here or in some irish newspaper seem to have an impact on what your friends say.

The pew survey and the bbc popularity confirmed Germany as popular number one, again this year, and that actually means that we should kick some as*, to make clear, that debt will be paid.

You have now Cyprus as a template , and Greece as an example where that gets you.

Ireland and Greece are of zero relevance globally, and the ESM firewall is up and working.


do you think you will be better of with a Steinbrück, the Pirate, who would be daily beaten up to exploit poor german workers to feed habitual criminal bankers in Ireland?

The evidence is now in the open, that all parties, all unions, all newspapers, all professors are part of it, as not only the german taxpayers see it.

I’d say Francis had several. ..rambling ad hom threatening post late ona Friday evening…

@ John G: “… should i buy or should i not?”

No buy! Especially in most parts of US. Much of the so-called ‘market’ in residential housing is being ‘goosed’ – again! Where do folk think all that Fed QE is going? Into increasing non-defense manufacturing? Nope. The number of employed in US is increasing? Nope. Into increasing some targeted assets (like real estate and stocks). Sure thing!

Be real careful.

@ rf

I think I was very much to the point, that we will not give one inch to slander blackmail attempts like from tull.

When after 2 times extremely generous help from mainland Europe, Ireland or Greece dive into the abyss, it will be 100% your own fault, and the rest of the world knows it. And with the ESM in place the chance to take anyobdy with you down, is gone. We remember that Papandreou in November 2011.

@ brian lucey

Where was I threatening anybody, especially “ad hom”?

Morning Francis. See the coffee worked.
In general, oh anonymous person who suspiciously switches from collloquial to germinglish, your tone is “dont mess with us, were BIG”. G’way now and look up the original treaties. You know, the ones that founded the whole thing. What were they designed to do again?


Apropos the mechanics of “those in possession” ensuring that they remain so, this outstanding contribution by Meredith Whitney on the financial crisis impacting US municipalities.

Interesting formulation of yours when when we have a Republican governor-appointed apparatchik stealing pension money from retirees to give it to the already-wealthy (they had repeatedly lied to the pensioners, saying that any move to block such a daylight theft was premature etc. – but of course it turned out to be just as people suspected), but rather par for the course around here unfortunately…

The engineered bankruptcy to get out of pay and pension commitments has become a popular form of corporate robbery in the US. And you don’t go to jail for ir!

@Paul W

Of course we can all see the real-world accountability of the private sector in our own captains of industry and enterprise, who can only ever fail upwards. Chin chin!

@Brian,hi Brian i was linking a few bits/pieces from US, for Sarah hope to catch her show its always excellent.But agreed my choice for Fed Chairman,Larry wants put the brakes on,about time too.The value play in resi is over,i also never invest where people eat,sleep and f..,just a rule i have.But i gotta live somewhere,it must be the ‘irish” in me,I have an unhealthy aversion to paying rent,a bit like they have now with mortgages !
But the FT this morning has excellent article-Sarah if its not too late worth a ..
Sorry behind paywall-summary.

‘Of course, in a free society, people who want to own homes and have the means should be able to purchase them, just as they would any other luxury item. But our governments do not need to subsidise that purchase. Increasing home ownership does not increase housing, least of all for the poor. Increasing home ownership in the US and Britain beyond what the free market would generate does, however, distort capital allocation, put a large share of household savings at unnecessary risk, impede mobility, and creates a powerful lobby for government transfers to the wealthy. And it creates housing bubbles to devastating effect.”


gah! Only saw your post now – that’s a great article and I even had the FT ( I rob it from TodayFM – their newspaper budget must be bigger than mine 🙂 ) and missed it.

Anyway, you can listen back here

(skip the news etc at the start – ’bout 6 mins in we get going)

I think we should be asking more – why should anyone buy? Why are we constantly being told we are subservient to Article 43 1 that protects property rights, but ignore 43, 2 that says they can be limited for the common good.

@ John G: Thanks; caught most of the ‘Rent v Buy’ bit. Chatty, but little real enlightenment. Its all relative, conditional and assumptions. Caveat emptor!

That Bruegel piece is a tad odd. Again, some dodgy assumptions being assumed. Lets say CA had an extensive, state-wide robust manufacturing sector (not just IT and planes) with moderate wages and a massive export trade. The state would quickly accumulated lots and lots of ‘savings’, which it then ‘exported’ into Utah. Think maybe little Utah might not enjoy a little property ‘bubble’? And when that bubble popped folks in Utah might not get to ‘enjoy’ some austerity instead. Now, I would like someone to explain to me how much ‘growth’ there has to be in Utah for it to exit its austerity programme. A lot? And for how long? And ‘they’ want CA to ‘bail out’ Utah, as well!

Its all relative I suppose.

Why are we constantly being told we are subservient to Article 43 1 that protects property rights, but ignore 43, 2 that says they can be limited for the common good.

Because the Irish constitution is a de facto meaningless document which the Irish State and associated enterprises have blithely ignored from the moment of its inception. They only choose to uphold those parts of it which are immediately convenient.

@Sarah,as i contemplate the rather long list of chores just handed to me,I’m also questioning the wisdom of home ownership,was going to call the landlord,then it struck,thats me.Will download the podcast and give it a listen as i do some manual labour…quite good for me.Looking forward to the show,they are always great,i do keep in mind the target audience.

@Brian,lost me a little with the analogy,but the tristate area did not have a housing or banking bust,yet ‘we’ bailed out the cowboys in Nevada and Arizona ?
The epicenter of subprime was OC or Orange County in Cali. they certainly exported and extorted plenty of pain,very predatory lending.
As you have expressed some interest in the US,there was a good debate/chat on Charlie Rose as a follow up to the POTUS economic speech,link above.It was savaged and ridiculed,bit harsh but 5 years in and still blaming the usual suspects is wearing thin.So grab your fav. 18 year old….single malt sit back and enjoy,I hope the austerity budget still allows a few small pleasures in life.

Great article in todays Barron’s this is fun….
“We are a bunch of cheap Irish peasants who will stand on our heads to save sixpence,” he says.”

We know that some Germans like you like to kick ass…that is the problem.
You are right that Ireland is irrelevant. If I was you I would watch Italy with a 130% debt/GDP ratio- and a huge chunk of it held by core European savers. It is one downturn away from Greece.
Greece after PSI has unsustainable debt levels so has Cyprus after its economy was pastorialised by the EZ. Ireland is on the cusp of debt un -sustainability and France and Holland are on a slippery slope.
Very soon after the German election, ESM coupons will have to be reduced to zero and maturities lengthened to infinity to save the Euroepan projects.

On Friday, the Central Bank forecast rises in GDP and GNP in 2013 of 0.7% and 0.3% and of course more optimistic outcomes in 2014.

The Fed and ECB uses ranges in their forecasts and as the Central Bank had to again revise down previous forecasts, it would be more realistic to use ranges rather than specific figures, which are guesses.

The bank said: “The slowdown last year was mainly due to a marked decline in the growth rate of exports.”

This did not have a significant impact on the economy in 2012. The rise in headline exports over a decade had not added materially to economic activity.

On Europe, it will likely take a decade of stagnation for attention to focus on the debt problem.

Growth in Europe to 2008 was sustained by a credit/ debt boom and increasing demand from the US and emerging markets. Can this model be restored to support higher social spending in ageing societies?


dream on

with a net international position of just – 24% Italy would be very stupid to do anything criminal

Cyprus has extreme private wealth, which would be gone, if they go criminal, I have provide the ECB link for that

In Greece some also realize now, that German bashing gets them nowhere, just as anti-Americanism didnt get them anything


just for change, something related to the topic:

quarterly growth numbers for singapore

and the long term perspective of folks, who came from behind, based on their own hard work, and not

extremely pampered like Ireland and Greece

see for example per capita GDP at :

Reminds me of our good Czech neighbors

@ John G: My frame of reference for CA v Utah was D-land v I-land! We’re effectively snookered in a similar fashion to Japan since 1990! For Irl to ‘exit’ this mess we would have to have a truly heroic level of manufacturing exports (real, real exports, not those virtual Transfer Pricing stuff). Can’t happen, so we’re snookered. Unless the next government repudiates the bank debts, sets up a workable resolution to the Irish residential mortgage mess and allows the banks to be liquidated. The foreign banks which lent into the Irish property boom will have to take their own knocks. Irish stockholders have little left to lose at this stage. We need three ‘new’ banks, so there would be a substantial salvage available. Maybe some crumbs as well.

What could the ECB do? They cannot eject us from the E-zone. We would have to ‘fall on our own sword’ for that. However our local politicians might be excessively fearful that such a dénoument would deprive them of the commercial loans – from dem markets! – loans they desperately need so that they can keep making those fanciful promises around election time. Successive Irish administrations had effectively ‘hocked’ the future incomes of Irish taxpayers, not for years ahead, but permanently! – until the last crowd stepped up and ‘saved’ our banks. That effectively ‘checkmated’ any possible recovery toward what passes as fiscal rectitude (aka: roll over national debts, indefinitely).

Its just a matter of time. Buy a farm, or make friends with a farm family (are there any left?).

@Brian great post,I’m mobile and it’s that time of day again,I have found a very direct correlation btw the lucidity of my posts and time on a barstool.
Regarding soverign debt was reading this earlier,will reply to your post most likely first thing.
This is a very interesting case,linked the amicus that France filed,h/t Joseph Coterrill.

@ Francis
Are you considered arrogant and offensive in Germany too?

I remember you boasting about some score in some test you got and you can’t see the difference between an epicentre of trade in a vastly populated and vibrant region (i.e. Singapore) with an island on the north western periphery of Europe (i.e. Ireland)
With you odious nationalistic prejudice seems to comes first and you construct idiotic arguments to justify it. You are incapable of argument without being dismissive, insulting or just plain racist.
The one value of you posting here is to remind us of the kind of people we share this European mess with

Francis is, I content, a troll. Hes probably a deeply frustrated socially inadequate fella in portarlington with a map of germany, a B in LC german and a host of sockpuppet accounts. DNFTT
(francis : if you reveal your real identity then I will cheerfully retract that supposition. In the meantime, dont get too damp under that bridge)

@Brian W-have not forgotten you,i did give your post some thought and still drawing a bit off a blank,in that here is no silver bullet or simple solution.
The window for defaulting on your debts has probably closed for now,with rates where they are,one could argue that the costs off defaulting or ‘new’ money may equate to the current costs off servicing existing debt w/o the upheaval involved.
As tough as this may sound the ‘boom’ was a mirage,its over guys not coming back any time soon you blew it.
Regarding,mortgages i simply cant understand why there had to be an ‘irish’ solution.The UK has an efficient BK system,all the major financial institutions have worked with it.Its battle hardened in that it appears to work,why not simply copy it?
Maybe I’m overly conservative but until you guys figure out a way to ‘earn’ a lot more that what you are spending,you are at the mercy of creditors,a dramatic pull back from austerity such as a gimme budget will blow yields out.
Knuckle down take the medicine…….hey look on the bright side you could be Cypress:)
Worth a watch..Michael Sarris: ‘Abandoned’ by Europe

@ Francis

“Cyprus has extreme private wealth, which would be gone, if they go criminal, I have provide the ECB link for that”

This would be the massively discredited ECB report I assume you’re referring to? And by massively discredited, I mean by the ECB itself. That report was basically put together by Schaeuble and some Bundesbank hardliners. It’s an abomination. Anyone citing it as a basis for their argument is a deranged ideologue.

@ John Gallagher
I agree with you in almost everything you say apart from the presumption that the current approach is beneficial.
It’s not – total debt growth in Ireland has outstripped the rest of Europe and its not going to get better with this strategy.

I think that this is bombastic Eamonn overplaying an extreme weak hand to prove his cojones to his own party. Any deviation will not yield a gain and will be slapped down. It’s silly

“Anyone citing it as a basis for their argument is a deranged ideologue.”
or a troll
Or both.

Hi Eureka,the simplest turn around strategy over here provokes a “duh” moment from me,we get presentations daily on “opportunistic” situations.
It’s normally cut expenses increases revenues,it’s not that simple.
There appears to be a consensus building that there has been too much focus on cutting expenses,they have been targeted and implemented incorrectly.Not enough focus on increasing revenue,start with taxing multi nationals,linked a simply fascinating,engaging marvelous interview above in Barrorns with the bête noire of Irish business.A brilliant businessman and Ireland can only hope for more like him.
Whether people like it or not it’s the “markets” that are in charge,James Carville or the raging cajun is immortalized by his quote,he wants to come back as the bond market,it’s intimidates everyone.Anemic or non existing growth strategy for Ireland,so the markets want you to cut expenses….
Alternatively,develop and implement a viable,believable strategy to increase revenues,excellent piece in yesterday’s IT by Dan O’Brien.

Compared with Eureka (sic) and Brian Lucey my answer to Francis was politeness itself.

Which proves the *Dutch* saying – The Germans are outspoken but polite.

Eureka and Brian Lucey, that kind of language gives no one a good reputation. But it shows how one should not act in a debate. Thank your for that.

@ John Gallagher
You’re right -very good article.
Would require a lot of hard thinking to get it right. Increase in the tax take would have to be accompanied by social welfare reform etc. but it is do-able.
The Swedish model is very worth looking at. It should be applied as much as is practical here.
Now, the real question is, is any one of our politicians capable of even starting to do that?

Very good point though. Regardless of how the Euro fiasco works out we need to reform on this

Imagine if a politician proposed raising taxes of people earning 35-75k. She would be excoriated on this blog and would lose her seat.

Not sure they would be excoriated. I think most follwers of economic stuff are aware of the incidence of taxation.

“Francis” wrote: “When after 2 times extremely generous help from mainland Europe, Ireland or Greece dive into the abyss, it will be 100% your own fault, and the rest of the world knows it.”

Francis the only people who are believable on this website at the economists and others who use their own names, you could be anyone Francis, you could be in Madrid, Canada, Mexico, and so on, you could be someone who wants to damage Ireland-German sentiment….. you might want more Bermingham than Bremen in Ireland’s future

@Tull some off the dwindling international audience on here, may not be au fait with Ireland’s rather unique incidence of taxation,hence the link.Dan O’Brien clearly considered it important enough to write a rather good article…
@Eureka looks like a “good” crisis has been squandered,much needed structural and institutional reform postponed or averted!

For those proponents of defaulting on debt,the friend of the court brief from France,as a leading member off the Paris Club is linked above,French/English versions at bottom of article,pertains to vulture funds and Argentina and a controversial NY court decision.

Bank of Italy has conducted partial audits (non performing debt) of 20 Italian banks. As a result 8 banks have been selected for audits of “performing debt”. No names announced. We know what is in store , Italy will have a few Anglos. As the 24 month recession lingers on it affecting businesses large and small.

@ Mickey Hickey

i actually think you’re being somewhat unfair – at the moment, Italian bank classification rules on NPLs are one of strictest in the EZ. They become formal NPLs much earlier than, for instance, Irish or Spanish banks have to classify them as. Hence Italian NPLs are up in the mid teens, but Spanish (and Portuguese), which are surely worse, are still in single digits.

@MH from this morning,the bank review of 20 commenced last fall,’word’ is mainly mid sized banks,WSJ was leaked the BofI paper.
the WSJ piece-paywall apols.
the skinny….
“With Italy’s economy shrinking for two years, businesses and individuals are falling behind or defaulting on their loans at an increasing clip. So-called nonperforming loans have been marching higher for at least 27 consecutive months. At the end of March, they totaled €249 billion, or 14.2% of the industry’s overall loans, according to Bank of Italy data. At the end of 2010, the figure was €157 billion, or 8.9% of total loans.”

but you will always have Capri/Mykonos in july…if i’m not mistaken the Greek tourist numbers are strong,you cant blame your man off NAMA fame,for taking that gig,i had no idea he possessed such linguistic WTF he’s 80 or 90 ?
Europe is ‘chic’ again my own hood is almost empty…maybe Pr Guy has a few foodi tips for Frank, tks for the other one its on my list.

“There’s nothing like Italy and France in July,” he said into the phone. “No, they couldn’t come this year. Yeah, it it’s a shame. They stayed home and had to use their house in the Hamptons. I guess he didn’t have a great year.”

This is for Frank G excellent source,links embedded in piece-re don’t cry for me……

@ john gallaher

Thanks for the link to the article by Timoty Garton Ash. Brilliant, as one might expect! However, if he accepts that Germany is a normal democracy, why not also draw the obvious conclusion i.e. not attribute monolithic policy attitudes to the country when these do not exist?

Herewith a perceptive “global” analysis by Peter Spiegel.

Italy is unlikely to oblige by bringing the roof down!

Incidentally, on the “foreign policy” of the EU, forget it! It is entirely intergovernmental in character i.e. no ceding of sovereignty of any description, copper-fastened by all decisions having to be taken by unanimity. The real action is in NATO which is an actual defence alliance. In both arenas, the aim of Washington is simply to get the Europeans to pay more of the cost.

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