Journal of Economic Perspectives (Summer 2013)

In addition to Kevin’s paper,  there are several others on the euro crisis.  In addition, there is a symposium on the “top one percent”.

All papers free online (or download the whole issue free): here.

Comments

comments

246 thoughts on “Journal of Economic Perspectives (Summer 2013)”

  1. @rf

    Mankiw’s paper is abysmal

    God, why put yourself through the pain of reading anything written by a former George W Bush adviser?

    That having been said it is satisfying how much Mankiw’s stock has fallen, he has what I think of as the most endearing feature of the neoliberal/libertarian – the more subjects he talks about the less seriously he can be taken on any subject.

    After a while one goes from “Well, not everyone can be a polymath.” to “If this person is so wrong about areas I am familiar with it is probably better to discount what he says about areas he is supposedly an expert on.”

    There is definitely something about Harvard. I wonder if Lorenzo Bini-Smaghi, Mankiw, John Yoo and Larry Summers get together every now and again in a local restaurant to be be collectively wrong about everything and rude to the waiting staff?

  2. @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?

  3. Shay

    I read it just so I could complain about it, tbh ; )

    Chris

    Yeah he seemed to be going for some idiosyncratically multi disciplinary masterpiece, but it just ended up a ball of incoherent nonsense

  4. 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”.”

  5. Liberalism’s final inflationism came the week ending August 9, 2013, resulting in a crack up credit boom, that provided a safe haven rally in US Regional Banks, RWW, and a currency carry trade and debt trade rally in the Eurozone, EZU, Global Producers, FXR, European Financials, EUFN, and Emerging Market Financials, EMFN, as is seen in the ongoing Yahoo Finance Chart of KRE, RWW, EMFN, EUFN, FEFN, FXR, RZV, EZU, which gave seigniorage, that is moneyness to Small Cap Nation Investment, IFSM, as is seen in the ongoing Yahoo Finance Chart of Eurozone Countries, Greece, GREK, Spain, EWP, and Emerging Market Countires, Mexico, EWW, Argentina, ARGT, Mexico, EWW, Poland, EPOL, and China Small Caps, ECNS. Mexico, EWW, stocks rising strongy have included AMX, MXT, GMK, IBA, CX, TV, ASR, OMB, PAC, seen in their ongoing Yahoo Finance Chart.

    Liberalism’s grand finale inflationism, coming from a rising Yen, FXY, and an even greater rising Euro, FXE, that is from a rising EURJPY, since May 21, 20123, to close August 9, 2013, at 128.34, seen here in Action Forex chart report, when the Interest Rate on the US Ten Year Note, ^TNX, began to rise, which stimulated the Eurozone Stocks, EZU, to rise, and blasted European Debt traded by the Wisdom Tree ETF, EU, 4.4% higher for the week, as is seen in the ongoing Yahoo Finance Chart of FXY, FXE, EZU, and EU.

    Usually it is debt, that is credit, gives seigniorage, that is moneyness to stocks; but not the week ending August 9, 2013, as just the opposite happened: investment demand for Eurozone Stocks, EZU, and especially European Banks, EUFN, was so strong that it drove Eurozone Debt, EU, up 5.0% over the last month.

    Despite the rally in Greece, GREK, Ireland, EIRL, and Spain, EWP, all of the Eurozone southern periphery nations, that is the PIGS, are insolvent sovereigns, and their collective banks, the European Financials, EUFN, are insolvent sovereigns, which were given temporary seigniorage through the ECB, in a Risk On, ONN, currency carry trade rally, based upon the most toxic of liberalism’s Treasury Debt, BWX. Of note, this week, Risk On, has turned to Risk Off, OFF, as is seen in the Risk Off ETN, OFF, rising.

    Leaders will soon be meeting in summits to renounce national sovereignty and pool sovereignty regionally, for regional security, stability, and security, and to appoint nannycrats to oversee the factors of production and oversee regional commerce, trade, banking and fiscal spending, as presented by the Prophet Daniel in Daniel 2:25-45, as a Ten Toed Kingdom, and John the Revelator, in Revelation 13:1-4, as the Beast Regime.

    Austrian Economists have been increasingly calling for a sound money system, yet with Jesus Christ at the helm of the Economy of God, presented in Ephesians, 1:10, from Friday August 9, 2013, forward, nannycrats will set the rules for the formation of the new money, that being diktat money, which will determine everything else.

    Diktat money is defined as the compliance required, as well as the trust that is engendered, the debt servitude that is enforced, the austerity schemes that are experienced, such as heavy losses on large bank deposits via bailins, levying additional taxes, privatizations, sale of a country’s central bank’s gold reserves, fiscal councils, such as those reported on by the IMF, Case studies of fiscal councils and The functions and impact of fiscal councils, and statist public private partnerships which oversee regional economic commerce, trade, and the factors of production, when sovereign regional leaders such as Jeroen Dijsselbloem, President of the Eurogroup, and Michel Barnier, EU Commissioner responsible for internal market and services, as well as sovereign regional sovereign bodies, such as the ECB, invoke mandates for regional security, stability, and sustainability.

  6. @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.

  7. Shay, Seafroid
    All going well I should have some…ahem..thoughts on this plus the R&D tax broughaha and the new funding ideas in the Times wednesday.

  8. 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.

  9. @Gregory Connor

    Greg Mankiw should be no ones first stop for deep thinking on the social importance of inter-generational income mobility or the relative heritability of income and intelligence or the role of individual financial incentives in innovation (other than “financial innovation” that is…).

    Seriously, the man is a fool and when ever he ventures into politics or sociology all I can think of J K Galbraith’s (possibly apocryphal
    ) “The modern conservative is engaged in one of man’s oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness. .”

  10. 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?

  11. The paper by Schmitt-Grohé and Uribe makes a powerful economic argument for 5 years of 4% inflation in the eurozone. Unfortunately it is a convincing economic argument and not a political one – Germany can effectively veto such a policy and the German polity is deeply frightened of inflation. A real shame since I agree their economic argument seems convincing.

  12. 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.

  13. mh
    “Academics generally live a sheltered life”
    Rot. And irrelevant ad sectoram to the rest of the post

  14. @ brian lucey

    …I should have added that some are fragile flowers when it comes to being the perceived target of criticism!

    Spare your little tweets for something more substantive.

    The line was a reference to Mr Mankiw and my purpose was not to demonise sensitive folk like you.

    There are a lot of sheltered groups in modern societies.

    As for inequality in the US, the portion of American families living in middle-income neighborhoods has declined significantly since 1970, according to a Stanford University study, as rising income inequality left a growing share of families in neighborhoods that are mostly low-income or mostly affluent.

    The 2011 study, using census data to examine family income at the neighborhood level in the country’s 117 biggest metropolitan areas, found a changed map of prosperity in the United States over the past four decades, with larger patches of affluence and poverty and a shrinking middle.

    In 2007, the last year captured by the data, 44% of families lived in neighborhoods the study defined as middle-income, down from 65% of families in 1970. At the same time, a third of American families lived in areas of either affluence or poverty, up from just 15% of families in 1970.

    Much of the shift is the result of changing income structure in the United States. Part of the country’s middle class has slipped to the lower rungs of the income ladder as manufacturing and other middle-class jobs have dwindled, while the wealthy receive a bigger portion of the income pie. Put simply, there are fewer people in the middle.

    Some people can go through life without ever having a real conversation with a person outside their income class – I would term them sheltered. In the case of an economist, it may be that a trend in a big emerging market is not evident for quite a time because it does not show up in data.

    May be some economists in the ECB tower in Frankfurt need to get out of their cubicles more!!

  15. 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..

  16. @Michael Hennigan

    @ brian lucey

    …I should have added that some are fragile flowers when it comes to being the perceived target of criticism!

    Spare your little tweets for something more substantive.

    I think many readers would, if given the choice, opt for a few “little tweets” rather than many long and rambling ones. (I sometimes feel that everything you post could be boiled down to “Modern capitalism is broken – change everything else!”.)

    The line was a reference to Mr Mankiw and my purpose was not to demonise sensitive folk like you.

    Since the inadequacy of academia (and academics (and public servants in general)) has been somewhat of a hobby horse for you I think regular readers could be forgiven for thinking that this was yet more sniping at those not carrying the sacred cross of small entrepreneurship.

  17. @ 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.

  18. @ Shay Begorrah

    Four posts and no comment on the main content.

    I’m at a disadvantage in responding to a person who choses anonymity and has the conviction of a religion but apart from the use of the term ‘neo liberal, I cannot tell whether you’re a frustrated capitalist, a loser, one of the dwindling band of what used to be called ‘Lenin’s useful idiots’ (I do realise that the great humanitarian himself may never have used the term) or maybe a person of wisdom despite the online persona.

    You may possibly believe that your smartphone or even a basic handset, was produced in a commune!

    So as someone once said: “Brevity is the soul of wit” I will also not waste time with the eejit who linked to a site on academic freedom and the Nazis.

    A big problem in reaching a solution to Ireland’s travails is that the faults are always on the other side of the spectrum.

    Bankers were not the only members of the elite that partied.

  19. @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/

  20. MH
    Many of us partied. Many of us are left to clean up the mess. Some who left are popping their heads in from the road saying ‘you missed a bit there, that stain will never come out, i told you not to mix the two’….. Others who left are nursing hangovers and will never darken the gaff again. But they refrain from carping at how the carpet will never be the same again…

  21. “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.

  22. @ brian lucey

    In the second last paragraph, I refer to a solution – current tense – meaning reforms for a better future. I do agree that fighting about the past will not help for example the unemployed.

    @ john gallaher

    You would of course know the scene better than I would.

    Poor whites in red states supporting Republicans that are trying to cut or eliminate the food stamps program while supporting farm welfare is weird.

    Gail Collins in the NYT had a recent piece on it and including one Republican congressman who opposes the food stamps program but in recent times collected $3.5m in farm welfare.

    http://www.nytimes.com/2013/07/13/opinion/collins-the-house-just-wants-to-snack.html

  23. @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.

  24. @MH would not even know what a food stamp looks like,its actually The Supplemental Nutrition Assistance Program -run by the Agriculture Department hence the rather weird combination.Just inside the beltway jockeying-no one is starving to death in the states.

    “One, the American public’s ire at the super-rich seems largely aimed at “cheaters” in the financial sector, not titans of industry like Bill Gates and Warren Buffett. ”

    all good in the hedge fund world,thanks:)
    Continuing with the sporting metaphors an oft used stat/metric is batting average,Ted Williams was the last player to hit .400, hitting .406 in 1941….most important to get up and swing,few home runs are always nice but yeah you will strike out just try keep the avg. relatively high,above .500 tends to work…
    But just to cheer up those who enjoy or wallow in failure,i’m more into success stories myself,Annus horribilis here-but he will be back very talented,herbalife too ouch.
    “The steps are a blow to Mr. Ackman, who has already lost more than $600 million on his stake in Penney. He is the company’s largest stockholder with nearly 18% of its shares via his Pershing Square Capital Management LP.”
    http://online.wsj.com/article/SB10001424127887324769704579010290931122848.html

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

  26. @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

  27. @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

  28. @ rf

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

    If you read the content above, you may see that it’s explained that the reference was to Mankiw, whom you also criticised.

    As for the nonsense on what are termed ‘attacks’ on the public sector etc, this is similar to the cry of ‘class warfare’ from the Republican Party echo chamber when the issue of inequality is raised.

    The tactic of course is to shut down debate on the issue.

  29. @ 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.

  30. @seafoid its a big topic here…
    “Aug 7 (Reuters) – Mexico’s soda lobby fought back on Wednesday against those who blame carbonated drinks for the country’s rising obesity rate, now higher than in the United States, pointing to lack of exercise and fried foods as the real culprits.
    A United Nations report released last month put Mexico’s obesity rate at 32.8 percent of adults, just above 31.8 percent in the United States, making Mexico the fattest country in the Western Hemisphere excluding Belize and some small Caribbean Islands.”
    http://www.reuters.com/article/2013/08/07/mexcio-obesity-idUSL1N0G81K320130807

    Switching gears,and on a lighter note….the simply genius Larry David just released his very very unique take on the 1% and the american dream gone wrong.Track it down,mask your ip,get a bootleg copy ask a teenager.Its called Clear History-simply amazing,DOD skin up sit back chill its that good.
    http://tv.nytimes.com/2013/08/10/arts/television/clear-history-starring-larry-david-on-hbo.html

  31. @ 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 ?

  32. 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!).

  33. 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.

  34. @Robert Heffernan (Togher A.C.)

    Gold Medal, 50K Walk, World Championship, Moscow 2013

    Epic! One of the great moments in Irish Athletics.

    Those years of training torture and 4th places finally pays off. Ya boy ya!

  35. 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

  36. @ All

    A pertinent commentary by John Kay on the limitations – and dangers – of economic forecasting.

    http://www.ft.com/intl/cms/s/0/fdd0c5bc-0367-11e3-b871-00144feab7de.html

    Notably;

    “These weather forecasting models are constantly calibrated and adjusted in light of the wealth of data that the weather provides hour by hour, and the physical system that governs the weather is relatively constant, even if our understanding of it is limited.

    “In contrast, severe recessions, property bubbles and bank failures are relatively infrequent, and calibration by economists has come to mean tweaking models to better explain the past rather than revising them to better predict the future – a particularly dangerous methodology when there are many reasons to think that the underlying structure of the economy is in a state of constant flux.

  37. @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.

  38. Largest two private donors at SFI-Gates/Templeton…..
    Templeton now why is that name ringing a bell……..
    http://www.santafe.edu/support/list-current-donors/
    any links to ‘packed”……
    “The Santa Fe Institute was created to be a visiting institution, with no permanent or tenured positions, a small group of “resident faculty,” a large visitors program, a group of postdoctoral researchers, and a larger group of “external” faculty affiliated with the Institute but located at other institutions. ”
    http://en.wikipedia.org/wiki/Santa_Fe_Institute

  39. @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”
    …………………………………

  40. @ All

    Now that France and Germany appear to be pulling in the same direction, the rather obvious fact that is this a sine qua non for an end to the crisis – as they make up half of the EA – is beginning to gain some traction.

    Olli Rehn is suitably cautious.

    http://europa.eu/rapid/press-release_MEMO-13-745_en.htm?locale=en

    As to the UK, Robert Skidelsky has a damper of a comment but one with which it would be hard to disagree. Promoting another housing boom is hardly the way to go!

    http://www.theguardian.com/commentisfree/2013/aug/13/labour-hammer-simple-message-economy#start-of-comments

  41. 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…

  42. @ David O’Donnell

    It’s great for Rob of course, the people of Togher and the athletic club.

    The ACs are usually the poor relation to the local GAA club and in the Togher/Lough area, it isn’t any auld club but the Barrs (St Finbarrs) where Jimmy Barry-Murphy played hurling and football.

    @ DOCM

    I wouldn’t hire Robert Skidelsky as a political consultant!

    Labour like the Tories before them have a problem in having been in government for a long time and out of power in recent times.

    If the recovery continues it will be difficult but a positive message is needed rather than warning about money printing and the like.

    Ed Balls is a clever guy but as Gordon Brown’s consigliere in both economic matters and the internal battle with Blair, he will provide an easy target at election time to put the blame for austerity on Brown.

  43. 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.

  44. @ 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.

  45. DOCM/Rameis,
    Every see anything from the UK that you found favour in. Both of you are nattering nabobs of negativity.

  46. @seafóid

    It’s hard to imagine a worse piece of political advice than ‘wait till the property bubble in London pops and then pounce’. If Labour heed that advice they could be out of power for a generation.

  47. 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.

  48. @seafóid

    I was there too – should have bought but didn’t. I looked at all the usual indicators – salaries, rent yields… missed the big picture – London is different. Local salaries are irrelevant to the London property market, it’s being driven by foreign money.

  49. @ 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.

  50. @ All

    The London property market is evidently a law unto itself!

    This blog contribution by Gavyn Davies may seem off-topic but I would suggest that it is not. There is a precious nugget of clear thinking IMHO in the middle of it.

    http://blogs.ft.com/gavyndavies/2013/08/11/indias-new-rajan/

    The nugget!

    “He [the new head of the Indian central bank] is a financial economist rather than a mainstream macro specialist, but in his recent writings he has shown an ability to think deeply and broadly about political economy. For example, he views the western financial bubble as a consequence of the response of the political system to rising income inequality: excess borrowing by low income groups was encouraged in order to close the widening gaps in consumption which followed greater inequality in earned income.”

    Exactly the problem confronting the framers of the next budget in Ireland!

    The other aspect is the monotonous manner in which politicians run the economies for which they are responsible repeatedly into populist brick walls. Voting, as one sage remarked, is one of democracy’s main disadvantages!

  51. @ jg

    I was tempted to reply with a rhetorical question; who cares what eminent economists think or do not think when they descend to this level? However, having read the contribution by Rajan, it seems to me that he has not done so, other than to deplore the descent.

    I would certainly agree with this view expressed by him;

    “All of this implies that economic policymakers require an enormous dose of humility, openness to various alternatives (including the possibility that they might be wrong), and a willingness to experiment. This does not mean that our economic knowledge cannot guide us, only that what works in theory – or worked in the past or elsewhere – should be prescribed with an appropriate degree of self-doubt.”

    One way or the other, Indian politicians are clearly aware that they need someone at the central banking wheel who knows what he is doing; an increasingly common occurrence, it seems, irrespective of the state of economic development of the country concerned!

  52. @Tull
    Re the “nutters”
    +100

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

  53. @ Tull

    “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.”

    That sounds like some FF apparatchik claiming his side are better than the blueshirts. As if.
    The banks are f88ked in the UK as well. Not much sign of growth there, either. There is more than enough elite ineptitude to go around.

  54. @ 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

  55. Rubbish,
    You and DOCM need to take off the anti UK blinkers. Give me the enlightened policy making in the UK over the cargo cultists over at the ECB. The Anglo Saxons have prevented the world from blowing up while the core Europeans want to push the big red button just to see how big the bang would be.

  56. @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.

  57. @ JG

    This FT article a few weeks ago was interesting.

    http://www.ft.com/intl/cms/s/0/76fde4da-f5d8-11e2-8388-00144feabdc0.html

    FT saying the EM story was all cheap money and in the case of B and R the commodities supercycle.

    I was in India for a while before Lehmans went t$tsup and the sense that their time in the sun was there for the foreseeable was such a dominant meme locally. Even China is slowing down now.
    There’ll probably be more capital controls elsewhere as well.

  58. 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”.”

  59. 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.

  60. @all; some lite reading from a Belfast man …

    Title: Complexity Economics: A Different Framework for Economic Thought
    Author(s): W. Brian Arthur
    Files: [abstract] [pdf]
    Paper #: 13-04-012
    Date: April 9, 2013

    Abstract: This paper provides a logical framework for complexity economics. Complexity economics builds from the proposition that the economy is not necessarily in equilibrium: economic agents (firms, consumers, investors) constantly change their actions and strategies in response to the outcome they mutually create. This further changes the outcome, which requires them to adjust afresh. Agents thus live in a world where their beliefs and strategies are constantly being “tested” for survival within an outcome or “ecology” these beliefs and strategies together create. Economics has largely avoided this nonequilibrium view in the past, but if we allow it, we see patterns or phenomena not visible to equilibrium analysis. These emerge probabilistically, last for some time and dissipate, and they correspond to complex structures in other fields. We also see the economy not as something given and existing but forming from a constantly developing set of technological innovations, institutions, and arrangements that draw forth further innovations, institutions and arrangements.

    Complexity economics sees the economy as in motion, perpetually “computing” itself— perpetually constructing itself anew. Where equilibrium economics emphasizes order, determinacy, deduction, and stasis, complexity economics emphasizes contingency, indeterminacy, sense-making, and openness to change. In this framework time, in the sense of real historical time, becomes important, and a solution is no longer necessarily a set of mathematical conditions but a pattern, a set of emergent phenomena, a set of changes that may induce further changes, a set of existing entities creating novel entities. Equilibrium economics is a special case of nonequilibrium and hence complexity economics, therefore complexity economics is economics done in a more general way. It shows us an economy perpetually inventing itself, creating novel structures and possibilities for exploitation, and perpetually open to response.

    Paper here: http://www.santafe.edu/media/workingpapers/13-04-012.pdf

  61. Tull:
    …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.

    Seafoid:
    That sounds like some FF apparatchik claiming his side are better than the blueshirts. As if.

    Unemployment in monetarily sovereign nations (e.g. USA, UK, Japan, Canada, Australia etc) is 7.5% or less. Unemployment in the EZ, where there are 17 non-monetarily sovereign nations, is over 12%, and is over 25% in two countries. This is not a coincidence.

    There are far more policy levers available as a currency-issuer than as a currency-user.

    I don’t see the relevance of McDowell’s ramblings to this thread, but would point out that whether you think being monetarily sovereign is a good thing or not has nothing to do with any left-wing/right-wing policies – it’s an orthogonal issue.

  62. 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.

  63. @ 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!

  64. Brian G/ JF,
    Policy in the US & UK was designed and implemented by clever pragmatic officials who saw the downside risk. Policy in the EZ was driven initially by dangerous and blinkered idealigues who wanted to punish miscreants for their alleged wrong doing. Once Weideman, Stark etc were shafted and replaced by Draghi and his pragmatism things began to improve. If the Teutons had been left on the bridge the good ship EZ would be in Davy Jones locker.

  65. @ 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!

  66. @ All

    The conclusions drawn by some with regard to unemployment and the euro seem to me not to be borne out by the facts as this chart, picked rather at random from the internet, demonstrates.

    http://tinyurl.com/o43y9al

    It could equally well be argued that the euro had a dramatic impact in reducing unemployment; until Lehmans went belly up and the international financial system – almost – with it.

    What does seem to be true is that the introduction of the euro has destroyed permanently certain forms of small-scale economic activity in Greece and Portugal. The problems of Spain are structural and homegrown. As is the case in Ireland.

    Countries with their own currency have clearly more lee-way to soften the impact on employment. The question is whether this leeway will lead to a more stable and permanent lower level. This seems to many observers to depend on whether the necessary structural changes are made; whether countries are inside or outside the euro.

  67. @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.

  68. @DOCM

    What will turn up is what usually does i.e. the inbuilt resilience of a large broadly-based economy; despite what politicians do to hinder it.

    That is an unusual lesson to have learned from the staggeringly large and long lasting government intervention required to stop the global financial crisis destroying the world economy. Or were you talking about the fiscal compact?

  69. @ 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.

  70. @Eureka
    Re “selective inflation”

    Couldn’t disagree there. It’s all kinds of “assets” that are now at bubble levels. Gold was the first to blow and now, Interestingly, sovereigns are deflating fairly quickly…uk 10 yr at 2.68% today and treasuries at 2.72%, with Aussies 10 yr near four percent. Seems Carney’s forward guidance is being ignored.
    Despite all the hype yesterday that the Euro recession was over the markets continue south today.
    I think we are in for an interesting autumn.

  71. 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

  72. Best quote of the day…
    “Earlier this morning Ann Pettifor of Prime Economics branded the UK an “Alice in Wongarland economy” on Radio Four Today’s Programme. Sources of growth are “ephemeral”, she said, with Britons using debt to fund shopping sprees.”

  73. @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?

  74. @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?

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

  76. Working on building sites in the UK is a pain in the a**e tbh. Unless you’re qualified/good at/enjoy what you do. For people with no apptitude towards labouring its not easy, and not romantic. Youre also competing with *a lot* of low paid labour, so generally your wages hover around 6-7 an hour
    Rents in central London start (for a smal, dirty place) if youre very luck at 4-450 a month. Despite JF’s romantic notions it is a difficult job, which to progress in you need a number of specialised skills, and its debillitating in the long run
    This isnt 1950, get a grip

  77. @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).

  78. @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’..

  79. jg

    Im not really arguing against aspects of what youre saying, or making any point about the positive/negatives of immigration/emigration (i think both are largely positive, given the right circumstances)
    I just object to JFs blase attitude towards the conditions that are *forcing* emigration on people, and the romantic nonsense that a summer/couple of years on the sites in London is the equivalent of a decade spent doing something youre no good at, that you dont like, for low pay and no opportunity of progression
    Its very easy for people like JF to be martyrs for the economy

    I did enjoy your recollections though (genuinely) and agree that theres a lot of mischief and laughs to be had out there

  80. @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…

  81. “You had a ‘go’ at MH for linking some off his original work,yet oh never mind…”

    MH uses every thread to market his blog, regardless of relevance! I have no issue one way or the other with MH, but this is an undoubted fact

  82. “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

  83. @DOCM
    It’s a sad state of affairs…depending on fine weather to boost the feel good factor so they all go off to Wongaland to borrow against their paycheck and buy mint for the Pimms.
    The less dependent we are on such wongaeconomics the better…though I’m worried about the decline in our exports of chemicals including Viagra et al.

  84. 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

  85. @rf ok ok but at times on here,a small group tend to ‘gang’ up on some posters,i’ve always had a soft spot for the ‘underdog’ or those with different views.
    The real disgrace stateside is the lack off a concerted effort to secure more working visas for the ‘irish’.Thousands are over here stuck tending bar,low paid jobs unable to travel,yet i’m not aware off much effort despite all the ‘us/irish’ special relationship nonsense.

  86. @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?

  87. It’s not the time to put champagne on ice but the slightly good news should be welcome.

    Maybe there are some one-off factors in Portugal’s 1.1% quarterly spurt but the decline in shrinkage in Spain, Italy and Greece coupled with rises in the northern economies with the exception of the Netherlands, shows a positive trend.

    Those who benchmark against 2007, at the end of a massive international credit boom, are foolish. This economy isn’t going to soon return.

    Even in that decade, mainly because of Chinese demand, for the first time in a century, commodity demand outpaced supply. Nevertheless, for those who are waiting for peak gas after peak oil, consider this: the world’s desert regions collect enough energy in six hours to more than meet the entire annual energy needs of the planet’s population.

    Latin America is as dependent on commodities today as it was 40 years ago, but this time it has benefitted from the price surge. Africa has mainly benefited from Chinese investments and Portuguese have headed back to Angola, their former colony, looking for jobs.

    The value of hope and different groups working together, is important even with a hopeless case; those who for example believe Limerick is a lost cause should check, which once worst city to live in the world, was this year selected as the world’s most innovative city:

    http://www.finfacts.ie/irishfinancenews/article_1026407.shtml

    Beyond the nitpicking, anyone unemployed from the construction sector, in particular with skills such as QS, which can become outdated after a time, shouldn’t wait for a recovery in the Irish sector. The likes of machinery drivers are also not going to find jobs in for example manufacturing.

    The key fact here is that in the boom period 2001-2007, there was NO addition of full-time jobs in the internationally tradeable goods and services. A post recession increase in domestic demand will have an impact but it needs to be huge – there were 486,000 people dependent on the State for some form of jobs support at the end of July.

  88. 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?

  89. @ JF: Thanks for the update earlier. I have the gravest suspicions about the UK’s medium and long-term economy. Bit too long to explain here. Buy the popcorn would be my suggestion.

    @ MH-ff: ” … the world’s desert regions collect enough energy in six hours to more than meet the entire annual energy needs of the planet’s population.”

    This is accurate, but, but, but. Its gets a tad very complicated after that. Think: attempting to fill the fuel tank of your car, using a 2 mm diameter pipe! You’ll succeed. But you may take quite a while. In the meantime, you could probably finish a Steig Larsson. 😎

    Anyhows, its actually Peak Energy – especially for liquid transport fuels that we have to be concerned about. The prognosis here is not good. How many private vehicles have Chindia now?

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

  91. @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

  92. @ 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.

  93. Isn’t this exciting? Look what you miss when you go to yoga for a few hours. But I’m still in search of calm, I think I might head over to Brian’s blog for some peace and quiet.


  94. 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…

  95. @Johnny F-can you take another yoga class..thought that was all about peace,love and understanding man !
    Lets move on,Brian L i have no problem with you at all,I deserved the ‘troll’ smack i normally do,your piece in IT yesterday was excellent.
    @francis,dropped out off the US housing debate/discussion,left you hanging apols. was traveling/holidays…

    Lots off commentary that low growth in the US is the new,new.

    “But now, the U.S. faces a future of diminished expectations like nothing witnessed since World War II. Unless business and government take daring, extraordinary measures, the economy is destined to generate sluggish growth that’s more than one-third slower than in the past. That scenario will stifle incomes, pressure corporate earnings and stock prices, sap tax revenues required to support the rising ranks of retirees—and shrink the savings Americans need to buy houses and send kids to college.”

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

  96. 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.

  97. @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.

  98. @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.

  99. 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.

  100. 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/

  101. @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.

  102. @JG

    Quote from a poster on thepropertypin – guessing the data is from the new register?

    “The number of properties sold in the first 6 months of 2013 is up approx. 21% in Dublin and 18.5% nationally on the same period in 2012”

    That looks like a big bounce to me. Mostly from cash buyers but mortgage lending is definitely on the increase as well – a lot of people have approval and don’t want to miss the boat.

  103. @ 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!

  104. @ Johnny Foreigner

    Noel? OFlynn, the cork developer, was recently in one of the papers – the Sindo, I think, predicting a development spree that would be financed by some international fund.
    I’d like to see how that would work. Disintermediating the banks. First, disinter them.

    21% up on very little with negligible mortgage issuance – what does it really mean?

  105. @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.

  106. @ John Gallaher

    The way I discussed the US housing markets was for numerically adapt, actually theory oriented people, optimum currency area stuff and that. No wonder I lost everybody here.

    One of the advantages to go with a nom de Guerre here and in other blogs, is that you don’t have to put your feet in concrete with ideological statements, just talk the relevant facts at the right time.

    Going incognito on the ground floor has served Susanne Klatten a.k.a. Kant, richest women of Germany, Biedenkopf as first prime minister of Saxonia, and not to forget Putin, the resident KGB, well.

    Uwe Tellkamp’s “Der Turm” is an interesting “Schlüsselroman” to understand this place.

    And well, JG and JF, here we have the second property price bubble going, remember that affordability thing?

    Not unusual, the second flame, when we look at historic comparisons, like Argentina-

    @ BL
    My wording with respect to irishbusinessblog was precise.

  107. @ 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.

  108. @ JF: “BoI are definitely lending. 10% deposit, 4 times salary, pretty strict guidelines on other debt and outgoings, and you need a stable job.”

    10% down payment, x4 salary! That’s insane! These ‘guidelines’ are a slamdunk recipe for another round of defaults and neg equity.

    The Golden Rule of Mortgages is: 20% down payment – from savings! 28% of nett income for mortgage repayment and 32% of nett income for all debt repayments (mortgage, card, car, etc). If these were to be enforced, whither residential property values? Whither total sales transactions?

    Are there any adults in charge? Hold on for 2/3 years – you’ll get value then.

  109. @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

  110. Mr Foreigner has really rattled the cages of the coalition of doom porn merchants, euro quislings and Anti Brits on here by pointing out that easy money has dragged the UK and US economy out of its slough of despond.
    Is he JTO long lost son.

    No doubt a few gold bug libertarians will turn up next to attack him.

  111. @ 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?

  112. BW,
    I would put you in the doom porn merchant class with classic symptoms of gold bug and golf club bore.

  113. @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.

  114. @ Tull

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

    I would give it another few quarters before passing judgement. Looks ok but it was very sunny..

    There was an article in the NZZ around the time CH started to throw money up against the Euro that said the danger of reacting to a dose of very heavy pressure with another dose of very heavy pressure is that it isn’t always possible to know what will transpire pressure-wise elsewhere in the area under control.

  115. @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?

  116. @ Johnny

    I agree about the Labour Blair/Brown record. The notion that Brown was some sort of serious Chancellor took a massive battering post Lehman when the tide went out. Having his deputy Balls in as Shadow chancellor is quite risky.
    But the Tories cut a lot – time will tell if it was the right thing to do.
    The schemes to get people back working, as documented in Private Eye, seem to be monumentally corrupt.

  117. @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

  118. @ Tull: Thank you for a very good laugh! Sorry, to disappoint you: you are incorrect on all three. But no matter. Better a poor reputation, than none at all.

    I’m a scientist Tull, and I take care to get my facts straight (most of the time anyways). If you, or any other contributor dislike what I write, or have an issue with it – then say so, but you must include verifiable data or sources as part of any rebuttal argument. Simply ‘saying’ I am wrong, or attributing personal bias and selectivity just will not cut it. OK?

    @ JF: Appreciate the comment. Thanks.

  119. 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.”

  120. + “… the repeated invocation of Ireland as a role model has gotten to be a sick joke.

    +1

  121. 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

  122. @ 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?”

  123. Paul Volcker has a very interesting article on the Fed in the latest New York Review of Books

    http://www.nybooks.com/articles/archives/2013/aug/15/the-fed-big-banking-crossroads/

    “We cannot “go home again,” not to the simpler days of the 1950s and 1960s. Markets and institutions are much larger, far more complex. They have also proved to be more fragile, potentially subject to large destabilizing swings in behavior. There is the rise of “shadow banking”—the nonbank intermediaries such as investment banks, hedge funds, and other institutions overlapping commercial banking activities. Partly as a result, there is the relative decline of regulated commercial banks, and the rapid innovation of new instruments such as derivatives. All these have challenged both central banks and other regulatory authorities around the developed world. But the simple logic remains; and it is, in fact, reinforced by these developments. The basic responsibility of a central bank is to maintain reasonable price stability—and by extension to concern itself with the stability of financial markets generally.”

    “I have long argued that concern for “stability” by central banks must range beyond prices for goods and services to the stability and strength of financial markets and institutions generally. I am afraid we collectively lost sight of the importance of banks and markets that would robustly be able to maintain efficient and orderly functioning in time of stress. Nor has market discipline alone restrained episodes of unsustainable exuberance before the point of crisis. Too often, we were victims of theorizing that markets and institutions could and would take care of themselves”

  124. When I wrote “numerically adapt” that could be read as sniding.
    What I meant, one has to go over the spreadsheets (together) , put prices in relation, to max, to other places, etc.

    Krugman has just sour grapes over the lack of his predictions of catastrophe, first in the baltics, now with Ireland.

    Irish 10-year rates are now just 100 bp about US bunds, and dropping fast.

    And while we can not go back to a much simpler world, 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.

  125. @ 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.

  126. @ seafoid

    ‘Too often, we were victims of theorizing that markets and institutions could and would take care of themselves’

    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 that ever gripped the human race. Pity Volcker didn’t get religion when he was in a position of authority, and stood four square against the Greenspan Put. He is well behind the game now.

    http://www.amazon.com/Call-Judgment-Sensible-Finance-Dynamic/dp/B008PH36K6

  127. 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.

  128. @PQ
    + 1
    I still think he has a good overview esp regarding the risk of uncontrollable inflation, US corruption, lobbying, the instability of the system and how fragile it all is. For me it always comes back to plutocracy . And how to model it LOL. Start by acknowledging it…

  129. @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.

  130. @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.

  131. @ DOCM

    “BTL seems to have been the real catalyst; certainly in the UK. ”

    BTL was a symptom, not the cause of the mess.
    Why was it that the only way to further grow capitalism back in 2003 was the expansion of credit and why was there no other growth engine ?

  132. @ 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.

  133. @ seafóid

    I could not disagree with you there!

    However, with regard to BTL, I was referring to it as the catalyst for re-starting the carousel.

    cf. this extract.

    “The rapid growth of the buy-to-let (BTL) market brings together all the elements fuelling house prices. For a start, BTL changed the British housing dream from owning your own property into owning other people’s property too. Many expected the credit crunch and recession to put paid to BTL. But the cult of the amateur landlord prospered in the crisis. Property values have held, rents have surged, and there have only been a piddling number of repossessions. After the new coalition government slashed planning red tape, mortgage volumes have ballooned.

    A year after the crash, the old names in BTL lending were back in the game. At the National Landlord Show in Kensington in 2010, well-heeled amateur landlords leafed their way through cheap housing for sale in poorer northern English cities. “Eviction popcorn” was being distributed by a law firm promoting its ability to turf out troublesome tenants. Estate agents explained that few locals could obtain a mortgage to buy a £120,000 house. BTL mortgages, however, were priced on the basis of likely rent received.

    Young first-time buyers such as Naomi Jacobs in Newcastle finds herself more in a property nightmare than a property dream.

    “I’d love to buy a little house now,” she told me. She wants to have a family, and as the family gets bigger so she’d want a bigger house. That is the dream. Naomi is a science graduate, a science graduate with a job. But she can’t get a mortgage. She blames the buy-to-letters. “The smaller flats that first-time buyers would want are ideal for them to rent out,” she sighs. “But that’s the way it is these days. It’s slightly cruel when you think about it.”

    The phenomenon of the promotion of property as a means of wealth acquisition is near universal; except, again, in Germany where historic experience, it seems, has created a different culture. In France, for example, “construire un patrimoine” is a standard enticement for the use of a bewildering assortment of property tax incentives usually named after the minister that came up with them.

    There is an essential political unwillingness to come to terms with the the results when things go wrong. In all likelihood because of the people involved, their number and the influence that they exercise; well beyond that of the ordinary homeowner. In Ireland, many are far from the description “amateur” and the schemes in which they were involved were many and inventive. The power they exercised was demonstrated by the failure of the previous government to withdraw them when the party was getting out of hand.

  134. @ 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

  135. Wondering where growth is going to come from in Ireland – an insight from Radio 1 this afternoon during the hurling semi-final .

    3 ads

    -Currys (UK retailer)
    -Betfair (Gambling)
    -Itihad Airways (Abu Dhabi)

  136. @ 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.

  137. @ BW

    There has to be more to it than that. I think every revolution has its blood letting and intellectually the takeover by the Thatcherites/Reaganites involved large numbers of professional sidelinings ,the denigration of theories, the promotion of believers and the crushing of resistance.

    There is no alternative at the moment because more or less everyone drank the Kool Aid.

    Everything that can be monetised is monetised. It took a lot of work for that system to become “common sense” .

  138. @ 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.

  139. @ seafóid

    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.

    I am at this stage convinced that the reason we are unable to face reality is that there is a conscious realisation that there were very many – and mainly domestic – fingers in the pie; German bankers can hardly have had a hand in the list of “property based incentive schemes” that everyone is free to consult in their tax return (assuming that they are required to make one which may well not be the case).

    It boils down to (i) correcting the consequences of the lack of credit regulation (ii) fixing the banks and (iii) ensuring that they do not run riot again. Given the state of political integration in Europe, these must remain mainly national prerogatives. However, note the comments by Merkel which I put on the “Cross of Euros” thread opened by Kevin O’Rourke, notably the possibility of increased involvement by the Commission respect of euro countries.

  140. @DOCM

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

    Straight out of Merkel’s and the Bundesbanke’s handbook. Gimme a break!

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

  142. @Brian Lucey

    Hmm 67m to HRH …

    …………………………..& ~67 BILLION in ODIOUS to the Financial System.

  143. @ 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.

  144. @ DOCM

    “It boils down to (i) correcting the consequences of the lack of credit regulation (ii) fixing the banks and (iii) ensuring that they do not run riot again.”

    Yeah. But without the pixie dust there won’t be any growth and we’ll have to look at debt writedowns. One way of looking at it is that there was too much money created and not enough to invest it in. A lot of “value” was destroyed but there is still a way to go.

    Nice to see the Dutch dragged into the mire in a Schadenfreude sort of way. Smug core northern Protestants. Maybe they’ll see the light.

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

    I wouldn’t use “must” myself. “May” would be more appropriate. Draghi said he’ll do “whatever it takes” but he been forced to go there yet.

  145. @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.

    Indeed, why should anyone in Ireland be concerned with the international arrangements that led to us facing a 65 billion

  146. @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.

  147. Economic models eventually show that they have a shelf life.

    The Swedish model in the 1920s developed with social democratic governments putting a welfare state in place while the Wallenberg banking family invested in a large number of companies, including some that would become large multinationals. Sweden had to retool the model in the 1990s and while the country has done well and has been liberal on migration, it has allowed a segregated society to develop.

    In 1978-1981, new leaders in China, UK and the US emerged in response to perceived economic failures. On balance, the results have been positive. Of course the impact of Wall Street buying control of the US Congress was a big negative.

    In the years of low growth ahead, fairness or justice in individual countries are likely to become more potent issues.

    Ireland has yet to even officially raise some of the challenges ahead with FDI unable to have a big impact on employment; a small indigenous tradeable sector with a low level of SMEs exporting; a low level of entrepreneurship; the populations of firms per capita at half the European average and a framing sector dependent on European welfare.

    Two weeks ago, President Hollande was challenged by a middle-aged woman on his jobs policy in front of the employment centre of La Roche-sur-Yon in Western France. He said he was in town to find solutions.

    “No, but what are we going to do? Right now there is nothing concrete,” demanded the woman according to France24 “to an uncomfortable Hollande, who quickly escaped Michaud – and the jostling media – by darting into the employment centre.”

    In France, job seekers over 50 account for 30% of the long-term unemployed (those out of work for more than one year). Since the 2008 financial crisis, the unemployment rate of people aged 50 and over has risen from 4.7% to 7.1%.

    In the UK, the almost million jobs added since early 2010 – some are low-paying, many are part-time – can be easily dismissed by people in secure jobs.

    The Guardian of course also employs people without security known as freelancers.

    In recent years, Ireland has embraced the dual labour market where vested interests are protected while mobile business is given the flexibility of having a low-cost adjustable workforce.

    This system is not going to change anytime soon.

    Prof. Michael Spence has said that the US economy added a respectable 27m jobs in the period 1980-2008, but 98% were in the “nontradable” side of the economy. Nontradable refers to sectors generating goods and services that are consumed where they are produced, such as government, health care, construction, retail, and hospitality.

    Over the same 18 years, growth in the generally higher-paying tradable sector, which includes exportable goods and services, was essentially flat – – a negligible 600,000 new jobs. Part of the slow growth was a result of labour-saving technology advancements, which permanently eliminated jobs. Beyond that, manufacturing jobs held by the middle class moved overseas, offsetting growth in high value-added, tradable service jobs in finance, consulting, and computer design.

    Google’s Moto X Motorola phone will be assembled in Texas at the hourly rate of $9 (€6.80) – 21% lower than the Irish hourly minimum wage of €8.65.

    Globalisation has its winners and losers.

    Edmund Phelps, another Nobel economist, attributes rising inequality in the workplace to falling rates of innovation in many sectors.

    It remains to be seen if big public companies will remain conservative with investments when demand rises.

  148. 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?

  149. @ Michael

    “Nontradable refers to sectors generating goods and services that are consumed where they are produced, such as government, health care, construction, retail, and hospitality.”

    If you look at the non farm payroll breakdowns every month you’ll see healthcare generating a large chunk of new jobs.

    And why wouldn’t it? It takes an increasing share of US national income in a dysfunctional system driven by campaign finance considerations and is more or less unreformable.

    http://www.nybooks.com/articles/archives/2013/aug/15/obamacare-how-it-should-be-fixed/

    “Prices for different medical treatments and procedures vary widely and unaccountably, as Goldhill observes. Without rational pricing, Goldhill says, consumers can’t evaluate their health care options, and ordinary market forces don’t work. Consequently, health care economics is almost totally dominated by the providers of care, mainly hospitals and physicians. This creates uncontrollable costs, and health providers have little incentive to focus on quality.

    The most telling part of Goldhill’s critique is his explanation of how insurance distorts the system. In his words:

    Health insurance isn’t real insurance…it’s the payment mechanism for health care…. Basically [it consists of] shifting money around from consumers and taxpayers to providers…at an almost inconceivable level of complexity and expense.

    Insurance relieves patients of most of the responsibility for payment of major charges, such as for operations, making them less concerned about costs. This lessens their incentive to weigh the price and quality of what they buy, as consumers do in other markets. Together with a payment system that reimburses doctors for the fees they charge for each item of service, and pays hospitals largely in the same way, insurance is a major cause of rising health costs.

    What can be done about this? The political gridlock in Washington, the financial interests of the health insurance industry, and the concerns of the physicians, clinical facilities, and businesses that are threatened by reform all make any significant change in the status quo unlikely—at least anytime soon.”

  150. @ 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.

  151. @ DOCM

    “Business as usual! Which is rather reassuring as it suggests that the worst of the euro crisis may be over.”

    It suggests the usual institutional status quo. I have reworded the US healthcare spiel above for you.

    The political gridlock in Brussels, the financial interests of the investment banking industry, and the concerns of the bankers, insurance companies and businesses that are threatened by reform all make any significant change in the status quo unlikely.

    Risk off will be back and the EZ will find itself back at the cliff edge and we ‘ll see another round of crisis decision making to push things forward. The centre is unlikely to hold.

  152. @ 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.”

  153. @ seafóid

    When it is allowed to work by those involved, the Brussels institutional “status quo” has shown itself to be effective. The equivalent of the Washington “gridlock” does not exist.

    The Chancellor’s office beats a hasty retreat from Merkel’s – electorally premature – dalliance with the UK. (Google Translate does a reasonable job).

    http://www.faz.net/aktuell/politik/europaeische-union/grossbritannien-london-treibt-eu-debatte-voran-12534801.html

  154. @ DOCM

    “When it is allowed to work by those involved, the Brussels institutional “status quo” has shown itself to be effective. The equivalent of the Washington “gridlock” does not exist.”

    That is a keeper.

  155. @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.

  156. @ seafóid

    Be sure to keep the qualification on this occasion! The Six-Pack and Two-Pack legislation has largely been adopted by way of Regulation and is now part of the legal order of the EU. Any rickety structures outside the treaties are the creation of Merkel.

    “Gridlock” in a Washington sense i.e. in terms of a seemingly unbridgeable ideological divide does not exist in Europe. If it does, you might be able to point me to it.

  157. @ 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.

  158. * Steadily increasing Eurozone unemployment (more worse than peers)

    More worse.? Sigh. English mine not so good today.

    It bears repeating though – from the point of view of millions of adults in the Eurozone the policies supported and implemented by the European Commission and ECB have been a personal disaster. Millions of lives have been made miserable by flawed economic theory, toxic ideological prejudice and gutless submission to the creditor nations.

    There is a substantial human cost being paid for the inadequacies, moral and intellectual, of the various EU institutions.

  159. @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.

  160. @ 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!

  161. @ 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.

  162. @DOCM

    We risk going around in circles.

    I suspect the going around in circles has to do with one party’s reluctance to get too close to the logical destination – the institutions of the EU are unfit for purpose and their ideological makeup and tendency to form national allegiances with whichever political bloc in Europe is current strongest has much to do with this. DG ECFIN is philosophically incapable of joining the reality based community so it (and Olli’s crowd) remain a part of the problem and not a source for any solutions. (The ECB was forced by circumstance to do the right thing but will revert to type at the earliest opportunity.)

    Then again if a person is still blaming individual countries for the consequences of the global financial crisis five years later there is no hope for them. It’s financial capitalism stupid.

  163. @ 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.

  164. @ Seafóid: Wars are great! Never mind the deficit – just look at the destruction! And after the 1939-1945 interlude, someone’s uncle (guess who), was the only one standing and in pole position to take advantage of the massive re-building (in specific territories, you understand) programmes. Those commies really needed to be kept in their place – and all!

    How long did that last. Until mid-60s I guess. Then it was Flatline time again! This is becoming quite tedious!

    Anyways, ‘In-sourcing’ is the new thingy. Bring manufacturing back to homeland from those oriental boonies – using robots (human variety) on subsistence fare. Bleeding marvelous!

    And how many times, and it what form of words will it take for the truth about Monopoly Financial Capitalism to penetrate folk’s heads? Financial crises are inevitable! Unavoidable! Stiff financial regulations, prudent fiscal policies and very low money inflation will certainly mitigate the severity of the recurring financial crises, but will not stop them.

    Meantime we keep sliding down into the Debt Pit!

  165. @ 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.

  166. @BW

    “And how many times, and it what form of words will it take for the truth about Monopoly Financial Capitalism to penetrate folk’s heads?”

    Have you ever seen the term mentioned in the IT?

    http://www.youtube.com/watch?v=f69TUDbPdLs

    Food Inc covers the US meatpacking industry. 4 companies control something like 80% of the market. That is monopoly capitalism.

  167. @ 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.

  168. @ 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 ?

  169. @ Seafóid: Thanks for the MR reference. It was actually Bellamy-Foster who coined the term. Fills in a gap.

    The balance was a ‘shitty comment’. Poor taste. I’ll remember that.

  170. @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.

  171. @ 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

  172. @seafóid

    Agree. The ‘confidence fairy’ is a propagandized illusion

    ‘The ABCs of the Economic Crisis
    What Working People Need to Know

    by Fred Magdoff and Michael D. Yates

    The economic crisis has created a host of problems for working people: collapsing wages, lost jobs, ruined pensions, and the anxiety that comes with not knowing what tomorrow will bring. Compounding all this is a lack of reliable information that speaks to the realities of workers. Commentators and pundits seem more confused than anyone, and economists—the so-called “experts”—still cling to bankrupt ideologies that failed to predict the crisis and offer nothing to explain it.

    http://monthlyreview.org/press/books/pb1955/

  173. @ 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.”

  174. 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.

  175. @ Tull

    Yes the numbers are not up to date but look at the trend. Let’s discuss it again in a year and see where we are. The notion that Osborne is a genius is very dubious.

    I don’t have a Brit phobia BTW. Lovely people.
    Especially dahn East London.

  176. 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.

  177. Tull

    Labour have very few ideas either. As recently as April, the IMF was lecturing Osborne. Let’s have a few months of risk off and see how it goes. The markets look like they want higher interest rates- is the UK ready for that ?

  178. 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.

  179. @ Tull

    I look forward to analysing the numbers here with you.

    There is a reasonable chance of Australia having a property crash.
    China is slowing down. Will interest rates go up? Holders of financial assets have so many risks to absorb.

    I’ll accept that Bernanake was more active than others. Plutocracy is going to hold the US back. I don’t believe the Tories will win an absolute majority in 2015 and I think this will be economy related. Cameron is a poor man’s Tony Blair.

    I wish this crisis would end soon but my pragmatic side says “don’t be so naïve”. I have seen mindless optimism crash against the waves of reality enough times.

    http://www.politics.ie/forum/economy/129549-irelands-financial-crisis-almost-resolved-says-lenihan-advisor-alan-ahearne.html

    “Ireland is in the ultimate phase in the resolution of its
    financial crisis, the chief adviser to the minister for finance
    has contended.”

  180. 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.

  181. @ Tull

    The 2012 election cost $6.3 bn. Why would anyone spend money on a presidential election?

    “Which candidates is the computer industry giving to? What are the patterns in tobacco contributions over the past 10 years? Where is the political money coming from within the agribusiness industries? You can answer this kind of question effortlessly here, with OpenSecrets.org’s one-of-a-kind resource.”

    http://www.opensecrets.org/industries/index.php

    “This section lists campaign contributions by PACs and donations to PACs, broken down by sector, industry and unique PAC. Only groups that made contributions during the current or last two election cycles are listed here.”

    http://www.opensecrets.org/pacs/index.php

    It’s all done out of the goodness of their lefty hearts

  182. 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.

  183. @Tullmcadoo

    So your pet theory is that the US is a plutocracy.

    Let me try and explain it for you.

    Money does not buy elections, it buys the candidates that win them.

    The point is not that plutocrats as a whole get together and choose (wealth weighted) which party wins any particular US election (though it may have for Dubya’s first term) but that many US election battles for national office are won by candidates beholden to one set of plutocrats or another.

    It is not even that expensive to buy the government. For plutocracy to work they only need to have enough of the elected representatives of the ruling party in their pockets to threaten its majority. Laws will then never then be enacted that reduce the power of concentrated wealth and by a ratchet effect it will end up increasing (as with the Citizens United ruling).

    I will leave you with a quote from John Stuart Mill that has been doing the rounds.


    Although it is not true that all conservatives are stupid people, it is true that most stupid people are conservative.

  184. @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

  185. @shay,hi shay it was a joke,you can stop rereading it now,what was that about only conservatives 🙂

  186. 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.

  187. Shay,
    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 assume you are 25. Some day you may grow up.

  188. … 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!

  189. /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)

  190. Shay,
    In defence of plutocrats, they probably conceived, designed and built great business and got filthy rich. Some created great endowments for the betterment of mankind. They have a great grasp of what is needed in times of crisis. Hence US pragmatism.
    Contrast that with the pettifogging bureaucrats of the EU/EcB who never had an original thought in their lives.

    If Churchill ripped of Clemenceau it would not have been a first . The “fight them on the beaches” line came from George.

  191. @ John G

    it apparently also depends on how you define “conservative”.

    In the US you have a 6 IQ points (0.4 sigma, not to be sneezed at) difference between students lining up to the GOP / Dem divide. That isn’t the case in the UK, where Labor makes a draw and Greenies / UK liberals score higher. Point is just, there were very few Greenies to be asked, making it statistically insignificant and that European liberals score higher (statistically significant) didn’t fit the agenda of the Greenie writer (he omitted it) in the sueddeutsche.de, one of my greenie friends showed around with glee : – )

    And dont get me started about just asking a few students on a few campuses, and “technical” stuff like that.

    Bismarcks 20 / 40 quote fits my experiences a lot, including myself and friends.

  192. @ 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”

  193. @ seafoid

    While looking up the barak-in-the-middle-east-there-is-no-mercy-for-the-weak quote, I also stumbled across Winston Churchill “The best argument against democracy is a five-minute conversation with the average voter.”

    I do not find Beitz’s remark in the online NZZ, just in the usual flagellating Spiegel.
    What he said about this specific situation, is more or less the opposite story, the “consensus myth” that Hyman is trying to sell you in the WaPo celtic tiger thread here.

    Looking at wiki/North_Sea_flood_of_1962, it was a little unknown police minister wiki/Helmut_Schmidt (yeah, I know, the official title is Innen-Senator), who empowered himself and started to commandeer the Bundeswehr, and calling his friends at NATO, to get half of Western Europes copter squadrons flying in to fish hundreds of people from their soon to be cold grave, often endangering themselves in the deep night, the “flying angels”. That was clearly unconstitutional, but we were grateful and made him chancellor.

    That does not mean, that we tolerate in general some subordinate calling in foreign military on their own account, but remind him with the hangman’s knot of the supreme rule of constitution and laws.

    The Schmidt wiki is actually a pretty detailed account of what all we tried as stimulus and “work programmes” in the 70ties. Our resistance to that is more based on those experiences than on theories.

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