Journal of Economic Perspectives (Summer 2013)

Mankiw’s paper is abysmal

@rf,

Agree. What do you call it when you cite Robert Nozick’s Wilt Chamberlain argument but then fail to cite Robert Nozick anywhere in your paper?

To make things worse, this paper was commented upon and reviewed by other economic leading lights such as soon-to-be Chair of the Federal Reserve Larry Summers and seemingly none of them thought it necessary to point out that a Harvard professor had previously made this argument (and in a much more cogent fashion).

If this dross gets through, what does it say about the Journal?

Re the 1% it won’t last. It will probably take the collapse of the pension industry to change things.

http://www.nybooks.com/articles/archives/2013/jun/20/when-our-world-turned-upside-down/?page=1

“What had taken hold at a deeper level was the idea that we were living through “late capitalism.” It is remarkable how many economic classics of the 1930s and 1940s had predicted a short shelf life for capitalism as we knew it. Although no longer a Trotskyist by then, James Burnham in The Managerial Revolution opined that “the capitalist organization of society has entered its final years.” John Maynard Keynes predicted “the euthanasia of the rentier” and the disappearance of shareholder capital. Joseph Schumpeter predicted that, faced with the increasing hostility of the legislative and administrative environment, entrepreneurs and capitalists would eventually cease to function.”

First of all the memes will die

http://www.ft.com/intl/cms/s/0/11903b18-f603-11e2-a55d-00144feabdc0.html#ixzz2bgvUivYN

“The decision to treat these bondholders as unsecured in the messy bankruptcy proceedings, despite the fact that these general obligation bonds were backed by the full faith and credit of the Detroit government, has been controversial.
The decision undermines long-held assumptions that GO bonds will be put ahead of other liabilities, such as employee pension and healthcare promises, investors and rating agencies say. In turn, that could lead to lower assessments of the bonds’ creditworthiness and higher funding costs, at least in Michigan if Detroit’s bonds are found to be unsecured under state law.
Mr Snyder laughed off such concerns as suggestions that he would “destroy the modern world”.

Such jockeying is an inevitable part of the bankruptcy process, the two men said. “Some of this is bad theatre. This is off-Broadway stuff,” Mr Orr said. Creditors and other claimants, including city employees’ unions, “have to do this for their own constituencies”.”

The YENGUY
why not put all that in CAPS!CAPS I TELL YOU CAPS!!!!!!!!!!
Shorter

@seafóid

RTE does a Sean Cavanagh job on the universities.

I laughed then choked. Imagine universities not serving their primary role as outsourced research departments for corporates? It is a twenty first international capitalist turn on the former United States habit of always asking how some basic scientific research could benefit national security.

I say to private enterprise, ask not what you can do for society, ask what society can do for you.

The Mankiw article was like the curate’s egg — good in parts. At least he acknowledges the flaws in the standard social science model, e.g. “the intergenerational transmission of income has many causes beyond unequal opportunity. In particular, parents
and children share genes, a fact that would lead to intergenerational persistence in income even in a world of equal opportunities. IQ, for example, has been widely studied, and it has a large degree of heritability. Smart parents are more likely to have smart children, and their greater intelligence will be reflected, on average, in higher incomes. Of course, IQ is only one dimension of talent, but it is easy to believe that other dimensions, such as self-control, ability to focus, and interpersonal skills, have a degree of genetic heritability as well.” You are not supposed to state that so bluntly, since it violates SSSM. The related paper by Miles Corak is very careful to stick religiously with the SSSM. Other parts I think Mankiw is misjudging things for example he does not give enough weight to the pernicious influence of excess compensation in financial services, and the destructive social impact of too-extreme US income inequality. So like the curate’s egg, good in parts.

Hey Shay! That’s a great idea. A thread with quotes like JKGs. There’s loads of them out there. Gavin K might ‘referee’ it for us.

“The man who is admired for the ingenuity of his larceny is almost always rediscovering some earlier form of fraud. The basic forms are all known, and have been practiced.” [J K Galbraith]

Was he ‘talking’ about our bankers, by any chance?

Academics generally live a sheltered existence and irrespective of the access to data, there are limits in interpreting the world from the same desk year after year…after year.

In the UK real average wages have fallen since 2008 but rose 62% in the period 1986-2011.

The top 1% had the biggest gains, rising 117% to £61.10 an hour, while the bottom 1% had the smallest real wage growth until the minimum wage was introduced in 1998 – after which they benefitted the most. Since 1986, the bottom 1% have seen their pay rise 70% to £5.93 an hour on average.

On the jobs front,  employment in professional occupations – which include lawyers, accountants and management consultants – grew by more than 230,000, or 4.4%, from early 2010 to mid 2012, the fastest increase of any group.

The next biggest rise was at the bottom of the pyramid:  a category that includes waiters, bar staff, kitchen assistants, security guards and cleaners – rose 2.5%.

The biggest decline, of 160,000 or 4.8%, had been among administrative and secretarial staff. Process, plant and machine operators were fewer, as were skilled trades, which include electricians and machine fitters.
 
McKinsey says half of the face-to-face service jobs that people once took for granted – bank tellers, travel agents, typists and so on — no longer exist. That, in turn, is helping to fuel the income gap in our societies.

@ MH

“Academics generally live a sheltered existence”

Have a look at this
http://www.cara1933.org/

MH
im as sensitive as a brick….
anyhow, what are we worrying about
Ireland – apparently its fine. http://wp.me/p1xJaL-RL
Best quote is on emigration which is apparently not so bad as a) there are fewer proportionally than in the 80s and b) sure isnt Ryanair great.
Blech..

@ MH

“Much of the shift is the result of changing income structure in the United States. ”

That in itself doesn’t explain what happened. No mention of the system behind it. Maybe you could get an academic to tease it out.

@MH there is a decent summary here-from US view.
“In the end, Mankiw says, the question of redistribution is more one of morals and political philosophy than absolute utility. “Economists can turn to empirical methods to estimate key parameters, but no amount of applied econometrics can bridge this philosophical divide,” he writes.”
http://www.washingtonpost.com/blogs/wonkblog/wp/2013/08/09/why-is-the-u-s-s-1-percent-so-much-richer-than-everywhere-else/

“We believe that the US evidence on income and wealth shares for the top 1 percent is most consistent with a “superstar”-style explanation rooted in the importance of scale and skill-biased technological change. ”

There’s a very heavy dose of rent seeking in there too. And good old trickle down failure. Plus political capture. The argument that it’s all about superstars is often used at Birmingham FC as well…
Interesting to see how the superstars of the hedge fund industry are managing these days as well.

@seafóid

The Economist (of all places) had a take down of Mankiw’s paper weeks ago.

http://www.economist.com/blogs/democracyinamerica/2013/06/inequality

Whether you think Mankiw is being highly disingenuous in his arguments in order to support his preferred political and social settlement or whether you think he has been driven mad by conservative affect the man is not worth reading except as an exercise in exploring the psychology of the academic reactionary.

Just to echo others here that perhaps attacks on PS workers/millionaire academics don’t have to make their way into every bloody thread?

@seafoid,hi seafoid,now now,oh r link does not work.
last time i was in Dublin,kinda reliving my youth a bit,but lots fat gurriers,gougers and bousies lurking,ok in fairness may not been a great idea to go get a kebab over the bridge still..WTF ya feeding them given the deficit!

“THE US Government is warning American tourists of assault by gangs “roaming the streets” of Dublin in the early hours.”
http://www.herald.ie/news/us-visitors-get-warning-over-dublin-crime-27986357.html

oh this too:)
“Ireland’s children are now among the fattest in Europe, medics have warned.
“Ireland ranks in fifth place among 27 EU countries for childhood obesity, an Oireachtas committee was told yesterday.
The figures were outlined by a panel of doctors and nutritionists who described it as a “pandemic”.
http://www.independent.ie/irish-news/irelands-children-are-among-the-fattest-in-europe-warn-medics-29343717.html

@seafoid,thank you its a fecking 1 hour an half,but will watch it later,tks.
Yeah we call them Florida big,but NOT in new york or hamptons or aspen,where the 1% hang.Its just not a good look:)
we have BIG STEP and yep changes in healthcare which may help bit early to tell but.
BIG improvement……
“But the overall good news is mounting evidence that obvious community-based solutions, like eliminating fried foods in school lunches and educating kids about the need to exercise every day, tend to get results.”
http://www.washingtonpost.com/blogs/wonkblog/wp/2013/07/12/looks-like-the-u-s-is-winning-its-war-on-childhood-obesity/

in stark contrast to…austerity you say!
“In Ireland at the present time 39% of adults are overweight and 18% are obese. Of these, slightly more men than women are obese and there is a higher incidence of the disease in lower socio-economic groups.”
http://www.dohc.ie/publications/report_taskforce_on_obesity_es.html

@ JG

I think it’s down to what food people eat and much of it is processed with all kinds of crap in the ingredient list. There is far more to the problem than fried stuff in schools.
In Ireland the amount of shop space devoted to chocolate and biscuits is probably highly correlated to the obesity level.

@ All

FYI

http://www.irishtimes.com/business/economy/ireland/eu-economy-data-may-show-return-to-growth-1.1492144

To quote MASH, “tomorrow has been cancelled because of a lack of interest”.

@ DOCM

Maybe there’ll be a smidgin of growth but in Ireland for example there is no money for upkeep of the national infrastructure . Investment is so low. It”ll be ok for a while but then Operation Things Fall Apart will roll.

Any thoughts on the output gap on the periphery ?

Methinks things must be pretty slack for ‘chippies’ in the Big Apple … now up dere with one of the blogs top neolib financial spinners …. and the deutschertroll …

According to Akerloff – economists don’t have a clue and are all on ‘banana time’ sucking ‘lemons’. The GOP, according to the IT columnist from across the pond, are making policy by reading Ayn Rand and following diktats from characters in Atlas Shrugged ……

@blog Randities
Apologies if I have hurt your feelings (assuming that you have any!).

Robert Heffernan vs The Russians (on and off the road) in Moscow … live right now in the 50K walk ……

@seafóid

“There’s enough money within the EZ to sort out the crisis.

Worth reminding people of this FACT.

Earlier, I was going through some material I have used previously for a piece on policy failure and this comes from research on innovation done by Eoin O’Leary and Declan Jordan , UCC economists, who used a sample of 184 high tech firms.

One of their findings was that:

“The greater the frequency of interaction with HEIs (higher education institutions) the lower the probability of both product and process innovation in these businesses.”

One finding of course isn’t necessarily the gospel but it would be an inconvenient truth to some involved in the research sector – there
has been no public dissent from there in a decade. It’s usually better to avoid the brickbats by keeping the head down and going with the flow.

The history shows that there is little tolerance of dissent in Ireland but more of it would be a good thing.

Irish Innovation: Evidence of science policy failure mounts

@Michael Hennigan

“… there is little tolerance of dissent in Ireland

Fully agree. This must now be fully recognised as one element of a series of institutionalised weaknesses in the Irish system. Probably most evident within the party political system; and closely followed by the dominant (often severely flawed) ideologies within the university system and .. er.. the ESRI. In terms of pragmatic governance this state of affairs is potentially disastrous … as it has proved to be in recent times.

Didn’t your lad from ‘Toke_er’ do well? Only took 15 years of really really hard work and focus.

@DOCM
The weather is a complex adaptive system. So is the economy at times but economists are only beginning to think in such terms – leaders at Santa Fe Institute (interdisciplinary) and the place is packed with very clever dissenters.

@DOD-“Methinks things must be pretty slack for ‘chippies’ in the Big Apple ”
ah jasysus dave shurly u off all people would know its the builders holliers, ya don’t begrudge a hard working chippie a few days off now do ya….

“Atlas Shrugged”
…………………………………

Re Kay and the economic modelling most of it is crap in fairness.
Models based on data from a few years when volatility was low were useless when TSHTF. Big questions around random walk notions and independent games as well. And how do you model policy intransigence?

@ DoD

Robert Heffernan – superb . Good man him. Came fourth in the lympics.
All the sacrifices – and now the reward.
Unlike austerity…

UK payrolls have risen by 3% since tghe trough an it is driving both the anti austerity lefties and the pro austerity quislings mad because it shows that the UK policy of very easy money, tight fiscal and welfare reform might just be right.

@ Tull

“UK payrolls have risen by 3% since tghe trough an it is driving both the anti austerity lefties and the pro austerity quislings mad because it shows that the UK policy of very easy money, tight fiscal and welfare reform might just be right.”

And London property prices have risen how much on the back of the easy money ? If that bubbuw bursts there’ll be blood all over Number 11.
The UK still doesn’t have a viable alternative to the dependence on the City that drove it into the crisis in the first place.

@ All

FYI

The problems with SME lending in the US seem similar to those impacting almost everywhere (except, it would seem, in Germany and closely allied economies). HT Alphaville.

http://www.clevelandfed.org/research/commentary/2013/2013-10.cfm

Johnny,
One can only hope

What keeps the RE bubbles in UK, Norway, Sweden, Canada and Oz from popping is the fact that they were not stupid enough to hand over control of their own policy levers to a bunch of nutters in Frankfurt who are obsessed with inflation.

@ Johnny

In 1999 it was still possible for a nurse to buy a flat in London. She only needed 10% for a deposit and 100K would get something decent.

Now the prices are at least 2.5 times what they were then and the deposit is 20% so today’s nurse can forget it. That is not sustainable long term IMO.

Easy money has kept the bubble going but it won’t last forever.

@ Tull
I dunno how stable property prices in the UK and Oz will be over the medium term. Property bubbles are very slippery.

Interest rates might go up quickly too.

That Morgan Kelly property crash paper where he crunched the OECD data is very interesting.

@DOCM some more on Rajan.
http://www.nakedcapitalism.com/2013/08/bill-black-rajan-calls-krugman-paranoid-for-criticizing-reinhart-and-rogoffs-research.html

@Tull
Re the “nutters”
+100

Remarkable that US inflation is not going anywhere fast despite the QE. Figures today show no inflationary pressure.

@ Fiat
Old style inflation = more money being printed and ending up in everybody’s hands

New style inflation = money being printed but going straight to financialists.

It’s selective inflation

@DOCM
“Mumbai: In a bid to protect a depreciating rupee against the dollar, the Reserve Bank of India (RBI) on Wednesday partially rolled back the currency’s convertibility and imposed capital controls on resident Indians. The objective is to stem dollar outflow from the country at a time when the greenback is in short supply, but the decision effectively undoes key reforms of the past two decades that removed capital controls”
http://www.livemint.com/Money/vs1bcMIMj8A1hqiniASC5O/RBI-announces-measures-to-limit-forex-outflows.html

Your old pal Mody has good paper and vid at Brugel it’s linked on Gregory’s tread quite good-debt equity swap.

Rottweiler McDowell is back and he has Tull in his sights

http://www.irishtimes.com/news/politics/mcdowell-criticises-pundits-who-enjoy-middle-class-self-hatred-1.1494093

“He said some commentators “seem to enjoy wallowing in what I have termed as a ‘middle-class self-hatred’ or negativity. It is easy to be critical; it is hard to be constructive, especially during times of economic crisis”.”

as well as others

“He recalled the 1998 amendment to the Constitution which he said redefined the nation as one which aspires to include all the people of Ireland, “in all the diversities of their identities and traditions”.
“Those words are important” he said, arguing that the State had opened up its sense of patriotism and republicanism “to build and develop on this island a republican State which is not mainly or exclusively Catholic, but is open to all traditions and identities”.
But he said “a particularly striking historical nonsense” was the belief by the “post-Marxist left” that republicanism equated with socialism, and a failure to deliver on socialism was a betrayal of the Republic. “The two ideals are not equivalents” he said.
He said loyalty to the State and the Constitution demanded loyalty to the institutions of government which “by and large have served the citizens well”.
He also said the Constitution had not failed the people and the three pillars of government – legislature, the executive and the judiciary – were not failed institutions “in concept”.”

Oh Dear!

Mick PD McDowell linked on the blog – Mick, the leading (flawed) ideological architect of the Irish ‘crash’ with his buddies Charles McCreevey, Mary Harney, and the ‘socialist’ (sic) Bertrand Ahern; and .. er .. one of the leading lights of the infamous ‘poltroon of eight’ AGs who believed themselves ‘above’ scrutiny by a committee of the Oireachtas!

How could anyone take this failed politico seriously? Not the republicans; not the people of Dublin South East; certainly not the socialists; as for the Marxists – well Blind Biddy will place a charitable copy of ‘Capital’ in the post … he can pass it on to the brudder when he digests its palatable realities.

@All

http://www.telegraph.co.uk/finance/mark-carney/10242597/Have-the-austerians-won-the-day-or-will-the-pragmatists-prevail.html

Great article in today’s Telegraph that puts the silly squabbling over austerity in perspective.

The big problem with academic macroeconomics is how easy it is to get away with making bad predictions, being completely contradicted by newly emerging evidence, and walking away with your reputation intact.

More great data out of the UK today (retail sales). And it’s not just the consumer and housing driving the UK recovery story – looks like manufacturing and exports are on their way back as well. With stronger growth and a much improved debt outlook for the UK it won’t be long before Germany and France are wondering enviously about what they could have achieved without the euro or at least with a euro with no PIIGS.

The UK recovery is great news for Ireland of course but it is hard to escape the suspicion that many would rather delight in UK misery than enjoy the secondary benefits of the clever management of the UK economy by the Tories.

@ Bryan G: Those ’employment’ estimates you allude to – are they reliable? credible? I’d consume them together with a bucket of popcorn!

Monopoly Capitalism has one major (maybe several) built-in, structural defects; one is under-utilization of productive resources (or even non-utilization), which has a parallel in higher levels of un-employments. These are un-avoidable.

It is not possible for a capitalist- style economy to attain levels of ‘full’ capacity utilization and employments except for short periods, or longer ones in the case of a protracted war. The only way capitalist economies can maintain ‘acceptable’ lower levels of un-employment is to continuously inflate their sovereign currency – hence reduce the purchasing value of that currency. As Einstein is reported as saying. “Its all relative, gentlemen!”

This monetary ploy has ‘worked’ in the past because raw energy (liquid hydrocarbon fossil fuel) was, relatively, inexpensive. Of high quality and abundant. The present scenario is much changed. Raw energy is now relatively, expensive. Its of a lower quality (you need more of it) and global production of liquid fuels has essentially plateaued since 2007. The recent impressive increases in fossil gases and liquids from shales and tar sands come at a very high energy cost and massive environmental degradation. Raw energy and economic activity are Siamese twins (in-separable ones). The oil-price ‘spike’ in 2008 is allegedly, one of the causal variables of the subsequent global financial crisis. Maybe?

Folk should have a long, hard look at what occurred in Cuba after the loss of Soviet aids. That’s where we are heading – absent the tropical weather and hurricanes!

@ Johnnie F: “The UK recovery is great news for Ireland of course ..”

You sure about this? They appear to have ‘enjoyed’ a -5% real decline in incomes since 2011. That must be fun for those on lower incomes, especially if HMG is also ‘engineering’ a slow-motion covert depreciation (loss of purchasing value) of the pound. UK is a nett importer of food and energy. That’s spells trouble!

@BW Snr

At the very least it is good news for the young citizens of the Republic who can find work. Construction is booming in the UK again and we have an enormous excess of young men who want to work. We also have great graduates in the health professions who need a functioning public sector to make all their studies worthwhile. The resurgent UK consumer is good news for our exporters, especially food sector.

Do you remember John the Optimist – northern nationalist type who was bewildered by the continuing strong demand for gilts? Nationalism will also lose out to pragmatism. The economic decisions made by the RoI over the last 40 years have been strongly influenced by nationalist impulses – euro membership is the strongest example of this. But you see the same thing in the hubris of Anglo and AIB.

@ All

More fun and games from Merkel who clearly wishes to create the impression that her re-election is a given.

http://www.independent.co.uk/news/uk/politics/angela-merkel-supports-tory-plan-to-give-back-eu-powers-to-member-states-8761988.html

The EU was built brick-by-brick on the basis of a strong central role for the Commission. Merkel seems intent on dismantling it with the aid – wittingly or unwittingly – of the Tories.

@ Bryan G

Unemployment is better in the UK than the EZ average and that’s down to policy which is fine but the notion that sterling is an independent player is not. Data from the UK looks better now than it has for some time but how long will it last? And what’s going to happen when we go back to risk off ? Is the UK going to exit the crisis first ? When are UK interest rates likely to go back to normal ?” Very hard to say based on 2 quarters of low growth.

http://www.ft.com/intl/cms/s/0/43e34a42-f0d3-11e0-aec8-00144feab49a.html#ixzz2c26Jsf8P

“Robert Parkes, equity strategist at HSBC, says: “QE is one big monetary experiment and no one really knows what will happen or where the money will go. On top of that, there is the uncertainty surrounding the eurozone crisis and global growth that could overshadow everything.””

This crisis is not over by a long shot.

Johnny F
“Construction is booming in the UK again and we have an enormous excess of young men who want to work”
ah yes. And sure isnt that great. Cricklewood, porter and exile. Great fupping plan

@BL

I worked on building sites in London in the 80s, used to be picked up outside the Crown in Cricklewood. Learned a lot about the true nature of labour. I remember coming back to Trinity and seeing the bewildered faces of the university professors when I told them I’d be working on a building site – might as well have told them I’d been working on the moon.

At least the guys who have to emigrate have skills that foreign employers want… how many Irish academics can say the same?

@BL

Most of your comments on here are badly constructed, mispelled, ill tempered and thin skinned. I was responding to a post from you which said “ah yes. And sure isnt that great. Cricklewood, porter and exile. Great fupping plan”.

I can guarantee you that if you asked 10 independent people which was the post of a troll they would pick yours.

Also – how many other posters do you intend to label as trolls? And exactly when you were appointed to be this site’s troll-hunter?

So far, I think its two recently – Frankeen and yourself. Hey, absent any form of moderation, someones gotta do it.

@Johnny Foreigner

Also – how many other posters do you intend to label as trolls? And exactly when you were appointed to be this site’s troll-hunter?

This is not the first time someone thought you were trolling Mr F.

http://www.irisheconomy.ie/index.php/2012/09/04/whingeing/#comment-326403

If you are not trolling then it might be sour grapes, or it might be a suggestion that your mode of expression is easily mistaken for trolling.

Either way the European Commission’s vocal glove puppet on the Irish Economy is a much, much worse offender (and one of the reasons the blog has become less useful).

@DOCM the UK retail sales are simply amazing,Pimm’s and mint sales off the charts,WalMart’s same stores very disappointing here.Hopefully a yank can win the mens at the US Open,as we have no royal snappers to give us a bounce!

@Johnny F stood outside some pub in Shepherd’s Bush until i got sorted,few summers as a student in London on the sites too,did not do me any harm…

@rf the sites in Dublin in the late 80’s were crap too work on,bad pay horrible safety conditions or none,some hung-over oul fella roaring at you not stop-even in you were the ‘bosses’ son !
London was terrific,in the late 80’s the ‘irish’ had squats in Islington,Kings Cross and Old Street to live in free,yep free contrary to the myth some were very comfy…
Fantastic,music and club/pub scene ..raves and the ‘summer of love’ ministry of sound,brixton academy….
Worked as a student in Dublin,NY,Toronto on the ‘sites’ probably had the best summers working sites in London,for what that trip down memory lane is worth !
Oh lots of older hands actually think the construction business in dublin now is worse than in the 50’s’..

@Brian L,in fairness you called me a troll on here,francis and paul w. too,don’t you have your own blog to moderate,doubt that takes too much time.
You had a ‘go’ at MH for linking some off his original work,yet oh never mind…

@Shay scroll down,what do you want an echo chamber,people with similar/same views going+1 all the time nodding their heads in agreement like a bunch idiots.
You appear to have ‘beliefs’ or ‘convictions’ can they not hold up to a bit off debate or a different view point ?

I enjoy Johnny F’s posts in fact most peoples…

“You appear to have ‘beliefs’ or ‘convictions’ can they not hold up to a bit off debate or a different view point ?”

Its not Aristotle we’re talking about here. Its Johnny bloody Foreigner. If he was offering ‘a debate’, and not just personal attacks and nonsense as salt of the earth wisdom, then grand

ps I know neither of those were directed at me, and I can see the contradiction in bemoaning personalised attacks while dishing them out..I have no excuses

@Bond Eoin Bond

I see they are selling off everything today with sovereigns going down with the markets. Treasuries 10 yr now at 2.79%….any thoughts?

@rf ehm you may have a point:)

btw, Im not claiming myself as a later day Aristotle, and would be equally oppossed to anyone arguing that my nonsense was adding to any class of ‘debate’ : ) so lets all make up and start again?

UK retail sales “are amazing” – anything to do with the weather ?
Last year it rained the whole summer and sales were very poor

@rf all good here,i enjoy your posts,and yes London was terrific lived there after coll. my fav. city after NY.

The US sales yikes…Roddick has retired,top ranked US player is John Isner at 22, ten spots behind Kei Nishikori,exactly…no royal family either we are fu..,its wall to wall tapering,tapering non stop.

“Coming a day after Macy’s missed expectations — its first miss in 25 quarters — and lowered annual guidance, and the same day that Kohl’s did the same, the retailers’ results suggest that consumers in both the low and middle sectors of the market are not yet being buoyed by an improving economic picture.”

http://www.nytimes.com/2013/08/16/business/wal-mart-lowers-outlook-as-consumers-hold-back.html?partner=socialflow&smid=tw-nytimesbusiness&_r=0

@Fiat its a sell bonds and short stocks day here,the TI numbers are a bit..
http://www.zerohedge.com/news/2013-08-15/ticsaster-foreigners-sell-more-us-securities-after-lehman-bankruptcy

@ all

From my perspective, the main problem with Prof. Lucey is that he repeatedly tries to silence people, who disagree with him.

Johnny Foreigner here today, he recently tried that with me, falsely accusing me of ad hom threats, John Gallaher pointed out other examples.

When I talk tomorrow to people here in Germany about, what I think

the problems of Ireland are, Tenured Prof. Brian M Lucey

serves as an excellent starting point.

Just a few weeks ago I was so naïve and unaware of his vitae to appeal to his patriotism, care for the common good, even looked for the “The patriot” youtube for that.

Where do I start?

1. His prediction : don’t worry about sub prime and lofty Irish real estate prices.

2. Calling in the German Frankfurter Allgemeine (FAZ) for Merkel to put deeply inappropriate foreign pressure towards an Intra Irish enquiry on the Anglo tapes.

3. While in parallel here telling Irish folks: The Germans will pay.

4. When it came for strategic defaulters in the discussions here, something mature nations, like the US, and the unforgettable FICO link from John Gallaher, talk about the problems and how to deal with them, it was from BL here all pssht, we don’t know and we don’t want to find out.

5. When I read the postings from Michael Hennigan, and his related threads on his own site, I find repeatedly interesting and quality links, like Herengracht index, the wage survey of the research institutes of the German Unions, and much more. While I do not agree with some of their conclusions, I still trust them to do the legwork of diligent research and honest reporting, especially when it doesn’t fit their agenda : – )

6. In contrast Brian Lucey is the main contributor (and what more? Part owner …. ? ) to an Irish site, which repeatedly features an obscure, new, few hundred subscriber, panic mongering (8% inflation) site (deutsche wirtschafts nachrichten)

@ Johnny Foreigner, John Gallaher

When I was young, I worked in a brewery, in the forest (that one I quit after a week for better pastures), as a surveyor (helper), and I did my 15 min rounds hammering away on asphalt in the boiling sun, and the engineer and senior helper doing equal shifts, in search of a mark underneath. Nothing “romantic” about that, just swollen hands. But it had to be done.

Restaurant, cashier, but then moving on to programming quickly, paid better :- )

I have been involved in hiring decisions since 1998. What we always looked for, was whether people have shop floor, real working world experience. Doesn’t need to be long, but a) to know first how that works with real, normal people.
And b) to be not afraid to get their hands dirty, the machine grease under their finger nails, when there is the need.

Because that also means for example, that they can handle more rough and tumble “normal” people in a work environment.

I worked age 35 Saturday night shifts at a machine, when nobody else could do it, to hammer through a key development project. The applause I got from battle hardened IBM comrades was one of the happiest days in my life. Shortly after some of them went on national guard duty to Afghanistan, and we filled in for them. Then you know, what real “Allies” are.

I have a PhD and an MBA, but I can also work a lathe and other machines and a machine gun : – )

And that makes actually to a late, but shorter and clearer answer to

Paul Quigley

On mass immigration / Germany (in an older, but recent thread here).

If people come and like it here, the work conditions, pay, the environment, they are all welcome.

But we do not roll out the red carpet, and get people worked up about special incentives, and induce a feeling of entitlement and what we should somehow owe them.

Good character folks, like Johnny Foreigner, are very welcome and don’t need special invitations.

”
contrast Brian Lucey is the main contributor (and what more? Part owner …. ? ) to an Irish site, which repeatedly features an obscure, new, few hundred subscriber, panic mongering (8% inflation) site (deutsche wirtschafts nachrichten)”

Huh? Wha? News to me…

John G
If I offended, apols. Your takes some getting used to. Thanks re the Times.

I still wonder what this marvellous site is that I own wherein I promote 8% inflation.

Sluggish growth is the new norm in a non credit fuelled economy. Lets get used to it.

@JG

It was Bikram, the aggressive form of yoga. 16 euros a pop and the class was mobbed – plenty of discretionary income in Cork it seems.

I was also talking to a publican, a cafe owner and a car dealer this week – all based in rural Cork. All said that this was the best Summer they have had for 6 years. Talked to a mortgage broker last week – reckons things are definitely turning, and not just in Dublin.There might be some life left in this auld sod yet.

Trying again:

@DOCM

Countries with their own currency have clearly more lee-way to soften the impact on employment.

True. But you then go on to question whether such softening makes the longer-term picture better or worse. There’s plenty of evidence that once people become stuck in long-term unemployment it is very difficult to re-enter the workforce. I would also argue that structural changes are more achievable if inflation runs along higher than it is (nominal wage rigidity and all that) and with low real interest rates (not achievable in many countries in the EZ due to fragmentation and a re-nationalization of financial systems).

@seafoid

Just because the policy levers don’t achieve everything people would like, or act as smoothly as they would like, doesn’t mean that they aren’t very useful – things would be a lot worse in the USA and UK were it not for co-ordinated Central Bank/Treasury actions that are simply institutionally not possible in the EZ.

@all

There are certain economic accounting identities that won’t go away. Since deficit spending in the EZ is now essentially illegal in the medium term, the *only* way the private sector in the EZ can gain net financial assets is via net exports outside the EZ, presumably to all those monetarily sovereign countries I listed. For a good number of EZ countries this just isn’t going to work. For a small number of countries it will work just fine.

The social costs endured by the majority of countries where it isn’t going to work are, and will continue to be, severe, and certainly more severe than they would have been if they could pull the same levers that (advanced) monetarily sovereign nations are pulling en masse.

Trying again mbl…
@johnny f we call it “hot yoga” excellent hangover cure,a spot on spring st in soho,wonderful way start the day the view has to be seen to be believed….
Speaking off scantily clad women and cold beers,that time off day over here.

Had a quick read of Rob’s post this morning,regarding the recovery in Dublin.
http://irelandafternama.wordpress.com/

@bryan g
The UK has stg but I dunno if it will make much difference. There is a limit to what CBs can do as well. The UK is in a very bad state – I just don’t buy that it is streets ahead of the ez because it can do stuff with inflation. This crisis is massive. Even in the US there are big questions around QE and how to wean the markets off it. Financial Prices are artificially high. Banks still.not lending. Corporate profit hoarding. Very little investment. CBs pushing on string with massive injections of money and no real experience in how to run the policies. It is very messy. And I agree on the social costs. It is going to be more than a lost decade.

@ JG: Thanks for the initial link. Now follow the next two. I recommend a comfortable seated position.

http://finance.fortune.cnn.com/2013/08/15/for-this-tepid-economy-theres-only-one-way-out-2/

http://www.cbo.gov/sites/default/files/cbofiles/attachments/43707-SlowRecovery.pdf

http://www.theoildrum.com/node/10182#more

There appears to be a civilization time cycle: lets call it 10:5:2 – of, Growth: Stagnation: Decline. Have we, in western developed economies [WDI] entered Stagnation?

Another observation is that we should consider the ‘quality’ of different employments, rather than their quantities. I op that employments are stacked in a vertical hierarchy and you need to have a vertical trans-section of the total so you can observe the actual proportions of each type of employment. These proportions change, and that change may be critical. Same goes for unemployment status. Unemployment is not a homogenous state.

Also, related to the nature of employments, is what I term, the Nett Income Generating Potential of Employment. Is this in decline now in WDI? If so, there would be significant issues with overall consumer demands, the levels of taxations and the amount of revenues arising from those taxations. If those revenues decline – then what?

Credit and energy keep economies moving forward (like sharks*). If either, or both should falter, we sink!

Lots to ponder upon.

*Sharks, unlike fish, lack a swim-bladder. If for any reason they stop moving forward they sink and drown!

@seafóid

BoI are definitely lending. 10% deposit, 4 times salary, pretty strict guidelines on other debt and outgoings, and you need a stable job. But a lot of people meet those guidelines, the MNCs have plenty of well paid staff in their 30s who meet the criteria and want to buy.

I’d prefer if it wasn’t so… still haven’t bought a place in Ireland myself.

@ Johnny

I saw something in the IT about mortgage lending stats and it is in the low thousands, IIRC.

Similar to car sales.

BoI has a mortgage fund of 2 billion. That would buy around 4000 houses in the more desirable parts of Dublin. It’s peanuts.

There is probably that much being paid back in mortgage direct debits every few months.

@johnny f-mtg. approvals-h/t NWL vol. 9.
Mixed numbers at best….
”Over 1,600 mortgages approved in June to the value of €280m
Key category of approvals for house purchases up 8.8% on last year
The latest figures from the IBF Mortgage Approval Report, published today for the month of June, show an annual increase of 7.3% in the level of mortgages approved by mainstream lenders.
With 92% of new approvals now accounted for by house purchases, the level of approvals in this key segment also showed a year-on-year increase, rising 8.8% on the same period in 2012; and the average mortgage approval value for the purposes of house purchase was €174,675 – down by 2.6% on June 2012.”

http://www.ibf.ie/gns/media-centre/news/13-07-29/Mortgage_Approvals_Show_Annual_Increase_of_7_3_in_June.aspx

Size of mtg mkt 06′ 203,953 vol 40Bil val-’12 15,881 vol 2.6 bil val !!!

@francis lots of numbers out there,today the NYT had an article regarding 1 dollar homes for sale…
Here from WSJ-i know you like your CS Index 🙂
“In all, between May 2012 and May 2013, the latest month for which data are available, the S&P/Case-Shiller 20-city index of home values climbed 12%. Home prices in two of the index’s metro areas—Denver and Dallas, which missed much of the boom—hit all-time records.
Instead of signaling a bargain, the national price/rent ratio in June was at 22.8—already above the historic long-term average of 20.6.”

http://online.wsj.com/article/SB10001424127887323838204578654321352118946.html?KEYWORDS=housing+market+numbers

@ john gallaher
 
There is an interesting chart here on mortgages in 2012. They were at the 1973 level. The population in 1971 was just less than 3m.

Earlier in 2012, loans issued were running at a rate back to the 1960s. Official data is from 1970.

http://www.finfacts.ie/irishfinancenews/article_1025601.shtml

@ Tull: “… pointing out that easy money has dragged the UK and US economy out of its slough of despond.”

There is no such (real) entity as ‘easy money’. If the sovereign emits ‘money’ (in whatever form) – its inflationary, and simultaneously devalues all the existing money. That’s fun – until it is not – rising import costs. Then rising commodity prices. Then those ‘revolting’ plebs will be looking for higher wages! 😎

Doom Porn Merchant.
Euro Quisling.
Anti-Brit.
Gold Bug.

Interesting cast of fictional characters. Who are the actual actors then?

@Tull

Be careful, you’ll end up on the troll list.

You could also plain old ‘snob’ to your list of characters. The naked disgust displayed towards work where you get your hands dirty is something that most academics try and hide but it’s been on full display in this thread.

In fairness to BW Snr he is right about the risks for Ireland of a world of expensive energy.

@seafóid

David Smith in the Sunday Times has been saying for a few years now that growth in the UK is understated by the NSO and the employment numbers indicate a much better picture. The UK deficit/debt figures are improving and their repayment schedule is much more favourable than elsewhere (e.g. US).

To be fair to the Tories they have done a lot of things in a short space of time that leftists should applaud. For example, massive cuts to military spending while ringfencing the NHS budget? Why did the Blair/Brown government spend so mucn money on failed military adventures and why isn’t Miliband’s Labour saying sorry?

@MH great graph few numbers to add-h/t again NWL.
yr. vol. val.
12 15,881 2,636
11 14,273 2,463
10 27,666 4,746

06 203,953 39,872

@Johnny/Tull two commentators i read/follow on the UK-decent reporting/analysis on the UK housing mkt.Anyway,always interesting views and i tend to think the London market is getting overheated,lots new supply on the way.The old BPS for starters,thanks to Malaysian property developers SP Setia and Sime Darby Property,but may be incorrect have been before.

” Osborne’s behaviour both angers and frightens me. He is playing brinkmanship with the UK economy to achieve political ends. Nothing he does makes much sense from an economic point of view – which is why the flagship Help to Buy scheme has been universally panned, even by his own department and by people from his own party. But if you view his actions as entirely determined by his desire to secure a Conservative victory in 2015, it all makes perfect sense. He is dangerous”
http://coppolacomment.blogspot.ch/2013/08/the-illusory-housing-recovery.html

and naturally..Simon Wren-Lewis
http://mainlymacro.blogspot.com/2013/08/the-wrong-sort-of-recovery.html

Krugman takes aim again
http://mobile.nytimes.com/blogs/krugman/2013/08/16/ireland-is-the-success-story-of-the-future-and-always-will-be/?smid=tw-share&_r=0&
“The one sense in which Ireland has made some progress is that it has somewhat reassured bond investors that its population will continue to sullenly acquiesce in austerity; as a result, Irish 10-year rates, while still at a large premium, are now 60-80 basis points below those of Italy and Spain.”

http://www.theguardian.com/commentisfree/2013/aug/16/george-osborne-economy-force-nature

“This is what a completely dysfunctional version of capitalism looks like. The crudest, most stupid, completely self-destructive formula for maximising profits – cutting wages while pushing up prices – is extended over the entire economy. An ever-increasing dependence on the service sector drives out skilled jobs in the middle, and offers no hope to those places which are still a byword for the end of heavy industry and manufacturing. The nation’s capital becomes the playground of the people at the very top, serviced by young people who can live cheaply(ish), and people from overseas who are just about able to cope, on the basis that they might eventually go home. Housing, surely any worker’s most basic need, is in permanent crisis. And for a lot of people trying to keep pace with forces that are out of anyone’s control, there is only one option: residence in what the economist Ann Pettifor this week called Wongaland, where people borrow unsustainably while saving absolutely nothing”

http://www.theguardian.com/commentisfree/2013/aug/16/not-road-to-recovery-but-wongaland

@ Seafóid: “This is what a completely dysfunctional version of capitalism looks like. The crudest, most stupid, completely self-destructive formula for maximising profits …”

This, 47 years ago – before the IT era.

“The contradiction between the increasing rationality of society’s methods of production and the organizations which embody them on the one hand and the undiminished elementality and irrationality in the functioning and perception of the whole creates an ideological wasteland which is the hallmark of monopoly capitalism.”

Baran, P. and Sweezy, P. ‘Monopoly Capitalism’. 1966.

“Are we there yet?”

Food banks are an important pillar of Tory economic policy, of course

http://www.theguardian.com/society/2013/aug/17/food-banks-inquiries-poverty-cuts-wages

@ francis: “… we can stabilize the system by gradually removing perverse tax incentives, implement strict supervision, and reduce the gigantic self satisfying churn by implementing clever transaction taxes.”

That ‘we’ – is actually ‘us’ – them self-same folks what gave the ordinary folk this economic and financial mess. ‘They’ might be a tad slow to reverse course, and all.

You want to ‘stabilize’. Very good idea – but that means applying the same ‘rules’ to financiers as for the rest of us ordinary folk. That would also meet with stiff resistance. When you observe many, many financiers before the courts, being convicted and going to jail – that’s when you know the ‘system’ is being stabilized. Not before.

‘Perverse tax incentives’. Now who devised these? Put them into effect? Kept them in effect? Our friendly financiers and the politicians they supported! Anyhows, that’s how the financiers make their large economic surpluses. Remove the perverse tax incentives and our financiers revert to what they were four decades ago. Can you see them agreeing to such loss of income, bonuses and the ‘prestige’ that goes with a close association with pecuniary endeavors? Neither can I francis.

We will indeed return to a ‘simpler world’. Just not anytime soon. A decade? Perhaps? The financial elites have spent the last 5 or 6 years attempting to stabilize their system – in their favour, but do not appear to be particularly successful (other than for short periods). Its like the tide francis. It goes in and out and men seek to harness it in some fashion. And they do. But they cannot alter its motion, much as they might wish they could.

Get a comfortable seat and ‘enjoy’ these interesting times. To-day is to-morrow’s history.

The simplest explanation for the uptick in UK consumption, is that people need a break. Fine weather makes everyone feel like they are holiday. People talk to their neighbours, go on trips, have family outings, indulge their kids, and generally kick back. Austerity is temporarily suspended on the basis that fine weather is likely to be brief. It went on a bit a bit longer than expected.

The other factor is that people have to see a future in which they wish to invest, deferring consumption accordingly. As recovery remains a mirage, people may be more inclined to enjoy the R&R, as in wartime.

@DOCM

‘ The problems with SME lending in the US seem similar to those impacting almost everywhere (except, it would seem, in Germany and closely allied economies). HT Alphaville.

http://www.clevelandfed.org/research/commentary/2013/2013-10.cfm

Thanks for that clear, succinct link. The implications for Irish SME’s, and domestic employment seem very clear. Back to the old days, when potential small entrepreneurs emigrated en masse, because they didn’t have the property collateral. They have it nowadays maybe, but it is in many cases hopelessly encumbered.

@ Paul Quigley

BTL seems to have been the real catalyst; certainly in the UK. And is still creating havoc.

http://www.theguardian.com/books/2013/aug/18/default-line-extract-faisal-islam-housing?guni=Keyword:news-grid%20main-1%20Main%20trailblock:Editable%20trailblock%20-%20news:Position1

@ DOCM

Faisal Islam asks

“Are we going to load the burden of adjustment from a decade-long bubble on to people who happen to have been born in the 1980s and 1990s? ”

Bien sur. That is the plan all over Europe.

@ seafóid

As most bloggers, one assumes, pay their income tax, they will be familiar with item 69 of Form 12.

69 – PROPERTY BASED INCENTIVES ON WHICH RELIEF IS CLAIMED IN 2012

You are required to provide the following information in support of your claim to any of the following reliefs. You should note that the
details required by this panel are the “specified details” referred to in S. 1052(1)(aa) and S. 1084(1)(b)(ib) and that any failure to fully and
correctly complete this panel may leave you liable to penalties under S. 1052 and/or a surcharge under S. 1084.

Enter the amount of the annual cost of the relief, that is the amount claimed in the year, excluding amounts carried forward into the year either
as losses or capital allowances, and before deducting any amount of unused losses and/or capital allowances which will be carried forward to
subsequent years.

Industrial Buildings Allowance Owner Occupier Investor – Lessor
Urban Renewal S.372C & D
Town Renewal S.372AC & AD
Seaside Resort S.352 & S.353
Rural Renewal S.372M & N
Multi-storey Car Parks S.344
Living over the Shop (Commercial Premises Only) S.372D
Enterprise Areas S.343
Park and Ride S.372V & W
Hotels S.268(1)(d)
Holiday Cottages S.268(3)
Holiday Hostel S.268(2C)(b)
Guest Houses S.268(2C)(a)
Nursing Homes S.268(1)(g)
Housing for elderly/infirm S.268(3A)
Convalescent Homes S.268(1)(i)
Qualifying Hospitals S.268(2A)
Qualifying Mental Health Centres S.268(1C)
Qualifying Sports Injury Clinics S268(2B)
Buildings used for certain childcare purposes S843A
Specialist Palliative Care Units S.268(1)(m)
Buildings or Structures in registered caravan & camping sites S.268(2D)
Mid-Shannon Corridor Tourism Infrastructure S.372AW
Investment Scheme

Where the scheme(s) on which you are claiming relief is/are not listed above state the name of the Incentive Scheme(s), quote the relevant Section and enter the amount of relief claimed in the year (Owner Occupier, Investor–Lessor).

Owner Occupier Investor – Lessor
Residential Property S.372 AR S.372 AP/AU
Urban Renewal S.372AP & AR
Town Renewal S.372AP & AR
Seaside Resort S.372AU
Rural Renewal S.372AP & AR
Living over the Shop S.372AP & AR
Park and Ride S.372AP & AR
Student Accommodati

@ PQ: “The elite economics schools sold themselves for an ideology, and destroyed the credibility of their profession. The ‘efficient markets hypothesis’ will be eventually seen as one of the worst lunacies …”

I wonder about this. Not that I am claiming you are incorrect – but my experience of academics makes me wary of their so-called intellects and their abilities to ‘see through’ stuff – rather than merely observing the reflections. It would be a very foolhardy undergrad who challenged her professor. Seen it happen. Very unpleasant reaction. Leaves an enduring and bitter memory.

And, for what its worth. The brightest academics are often the most obstinate. If they have learned and assimilated something, and hold that to be true – then it IS true! Observations which would refute their beliefs are axiomatically wrong! Sentiment rules, KO!

You will know that a paradigm shift has occurred when the ‘Efficient Market Hypothesis’ (and a few other daft* economic concepts) no longer appear in mainstream undergrad texts. Unfortunately, that could be some time yet!

* Daft in a scientific sense.

@ seafóid

Why go looking for explanations abroad when they are right here at home? Herewith a commentary just to hand from Martin Sandbru in the FT with which I would agree 100%.

http://www.ft.com/intl/cms/s/0/91436c86-05df-11e3-ad01-00144feab7de.html#axzz2cLLe4QEu

@ DOCM

“Asymmetric capital flows are not incompatible with healthy economies – private sector lending from richer economies to poorer ones is to be desired – but such credit must fund productive investment.”

Most logical but perhaps you could suggest a few productive investment opportunities going at the moment.

When shedloads of money are invested in indices and the indices are effectively made up of high yielding ponzi schemes where’s the incentive to put money into productive investments yielding sub 10% crap such as dividends ? That is essentially what happened from 03 to 08.

Where are the growth drivers of the next decade ? Answers on a postcard.

@ seafóid

There has, of course, been the odd moment of lucidity.

http://www.independent.ie/irish-news/people-went-mad-borrowing-during-boom-taoiseach-26815231.html

http://www.theguardian.com/business/2013/aug/18/vodafone-tax-deal-irish-office
Ireland is of course NOT a tax haven. No, no…Not at all. no suggestion of it. Not a bit.

lovely. WE (well, the 2009 govt) paid HMRC 67m in effect on foot of the ‘situation’ re Vodafone. Sweet holy…

@ seafóid

On the question of whether Europe has reached the high-water mark of integration, Charlemagne of the Economist had an insightful comment on the changing attitudes of the Dutch some weeks ago.

http://www.economist.com/blogs/charlemagne/2013/06/netherlands-and-eu

Now that Merkel has indicated that she is open to having a debate, it is a racing certainty that “European where necessary, national where possible” will be the topic of the day post-election.

@ DOCM

One other thing we must always remember , from the Muenchkin

“Global investors have recognised a fundamental truth, that this is not a sovereign debt crisis at heart, as Germany and the European Central Bank keep on telling us, but a banking crisis and a crisis of policy co-ordination failures. “

http://www.ft.com/intl/cms/s/0/16f49830-7c9c-11df-8b74-00144feabdc0.html

@DOCM

I do not see why anyone in Ireland has to take on the responsibility for finding the answer to all the ailments troubling the international financial system, of which there are many. We simply have to sweep in front of our own doorstep.

The moderator must have deleted the post where it was suggested that Ireland had to single-handedly fix the global financial system and the many flaws of the current flavour of EMU.

Anyway, straw men aside it would take a fool (or a lobbyist) to claim that Ireland can free itself from the European component of the global financial crisis with out the problems with the European financial sector and EMU being corrected. These problems are of overwhelming importance to us and nothing we do domestically will protect us from their implications.

Also, that Sandbru FT piece is rubbish on multiple levels: Portugal’s “recovery” leaves them with 16% unemployment in the tourist season, the Netherlands’ housing problem is proof (if proof be needed) that EMU made managing housing bubbles extraordinarily difficult.

Its the banks wot done it and EMU wot let them.

This current, so-called financial crisis, is a simply a further episode in a continuum. There have been many previous episodes, some small some large, and they have a common causal process. The excess emission of fiat credit money and no productive investment* outlet to absorb this excess money. This current episode just happens to be the granddaddy of them all. And its continuing – not being addressed in a meaningful way. Its in effect, intractable, absent significant debt writeoffs and writedowns. QED.

Previous episodes were wholly, or only partially, resolved because productive enterprises were able to expand, produce sufficient economic surpluses and much (but not all) of the accumulated debt was paid down. remember that debt paydown is the destruction of principle lent, but not the interest. That has to arise from productive sources producing actual physical assets – not the churning of financial instruments and derivatives, with the emission of more and more leveraged credit, which is what is happening now.

Our economies are sliding down the steep slope of a giant excavation. Japan is waiting at the bottom for us. The Growth Fairy is tuckered out.

*productive investment of surplus capital in the manufacture of goods that are sold into an export market. Outsourcing of manufacturing (the ‘export’ of jobs) is the direct negative of this. And dopey folk wonder?

@ seafóid

The full sentence;

“Given the state of political integration in Europe, these must remain mainly national prerogatives.”

If anyone can advance evidence of a political willingness to increase the level of political integration, I will be happy to consider it. I used the word “mainly” to indicate that there would be some European involvement (especially in relation to the concept of banking union). Its elements are either agreed or currently under negotiation.

However, the bulk of the heavy lifting will be left with the sovereign individual nation states of the EU because that is what they are and there is no sign of this situation changing.

MH has provided some illustrations of the failure to act – in the matter of badly needed reforms – of the current French socialist government under Hollande. The strategy of Merkel is clearly to use deep-seated popular dissatisfaction in the UK, and now the Netherlands, to keep up the pressure to get him to do so.

There will be reciprocal pressure to get Germany to get her own act together. Business as usual! Which is rather reassuring as it suggests that the worst of the euro crisis may be over.

@ BW

“Previous episodes were wholly, or only partially, resolved because productive enterprises were able to expand, produce sufficient economic surpluses and much (but not all) of the accumulated debt was paid down”

What about the wars ?

” Hence, why wars are so hugely useful for dealing with economic depressions. They permanently and effectively destroy capacity. Not just the surplus capacity that plagues the system, but core capacity, which serves a genuine economic need. Indeed, it’s the need for the capacity to be reinstalled that in many ways justifies a return on investment again.”

@MH re min. wage,15 mil workers make 15,000 a year…
http://abcnews.go.com/US/t/story/campaign-seeks-push-seattle-minimum-wage-15-19997290

@DOCM

When it is allowed to work by those involved, the Brussels institutional “status quo” has shown itself to be effective.

From Ireland’s point of view in particular what beneficial policies has the Commission (either DG-ECFIN or Rehn’s bootboys) effected since the European component of the global financial crisis started?

<No answer is expected.>

Of course there are things at which the Commission and the ECB have unarguably been effective:

* Steadily increasing Eurozone unemployment (more worse than peers)
* Making EU economic policy making the laughing stock of the western world (arguing down the multiplier anyone?)
* Stifling growth in the countries worst affected by the crisis.
* Protecting the interests of financial capitalists (no bondholder left behind)
* Undermining democracy (not that has ever been a big concern for neoliberals).
* Enforcing the demands of the creditor states.

Europe has had a disastrous global financial crisis and the alternate gutlessness and wrongheadedness of the various EU institutions has been a major part of this.

@ DOCM

““Gridlock” in a Washington sense i.e. in terms of a seemingly unbridgeable ideological divide does not exist in Europe”

Now into year 5 of the crisis and the EZ still doesn’t have

• a Banking union with a single supervisor
• a single resolution authority
• a common safety net involving
o Deposit insurance
o fiscal backstops
o burden sharing and
o a credible Lender of Last Resort

It’s the same lobbying , vested interests, short sightedness , regulatory capture and corruption as in the US.

@seafóid

It’s the same lobbying , vested interests, short sightedness , regulatory capture and corruption as in the US.

You are being too generous to the institutions of the EU – the federal government did not collaborate with the richer states of the US to push the costs from the financial sector crisis onto the poorer ones.

The US does of course have severe problems (see Chomsky’s most recent thoughts) but they are to do with the disconnection of the interests of the elected representatives from the people they represent and the corruption of democracy and the media by concentrated wealth.

@ seafóid

We risk going around in circles. The EU – or rather the EA – cannot fully complete your shopping list because it is NOT the US and there is no political willingness, as far as I can discern, in the general electorate for further political and institutional integration to make it into the US, a fact which European politicians seeking re-election are taking into account (when they are not engaging in naval manouevres).

We will have to make do with an anaemic banking union until this mood changes which, as far as I can see, will only happen when economic circumstances improve. There is an element of “live horse and you will get grass” about this. But there it is!

@ Flj

Great link! A property bubble is also clearly brewing in Sweden with the capital parting company with the rest of the country (as usually happens).

For me, the most telling fact is the following;

“Fixed-rate mortgages are also popular in the core, with around 90 percent of mortgages structured that way in Germany and over 95 percent in France. Terms of 20 years or more are common.”

This is the shared bedrock of French and Germany prosperity and which should ensure that the two countries do not part company. Such an approach also requires a big investment in social housing.

Greta Krippners book ‘capitalizing (sorry for disgraceful US spelling) on crisis’ is pretty good for anyone interested, a nice run down from a sociological perspective on how the US economy became financialised
heres a forum/review about it, which covers pretty much everything. so no need to actually buy the thing!

http://scholar.harvard.edu/files/dobbin/files/pdf_2_0.pdf

@ Brian Woods Snr

I do not see the the banking sector as the prime trouble maker (< 10 – 20% of my blame). And I think I have made it here clear, that people like me “will cry not tears into my cornflakes”, as someone has put it here very poetically, if some of them lose their money.

I see that way more as
“wiki/The_road_to_hell_is_paved_with_good_intentions”

A very few terse points:

The main ingredients for that bubble were “mortgage interest tax deductibility”, the US did from their very start of income tax (1911, 1913 ?), and the Dutch also from a very long time.

You combine this with trying to help disadvantaged folks with cheap , sort of government (Fannies) guarantees, folks trying to proof bias by bank assessors, and then the “new finance” as the final incendiary. It takes a few years, some other financial bubbling, and the combination of separately healthy political measures become the toxic mix.

Brian, my comments to that were with focus on the China, US, DE, NL, and not on Ireland.

@ all
Some interesting assessment in the WaPo, I have not seen so far in this blog
http://www.washingtonpost.com/business/can-irelands-celtic-tiger-roar-again/2013/08/16/1462304c-0460-11e3-a07f-49ddc7417125_story.html

For folks, arguing their way with interest rates (it is one important market temperature measurement, no doubt)
http://ftalphaville.ft.com/2013/08/19/1606563/that-spike-in-us-treasury-yields/

@ DOCM
I am afraid, from several personal experiences too, that your
“Terms of 20 years or more are common” might only describe the much larger bulk of existing mortgages, but much lesser what is happening right now in new transactions.

(why the case shiller index catched the bubble character, but not the 4 other macro indices, supposed to v

I watched a few of that, what these people, including in my family, do.
The decisions are, so far, not stupid, dangerous, I would intervene, If I would feel very strongly about it. But the way these decisions are done, gives me the creeps repeatedly.

Same bubble dynamics here around now.

@ francis: Thanks for the update. Not sure how to reply. There was a causal process for the current global financial crisis. There are many symptoms of same. I’m trying to focus on the former, but the latter are salient and clutter up things. I’m also trying (maybe not too successfully) to avoid the Irish question. Its too emotive, as you may have noticed by now. But some commentary is inadequate, foolish even, and that needs correction.

Cheers.

@ Seafóid: Are you trying to ‘rain on my day’? 😎 Sorry!

Monopoly Capitalism is the name of a book [1966] by Paul Baran and Paul Sweezy. I would only recommend it to folk who are of a contrarian and skeptical nature. The authors are what might be termed (by some naughty folk) as Marxian. Isms of any kind are not my ‘glass of tea’, but the authors do lay out the genesis of ‘financial crises’ in a capitalist style economy which rests on a Permagrowth (they actually do use this term, but not with the capital letter – that’s me!) paradigm. I would rate it useful and informative.

The term Monopoly-Finance Capitalism comes from the book [2009] ‘The Great Financial Crisis’ by John Bellamy and Fred Magdoff,; chapt 3: Monopoly-Finance Capitalism.

The IT? God help us!

I’ve mentioned several times that I am a scientist – a biochemist actually and I used to teach undergrad Food Chemistry. Its hard to know which is worse – Big Pharma or Big Food. Thanks for that link. I’ll pour myself a stiff alcoholic beverage and watch it.

@ BW

I think MR were using the term Monopoly Finance Capitalism pre 2009.
Why don’t you enter Celebrity Master Chef and bring up the subject during one of the souffle demonstrations ?

@ DOCM

EU fishery policy is worse than the US version.

@nearly ALL

The Great Financial Crisis
Causes and Consequences

by Fred Magdoff and John Bellamy Foster [h/t the biochemist and seafarer]

http://monthlyreview.org/press/books/pb1849/

I recommend Monthly Review Press for those who maintain some semblance of contact with reality …

@DOCM
Riting 101
‘must’ is prescriptive, patronising, and annoying – a wee bit too much of the .croppie lie down.

@ DoD

It is very insightful and beats paying devotions at the altar of the confidence fairy

For example

“such financialisation of capital appears to be taking the form of bigger and bigger bubbles that burst more frequently and with more devastating effect, threatening each time a deepening of stagnation- i.e the condition, endemic to mature capitalism, of slow growth and rising excess capacity and rising unemployment/underemployment”

http://monthlyreview.org/2008/04/01/the-financialization-of-capital-and-the-crisis

No coincidence that so many S&P 500 companies are sitting on record profits that they won’t invest

@ Tull

http://www.voxeu.org/article/fact-checking-financial-recessions

Check out Figure A1. The US and UK, 2007–12: actual versus predicted paths

@ DoD

More on stagnation

http://www.alternet.org/world/massacres-egypt-are-precursor-wider-global-conflict-between-worlds-elites-and-worlds-poor

“What is happening in Egypt is a precursor to a wider global war between the world’s elites and the world’s poor, a war caused by diminishing resources, chronic unemployment and underemployment, declining crop yields caused by climate change, overpopulation and rising food prices.”

Seafoid,

the article is a year out of date. UK data also looks stronger than the article predicted. UK GDP did not turn down as per the graph. Over the last 4 quarters it has evolved at 0.7%, -0.2%, 0.3%, 0.6%.

You need to take a chill pill for your anti tory/Brit phobia.

Seafoid,
Methinks you doth protest too much about your fondness for the UK.
The good professors forecast is lamentably wrong. In fact the UK economy now looks to be trending towards the top of the range- a little behind the US but miles ahead of Europe which is still dominated by Teutonic nut jobs.
Osborne is no genius but competent and pragmatic. Something the Red Eds are not.

Seafoid,
There is a good chance that growth will surprise on the upside in free Market Anglo Saxon economies. This is going to p— off both the doom porn merchants, the euro Quislings and the faux Keynesians who love public spending. It owes a lot to pragmatic governance of Cameron & Obama plus Bernanke plus Merv.
EZ rhymes with a Disney character while the Prussians run the show.

Seafoid,
Obama would never be in the White House if the US was a plutocracy. It is a left wing BS excuse for the failure of electorates to vote for left wing policies.

Seafoid,
So your pet theory is that the US is a plutocracy. Certainly, the GOP ran a plutocrat who raised tonnes of money from other plutocrats. However, Obama out raised him and WON. I would say your theory is without merit.

@shay….ehm…its a pretty famous misquote!
‘I never meant to say that the Conservatives are generally stupid. I meant to say that stupid people are generally Conservative. I believe that is so obviously and universally admitted a principle that I hardly think any gentleman will deny it.”

“John Stuart Mill, in a Parliamentary debate with the Conservative MP, John Pakington (May 31, 1866); this seems to have become paraphrased as “Conservatives are not necessarily stupid, but most stupid people are conservatives.” which was a variant published in Quotations for Our Time (1978), edited by Laurence J. Peter.”
http://en.wikiquote.org/wiki/John_Stuart_Mill

The Citizens United ruling is not good , Tull.
The US badly needs campaign finance reform.
And if regular schmucks don’t have any income growth or access to credit they aren’t going to drive consumption. It’s not that complicated.

Mid ranking chainstores in the US have had a very hard crisis. Lower down and luxury chains have done much better.

Never bet against the US is what they all say but this century is going to be tough for the country, IMO.

… closer to home – which lobby group has had more access [>30 visits] to the office of An Taoiseach than any other in the past year?

…

IFSC.

@Tull

Accept it – Sinn Fein will not accept any of your membership applications; suggest you try The Irish Communist Party – a 32 county organisation; methinks they would gladly accept such a challenge!

/Incredibly off topic.

@rf

+10^9

This clearly signals the start of recommendation hyperinflation. First will come chaos as peer approval and commenter’s reputations becomes worthless. Then a moderation void will arise and a strong figure will take control and bring discipline, stability and pride to IrishEconomy.ie before annexing http://www.progressive-economy.ie.

The IrishEconomy will be great again!

@TullMcAdoo

One thing I would agree with you on is the inferiority of the European Union economic policy making apparatus, it turns out that plutocracy as practiced in the US beats neoliberal technocracy as practiced in Europe as far as economic management goes.

The difference is of course that Americans gets to elect new representatives every few years and the public in Europe has zero control over the Commission or the ECB.

If you are not a socialist in your 20s, you have no heart,, if you are still a socialist in your 40s you have no brains.

I am in the no brains camp, apparently. (The quote has an interesting history)

“In defence of plutocrats, they probably conceived, designed and built great business and got filthy rich”

They left some lovely houses behind in Ireland

http://www.abandonedireland.com/

Plutocracy has an unfortunate habit of going tits up every so often.

@ Francis

This was mentioned in the NZZ am Sonntag at the weekend

http://www.spiegel.de/wirtschaft/unternehmen/thyssenkrupp-berthold-beitz-ist-tot-a-914148.html

“Ich kenne die Deutschen. Wenn man fest, klar und bestimmt auftritt, dann respektieren sie einen. Wenn man weich ist oder verzweifelt, bringen sie einen um.”

“I know the Germans. If someone is strong, direct and confident they’ll respect him. If he’s soft and despairing they’ll kill him”