Good numbers but sad to see that capital voted spending fell four times faster than current voted spending.
Transport and environment investment both fell by double digits.
Could they not merge several single page PDF documents into one longer PDF document?
@Ossian Smyth
If we get below 5% deficit next year get ready for a giveaway budget (of sorts) next Autumn with plenty of pork in all the marginals. The coalition could not have timed this better re the next election.
@ JF
Let’s hope the government is not so cynical although I suspect you are probably right that some politicians will be thinking along those lines. At least there is greater discipline in place now as we have to adhere to the long term fiscal pact guidelines and also have some oversight from the fiscal advisory council.
Pension Levy 14,232
Public Service Pension Payments 139
That 14m for the pension levy to Nov itself looks like there could be timing questions.
There are around 80bn in the funds so you would expect to get close to 500m per year from it.
Perhaps someone could comment on the 139k in PSPPs?
This haircut is to an industry whose defined benefit funds are already known to be significantly underfunded even using the officially sanctioned “undemanding” (hint: this is very diplomatic language) assumptions.
In case anyone hasn’t noticed, the electricity workers at the ESB are likely to force the government into a bailout of their fund. According to the regulator and the government, the ESB fund is one of the most strongly capitalised in the state.
What happens if the “undemanding” assumptions about things like discount rates are tightened up?
Will some of the Pension Levy be re-allocated to pension fund bailouts?
@ grumpy
The Private Pension Levy is counted as under Stamp Duty.
The €14 million of “Pension Levy” receipts relate to the Public Sector Pension Levy. The levy is an appropriation-in-aid for the department in which the employee works and about €1 billion a year is deducted from pay. The small amount of the levy that is collected in the Exchequer Account may be from certain PS employees who have voluntarily agreed to the levy (judges?) or from agencies not linked to any particular department (the Oireachtas Commission?).
The €139,000 in “Public Service Pension Payments” in Non-Tax Revenue may be amounts voluntarily surrendered by certain PS pension recipients.
Thanks Seamus that’s way less surreal, if not the wonderful nomenclature. Was beginning to wonder if these payments were being phased with retail sales – or something.
I can’t find any breakdown of Stamps to unearth the Pension Levy & see how its comparing with ests from fund size (say 500m then 700m p/a). Is there one?
Interestingly, star performer, 37% over estimates is Local Property Tax. Does this suggest Rev ests of property values about 25 – 30% less than owners valuations, or were they just expecting lots of non-payment. Seems odd.
@ grumpy0
The reason the LPT is ahead of target is because some 2014 receipts are being collected now from people who re-registered in the past month to pay by credit card etc.
Haven’t seen a Stamp Duty breakdown.
That would presumably be the Nov mix-up. If you look at end Aug which shouldn’t have been affected, LPT was 191 against 80 expected. End Sept was 200 against 120 expected. Looks like consistent LPT way in excess of expectations – or am I missing something?
@ grumpy
When the 2013 Tax Profile was done it looks like the DoF factored that most people would go for stage payments and they spread out the receipts into six monthly amounts of around €40 million.
When the tax was introduced by the Revenue about 60 percent of people went for a lump-sum payment, hence much more tax was collected in July and August than was projected for.
In the first month of collection, June, LPT receipts were €126 million which rose to €178 million by July. In the three months to October revenue rose slowly to €215 million until we get the big jump again in November to €287 million.
Yes, that would explain most of it.
@SC
Demonstrates again how archaic Irish Govt accounting is….cash based simply distorts and is open to manipulation. Can the Govt not accrue like everyone else?!
9bn continuing deficit is something to be “very pleased” about, as per Noonan?
So the prepayment /early scheduling of tax receipts is dressed up to make things look better than they are? 2014 tax receipts received and accounted for in 2013 will simply create a hole in 2014.
It’s good to see signs of recovery but given the experience during the bubble, we should treat the optimism of the professional cheerleaders with caution.
Tax surge of 4.2% because of rising job numbers?
In Dec 2012, Budget 2013 provided for a €3.5bn fiscal adjustment split between €1.94bn of spending cuts and €1.44bn of tax measures.
So in the 11 months to end Nov, the excess over the targeted tax revenues was 0.6%. The year-on-year excess over 2012 to date is €1.41bn leaving Dec to provide a surplus.
As for the jobless data, officially 58,000 jobs were added in the 12 months to Sept 2013. The real number maybe less than half of that level.
An estimated rise of 25,000 in agricultural jobs is assumed to be a correction for a wrongly assumed drop of 30% in earlier periods.
Almost half the 58,000 is in the category ‘self-employment (without employees),’ which suggests that some of the number cannot get jobs that would be seen as real work.
The current 12.5% rate of unemployment excludes 4% of the workforce that is unemployed. They are in publicly funded activation schemes. Another 6.5% of the workforce are in part-time jobs but are seeking full-time work.
@ grumpy
The outcome of the pensions case against the De Beers’ owned Element Six could be interesting.
Unlike the faux-victims who need top-ups and charity whip-arounds, there are quite a number of us who have been on the receiving end of trustees opportunistically winding-up schemes of cash-flush groups since the crash.
Why it doesn’t matter to those who could do something about it is self-evident.
@ Paul W,
The ‘General Government Accounts’ are produced on an accruals basis. Deficits targets under the EDP etc. are based on the General Government Deficit.
The Exchequer Account has some limited uses but it is only a partial, and at times distorted, view of the public finances. It gets a disproportionate amount of attention because it is published on a monthly and very timely basis. The CSO have taken over responsibility for the publication of the General Government Accounts from the DoF and are now producing them on a quarterly basis whereas previously they were only available on an annual basis.
Slightly off topic but a very interesting article on pensions (a subject which will influence future Exchequer statements)
Seafoid,
What happens if we are at the end of a 30 year bull marker in bonds due to an acceleration in nominal GDP growth. Will long rates continue their ascent. What happen to all the long bonds bought by PFs. Will they actuaries get sued or jailed. Will they f…! No doubt these specimen will have tweaked the excel to exonerate themselves.
@ Seamus Coffey
The IMF last July supported Paul’s jaundiced view of public accounting.
Ireland’s consolidated government balance sheet data currently excludes the €116.8bn (73.5% of GDP) in fixed assets of central and local governments, the €116bn (73.0% of GDP) in liabilities associated with public service pensions, €4.0bn (2.5% of GDP) in liabilities under PPPs, and the €324.7bn (204.3% of GDP) in assets and liabilities held by public corporations
Monthly Exchequer returns only include part of revenues and spending; the charts of accounts for central government departments, extra-budgetary funds and other non-market agencies, local governments, and public corporations are not able to automatically generate summary fiscal data in line with international reporting standards; there is no permanent official or unit in the Irish administration responsible for setting and enforcing financial reporting standards across the public sector. As a result, there is no uniform set of accounting rule and procedures applying to government departments, extra-budgetary funds, semi-state bodies, local governments, and public corporations. “This makes consolidating government-wide financial information and promoting system-wide improvements in financial reporting practices very costly and time consuming.”
The report adds that collection and consolidation of ESA95 (European System of Accounts 1995 standard) general government data for fiscal surveillance purposes cannot be done directly from the accounting systems used by central government departments, local governments, and other general government entities. “Instead it requires extensive manual manipulation to reclassify data and consolidate out intra-governmental stocks and flows. This increases the risk of double counting of assets and liabilities across general government units, as happened in the case debt issued by the NTMA to the Housing Finance Agency which was mistakenly counted as being held outside the general government between 2007 and 2011. This resulted in Ireland’s general government gross debt being overstated by €3.6bn (2.3% of GDP) at the end of 2011.
“Detailed control reviews and improvements have occurred since then, including three published reports into the error. The lack of a comprehensive and exhaustive program classification also blurs the line of sight between policy objectives, resource allocations, expenditures, and outcomes and makes it difficult to prepare COFOG (Classification of the Functions of Government) based statistics on the functional distribution of expenditure without resort to estimation.”
hope rates stay low like forever,quite a few one off non recurring events,Irish Life,CoCo’s,ELG..
Debt Servicing costs
“ The cost of servicing the national debt, at €7,524 million to end-November, was €1,069 million (16.6%) higher than the corresponding period last year. This year-on-year increase reflects the increase in stock of the national debt generally as well as the first interest payments on the IBRC related floating rate bonds.”
Which bit of that are you suggesting I disagree with?
@JG/seafóid
The surest sign that an economic recovery is underway is the commentariat switching to the long-term boogeyman. Happening in the UK already – a lot of fluff now appearing about pensions, peak oil, the usual stuff. Some people like to be negative. And some people are pimping their book (usually gold – which is heading for the toilet).
JF,
The gold chart looks like that of the Irish 3 bed semi d in c. 2007. Like Eircom, Anglo and sub prime it is headed to money heaven?
@JF-Johnny don’t get me wrong i enjoy visiting,more fun with new places opening,energy in the streets.People upbeat out having fun otherwise i could just go to detroit…oh hold on it had a bit too much debt too!
great news on FB profits was circulated in DC/NY in this morning’s via Politico’s morning briefing… ah yeah best little country to eh…
“FACEBOOK POSTS LOW TAX BILL — AGAIN — IN IRELAND. Colm Keena reports for the Irish Times, “Facebook Ireland, the Dublin-based company that forms a key part of its global corporate structure, grew its turnover by €737 million last year to €1.78 billion, but only generated an Irish corporation tax charge of €1.9 million. The company recorded a pre-tax loss of €626,000, according to the accounts, which show how the gross profit made by the company was turned into a loss when administrative expenses, paid to other group companies, were taken into account. These expenses included royalty payments of €770 million to its immediate parent, Facebook Ireland Holdings, an unlimited company registered in Ireland but not believed to be tax-resident here. Its shareholders include a number of Facebook companies based in the Cayman Islands, where there is no corporation tax.”
@Tull
And the same people pimping gold now were pimping houses back then. Is there a category lower than a stopped clock?
@JG
Ireland is the worst governed country in Northern Europe – I think we can all agree on that.
@JF not according to some rather dodgy media outlets over here,that mag is a sad joke.
“But it became a model of an old-line media company that would do anything – anything – to survive. In the manner of the Huffington Post, it built a stable of free contributors, bores and semi-literates and inveterate self-promoters who nevertheless provide ever-more search links to the site. Outdoing even Buzzfeed, the native advertising ne plus ultra, Forbes, without restraint, became an open bazaar for selling its space to fake content poseurs. What did it matter? On the internet, no one can tell if you’re a sinkhole or a brand. ”
Surely the PF trustees will be well advised on the investment side. Maybe the investment funds in Europe could reduce their management fees to something closer to US levels. Every little helps.
But what if Bill Gross is wrong and we head into a 15 year Japan style fight against deflation ?
@ Paul W and MH
I agree with the views that you express with regard to the parlous state of government accounting which is stuck not in the last century but the preceding one. Analysis of such data must come with a serious health warning.
This profit turned into a pre-tax loss of €626,000 when the company paid Facebook Holdings Limited, its Irish-based parent company, €770m in administrative expenses for the use of intellectual property central to its technology platform.
Thanks.
However, with US 3rd qtr GDP revised to 3.6% annualised (albeit driven by inventories), and therefore Fed tapering timeline shortening, things can change very quickly to the negative (LT interest rates, asset valuations, etc). Can Ireland get ahead of the curve on its current trajectory?
On top of that, one has a far too strong Euro FX situation.
The jobs data is also very confusing. Empirically, I read about large job losses in Ireland every week (do you ever notice how fast they are lost and how slowly they are added?). Hard to know what to believe, really.
At least when the Troika were around, we got some better figures /clarity.
Point is that time is going by and that all important growth is missing….albeit Ireland may benefit somewhat from the pickup in the UK in particular.
A Dublin-based company at the heart of Facebook’s international tax structure used a complex tax avoidance scheme to limit its Irish corporation tax bill to €1.9m last year, despite generating turnover of €1.79bn.
@ Brian Lucey
“High quality global journalism requires investment.”
Don’t we have Michael Hennigan posting freely here? Hasn’t he been exposing the dark underbelly of tax avoidance and the related overstatement of Irish “exports” for years? Having clicked on the links it appears the FT could do with him also.
@ All
I welcome the good news re the labour market and the fact that tax receipts are holding up and even improving slightly. With a young family and on a fixed income I want/need to be positive. It’s just that nothing I see in my daily life or intermittent travels around the country accords with a general improvement in economic conditions. So I’m genuinely puzzled by the seeming upturn.
Paul w,
Clearly you don’t believe the tax or the QHS data. Such a shame when the facts don’t accord with one’s blinkered, doom laden, world view.
Elia
Some cynical souls would suggest that MH’s excellent posts reflect both a desire to show his views and a desire to show his wares. Advertising is useful.
@ Tull
When did you become so chirpy ? I seem to recall you playing the role of Cassandra for the EZ for a long time after the bailout.
Seafoid,
I think the sensibly run economies of the US and UK are approaching escape velocity. I am not sure about the EZ. On balance, I think the EZPTB have wrestled the initaiatve from the German Axis and are not going to let them destroy Europe again. But I admit Europe is the fly in the ointment.
When the facts change…. Currently, I am changing. In addition, I havve met or seen 30 MNCs in the last month. All the talk of deleveraging has gone and it is now M&A and capex.
Brian Lucey
Is it in the interests of an Irish financial facts website to expose the facts?
From what I can see most people involved in Irish finance have an interest in undermining the facts.
Compare MH’s or Jim Stuarts or even your own views on corporate tax compared to the “we are not a tax haven” brigade.
I would suggest Michael would get a lot more subscriptions from the Irish financial sector if he pandered to those type of conformist non contrarian views. Of all the Business Journo’s in the Country it seems Colm Keena is the only one doing any investigative work in this area.
Would the Indo or RTE hire business journos who have so clearly misplaced their Green Jerseys in this way?
@ Seamus Coffey
Just making a general point that not much has changed since the MacGill Summer School in July 2009, when Enda Kenny, then leader of the Opposition, asked why do we have a budgetary system in place that is unfit to run a corner-shop, let alone a nation of 4m people?
@ Johnny Foreigner
There is always a market at airports for books on the next big crash.
However, in my opinion in Ireland in particular, it’s irrational not to be sceptical.
The conflation of the foreign multinational sector with local data gives a wide latitude for deception and it’s seldom that a statement from a minister can be taken at face value.
Besides, the experience during the bubble was that the country was full of fools including in the media – some of course were clever fools.
@ Elia/ Brian Lucey/eamonn moran
The state of the media market is illustrated today by a report that thejournal.ie, owned by the Fallon brothers, founders of daft.ie, has lost about €2m in 2011/12 and in the first 11 months of 2011 had revenues of €45k.
In 1996 I had originally planned a subscription service but it was hard to sail against the freeloader Internet model.
What we know about the challenges others face despite the Internet is limited at best.
I was reading The Economist earlier and it has a story on how well-meaning French socialist members of the National Assembly are proposing restrictions on prostitution to help sex workers. The same politicians could well put the similar desperate people out of menial work in their own countries by raising trade barriers.
The Economist also has a story on GM foods and a recent health scare story following a journal article that was eventually retracted.
The well-fed Europeans who are anti-science when it comes to GM food while being pro-science on climate change has intrigued me for some years.
In coming weeks, the Government plans to publish a promotional brochure that will officially be called a medium-term strategy 2014-2020.
It will have lots of fancy charts and according to the invitation to tender, comparisons with what’s happening in other economies e,g. what we could aspire to etc.
Praise is certainly merited when it comes to announcements but the execution usually leaves a lot to be desired.
The brochure will have references to PMI (purchasing managers’ index) data but not a CSO services index which showed a decline in October when the services PMI was back to the early 2007 level.
It will have misleading productivity and competitiveness claims.
In a few years will Facebook be able to book 48% of its global revenues in Ireland?
By then, €50bn of services exports and output could vapourise.
While job numbers fell, headline exports grew at current prices by 71% in the period 2000-2012 and at constant prices by 59%.
Despite all the blather about lessons to learn from the bubble, Jack Nicholson line in ‘A Few Good Men,’ “You Can’t Handle the Truth!” could apply to a lot of people in policy making positions.
Could you lighten up a bit on the gloom? The glass is not necessarily always half empty.
@ All
Derek Scally deserves a prize of some sort for this coverage of German state creative accounting using Ireland’s concessionary tax arrangements. At least Eichel has the grace to concede that a certain element of hypocrisy was involved.
@Tull
I’ve been around long enough to know how to “present financial information”. Irish Govt figures have been full of spin for years…..
Certainly the MNCs are gearing up more positively. That is to be seen here in the US also. That said, it won’t be straight line. Tapering is a big deal in this regard. If inflation creeps in, no CFO or treasurer will want to be sitting on dead cash……ie inflation, if it can be “manufactured”, would or at least could be a real game changer…..deflation would potentially have the opposite effect.
The problem more generally of course is whether tapering will cause interest rates to rise and rise again. Already US mortgage rates have risen 100bps since Sept……Large corporates /MNCs will be less negatively impacted in the short to medium term. Equities will then go where do you think….? The talk here is a 2014 correction and collateral fallout….Things are generally more positive, but this will be a bumpy rise, and not all those still standing now will be standing afterwards. Conversations here have turned to how to position for all the expected change.
@Tull
Thanks. I think the mood is better now than a year ago but there’s an awful lot of risk out there and if things were closer to normal interest rates would be higher. There was a bit of a jump in rates in June but CHF yields are still around 1% which indicates a lot of punters still prefer safety. As Paul W says tapering is going to be tricky. How are the CBs going to unwind everything without exciting the horses ?
Seafoid,
Some time next year, the Fed and the Old Lady will slow down the pace of buying to a crawl. Will the world go on & will equities go down and bond yields rise? Probably. The. We will obsess about selling the CBs portfolio or refinancing in the market. I bet some will be termed to infinity at 2%. Will that cause hyperinflation…no and the world will still turn.
@Tull & Seafoid
Inflation is a strange beast and pops up /shows itself in many ways. Official inflation is low in the US but anyone living in the North East finds it difficult to relate to the official figures…..(very expensive) health insurance up by 20-30pc in the last few years (at least)…..However, one of the biggest signs right now is the US wide fast food worker demand for an increase in the min wage from $7.25 p/h (avg. $9) to $15 p/h…….
We’ll see. However my question above stands – is Ireland ready for the change that is coming? There may not be an economic crisis like 2007 /2008′ but there will be strong economic storms…..
David Kelly, Chief Global Strategist with JP Morgan (UCD, Michigan Uni), indicated on Public TV in the US tonight that, based on historical analysis, inflation will not cause a problem provided LT US treasuries do not break through 5pc ie he says equities will continue on a positive trajectory despite upcoming interest rate rises, provided those interest rates remain within a moderate band….says interest rates are extremely low right now, so no big issues if they rise a bit.
Maybe for the US…..not so sure if that applies broadly.
Anyway, watch out…..! Tapering will commence in Dec or Jan.
UBS is advising its private clients to remain in equities through y/e (only)…..
The “experts” (Citi here) say tapering will be a benign event……
10 yr treasury rate approaching 3pc, 30 yr approaching 4pc. The 10 yr is a driver of US mortgage rates. What are the chances of a 5pc 10 yr rate in the foreseeable future…?
Younger people nowadays have no history of high interest rates….but I can remember my parents with 18pc rates (ok, it won’t be that). Still……5pc?
And still the euro rises….1.3705 right now against the $…..!
It will be highly interesting to watch the FX markets……rising US interest rates should obviously mean a stronger $
“Irrational exuberance”? No says the Irish experts…..ah!
@Paul W…tis the season and all that,terrific jobs numbers today:)
And in other news Apollo buys more irish loans,another Irish REIT oversubscribed…
“Lloyds, which has lost billions of pounds in Ireland since the financial crisis and is one-third owned by the UK government, said on Friday the non-performing loans had a nominal value of 610 million pounds. They were sold at a 58 percent discount to that value.” http://www.reuters.com/article/2013/12/06/lloyds-ireland-apollo-idUSL5N0JL1EU20131206
Could you lighten up a bit on the gloom? The glass is not necessarily always half empty.
True and that could apply to some of your own commentary on Germany in particular.
It would be good to get the balance between gloom and exuberance right.
I am by instinct an optimist, having fortunately never suffered from depression while most of my work life has been in companies that survived by selling into competitive markets – if people don’t think they will sell they are unlikely to sell.
Being dismissed as gloomy can apply when facts are inconvenient or in respect of a difference of opinion on a future outcome.
During the bubble it was a reasonable assumption based on the facts (annual credit growth of 30% etc) to query policy, which was called “talking down the economy.”
Today, it’s a reasonable assumption to say that 12-month job creation may have been half the official level; it’s a fact that the official rate of unemployment understates the real rate; the indigenous sector remains extraordinarily weak with low linkages to the FDI sector after a half-century and so-on.
None of the foregoing would be officially acknowledged.
Paul Krugman wrote a piece this week on US inequality – to me he is optimistic because he sees what’s possible. Others would prefer that he would change the subject and highlight what they think is great about America or for themselves.
Finally, just to nail that tired old glass cliché, whether in the darkest days or brighter ones of the recession, I never advocated drastic courses of action, not because I could say that high levels of debt will be sustainable in the longer term but because of the potential short-term damage to the embattled indigenous sector – the main source of jobs.
In primary school, I had a simpler version of ‘A Dissertation Upon Roast Pig’ by Charles Lamb (1822). Burning a house to roast a pig is seldom wise.
@MH lost me on the Krugerman piece and Americans changing the subject,there an awful lot of bad incompetent corrupt governance over here.
I completely disagree with you regarding drastic courses of action,what is great about America is the bankruptcy laws!
You would be hard pressed to find many Americans who want the federal govt. to bail out or lend money to Detroit.Its debt load currently is choking the city drastic course action required,so burn the creditors but include all creditors.
Will the ESB be “allowed” strike or does the govt. blink,no power hardly fits with the best little country story.The unions held Detroit to ransom for years wrecked the place and bad government.
The decision last week is drastic and exactly what is required,a dollar is still a dollar in Detroit same as in NY,the ATM’s work,and they have power too.
The Detroit free press is probably best for its reporting on this,the judge in a very usual move released his decision.
“In a separate filing, he expounded on the summary he gave in court on Tuesday with a detailed ruling, saying pensions can be cut because they are contracts. He also urged the city to be cautious about “one-time” sale of assets unless it contributes to the city’s “operational revenue.””
The – supposed – inviolability of public sector pension rights in the US is little short of amazing.
@JG
My better half is back in the Ole Sod at present. Reports that people are now saying “the recession is over”. No visible signs of recession generally…..the pubs and restaurants in Howth and Dublin were packed these last two nights…..Cork was lively mid week also.
House prices in the Howth Peninsula are up 12pc on average, there are houses being built ther (many developments being funded by NAMA eg Techrete site, etc).
He gets a lot of pushback in comments so theyre also worth reading.
“Ultimately, Detroit is in a predicament because the principle on which good republican government rests – the separation of powers – broke down. Politicians were meant to drive a hard bargain with unions representing government workers. But over time the politicians who deal with unions came to be dependent on them. They may have been sitting on opposite sides of the table, but they had the same incentives – bigger pensions and benefits than the city could afford. (Astonishingly, Detroit still has defined benefit plans – costly pensions that are determined in advance by employees’ earnings.)
This kind of government largesse at taxpayer expense cannot last forever. But it is hard to imagine what will happen to US big-city politics – or the get-out-the-vote efforts that it enables – once this arrangement is gone. It will not be given up without a fight.”
Capital is running roight riot around here …. what crisis?
@all
Blind Biddy is back – the Iranian contract in her hand_bag – something to do with internationally traded services …. tbc
@Detroit heads
Get a grip! Blaming its public service unions for the bankruptcy is idiotic …. look at the decline of its industry and the failure of its auto firms to innovate and outsourcing to low wage juristictions and Chinese competition on others.
@Paul W gosh yes its absolutely working for some.The top chap at the new REIT is x NAMA,must had a good look/review of the assets/files on the taxpayers dime.Cherry picked what he wants to buy,one wonders did he contact any the funds that visited NAMA to buy the assets direct,would not happen over here not even in Detroit.Psst i’m setting up a fund/reit giva ya a bell shortly we can work together..only in dirty little old ireland-yeah yeah Geitner but its not the same he’s not buying assets he managed.
Dunner must be crying today in his cornflakes this morning,he’s is x a/c manager!
@rf great link perhaps DOD could read it,before commenting-David ehm the auto industry got bailed out you may have missed it!
“Despite the shorthand that we still use, Detroit’s moniker is a historic relic. The region was the birthplace of U.S. auto manufacturing, but its heyday is long since gone: since the 1970s and 80s, the industry has both downsized and shifted to other parts of the country. In 1975, there were some 100,000 jobs in the surrounding Wayne County; now there are only a quarter of those jobs left–and only about 10,000 jobs are in Detroit city. Despite the lingering nostalgia for the Motor City of old, the two Detroits are no longer interchangeable–and they haven’t been for a long time.” http://www.msnbc.com/all-in/why-didnt-the-auto-bailout-save-detroit
@JG
Dunne will survive. NAMA have more or less conceded (privately) that they will not recover the 50m transferred to Gayle…..that’s how I heard it.
Irish Govt strategy appears to be based on things remaining stable, not getting any worse……and therefore room available to buy the next election…..
It won’t be so simple.
@JG
My PE guys are making a killing off the scalping of those Detroit pension funds…..they are also salivating re the sale of the enormous art collection accumulated by Detroit. It’s like a Nat Geo documentary…..the scavengers cleaning up the mess. Son there will be no sign of the old corpse.
Bail in the National Museum and other Irish treasures? Book of Kells?
@Paul W,the current govt. has played the hand they were dealt quite adroitly.
What happens next may be more external,but given that debt servicing will continue to grow and increase…oh never mind something will turn up right!
“This assessment is also reflected in the December 2013 Eurosystem staff macroeconomic projections for the euro area, which foresee annual real GDP declining by 0.4% in 2013 before increasing by 1.1% in 2014 and 1.5% in 2015. Compared with the September 2013 ECB staff macroeconomic projections, the projection for real GDP growth for 2013 has remained unchanged and it has been revised upwards by 0.1 percentage point for 2014.”
@Paul W,the irish art collection somehow attracts audience participation,in case you missed it..why was he held w/o bail ?
Rather bizarre case and set of circumstances.
“A man accused of punching a hole in a €10m Monet has been granted bail after a jury could not reach a verdict yesterday.
Andrew Shannon of Willans Way, Ongar admitted causing the damage at the National Gallery in June 2012 but claimed it was accidental.
He was granted bail this afternoon pending a possible retrial.”
‘Much of the euro’s design reflects the neo-liberal economic doctrines that prevailed when the single currency was conceived. It was thought that keeping inflation low was necessary and almost sufficient for growth and stability; that making central banks independent was the only way to ensure confidence in the monetary system; that low debt and deficits would ensure economic convergence among member countries; and that a single market, with money and people flowing freely, would ensure efficiency and stability.
Each of these doctrines has proved to be wrong.
[…] No country has ever restored prosperity through austerity.’
@JG
External….yes….and as unexpected as a guy falling through a Monet painting. Funny thing about Irl (and elsewhere)….property /money is more important than people…..it was always such.
W/o bail….he lives on the other is of Blanchardstown…must be a bad guy…..not from leafy-Dublin……jury was not convinced (despite the reporting all but saying he was guilty). They’ll have another go at crucifying him….if only they consistently applied the approach to overpayments, top-ups, etc…..it’s a mad country. Utilitarian (with property and money as God, enshrined in the Constitution), without principle. That is the place of our birth.
@Paul W the Forbes thing is rather amusing excellent piece by CG on ther methodology or lack there off….they pin a list of countries onto a wall,then blindfold a money with a dart for f**ks sake it’s a rag.Do they still have a zoo,wasn’t Malcolm a big animal collector amongst many many other peccadillos,talk about shameless really!
No Richard it does not,he’s a sports journalist.
“Today’s finding by Forbes that we are the best country in the world for business is above all a testament to the hard work and innovation of our businesses and workers. It is the latest in a range of indicators which shows that the environment for business here is steadily improving, and shows that the hard work and sacrifices of so many people are yielding tangible results in terms of international competitiveness and the jobs we so badly need.” http://www.merrionstreet.ie/index.php/2013/12/minister-bruton-welcomes-forbes-magazine-ranking/?cat=3
Re: Detroit link:
“They may have been sitting on opposite sides of the table, but they had the same incentives – bigger pensions and benefits than the city could afford. (Astonishingly, Detroit still has defined benefit plans – costly pensions that are determined in advance by employees’ earnings.)”
“Couldn’t happen on Craggy Ireland.” Grumpy.
A. The ‘taxpayers’ of this country, about 60% of whom have no pensions, have generously contributed €1billion to AIB staff, including do doubt senior executive and board members.
B. We are well on the way to contributing to a cast-iron guarantee of ESB staff / pensioners, with the pension of one beneficiary likely to top 300,000 pa.
C. Pat Rabbitte has in effect written the guarantee by stating that ‘even if the ESB wished to close the scheme in the morning, the shareholder (Govt) would not agree. A none too subtle reminder to Kieran Mulvey to do a ‘deal’, regardless of what the ESB CE or ESB board might think.
D. Minister Noonan and the PS mandarins have seen it coming of course, and provided a ‘fund’ from every pension to top up DB beneficiaries of AIB, ESB, EBS, Ir Nat, even Anglo, and no doubt the Pensions Board staff themselves.
E. One of the major underlying causes of the failure to tackle pensions, is that those negotiating on behalf of the State, are in fact ‘negotiating’ on behalf of themselves.
There is of course a way out, but as politicians and the PS elite have their
snouts so deep in the tax payer funded pensions trough, nothing will be done.
The simple way is this.
1. State takes all State/Semi-State pension funds into charge/administration, including pension assets.
2. Change all State/Semi State (even university!) benefit rules to ensure that all beneficiaries get minimum of State pension, with no member getting more than twice State OAP, from any pension fund that is funded by the State. In other words, scrap the concept of State DB. Why should such largesse be available to a privileged minority, paid for by an underprivileged majority.
3. Scrap the ‘rule’ or notion that retired people cannot have their pensions cut. I see no reason why any citizen of the State should have to subsidise pensions, beyond the level of the State OAP.
4. Ultimately there is no entitlement to a pension from a bankrupt pension fund, other than a subsidy from the State. Any such subsidy should always be subject to a minimum and maximum parameters for any pension payouts.
5. This country need to level up the pensions field. Right now the ESB and some PS pension beneficiaries are milking the country worse than the Anglo Irish ever did in Swifts time.
As I incline to the left of the political spectrum, some may consider such proposals outlandish. But I regard union demands for very well privileged workers as being very right wing in nature, and have no problem is saying so.
University pension funds can be funded that those who attend universities, who are a far from underprivileged group and who benefit greatly from the service provided. Education expenditure can increase the economic capacity of the country and so its ability to pay pensions. Admittedly some other public bodies probably reduce the economic capacity of the country, but this should be dealt with directly, not by fiddling about with pensions.
@JG
Are the ECB going to pull the plug in Irl?
Doubtful…..besides EU not wishing to bring down one of its debtors, Ireland is a master at living in the cracks…..if only the tax avoidance publicity would go away! It ain’t going away though, in fact we are only seeing the beginning. A very senior tax ptnr from PWC Dublin says “bullshit”, the tax scrutiny has been there for 30 yrs……if he doesn’t see the change coming (writes much of the IFSC legislation for the Govt), then who will?
He also is of the opinion that Ireland is too small to support everyone (emigration is good). Brian Lenihan’s legacy continues…..when I asked him whether he is reflecting the fact that his family is ok / doing well out of this as opposed to the wider community, he shrugged uncomfortably but said yes “but so what” (we’ve known each other for years and years so there is no BS in our conversations).
What I see is decline, slowly, unevenly. The older elites are feathering themselves in anticipation and agreement…maybe hoping for better, but hedging themselves against the downside (at the expense of so many).
That’s fairly much the official (unofficial) line……sad.
@ Joseph Ryan
You sum up the two Irelands well – maybe I should race through the ‘terms and conditions’ 🙄 for the sensitive. There are worse places and better!
The threat to close down the economy could be termed economic terrorism, comparable with the actions of the Tea Party Republicans in the US last October.
Ireland with the UK have the worst private sector pension coverage among the OECD economies (which includes all the developed countries) while the public defined benefit (guaranteed payout) scheme, linked to current earnings is among the world’s best.
It’s a particularly discriminatory system as the Irish policy makers who have well-feathered nests themselves (TDs get a 50% pension after 20 years service), have kept employer social security costs among Europe’s lowest while maintaining the provision of pensions as a voluntary issue – even when corporate tax rates were cut by 75% for domestic companies.
Recall during the boom when well-meaning Pensions Board staff turned up at race meetings and the like to flog PRSAs?
Last year a report prepared for Minister Burton by PricewaterhouseCoopers said:
If an individual age 35 saves €250 per month for a pension for 30 years, a fund of approximately €200,000 is created which results in a pension of about €10,000 per annum. Apply the average charge of 2.18% per annum to this fund and the final fund is reduced by 31% i.e. the fund is reduced by €62,000, resulting in a lower pension of €6,900 per annum. This impact would be significantly higher where the maximum charges apply.
So much for the little people.
It’s indeed a very good time to close a private sector defined benefit scheme – a CSO household survey found that 13.9% of covered individuals did not know the type of plan they are enrolled into.
It’s also over 4 years since the public sector pension liability was estimated at €116bn and the reason why the estimate hasn’t been revised since is that Minister Howlin knows that it would show a big rise and blunt his claims about savings on the pay and pensions bill.
Whether it was FÁS, the universities, the ESB and so on, public pension funds have in the past doubled up as slush funds.
In 2009, the funds of FÁS, the old universities and the ESRI were transferred to the National Pensions Reserve Fund. It was the bailout that “dare not speak its name” in that grim year. Total deficits were over €1bn.
Top-up years were what a Trinity official told the Comptroller and Auditor General on “the basis of custom and practice” a “legitimate de facto entitlement” since 1972.
In Galway, all staff in the grade of administrative officer and above were awarded added years on retirement provided they met specified conditions. The Pensions and Investment Officer made the decisions and nobody knew when or if the governing body had ever delegated such authority.
In UCC, academic staff appointed prior to 8 July 1986 are eligible by statute for seven professional added years at age 60. The years are accrued in the first ten years so that in the 11th year a member of the academic staff has gained a right to seven added years at age 60. Where such academics retire at age 65 they are entitled to a maximum of ten added years as with the normal application.
So Seamus Coffey has a less extravagant bonanza!
Under the Superannuation and Pensions Act 1963, the minister of finance can top up a pension where a public servant retires early or is removed from his/her position.
Adding years isn’t cheap when people can live 20 or more years after exit and the value of over 4 added years for one agency official was put at over €1.4m.
Minister Richard Bruton invoked the Constitution’s property clause when defending lack of action against the pensions of former bankers that were based on phantom profits.
Detroit is a US system issue. Compare to the Ruhrtal in Germany where they also entered the 80s with dying industries. The Germans invested. Detroit didn’t. They just moved to the suburbs. Someone else’s problem.
It’s all about the principles. The US grew up with abundance and never lost a war at home. Germany experienced total war within the lifetime of people alive now. Waste and efficiency and how people see things. It comes out in the iterations.
“Capital must be destroyed in order for liquidity to be usefully deployed once again — especially if it is to deliver investment returns.
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.”
Hugely useful- but the Germans wouldn’t agree
MH
And how much assets (real, market value) were transferred at the same time as the liabilities (actuarial figures, critically dependent on assumed future growth paths)?
Anyhow, sure you decided recently not to apply for a university post. Come on in, the waters fine….
You’re on the back foot again with that weighty victims’ cross on your shoulders.
I’m not arguing that people should have no pensions but for a better system than one where the taoiseach, finance minister and leader of the opposition have entitlement to 3 public occupational pensions each while the lowest and most vulnerable earners have a system that entitles them to little.
As for the article linked to, you hardly believe that David Simon would see you as a victim compared with the people on low pay, job insecurity and the prospect of pensioner poverty?
@ Colm McCarthy
The organisational zoo
It is almost seven years since Bertie Ahern commissioned the Organisation for Economic Co-operation and Development to review the public service and recommend changes. The OECD reported in April 2008 and criticised the proliferation of “arm’s length bodies,” known as quangos and concluded the situation amounted to an “organisational zoo.”
Bertie Ahern agreed that the estimated 800 agencies were “too many agencies by half.”
Glacial speed is not news but 12 years for An Bord Uisce Mall is pushing it a bit but what crisis?
Enda Kenny has already chalked up a success for creating “the best small country in the world in which to do business.” His target date was 2016. So credit where it’s due and who is to argue with what’s termed a “financial bible” elsewhere in the Sindo and both “renowned” and “influential” in The Irish Times?
He will get around to other things in time, surely?
Fairytales for American audiences do come at a cost as there is also a big market for them at home.
Culling quangos is not easy as those who do not wish to leave have to be given desks somewhere.
Maybe Enda should have discussed ‘banishment rooms’ this week with Shinzo Abe?
There are no easy solutions to breaking the “vicious circle” between the salaries and pensions of politicians (public representatives) and public servants. However, public recognition that something has to be done to break the “upward only ratchet” that currently exists in Ireland, and which neither beneficiary side is in any hurry to do anything about, would be a start.
@ All
I should add that when the financial well runs dry, it can also act as a temporary “downward” ratchet.
“2.2.1 Public servants affected will include members of the
Government and the Oireachtas (other than the President), and the
judiciary.”
It’s official!
Hi Michael
I wasnt actually thinking of you but if the cap fits…
I know of nobody who thinks the ministerial pension arrangements are fair. But I dont know any ministers.
I do know that you seem mildly obsessed with public sector workers pensions. Heres a wordle of your posts in the last 12 threads. http://www.wordle.net/delete?index=7365592&d=DSDM
There are, actually, other things wrong with the economy and society than that a) private pensions got walloped in the crash and b) theres a rump defined benefit scheme in the public sector. But feel free to continue on your path.
@Dearg Doom,is there any studies on endowments in Irl,it quite common over here:)
In the business field,I simply can’t deal today with an avalanche of hysterical commentary from Ernie No Balls today,so I confine it to that,why do lectures not do a bit on the side…the markets are a handy yard stick, wayto go Eugene. http://www.dfaus.com
@Seafoid,it’s precisely because off the US system that Detroit can go BK and pursue a scorched earth policy with its creditors…unlike say Ireland!
Comparing Germays idiotic and financially immature attitude to debt and second chances is ill informed.As is the comment that people moved to the suburbs,should they have been made stay then?
Sounds familiar …
“Instead, numerous factors over many years have brought Detroit to this point, including a shrunken tax base but still a huge, 139-square-mile city to maintain; overwhelming health care and pension costs; repeated efforts to manage mounting debts with still more borrowing; annual deficits in the city’s operating budget since 2008; and city services crippled by aged computer systems, poor record-keeping and widespread dysfunction.”
A lot of things interest me and forthcoming piece will be on the politics of whitening in Thailand!
Here recent comments are responses to current threads or comments made by others – not really representative of what I cover.
I do run 2 websites and a blog.
Since last Fri week, pieces I have done that have involved my own research, editorial input and analysis as distinct from economic data reports/studies etc are:
Japan needs pay rises; Brazil – a falling BRIC; Culture as an economic engine for cities; The search for growth; roads to prosperity; Ireland as ‘The Global Technology Hub’ or a fantasy?; Irish Medium-Term Economic Strategy 2014-2020: Innovation and entrepreneurs? – – Part 3; Irish Medium-Term Economic Strategy 2014-2020: Exports to Japan and emerging markets — Part 4; Forbes: US business thrives in Ireland: Why not Irish business?
What interests me about Ireland?
Glacial reform if at all; political sclerosis; unemployment and the lack of a credible jobs engine; export markets; the nuttiness of having science as the flagship enterprise policy; fairness in society; corporate tax avoidance and official economy with the truth in the use of data that has been distorted by foreign MNC transactions.
I don’t think that I have written more than once in the past 6 months on public pay/pension issues. Is that evidence of an obsession?
I understand why repetition of bitter facts is unpalatable but it can have an impact over time: wonder why of late the 85,000 unemployed in activation programs (some move back onto the Live Register in the summer months) who are not counted as unemployed, are getting belated attention in the mainstream media?
@Michael Hennigan
I understand why repetition of bitter facts is unpalatable but it can have an impact over time
Even more indigestible than unpalatable Michael!
I have been reading your many, many posts on this blog for years and I think that as regards understanding the plight of the Irish economy it has been a significant net loss. Your animus against the public sector is so powerful that it blinds you to bigger issues. It bears repeating that Ireland’s economic crisis, like Europe’s, has private sector origins horribly multiplied by the structure of EMU and EU decision making. The pension arrangements of Irish ministers are appalling and wrong but basically inconsequential, the multiplicity of quangos is a horrible waste of money but a way down the list of critical national ailments right now.
Michael
In almost every post you bring in he PS. Regardless of the topic.
I know you seem to think that all academic PS economists are carried to and fro on palanquins by opressed non pensioned PAYE workers. It may amaze you to know -they arent.
Try, for one week, to post without bringing in the Grand National Card of hobby horses. Try. We know you can. Try. Else you run the danger of being something that wont change their mind and wont change the subject.
@JG
Germany’s idiotic attitude to debt is a bit like america’s current idiotic attitude to taxes. The tax rate is 10 percentage points lower than the 50 year average, IIRC.
But nothing to do with how Germany dealt with sunset industries.
The US was built on abundance and waste. The buffalo. West Virginian mountaintop blasting for coal because explosives are cheaper than labour. And so on.
What were the whites in Detroit supposed to do? Maybe in another country there would have been better incentives.
“I don’t think that I have written more than once in the past 6 months on public pay/pension issues. Is that evidence of an obsession?”
Ok. I have better things to do on a sunday evening but looking at the last 12 blogposts you have mentioned it 6times in comments. And thats just since mid november.
@seafoid,buffalo,west virginia coal mines,white flight,abundance,waste…try to get out a bit more.
Too many old tired cliches…modern america is a long way from John Wayne movies.
Its like BL’s link to Baltimore,another mismanaged city,has he even been there.It was an Irish guy O’Malley who turned it around as mayor.
@ All
FYI this OECD study which illustrates how the problem of inadequately funded public sector pensions impacts on a selection of OECD economies. (Apart from a brief reference to the now rifled Pension Reserve Fund, Ireland does not figure greatly.)
Leaving aside the many extraneous aspects that easily arise, resolving this problem, and that of pensions in general, is an essential element in the consideration of the public finances of practically all European economies and cannot be excluded from meaningful discussion.
@BL was this during your guns and amo tour,it’s actually a fascinating case study in urban renewal.
Hopefully you got a chance to visit a world class university,Hopkins.
95 which connects NY to DC kinda bypasses it as does the train….BWI is out in the boonies,curious how one passes tru it:)
But like you its a cold Sunday afternoon and I also have …
Jg as a man who once spent a vacation in Detroit….let’s leave it there!
@BL it’s truly freezing here I’m mobile but the comment was …I may as well go on vacation in detroit…
.
Detroit isn’t the worst to visit. The art museum has some good stuff, there is rock and roll and you can head out to the Henry Ford museum in Dearborn.
It is a pity it is such a mess.
It’s a great city for music
It should hardly be a mystery as to why twice in a generation that the Irish economy crashed after periods of reckless misgovernance — events that would cause much collateral human damage and require years to recover from.
De Valera’s Fianna Fail ruled Ireland in a remarkably similar way to the Irish rule of America’s big cities from the late nineteenth century where politics, patronage and favours had precedence over good government.
Joining the euro was different for the Irish and Finns as in Ireland, the system was one of limited accountability where the buck seldom stopped anywhere.
In this system, some people in both the private and public sectors who were in a position to take advantage, took it.
Travel slush funds, secret top-ups and bankers laughing up their sleeves on receipt of begging letters for restraint from the Central bank governor.
Whether in the public or private sectors, those with access to power did well and the delay in progressing a legal services regulation bill shows that it endures.
Workers in the SME sector got half the earnings rise during the boom as TDs got and presumably their public service reference group – never mind other benefits.
The charge of hating the public sector is made because it is easier to use this nonsense than challenging me on the facts or evidence.
To criticize the land rezoning system is to hate farmers?
There are several issues that lead to the same potential pathway of durable reform or a cul- de-sac.
For example if it’s regarded as normal that a deputy prime minister’s partner can have job magiced up after an agency is abolished, which in terms of cost is equivalent to 4 entry level teachers, then no real reform is possible.
A few weeks ago I asked you without success to support trenchant criticism of austerity with some figures to support what you would do.
There are lots of views but without having to detail credible alternatives.
Because there is seldom one simple explanation for the economic crash does not mean that Ahern, McCreevy and Harney who entered national politics in 1977 at an auction election, were innocent victims of naive or nefarious Europeans just over two decades later.
@MH
“Adding years isn’t cheap when people can live 20 or more years after exit and the value of over 4 added years for one agency official was put at over €1.4m.”
Do you have a source for this? It suggests that the official’s salary well over half a million.
@Michael Hennigan
A few weeks ago I asked you without success to support trenchant criticism of austerity with some figures to support what you would do.
Great idea. I will just nip off during my lunch breaks and run up an Irish budget that will somehow deal with the European political, banking and monetary policy crisis that the right has been busy ignoring for four years by mistaking it for issues of national character that affect every country in the Eurozone that does not border Germany.
After all, the European component of the global financial crisis is basically just bad fiscal management, lack of competitiveness and poor governance, right?
Anyone looking for a good overview of austerity, its record of failure and its supporters real motivations should read Mark Blyth’s “Austerity: The history of a dangerous idea”. It is a terrific read and leaves one suitably enraged.
good interview with Blyth here as well, for anyone interested
Thanks, that is a great interview with Blyth. Depressing in a European context, where austerity is now effectively a cornerstone of EU economic policy.
I think the highest praise I can give Blyth’s book in the context of the Irish Economy is that its thesis would be anathema to any serving senior European technocrat, banker, German politician or DOCM.
@DOCM
However, public recognition that something has to be done to break the “upward only ratchet” that currently exists in Ireland
I just spewed my coffee all over my keyboard. Thanks. Good to know that the experience of those in the public sector in the last 5 years has been flushed down the memory hole. No PR flack could play it better. Chapeau.
@John Gallaher
“Ernie No Balls” was really a brilliant touch. I nominate you for King of the Schoolyard.
@EnoB thought you would enjoy that,nice turn of phrase huh:)
Ernie your persecution complex and paranoia gets a bit tiresome,but it doesn’t mean we not out to get you ….If the so called lecturers are half as good as they claim on here,shurly even collecting a state pension would be beneath them.
Link above too Eugene Fama’s little side gig I know I know different league…doubt given his skill set he’s overly worried bout state handouts…
@ Ernie
You seem to have missed my associated post.
—-
@ All
I should add that when the financial well runs dry, it can also act as a temporary “downward” ratchet.
“2.2.1 Public servants affected will include members of the
Government and the Oireachtas (other than the President), and the
judiciary.”
It’s official!
—-
The general point that I am making should be obvious. It is a deeply unhealthy situation in a democratic country if those elected by the people to represent them, and to raise revenues, are confused with those charged with spending them. The dangers inherent are not confined to the level of central government.
Incidentally, as recent wall to wall coverage in the media, which you seem also to have missed, has confirmed, the “downward ratchet” is not very effective when it comes to the decision-makers.
I have also repeatedly made the point that treating the public service as if it was a homogeneous whole is a management nonsense which leads to the bureaucratic overload of which you complained on another thread recently in relation to the third-level education sector.
The failure of the attempted standardised system of assessment is but the most recent example.
I am all in favour of paying the appropriate rate for the job based on merit and removing those administrative posts which serve no productive purpose. I am totally opposed to either across the board increases, or reductions, or blunt instrument measures such as staff embargoes which are a reflection of a failure of management and nothing else.
I suggest that you pick the targets for your ire with a little more attention to what they are actually saying.
@ Ernie
This link – already referenced by Michael Hennigan – is of interest.
The report is considerably less rosy than the covering blurb would suggest. The real failure of management is not so much in respect of public transparency – although this is also a vital ingredient – but of financial control. Until this is remedied by the introduction of modern standardised accounting systems – the one area where such an approach is both feasible and essential – which can supply expenditure and performance data in real time to central government, there will be no real breakthrough. Having two departments and two ministers with a confused division of responsibilities is a major handicap in this regard.
@DOCM
So you want “the introduction of modern standardised accounting systems . . . which can supply expenditure and performance data in real time to central government” but you’re against the proliferation of bureaucrats.
Interesting position. Do you also want a square circle whose surface is entirely red and entirely green simultaneously?
Nevermind the meaninglessness of “performance data” in fields like education and research…
@ Ernie
What planet are you on? Computerised systems supply such information on a daily basis to all kinds of organisations, both in the public and the private sector, across the globe.
As to your second point…!
I’m on planet higher education. You may have noticed that the best higher education institutions on this planet (as opposed to yours) go in for none of this “performance management” horsesh*t.
@ Ernie
Do you not ever read what others write? I referred to performance data, not performance management. Put in “output” instead of “performance”, if you wish. These measurements cannot be standardised. But the idea that none can be found as you suggest leaves me entirely perplexed. (You might let me know which institutions have given up the search.)
@DOCM
I see. So you just want centralised data but nothing to flow from it. And you think that this is not a bureaucratic boondoggle. Duly noted.
Here’s a partial list of institutions that do not engage in bibliometric evaluation of their staff: Harvard, Yale, Cornell, Penn, Dartmouth, Columbia, Brown, Princeton, Stanford, Berkeley, U of Chicago, Johns Hopkins.
The idea that measuring “outputs” (in what units? intelligence units?) is somehow preferable to measuring “performance” is testimony only to how far away you are from ever having been in a classroom or done any research worthy of the name.
@Shay
“Blyth convincingly argues that what has happened since 2007 is the “greatest bait and switch in modern history” (p. 73), as business leaders, bankers and European politicians have sold a private banking crisis to citizens as a sovereign crisis.”
Precisely.
@DOCM
fyi
“Blyth convincingly argues that what has happened since 2007 is the “greatest bait and switch in modern history” (p. 73), as business leaders, bankers and European politicians have sold a private banking crisis to citizens as a sovereign crisis.”
. . . and sold the idea that the perpetrators of that private banking crisis were (somehow) public-sector workers and that, consequently, the antidote to a failure of the private market is to impose the forces of that private market on the public sector.
@ Ernie
“bibliometric evaluation of their staff”!
You are talking about a subject I have not actually raised and assuming that I am in the same line of business as you are. As far as the education sector is concerned, my focus, as an outsider, would be on the students the education of whom is the reason, I would assume, that staff are employed. (Are all attempts at output measurement being abandoned in this context also?).
Given the position that I have set out in various posts, I do not know how you manage to arrive at the conclusion that I am a supporter of “performance management”. What I am advocating is its abolition, leaving the staff actually doing the work, whatever it might happen to be, freedom to obtain the most effective output for their work i.e. given the freedom to manage (and removing layers of pseudo management from the equation). The only way this can be done is through effective financial control i.e. staying within budget. This is the quid pro quo. Without this mechanism, the present blunt instruments of staff embargoes, promotion blocks, temporary contracts etc. will continue.
I cannot make my position any clearer.
Is everyone ‘cool’ about the circa 5% fall in manufacturing output in November. I thought there would be a thread on how big a deal that is.
P. S.
Anyone got a link to any recent North-South economic comparisons?
@DOCM
You are the one who used the term “performance data” and talked about it being fed back to some centralised government office. I don’t know what you think that might mean other than that the “performance” is going to be managed based on the data. Why would you collect it if nothing was to flow from it (rewards and punishments, say)?
In my line of work, here’s the sort of performance I and all of my intelligent colleagues care about: intelligence. As in: how intelligent is so-and-so’s work? As in: how intelligent is the argument that this student has produced? These are qualitative evaluations. I don’t care one jot about how many (unintelligent, usually) performances a person manages to churn out. My “superiors” (the idea of which is itself a perversion of the university) don’t see things that way. They can’t be arsed to actually have expert panels read and report on academic work. So they do it the easy way: tot up numbers of publications (which are all held to be of equal worth) and student evaluations (which are all held to be equally valid).
Those are the performance metrics in higher education. They take an army of bureaucrats to devise, implement and interpret. And what they measure is idiotic and has nothing to do with what actually matters, not just for me but to the public.
In 2010, the C&AG estimated that the cost of an additional year on pension entitlement for judges and ministers was a net 62% of salary after payment of the 2009 public sector pension levy and the normal individual contribution.
We should not forget that the quangos were created to allow the continuation of nepotism, cronyism and favouritism when it was being curbed in the Public Service.
As the Germans say “One hand washes the other.” and the British say “You scratch my back and I will scratch yours.”. The Irish have a long history going back to the pre-tribal days of the Clans, we are evolving slowly. Do not expect the concept of governing for the public good to sweep across the land in our lifetimes. Shure dancin wit da wan dat brung youse is da rite ting ta do. “twas always thus and what was good enough for our grandparents should be good enough for us. Down in Kerry we have almost enshrined it in poetry.
@MickeyHickey
We should not forget that the quangos were created to allow the continuation of nepotism, cronyism and favouritism when it was being curbed in the Public Service.
Not sure about that history of QUANGOs Mr Hickey, the original justification for bodies of these nature goes back a while and seems to have been motivated by ideas about freedom from “political interference” (aka “democratic legitimacy”), the sluggishness and bureaucracy of the public service in responding to change (aka “accountability”) and the philosophical undesirability of having semi-state bodies at all (aka “right wing dogma”)
In other words QUANGOs are firmly in the realm of neoliberal/orodliberal reforms. The fact that they have lent themselves to corruption is an added bonus but their wastefulness is a feature, not a bug.
@ MH
Thanks. Annoyingly the figure is attributed to two unnamed “independent pensions experts”. (Catriona Ceitin is named in the next paragraph but it’s not clear if she was one one of the people who gave the value of €1.4m)
It looks like the €1.4m was based on a total value of €4m (about €111k p.a. times 36) and the fact that he was credited with 4.5 years after serving about 8 with FAS. (€4m x 4.5 / 12.5 = €1.44m) This takes no account of previous service, so I suspect that €1.4m is an overstatement of the value but no doubt he got a good deal.
@ Ernie
Keep it up.
The MBA toolbox is far less effective than it says on the tin.
122 replies on “Data releases”
Good numbers but sad to see that capital voted spending fell four times faster than current voted spending.
Transport and environment investment both fell by double digits.
Could they not merge several single page PDF documents into one longer PDF document?
@Ossian Smyth
If we get below 5% deficit next year get ready for a giveaway budget (of sorts) next Autumn with plenty of pork in all the marginals. The coalition could not have timed this better re the next election.
@ JF
Let’s hope the government is not so cynical although I suspect you are probably right that some politicians will be thinking along those lines. At least there is greater discipline in place now as we have to adhere to the long term fiscal pact guidelines and also have some oversight from the fiscal advisory council.
Pension Levy 14,232
Public Service Pension Payments 139
Wow. This is from the receipts document, page 2
http://www.finance.gov.ie/documents/exchequerstatements/2013/ExcheqstatNov2013.pdf
It pulled me up short. Is this for real?
That 14m for the pension levy to Nov itself looks like there could be timing questions.
There are around 80bn in the funds so you would expect to get close to 500m per year from it.
Perhaps someone could comment on the 139k in PSPPs?
This haircut is to an industry whose defined benefit funds are already known to be significantly underfunded even using the officially sanctioned “undemanding” (hint: this is very diplomatic language) assumptions.
In case anyone hasn’t noticed, the electricity workers at the ESB are likely to force the government into a bailout of their fund. According to the regulator and the government, the ESB fund is one of the most strongly capitalised in the state.
What happens if the “undemanding” assumptions about things like discount rates are tightened up?
Will some of the Pension Levy be re-allocated to pension fund bailouts?
@ grumpy
The Private Pension Levy is counted as under Stamp Duty.
The €14 million of “Pension Levy” receipts relate to the Public Sector Pension Levy. The levy is an appropriation-in-aid for the department in which the employee works and about €1 billion a year is deducted from pay. The small amount of the levy that is collected in the Exchequer Account may be from certain PS employees who have voluntarily agreed to the levy (judges?) or from agencies not linked to any particular department (the Oireachtas Commission?).
The €139,000 in “Public Service Pension Payments” in Non-Tax Revenue may be amounts voluntarily surrendered by certain PS pension recipients.
Thanks Seamus that’s way less surreal, if not the wonderful nomenclature. Was beginning to wonder if these payments were being phased with retail sales – or something.
I can’t find any breakdown of Stamps to unearth the Pension Levy & see how its comparing with ests from fund size (say 500m then 700m p/a). Is there one?
Interestingly, star performer, 37% over estimates is Local Property Tax. Does this suggest Rev ests of property values about 25 – 30% less than owners valuations, or were they just expecting lots of non-payment. Seems odd.
@ grumpy0
The reason the LPT is ahead of target is because some 2014 receipts are being collected now from people who re-registered in the past month to pay by credit card etc.
Haven’t seen a Stamp Duty breakdown.
That would presumably be the Nov mix-up. If you look at end Aug which shouldn’t have been affected, LPT was 191 against 80 expected. End Sept was 200 against 120 expected. Looks like consistent LPT way in excess of expectations – or am I missing something?
@ grumpy
When the 2013 Tax Profile was done it looks like the DoF factored that most people would go for stage payments and they spread out the receipts into six monthly amounts of around €40 million.
When the tax was introduced by the Revenue about 60 percent of people went for a lump-sum payment, hence much more tax was collected in July and August than was projected for.
In the first month of collection, June, LPT receipts were €126 million which rose to €178 million by July. In the three months to October revenue rose slowly to €215 million until we get the big jump again in November to €287 million.
Yes, that would explain most of it.
@SC
Demonstrates again how archaic Irish Govt accounting is….cash based simply distorts and is open to manipulation. Can the Govt not accrue like everyone else?!
9bn continuing deficit is something to be “very pleased” about, as per Noonan?
So the prepayment /early scheduling of tax receipts is dressed up to make things look better than they are? 2014 tax receipts received and accounted for in 2013 will simply create a hole in 2014.
It’s good to see signs of recovery but given the experience during the bubble, we should treat the optimism of the professional cheerleaders with caution.
Tax surge of 4.2% because of rising job numbers?
In Dec 2012, Budget 2013 provided for a €3.5bn fiscal adjustment split between €1.94bn of spending cuts and €1.44bn of tax measures.
So in the 11 months to end Nov, the excess over the targeted tax revenues was 0.6%. The year-on-year excess over 2012 to date is €1.41bn leaving Dec to provide a surplus.
As for the jobless data, officially 58,000 jobs were added in the 12 months to Sept 2013. The real number maybe less than half of that level.
An estimated rise of 25,000 in agricultural jobs is assumed to be a correction for a wrongly assumed drop of 30% in earlier periods.
Almost half the 58,000 is in the category ‘self-employment (without employees),’ which suggests that some of the number cannot get jobs that would be seen as real work.
The current 12.5% rate of unemployment excludes 4% of the workforce that is unemployed. They are in publicly funded activation schemes. Another 6.5% of the workforce are in part-time jobs but are seeking full-time work.
@ grumpy
The outcome of the pensions case against the De Beers’ owned Element Six could be interesting.
Unlike the faux-victims who need top-ups and charity whip-arounds, there are quite a number of us who have been on the receiving end of trustees opportunistically winding-up schemes of cash-flush groups since the crash.
Why it doesn’t matter to those who could do something about it is self-evident.
@ Paul W,
The ‘General Government Accounts’ are produced on an accruals basis. Deficits targets under the EDP etc. are based on the General Government Deficit.
The Exchequer Account has some limited uses but it is only a partial, and at times distorted, view of the public finances. It gets a disproportionate amount of attention because it is published on a monthly and very timely basis. The CSO have taken over responsibility for the publication of the General Government Accounts from the DoF and are now producing them on a quarterly basis whereas previously they were only available on an annual basis.
Slightly off topic but a very interesting article on pensions (a subject which will influence future Exchequer statements)
http://www.ft.com/intl/cms/s/0/d3b8fc0e-5c54-11e3-931e-00144feabdc0.html
@ Grumpy
It’s like a bigger scale Equitable Life
Seafoid,
What happens if we are at the end of a 30 year bull marker in bonds due to an acceleration in nominal GDP growth. Will long rates continue their ascent. What happen to all the long bonds bought by PFs. Will they actuaries get sued or jailed. Will they f…! No doubt these specimen will have tweaked the excel to exonerate themselves.
@ Seamus Coffey
The IMF last July supported Paul’s jaundiced view of public accounting.
There is not even a common chart of accounts.
http://www.imf.org/external/pubs/ft/scr/2013/cr13209.pdf
Ireland’s consolidated government balance sheet data currently excludes the €116.8bn (73.5% of GDP) in fixed assets of central and local governments, the €116bn (73.0% of GDP) in liabilities associated with public service pensions, €4.0bn (2.5% of GDP) in liabilities under PPPs, and the €324.7bn (204.3% of GDP) in assets and liabilities held by public corporations
Monthly Exchequer returns only include part of revenues and spending; the charts of accounts for central government departments, extra-budgetary funds and other non-market agencies, local governments, and public corporations are not able to automatically generate summary fiscal data in line with international reporting standards; there is no permanent official or unit in the Irish administration responsible for setting and enforcing financial reporting standards across the public sector. As a result, there is no uniform set of accounting rule and procedures applying to government departments, extra-budgetary funds, semi-state bodies, local governments, and public corporations. “This makes consolidating government-wide financial information and promoting system-wide improvements in financial reporting practices very costly and time consuming.”
The report adds that collection and consolidation of ESA95 (European System of Accounts 1995 standard) general government data for fiscal surveillance purposes cannot be done directly from the accounting systems used by central government departments, local governments, and other general government entities. “Instead it requires extensive manual manipulation to reclassify data and consolidate out intra-governmental stocks and flows. This increases the risk of double counting of assets and liabilities across general government units, as happened in the case debt issued by the NTMA to the Housing Finance Agency which was mistakenly counted as being held outside the general government between 2007 and 2011. This resulted in Ireland’s general government gross debt being overstated by €3.6bn (2.3% of GDP) at the end of 2011.
“Detailed control reviews and improvements have occurred since then, including three published reports into the error. The lack of a comprehensive and exhaustive program classification also blurs the line of sight between policy objectives, resource allocations, expenditures, and outcomes and makes it difficult to prepare COFOG (Classification of the Functions of Government) based statistics on the functional distribution of expenditure without resort to estimation.”
hope rates stay low like forever,quite a few one off non recurring events,Irish Life,CoCo’s,ELG..
Debt Servicing costs
“ The cost of servicing the national debt, at €7,524 million to end-November, was €1,069 million (16.6%) higher than the corresponding period last year. This year-on-year increase reflects the increase in stock of the national debt generally as well as the first interest payments on the IBRC related floating rate bonds.”
http://www.finance.gov.ie/documents/exchequerstatements/2013/infonotenov.pdf
@ MH,
Which bit of that are you suggesting I disagree with?
@JG/seafóid
The surest sign that an economic recovery is underway is the commentariat switching to the long-term boogeyman. Happening in the UK already – a lot of fluff now appearing about pensions, peak oil, the usual stuff. Some people like to be negative. And some people are pimping their book (usually gold – which is heading for the toilet).
JF,
The gold chart looks like that of the Irish 3 bed semi d in c. 2007. Like Eircom, Anglo and sub prime it is headed to money heaven?
@JF-Johnny don’t get me wrong i enjoy visiting,more fun with new places opening,energy in the streets.People upbeat out having fun otherwise i could just go to detroit…oh hold on it had a bit too much debt too!
great news on FB profits was circulated in DC/NY in this morning’s via Politico’s morning briefing… ah yeah best little country to eh…
“FACEBOOK POSTS LOW TAX BILL — AGAIN — IN IRELAND. Colm Keena reports for the Irish Times, “Facebook Ireland, the Dublin-based company that forms a key part of its global corporate structure, grew its turnover by €737 million last year to €1.78 billion, but only generated an Irish corporation tax charge of €1.9 million. The company recorded a pre-tax loss of €626,000, according to the accounts, which show how the gross profit made by the company was turned into a loss when administrative expenses, paid to other group companies, were taken into account. These expenses included royalty payments of €770 million to its immediate parent, Facebook Ireland Holdings, an unlimited company registered in Ireland but not believed to be tax-resident here. Its shareholders include a number of Facebook companies based in the Cayman Islands, where there is no corporation tax.”
@Tull
And the same people pimping gold now were pimping houses back then. Is there a category lower than a stopped clock?
@JG
Ireland is the worst governed country in Northern Europe – I think we can all agree on that.
@JF not according to some rather dodgy media outlets over here,that mag is a sad joke.
“But it became a model of an old-line media company that would do anything – anything – to survive. In the manner of the Huffington Post, it built a stable of free contributors, bores and semi-literates and inveterate self-promoters who nevertheless provide ever-more search links to the site. Outdoing even Buzzfeed, the native advertising ne plus ultra, Forbes, without restraint, became an open bazaar for selling its space to fake content poseurs. What did it matter? On the internet, no one can tell if you’re a sinkhole or a brand. ”
http://www.theguardian.com/commentisfree/2013/nov/18/forbes-magazine-for-sale-decline
Politico email/link from this morning,half way down…
http://www.politico.com/morningtax/1213/morningtax12408.html
@ Tull
Surely the PF trustees will be well advised on the investment side. Maybe the investment funds in Europe could reduce their management fees to something closer to US levels. Every little helps.
But what if Bill Gross is wrong and we head into a 15 year Japan style fight against deflation ?
@ Paul W and MH
I agree with the views that you express with regard to the parlous state of government accounting which is stuck not in the last century but the preceding one. Analysis of such data must come with a serious health warning.
cf. this debate on RTE radio.
http://www.rte.ie/radio1/today-with-sean-o-rourke/programmes/2013/1205/491019-today-with-sean-o-rourke-thursday-5-december-2013/?clipid=1371083
Item “New Party, New Politics”. Or rather “No new party, same old politics”.
As to Forbes, JG introduces above a note of realism. Still! No point in looking a gift horse in the mouth.
Meanwhile
The best little country to route tax through rolls on
http://www.ft.com/intl/cms/s/0/ca64f938-5dc0-11e3-95bd-00144feabdc0.html?siteedition=uk#axzz2mcxuz1I0
”
generating turnover of more than €1.7bn. Facebook Ireland Limited, which employed 382 people in Dublin, generated a gross profit worth €1.75bn in the year to the end of December 2012. High quality global journalism requires investment.
This profit turned into a pre-tax loss of €626,000 when the company paid Facebook Holdings Limited, its Irish-based parent company, €770m in administrative expenses for the use of intellectual property central to its technology platform.
Thanks.
However, with US 3rd qtr GDP revised to 3.6% annualised (albeit driven by inventories), and therefore Fed tapering timeline shortening, things can change very quickly to the negative (LT interest rates, asset valuations, etc). Can Ireland get ahead of the curve on its current trajectory?
On top of that, one has a far too strong Euro FX situation.
The jobs data is also very confusing. Empirically, I read about large job losses in Ireland every week (do you ever notice how fast they are lost and how slowly they are added?). Hard to know what to believe, really.
At least when the Troika were around, we got some better figures /clarity.
Point is that time is going by and that all important growth is missing….albeit Ireland may benefit somewhat from the pickup in the UK in particular.
//www.ft.com/cms/s/0/ca64f938-5dc0-11e3-95bd-00144feabdc0.html
A Dublin-based company at the heart of Facebook’s international tax structure used a complex tax avoidance scheme to limit its Irish corporation tax bill to €1.9m last year, despite generating turnover of €1.79bn.
@ Brian Lucey
“High quality global journalism requires investment.”
Don’t we have Michael Hennigan posting freely here? Hasn’t he been exposing the dark underbelly of tax avoidance and the related overstatement of Irish “exports” for years? Having clicked on the links it appears the FT could do with him also.
@ All
I welcome the good news re the labour market and the fact that tax receipts are holding up and even improving slightly. With a young family and on a fixed income I want/need to be positive. It’s just that nothing I see in my daily life or intermittent travels around the country accords with a general improvement in economic conditions. So I’m genuinely puzzled by the seeming upturn.
Paul w,
Clearly you don’t believe the tax or the QHS data. Such a shame when the facts don’t accord with one’s blinkered, doom laden, world view.
Elia
Some cynical souls would suggest that MH’s excellent posts reflect both a desire to show his views and a desire to show his wares. Advertising is useful.
@ Tull
When did you become so chirpy ? I seem to recall you playing the role of Cassandra for the EZ for a long time after the bailout.
Seafoid,
I think the sensibly run economies of the US and UK are approaching escape velocity. I am not sure about the EZ. On balance, I think the EZPTB have wrestled the initaiatve from the German Axis and are not going to let them destroy Europe again. But I admit Europe is the fly in the ointment.
When the facts change…. Currently, I am changing. In addition, I havve met or seen 30 MNCs in the last month. All the talk of deleveraging has gone and it is now M&A and capex.
Brian Lucey
Is it in the interests of an Irish financial facts website to expose the facts?
From what I can see most people involved in Irish finance have an interest in undermining the facts.
Compare MH’s or Jim Stuarts or even your own views on corporate tax compared to the “we are not a tax haven” brigade.
I would suggest Michael would get a lot more subscriptions from the Irish financial sector if he pandered to those type of conformist non contrarian views. Of all the Business Journo’s in the Country it seems Colm Keena is the only one doing any investigative work in this area.
Would the Indo or RTE hire business journos who have so clearly misplaced their Green Jerseys in this way?
@ Seamus Coffey
Just making a general point that not much has changed since the MacGill Summer School in July 2009, when Enda Kenny, then leader of the Opposition, asked why do we have a budgetary system in place that is unfit to run a corner-shop, let alone a nation of 4m people?
@ Johnny Foreigner
There is always a market at airports for books on the next big crash.
However, in my opinion in Ireland in particular, it’s irrational not to be sceptical.
The conflation of the foreign multinational sector with local data gives a wide latitude for deception and it’s seldom that a statement from a minister can be taken at face value.
Besides, the experience during the bubble was that the country was full of fools including in the media – some of course were clever fools.
@ Elia/ Brian Lucey/eamonn moran
The state of the media market is illustrated today by a report that thejournal.ie, owned by the Fallon brothers, founders of daft.ie, has lost about €2m in 2011/12 and in the first 11 months of 2011 had revenues of €45k.
In 1996 I had originally planned a subscription service but it was hard to sail against the freeloader Internet model.
What we know about the challenges others face despite the Internet is limited at best.
I was reading The Economist earlier and it has a story on how well-meaning French socialist members of the National Assembly are proposing restrictions on prostitution to help sex workers. The same politicians could well put the similar desperate people out of menial work in their own countries by raising trade barriers.
The Economist also has a story on GM foods and a recent health scare story following a journal article that was eventually retracted.
The well-fed Europeans who are anti-science when it comes to GM food while being pro-science on climate change has intrigued me for some years.
In coming weeks, the Government plans to publish a promotional brochure that will officially be called a medium-term strategy 2014-2020.
It will have lots of fancy charts and according to the invitation to tender, comparisons with what’s happening in other economies e,g. what we could aspire to etc.
Praise is certainly merited when it comes to announcements but the execution usually leaves a lot to be desired.
The brochure will have references to PMI (purchasing managers’ index) data but not a CSO services index which showed a decline in October when the services PMI was back to the early 2007 level.
It will have misleading productivity and competitiveness claims.
In a few years will Facebook be able to book 48% of its global revenues in Ireland?
By then, €50bn of services exports and output could vapourise.
While job numbers fell, headline exports grew at current prices by 71% in the period 2000-2012 and at constant prices by 59%.
Despite all the blather about lessons to learn from the bubble, Jack Nicholson line in ‘A Few Good Men,’ “You Can’t Handle the Truth!” could apply to a lot of people in policy making positions.
Irish Medium-Term Economic Strategy 2014-2020: Exports to plunge by €50bn – Part 1-5
@ MH
Could you lighten up a bit on the gloom? The glass is not necessarily always half empty.
@ All
Derek Scally deserves a prize of some sort for this coverage of German state creative accounting using Ireland’s concessionary tax arrangements. At least Eichel has the grace to concede that a certain element of hypocrisy was involved.
http://www.irishtimes.com/business/economy/europe/germany-s-use-of-irish-tax-advantages-must-be-seen-in-the-context-of-the-time-1.1618319
@Tull
I’ve been around long enough to know how to “present financial information”. Irish Govt figures have been full of spin for years…..
Certainly the MNCs are gearing up more positively. That is to be seen here in the US also. That said, it won’t be straight line. Tapering is a big deal in this regard. If inflation creeps in, no CFO or treasurer will want to be sitting on dead cash……ie inflation, if it can be “manufactured”, would or at least could be a real game changer…..deflation would potentially have the opposite effect.
The problem more generally of course is whether tapering will cause interest rates to rise and rise again. Already US mortgage rates have risen 100bps since Sept……Large corporates /MNCs will be less negatively impacted in the short to medium term. Equities will then go where do you think….? The talk here is a 2014 correction and collateral fallout….Things are generally more positive, but this will be a bumpy rise, and not all those still standing now will be standing afterwards. Conversations here have turned to how to position for all the expected change.
@Tull
Thanks. I think the mood is better now than a year ago but there’s an awful lot of risk out there and if things were closer to normal interest rates would be higher. There was a bit of a jump in rates in June but CHF yields are still around 1% which indicates a lot of punters still prefer safety. As Paul W says tapering is going to be tricky. How are the CBs going to unwind everything without exciting the horses ?
Seafoid,
Some time next year, the Fed and the Old Lady will slow down the pace of buying to a crawl. Will the world go on & will equities go down and bond yields rise? Probably. The. We will obsess about selling the CBs portfolio or refinancing in the market. I bet some will be termed to infinity at 2%. Will that cause hyperinflation…no and the world will still turn.
@Tull & Seafoid
Inflation is a strange beast and pops up /shows itself in many ways. Official inflation is low in the US but anyone living in the North East finds it difficult to relate to the official figures…..(very expensive) health insurance up by 20-30pc in the last few years (at least)…..However, one of the biggest signs right now is the US wide fast food worker demand for an increase in the min wage from $7.25 p/h (avg. $9) to $15 p/h…….
We’ll see. However my question above stands – is Ireland ready for the change that is coming? There may not be an economic crisis like 2007 /2008′ but there will be strong economic storms…..
David Kelly, Chief Global Strategist with JP Morgan (UCD, Michigan Uni), indicated on Public TV in the US tonight that, based on historical analysis, inflation will not cause a problem provided LT US treasuries do not break through 5pc ie he says equities will continue on a positive trajectory despite upcoming interest rate rises, provided those interest rates remain within a moderate band….says interest rates are extremely low right now, so no big issues if they rise a bit.
Maybe for the US…..not so sure if that applies broadly.
Anyway, watch out…..! Tapering will commence in Dec or Jan.
UBS is advising its private clients to remain in equities through y/e (only)…..
http://nbr.com/2013/12/06/waiting-for-taper-start-you-may-have-missed-it/
The “experts” (Citi here) say tapering will be a benign event……
10 yr treasury rate approaching 3pc, 30 yr approaching 4pc. The 10 yr is a driver of US mortgage rates. What are the chances of a 5pc 10 yr rate in the foreseeable future…?
Younger people nowadays have no history of high interest rates….but I can remember my parents with 18pc rates (ok, it won’t be that). Still……5pc?
And still the euro rises….1.3705 right now against the $…..!
It will be highly interesting to watch the FX markets……rising US interest rates should obviously mean a stronger $
http://www.independent.ie/business/no-housing-bubble-in-dublin-despite-hike-in-prices-watchdog-reports-29813420.html
“Irrational exuberance”? No says the Irish experts…..ah!
@Paul W…tis the season and all that,terrific jobs numbers today:)
And in other news Apollo buys more irish loans,another Irish REIT oversubscribed…
“Lloyds, which has lost billions of pounds in Ireland since the financial crisis and is one-third owned by the UK government, said on Friday the non-performing loans had a nominal value of 610 million pounds. They were sold at a 58 percent discount to that value.”
http://www.reuters.com/article/2013/12/06/lloyds-ireland-apollo-idUSL5N0JL1EU20131206
“Ireland’s second-ever real estate investment trust, Hibernia REIT, has raised €365m in its maiden capital raising from more than a dozen US and European institutional investors.”
http://costarfinance.com/2013/12/06/hibernia-reit-raises-e365m-as-irish-deal-flow-momentum-builds/
Are the ECB going to pull the plug,exposing Ireland’s bad wiring,Detroits pension ruling in BK,is the first won’t be the last,over here at least.
http://www.economist.com/news/united-states/21591189-where-detroit-has-gone-will-others-follow-those-pension-blues
@ DOCM
True and that could apply to some of your own commentary on Germany in particular.
It would be good to get the balance between gloom and exuberance right.
I am by instinct an optimist, having fortunately never suffered from depression while most of my work life has been in companies that survived by selling into competitive markets – if people don’t think they will sell they are unlikely to sell.
Being dismissed as gloomy can apply when facts are inconvenient or in respect of a difference of opinion on a future outcome.
During the bubble it was a reasonable assumption based on the facts (annual credit growth of 30% etc) to query policy, which was called “talking down the economy.”
Today, it’s a reasonable assumption to say that 12-month job creation may have been half the official level; it’s a fact that the official rate of unemployment understates the real rate; the indigenous sector remains extraordinarily weak with low linkages to the FDI sector after a half-century and so-on.
None of the foregoing would be officially acknowledged.
Paul Krugman wrote a piece this week on US inequality – to me he is optimistic because he sees what’s possible. Others would prefer that he would change the subject and highlight what they think is great about America or for themselves.
Finally, just to nail that tired old glass cliché, whether in the darkest days or brighter ones of the recession, I never advocated drastic courses of action, not because I could say that high levels of debt will be sustainable in the longer term but because of the potential short-term damage to the embattled indigenous sector – the main source of jobs.
In primary school, I had a simpler version of ‘A Dissertation Upon Roast Pig’ by Charles Lamb (1822). Burning a house to roast a pig is seldom wise.
@MH lost me on the Krugerman piece and Americans changing the subject,there an awful lot of bad incompetent corrupt governance over here.
I completely disagree with you regarding drastic courses of action,what is great about America is the bankruptcy laws!
You would be hard pressed to find many Americans who want the federal govt. to bail out or lend money to Detroit.Its debt load currently is choking the city drastic course action required,so burn the creditors but include all creditors.
Will the ESB be “allowed” strike or does the govt. blink,no power hardly fits with the best little country story.The unions held Detroit to ransom for years wrecked the place and bad government.
The decision last week is drastic and exactly what is required,a dollar is still a dollar in Detroit same as in NY,the ATM’s work,and they have power too.
The Detroit free press is probably best for its reporting on this,the judge in a very usual move released his decision.
“In a separate filing, he expounded on the summary he gave in court on Tuesday with a detailed ruling, saying pensions can be cut because they are contracts. He also urged the city to be cautious about “one-time” sale of assets unless it contributes to the city’s “operational revenue.””
http://www.freep.com/article/20131205/NEWS01/312050123/Detroit-bankruptcy-Judge-Steven-Rhodes-order-Chapter-9-bankruptcy-Kevyn-Orr
Judgement here.
http://www.freep.com/assets/freep/pdf/C4216000125.PDF
@ All
FYI this informative interview with Regling by Ann Cahill of the Examiner.
http://www.irishexaminer.com/ireland/eu-body-will-monitor-states-budget-until-2042-to-ensure-we-repay-debts-251976.html
@ JG
http://www.ft.com/intl/cms/s/0/5be21c2a-5d16-11e3-a558-00144feabdc0.html?siteedition=intl
The – supposed – inviolability of public sector pension rights in the US is little short of amazing.
@JG
My better half is back in the Ole Sod at present. Reports that people are now saying “the recession is over”. No visible signs of recession generally…..the pubs and restaurants in Howth and Dublin were packed these last two nights…..Cork was lively mid week also.
House prices in the Howth Peninsula are up 12pc on average, there are houses being built ther (many developments being funded by NAMA eg Techrete site, etc).
Seems to be working for some.
JG
This might be of interest to you re Detroit.
http://understandingsociety.blogspot.ie/2013/03/what-became-of-detroit.html
He gets a lot of pushback in comments so theyre also worth reading.
“Ultimately, Detroit is in a predicament because the principle on which good republican government rests – the separation of powers – broke down. Politicians were meant to drive a hard bargain with unions representing government workers. But over time the politicians who deal with unions came to be dependent on them. They may have been sitting on opposite sides of the table, but they had the same incentives – bigger pensions and benefits than the city could afford. (Astonishingly, Detroit still has defined benefit plans – costly pensions that are determined in advance by employees’ earnings.)
This kind of government largesse at taxpayer expense cannot last forever. But it is hard to imagine what will happen to US big-city politics – or the get-out-the-vote efforts that it enables – once this arrangement is gone. It will not be given up without a fight.”
Down with that sort of thing!
Couldn’t happen on Craggy Ireland.
Capital’s Hibernian man of the year …..
http://dzswc0o8s13dx.cloudfront.net/goldcore_bloomberg_chart1_03-12-13.png
h/t Robert Browne
Unemployed labour – €188.00 pw
Citizen_serf bail_in ~90Billion; MNC/IFSC contribution ~ZERO
Capital is running roight riot around here …. what crisis?
@all
Blind Biddy is back – the Iranian contract in her hand_bag – something to do with internationally traded services …. tbc
@Detroit heads
Get a grip! Blaming its public service unions for the bankruptcy is idiotic …. look at the decline of its industry and the failure of its auto firms to innovate and outsourcing to low wage juristictions and Chinese competition on others.
@DOCM good link and just cause i did not comment on other tread,i did read it:)
here ya go detroit irish style!
http://www.youtube.com/watch?v=fYLMqKC3NqY
@Paul W gosh yes its absolutely working for some.The top chap at the new REIT is x NAMA,must had a good look/review of the assets/files on the taxpayers dime.Cherry picked what he wants to buy,one wonders did he contact any the funds that visited NAMA to buy the assets direct,would not happen over here not even in Detroit.Psst i’m setting up a fund/reit giva ya a bell shortly we can work together..only in dirty little old ireland-yeah yeah Geitner but its not the same he’s not buying assets he managed.
Dunner must be crying today in his cornflakes this morning,he’s is x a/c manager!
“The Sunday Independent can reveal that lawyers for Sean Dunne wrote to Nama Senior Portfolio Manager Kevin Nowlan last Wednesday expressing their concern that the contents of his Statement of Affairs and information in relation to his companies’ assets had been leaked from Nama.”
http://www.independent.ie/irish-news/second-nama-official-investigated-on-sale-of-agencys-lucan-property-28821598.html
@rf great link perhaps DOD could read it,before commenting-David ehm the auto industry got bailed out you may have missed it!
“Despite the shorthand that we still use, Detroit’s moniker is a historic relic. The region was the birthplace of U.S. auto manufacturing, but its heyday is long since gone: since the 1970s and 80s, the industry has both downsized and shifted to other parts of the country. In 1975, there were some 100,000 jobs in the surrounding Wayne County; now there are only a quarter of those jobs left–and only about 10,000 jobs are in Detroit city. Despite the lingering nostalgia for the Motor City of old, the two Detroits are no longer interchangeable–and they haven’t been for a long time.”
http://www.msnbc.com/all-in/why-didnt-the-auto-bailout-save-detroit
@JG
Dunne will survive. NAMA have more or less conceded (privately) that they will not recover the 50m transferred to Gayle…..that’s how I heard it.
Irish Govt strategy appears to be based on things remaining stable, not getting any worse……and therefore room available to buy the next election…..
It won’t be so simple.
@JG
My PE guys are making a killing off the scalping of those Detroit pension funds…..they are also salivating re the sale of the enormous art collection accumulated by Detroit. It’s like a Nat Geo documentary…..the scavengers cleaning up the mess. Son there will be no sign of the old corpse.
Bail in the National Museum and other Irish treasures? Book of Kells?
@Paul W,the current govt. has played the hand they were dealt quite adroitly.
What happens next may be more external,but given that debt servicing will continue to grow and increase…oh never mind something will turn up right!
“This assessment is also reflected in the December 2013 Eurosystem staff macroeconomic projections for the euro area, which foresee annual real GDP declining by 0.4% in 2013 before increasing by 1.1% in 2014 and 1.5% in 2015. Compared with the September 2013 ECB staff macroeconomic projections, the projection for real GDP growth for 2013 has remained unchanged and it has been revised upwards by 0.1 percentage point for 2014.”
http://www.ecb.europa.eu/press/pressconf/2013/html/is131205.en.html
@Paul W,the irish art collection somehow attracts audience participation,in case you missed it..why was he held w/o bail ?
Rather bizarre case and set of circumstances.
“A man accused of punching a hole in a €10m Monet has been granted bail after a jury could not reach a verdict yesterday.
Andrew Shannon of Willans Way, Ongar admitted causing the damage at the National Gallery in June 2012 but claimed it was accidental.
He was granted bail this afternoon pending a possible retrial.”
http://www.irishexaminer.com/breakingnews/ireland/man-accused-of-punching-hole-in-10m-monet-painting-granted-bail-616415.html
Detroit art recent appraisal…
“Creditors will undoubtedly see the estimate as low; art experts enlisted by The Detroit Free Press this year to conduct a quick, unofficial appraisal had said that 38 of the museum’s masterpieces alone would be worth at least $2.5 billion in the current art market.”
http://www.nytimes.com/2013/12/05/arts/design/christies-releases-appraisal-of-part-of-detroit-museums-collection.html?_r=0
Must Read: Joe Stiglitz
‘Much of the euro’s design reflects the neo-liberal economic doctrines that prevailed when the single currency was conceived. It was thought that keeping inflation low was necessary and almost sufficient for growth and stability; that making central banks independent was the only way to ensure confidence in the monetary system; that low debt and deficits would ensure economic convergence among member countries; and that a single market, with money and people flowing freely, would ensure efficiency and stability.
Each of these doctrines has proved to be wrong.
[…] No country has ever restored prosperity through austerity.’
http://www.theguardian.com/business/economics-blog/2013/dec/06/eurozone-gdp-unemployment-austerity
@JG
External….yes….and as unexpected as a guy falling through a Monet painting. Funny thing about Irl (and elsewhere)….property /money is more important than people…..it was always such.
W/o bail….he lives on the other is of Blanchardstown…must be a bad guy…..not from leafy-Dublin……jury was not convinced (despite the reporting all but saying he was guilty). They’ll have another go at crucifying him….if only they consistently applied the approach to overpayments, top-ups, etc…..it’s a mad country. Utilitarian (with property and money as God, enshrined in the Constitution), without principle. That is the place of our birth.
@Paul W the Forbes thing is rather amusing excellent piece by CG on ther methodology or lack there off….they pin a list of countries onto a wall,then blindfold a money with a dart for f**ks sake it’s a rag.Do they still have a zoo,wasn’t Malcolm a big animal collector amongst many many other peccadillos,talk about shameless really!
No Richard it does not,he’s a sports journalist.
“Today’s finding by Forbes that we are the best country in the world for business is above all a testament to the hard work and innovation of our businesses and workers. It is the latest in a range of indicators which shows that the environment for business here is steadily improving, and shows that the hard work and sacrifices of so many people are yielding tangible results in terms of international competitiveness and the jobs we so badly need.”
http://www.merrionstreet.ie/index.php/2013/12/minister-bruton-welcomes-forbes-magazine-ranking/?cat=3
Well worth a…
http://trueeconomics.blogspot.com/2013/12/5122013-that-forbes-folly-of-global.html
Re: Detroit link:
“They may have been sitting on opposite sides of the table, but they had the same incentives – bigger pensions and benefits than the city could afford. (Astonishingly, Detroit still has defined benefit plans – costly pensions that are determined in advance by employees’ earnings.)”
“Couldn’t happen on Craggy Ireland.” Grumpy.
A. The ‘taxpayers’ of this country, about 60% of whom have no pensions, have generously contributed €1billion to AIB staff, including do doubt senior executive and board members.
B. We are well on the way to contributing to a cast-iron guarantee of ESB staff / pensioners, with the pension of one beneficiary likely to top 300,000 pa.
C. Pat Rabbitte has in effect written the guarantee by stating that ‘even if the ESB wished to close the scheme in the morning, the shareholder (Govt) would not agree. A none too subtle reminder to Kieran Mulvey to do a ‘deal’, regardless of what the ESB CE or ESB board might think.
D. Minister Noonan and the PS mandarins have seen it coming of course, and provided a ‘fund’ from every pension to top up DB beneficiaries of AIB, ESB, EBS, Ir Nat, even Anglo, and no doubt the Pensions Board staff themselves.
E. One of the major underlying causes of the failure to tackle pensions, is that those negotiating on behalf of the State, are in fact ‘negotiating’ on behalf of themselves.
There is of course a way out, but as politicians and the PS elite have their
snouts so deep in the tax payer funded pensions trough, nothing will be done.
The simple way is this.
1. State takes all State/Semi-State pension funds into charge/administration, including pension assets.
2. Change all State/Semi State (even university!) benefit rules to ensure that all beneficiaries get minimum of State pension, with no member getting more than twice State OAP, from any pension fund that is funded by the State. In other words, scrap the concept of State DB. Why should such largesse be available to a privileged minority, paid for by an underprivileged majority.
3. Scrap the ‘rule’ or notion that retired people cannot have their pensions cut. I see no reason why any citizen of the State should have to subsidise pensions, beyond the level of the State OAP.
4. Ultimately there is no entitlement to a pension from a bankrupt pension fund, other than a subsidy from the State. Any such subsidy should always be subject to a minimum and maximum parameters for any pension payouts.
5. This country need to level up the pensions field. Right now the ESB and some PS pension beneficiaries are milking the country worse than the Anglo Irish ever did in Swifts time.
As I incline to the left of the political spectrum, some may consider such proposals outlandish. But I regard union demands for very well privileged workers as being very right wing in nature, and have no problem is saying so.
University pension funds can be funded that those who attend universities, who are a far from underprivileged group and who benefit greatly from the service provided. Education expenditure can increase the economic capacity of the country and so its ability to pay pensions. Admittedly some other public bodies probably reduce the economic capacity of the country, but this should be dealt with directly, not by fiddling about with pensions.
@JG
Are the ECB going to pull the plug in Irl?
Doubtful…..besides EU not wishing to bring down one of its debtors, Ireland is a master at living in the cracks…..if only the tax avoidance publicity would go away! It ain’t going away though, in fact we are only seeing the beginning. A very senior tax ptnr from PWC Dublin says “bullshit”, the tax scrutiny has been there for 30 yrs……if he doesn’t see the change coming (writes much of the IFSC legislation for the Govt), then who will?
He also is of the opinion that Ireland is too small to support everyone (emigration is good). Brian Lenihan’s legacy continues…..when I asked him whether he is reflecting the fact that his family is ok / doing well out of this as opposed to the wider community, he shrugged uncomfortably but said yes “but so what” (we’ve known each other for years and years so there is no BS in our conversations).
What I see is decline, slowly, unevenly. The older elites are feathering themselves in anticipation and agreement…maybe hoping for better, but hedging themselves against the downside (at the expense of so many).
That’s fairly much the official (unofficial) line……sad.
@ Joseph Ryan
You sum up the two Irelands well – maybe I should race through the ‘terms and conditions’ 🙄 for the sensitive. There are worse places and better!
The threat to close down the economy could be termed economic terrorism, comparable with the actions of the Tea Party Republicans in the US last October.
Ireland with the UK have the worst private sector pension coverage among the OECD economies (which includes all the developed countries) while the public defined benefit (guaranteed payout) scheme, linked to current earnings is among the world’s best.
It’s a particularly discriminatory system as the Irish policy makers who have well-feathered nests themselves (TDs get a 50% pension after 20 years service), have kept employer social security costs among Europe’s lowest while maintaining the provision of pensions as a voluntary issue – even when corporate tax rates were cut by 75% for domestic companies.
Recall during the boom when well-meaning Pensions Board staff turned up at race meetings and the like to flog PRSAs?
Last year a report prepared for Minister Burton by PricewaterhouseCoopers said:
So much for the little people.
It’s indeed a very good time to close a private sector defined benefit scheme – a CSO household survey found that 13.9% of covered individuals did not know the type of plan they are enrolled into.
It’s also over 4 years since the public sector pension liability was estimated at €116bn and the reason why the estimate hasn’t been revised since is that Minister Howlin knows that it would show a big rise and blunt his claims about savings on the pay and pensions bill.
Whether it was FÁS, the universities, the ESB and so on, public pension funds have in the past doubled up as slush funds.
In 2009, the funds of FÁS, the old universities and the ESRI were transferred to the National Pensions Reserve Fund. It was the bailout that “dare not speak its name” in that grim year. Total deficits were over €1bn.
Top-up years were what a Trinity official told the Comptroller and Auditor General on “the basis of custom and practice” a “legitimate de facto entitlement” since 1972.
In Galway, all staff in the grade of administrative officer and above were awarded added years on retirement provided they met specified conditions. The Pensions and Investment Officer made the decisions and nobody knew when or if the governing body had ever delegated such authority.
In UCC, academic staff appointed prior to 8 July 1986 are eligible by statute for seven professional added years at age 60. The years are accrued in the first ten years so that in the 11th year a member of the academic staff has gained a right to seven added years at age 60. Where such academics retire at age 65 they are entitled to a maximum of ten added years as with the normal application.
So Seamus Coffey has a less extravagant bonanza!
Under the Superannuation and Pensions Act 1963, the minister of finance can top up a pension where a public servant retires early or is removed from his/her position.
Adding years isn’t cheap when people can live 20 or more years after exit and the value of over 4 added years for one agency official was put at over €1.4m.
Minister Richard Bruton invoked the Constitution’s property clause when defending lack of action against the pensions of former bankers that were based on phantom profits.
Detroit is a US system issue. Compare to the Ruhrtal in Germany where they also entered the 80s with dying industries. The Germans invested. Detroit didn’t. They just moved to the suburbs. Someone else’s problem.
It’s all about the principles. The US grew up with abundance and never lost a war at home. Germany experienced total war within the lifetime of people alive now. Waste and efficiency and how people see things. It comes out in the iterations.
The Yanks run an older version of capitalism
http://ftalphaville.ft.com/2012/07/10/1078071/the-negative-fear-bubble
“Capital must be destroyed in order for liquidity to be usefully deployed once again — especially if it is to deliver investment returns.
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.”
Hugely useful- but the Germans wouldn’t agree
MH
And how much assets (real, market value) were transferred at the same time as the liabilities (actuarial figures, critically dependent on assumed future growth paths)?
Anyhow, sure you decided recently not to apply for a university post. Come on in, the waters fine….
some of the more extreme “sack em all, take their pensions (and give them to me), make them cheaper, we must make more proifit” merchants on the board here might well read this piece by David Simon
http://www.theguardian.com/world/2013/dec/08/david-simon-capitalism-marx-two-americas-wire?CMP=twt_gu
@ All
FYI
http://www.independent.ie/opinion/columnists/colm-mccarthy/reform-of-quangos-by-politicians-just-not-happening-29819337.html
Plus ca change!
@ Brian Lucey
Brian,
You’re on the back foot again with that weighty victims’ cross on your shoulders.
I’m not arguing that people should have no pensions but for a better system than one where the taoiseach, finance minister and leader of the opposition have entitlement to 3 public occupational pensions each while the lowest and most vulnerable earners have a system that entitles them to little.
As for the article linked to, you hardly believe that David Simon would see you as a victim compared with the people on low pay, job insecurity and the prospect of pensioner poverty?
@ Colm McCarthy
The organisational zoo
It is almost seven years since Bertie Ahern commissioned the Organisation for Economic Co-operation and Development to review the public service and recommend changes. The OECD reported in April 2008 and criticised the proliferation of “arm’s length bodies,” known as quangos and concluded the situation amounted to an “organisational zoo.”
Bertie Ahern agreed that the estimated 800 agencies were “too many agencies by half.”
Glacial speed is not news but 12 years for An Bord Uisce Mall is pushing it a bit but what crisis?
Enda Kenny has already chalked up a success for creating “the best small country in the world in which to do business.” His target date was 2016. So credit where it’s due and who is to argue with what’s termed a “financial bible” elsewhere in the Sindo and both “renowned” and “influential” in The Irish Times?
He will get around to other things in time, surely?
Fairytales for American audiences do come at a cost as there is also a big market for them at home.
Culling quangos is not easy as those who do not wish to leave have to be given desks somewhere.
Maybe Enda should have discussed ‘banishment rooms’ this week with Shinzo Abe?
@ All
FYI
http://tinyurl.com/nbptyyq
There are no easy solutions to breaking the “vicious circle” between the salaries and pensions of politicians (public representatives) and public servants. However, public recognition that something has to be done to break the “upward only ratchet” that currently exists in Ireland, and which neither beneficiary side is in any hurry to do anything about, would be a start.
@ All
I should add that when the financial well runs dry, it can also act as a temporary “downward” ratchet.
http://www.cpsu.ie/assets/fempi%20bill%202013%20explanatory%20memo.pdf
“2.2.1 Public servants affected will include members of the
Government and the Oireachtas (other than the President), and the
judiciary.”
It’s official!
Hi Michael
I wasnt actually thinking of you but if the cap fits…
I know of nobody who thinks the ministerial pension arrangements are fair. But I dont know any ministers.
I do know that you seem mildly obsessed with public sector workers pensions. Heres a wordle of your posts in the last 12 threads. http://www.wordle.net/delete?index=7365592&d=DSDM
There are, actually, other things wrong with the economy and society than that a) private pensions got walloped in the crash and b) theres a rump defined benefit scheme in the public sector. But feel free to continue on your path.
@Dearg Doom,is there any studies on endowments in Irl,it quite common over here:)
In the business field,I simply can’t deal today with an avalanche of hysterical commentary from Ernie No Balls today,so I confine it to that,why do lectures not do a bit on the side…the markets are a handy yard stick, wayto go Eugene.
http://www.dfaus.com
@Seafoid,it’s precisely because off the US system that Detroit can go BK and pursue a scorched earth policy with its creditors…unlike say Ireland!
Comparing Germays idiotic and financially immature attitude to debt and second chances is ill informed.As is the comment that people moved to the suburbs,should they have been made stay then?
Sounds familiar …
“Instead, numerous factors over many years have brought Detroit to this point, including a shrunken tax base but still a huge, 139-square-mile city to maintain; overwhelming health care and pension costs; repeated efforts to manage mounting debts with still more borrowing; annual deficits in the city’s operating budget since 2008; and city services crippled by aged computer systems, poor record-keeping and widespread dysfunction.”
http://www.nytimes.com/2013/07/19/us/detroit-files-for-bankruptcy.html?pagewanted=2&_r=1&hp&
@ Brian Lucey
Brian,
A lot of things interest me and forthcoming piece will be on the politics of whitening in Thailand!
Here recent comments are responses to current threads or comments made by others – not really representative of what I cover.
I do run 2 websites and a blog.
Since last Fri week, pieces I have done that have involved my own research, editorial input and analysis as distinct from economic data reports/studies etc are:
Japan needs pay rises; Brazil – a falling BRIC; Culture as an economic engine for cities; The search for growth; roads to prosperity; Ireland as ‘The Global Technology Hub’ or a fantasy?; Irish Medium-Term Economic Strategy 2014-2020: Innovation and entrepreneurs? – – Part 3; Irish Medium-Term Economic Strategy 2014-2020: Exports to Japan and emerging markets — Part 4; Forbes: US business thrives in Ireland: Why not Irish business?
What interests me about Ireland?
Glacial reform if at all; political sclerosis; unemployment and the lack of a credible jobs engine; export markets; the nuttiness of having science as the flagship enterprise policy; fairness in society; corporate tax avoidance and official economy with the truth in the use of data that has been distorted by foreign MNC transactions.
I don’t think that I have written more than once in the past 6 months on public pay/pension issues. Is that evidence of an obsession?
I understand why repetition of bitter facts is unpalatable but it can have an impact over time: wonder why of late the 85,000 unemployed in activation programs (some move back onto the Live Register in the summer months) who are not counted as unemployed, are getting belated attention in the mainstream media?
@Michael Hennigan
Even more indigestible than unpalatable Michael!
I have been reading your many, many posts on this blog for years and I think that as regards understanding the plight of the Irish economy it has been a significant net loss. Your animus against the public sector is so powerful that it blinds you to bigger issues. It bears repeating that Ireland’s economic crisis, like Europe’s, has private sector origins horribly multiplied by the structure of EMU and EU decision making. The pension arrangements of Irish ministers are appalling and wrong but basically inconsequential, the multiplicity of quangos is a horrible waste of money but a way down the list of critical national ailments right now.
Michael
In almost every post you bring in he PS. Regardless of the topic.
I know you seem to think that all academic PS economists are carried to and fro on palanquins by opressed non pensioned PAYE workers. It may amaze you to know -they arent.
Try, for one week, to post without bringing in the Grand National Card of hobby horses. Try. We know you can. Try. Else you run the danger of being something that wont change their mind and wont change the subject.
@JG
Germany’s idiotic attitude to debt is a bit like america’s current idiotic attitude to taxes. The tax rate is 10 percentage points lower than the 50 year average, IIRC.
But nothing to do with how Germany dealt with sunset industries.
The US was built on abundance and waste. The buffalo. West Virginian mountaintop blasting for coal because explosives are cheaper than labour. And so on.
What were the whites in Detroit supposed to do? Maybe in another country there would have been better incentives.
“I don’t think that I have written more than once in the past 6 months on public pay/pension issues. Is that evidence of an obsession?”
Ok. I have better things to do on a sunday evening but looking at the last 12 blogposts you have mentioned it 6times in comments. And thats just since mid november.
@seafoid,buffalo,west virginia coal mines,white flight,abundance,waste…try to get out a bit more.
Too many old tired cliches…modern america is a long way from John Wayne movies.
Its like BL’s link to Baltimore,another mismanaged city,has he even been there.It was an Irish guy O’Malley who turned it around as mayor.
@ All
FYI this OECD study which illustrates how the problem of inadequately funded public sector pensions impacts on a selection of OECD economies. (Apart from a brief reference to the now rifled Pension Reserve Fund, Ireland does not figure greatly.)
http://www.oecd.org/finance/private-pensions/47827915.pdf
Leaving aside the many extraneous aspects that easily arise, resolving this problem, and that of pensions in general, is an essential element in the consideration of the public finances of practically all European economies and cannot be excluded from meaningful discussion.
http://en.m.wikipedia.org/wiki/Martin_O'Malley
John G
Passed through it once. Does that count?
@BL was this during your guns and amo tour,it’s actually a fascinating case study in urban renewal.
Hopefully you got a chance to visit a world class university,Hopkins.
95 which connects NY to DC kinda bypasses it as does the train….BWI is out in the boonies,curious how one passes tru it:)
But like you its a cold Sunday afternoon and I also have …
Jg as a man who once spent a vacation in Detroit….let’s leave it there!
@BL it’s truly freezing here I’m mobile but the comment was …I may as well go on vacation in detroit…
.
Detroit isn’t the worst to visit. The art museum has some good stuff, there is rock and roll and you can head out to the Henry Ford museum in Dearborn.
It is a pity it is such a mess.
It’s a great city for music
It should hardly be a mystery as to why twice in a generation that the Irish economy crashed after periods of reckless misgovernance — events that would cause much collateral human damage and require years to recover from.
De Valera’s Fianna Fail ruled Ireland in a remarkably similar way to the Irish rule of America’s big cities from the late nineteenth century where politics, patronage and favours had precedence over good government.
Joining the euro was different for the Irish and Finns as in Ireland, the system was one of limited accountability where the buck seldom stopped anywhere.
In this system, some people in both the private and public sectors who were in a position to take advantage, took it.
Travel slush funds, secret top-ups and bankers laughing up their sleeves on receipt of begging letters for restraint from the Central bank governor.
Whether in the public or private sectors, those with access to power did well and the delay in progressing a legal services regulation bill shows that it endures.
Workers in the SME sector got half the earnings rise during the boom as TDs got and presumably their public service reference group – never mind other benefits.
The charge of hating the public sector is made because it is easier to use this nonsense than challenging me on the facts or evidence.
To criticize the land rezoning system is to hate farmers?
There are several issues that lead to the same potential pathway of durable reform or a cul- de-sac.
For example if it’s regarded as normal that a deputy prime minister’s partner can have job magiced up after an agency is abolished, which in terms of cost is equivalent to 4 entry level teachers, then no real reform is possible.
A few weeks ago I asked you without success to support trenchant criticism of austerity with some figures to support what you would do.
There are lots of views but without having to detail credible alternatives.
Because there is seldom one simple explanation for the economic crash does not mean that Ahern, McCreevy and Harney who entered national politics in 1977 at an auction election, were innocent victims of naive or nefarious Europeans just over two decades later.
@MH
“Adding years isn’t cheap when people can live 20 or more years after exit and the value of over 4 added years for one agency official was put at over €1.4m.”
Do you have a source for this? It suggests that the official’s salary well over half a million.
@Michael Hennigan
Great idea. I will just nip off during my lunch breaks and run up an Irish budget that will somehow deal with the European political, banking and monetary policy crisis that the right has been busy ignoring for four years by mistaking it for issues of national character that affect every country in the Eurozone that does not border Germany.
After all, the European component of the global financial crisis is basically just bad fiscal management, lack of competitiveness and poor governance, right?
Anyone looking for a good overview of austerity, its record of failure and its supporters real motivations should read Mark Blyth’s “Austerity: The history of a dangerous idea”. It is a terrific read and leaves one suitably enraged.
good interview with Blyth here as well, for anyone interested
http://www.brownalumnimagazine.com/content/view/3553/32/
@rf
Thanks, that is a great interview with Blyth. Depressing in a European context, where austerity is now effectively a cornerstone of EU economic policy.
I think the highest praise I can give Blyth’s book in the context of the Irish Economy is that its thesis would be anathema to any serving senior European technocrat, banker, German politician or DOCM.
@DOCM
However, public recognition that something has to be done to break the “upward only ratchet” that currently exists in Ireland
I just spewed my coffee all over my keyboard. Thanks. Good to know that the experience of those in the public sector in the last 5 years has been flushed down the memory hole. No PR flack could play it better. Chapeau.
@John Gallaher
“Ernie No Balls” was really a brilliant touch. I nominate you for King of the Schoolyard.
@EnoB thought you would enjoy that,nice turn of phrase huh:)
Ernie your persecution complex and paranoia gets a bit tiresome,but it doesn’t mean we not out to get you ….If the so called lecturers are half as good as they claim on here,shurly even collecting a state pension would be beneath them.
Link above too Eugene Fama’s little side gig I know I know different league…doubt given his skill set he’s overly worried bout state handouts…
@ Ernie
You seem to have missed my associated post.
—-
@ All
I should add that when the financial well runs dry, it can also act as a temporary “downward” ratchet.
http://www.cpsu.ie/assets/fempi%20bill%202013%20explanatory%20memo.pdf
“2.2.1 Public servants affected will include members of the
Government and the Oireachtas (other than the President), and the
judiciary.”
It’s official!
—-
The general point that I am making should be obvious. It is a deeply unhealthy situation in a democratic country if those elected by the people to represent them, and to raise revenues, are confused with those charged with spending them. The dangers inherent are not confined to the level of central government.
Incidentally, as recent wall to wall coverage in the media, which you seem also to have missed, has confirmed, the “downward ratchet” is not very effective when it comes to the decision-makers.
I have also repeatedly made the point that treating the public service as if it was a homogeneous whole is a management nonsense which leads to the bureaucratic overload of which you complained on another thread recently in relation to the third-level education sector.
The failure of the attempted standardised system of assessment is but the most recent example.
http://www.irishtimes.com/news/ireland/irish-news/civil-service-performance-review-deemed-failure-as-majority-pass-1.1621423
I am all in favour of paying the appropriate rate for the job based on merit and removing those administrative posts which serve no productive purpose. I am totally opposed to either across the board increases, or reductions, or blunt instrument measures such as staff embargoes which are a reflection of a failure of management and nothing else.
I suggest that you pick the targets for your ire with a little more attention to what they are actually saying.
@ Ernie
This link – already referenced by Michael Hennigan – is of interest.
http://www.finance.gov.ie/viewdoc.asp?DocID=7737
The report is considerably less rosy than the covering blurb would suggest. The real failure of management is not so much in respect of public transparency – although this is also a vital ingredient – but of financial control. Until this is remedied by the introduction of modern standardised accounting systems – the one area where such an approach is both feasible and essential – which can supply expenditure and performance data in real time to central government, there will be no real breakthrough. Having two departments and two ministers with a confused division of responsibilities is a major handicap in this regard.
@DOCM
So you want “the introduction of modern standardised accounting systems . . . which can supply expenditure and performance data in real time to central government” but you’re against the proliferation of bureaucrats.
Interesting position. Do you also want a square circle whose surface is entirely red and entirely green simultaneously?
Nevermind the meaninglessness of “performance data” in fields like education and research…
@ Ernie
What planet are you on? Computerised systems supply such information on a daily basis to all kinds of organisations, both in the public and the private sector, across the globe.
As to your second point…!
I’m on planet higher education. You may have noticed that the best higher education institutions on this planet (as opposed to yours) go in for none of this “performance management” horsesh*t.
@ Ernie
Do you not ever read what others write? I referred to performance data, not performance management. Put in “output” instead of “performance”, if you wish. These measurements cannot be standardised. But the idea that none can be found as you suggest leaves me entirely perplexed. (You might let me know which institutions have given up the search.)
@DOCM
I see. So you just want centralised data but nothing to flow from it. And you think that this is not a bureaucratic boondoggle. Duly noted.
Here’s a partial list of institutions that do not engage in bibliometric evaluation of their staff: Harvard, Yale, Cornell, Penn, Dartmouth, Columbia, Brown, Princeton, Stanford, Berkeley, U of Chicago, Johns Hopkins.
The idea that measuring “outputs” (in what units? intelligence units?) is somehow preferable to measuring “performance” is testimony only to how far away you are from ever having been in a classroom or done any research worthy of the name.
@Shay
“Blyth convincingly argues that what has happened since 2007 is the “greatest bait and switch in modern history” (p. 73), as business leaders, bankers and European politicians have sold a private banking crisis to citizens as a sovereign crisis.”
Precisely.
@DOCM
fyi
“Blyth convincingly argues that what has happened since 2007 is the “greatest bait and switch in modern history” (p. 73), as business leaders, bankers and European politicians have sold a private banking crisis to citizens as a sovereign crisis.”
. . . and sold the idea that the perpetrators of that private banking crisis were (somehow) public-sector workers and that, consequently, the antidote to a failure of the private market is to impose the forces of that private market on the public sector.
@ Ernie
“bibliometric evaluation of their staff”!
You are talking about a subject I have not actually raised and assuming that I am in the same line of business as you are. As far as the education sector is concerned, my focus, as an outsider, would be on the students the education of whom is the reason, I would assume, that staff are employed. (Are all attempts at output measurement being abandoned in this context also?).
Given the position that I have set out in various posts, I do not know how you manage to arrive at the conclusion that I am a supporter of “performance management”. What I am advocating is its abolition, leaving the staff actually doing the work, whatever it might happen to be, freedom to obtain the most effective output for their work i.e. given the freedom to manage (and removing layers of pseudo management from the equation). The only way this can be done is through effective financial control i.e. staying within budget. This is the quid pro quo. Without this mechanism, the present blunt instruments of staff embargoes, promotion blocks, temporary contracts etc. will continue.
I cannot make my position any clearer.
Is everyone ‘cool’ about the circa 5% fall in manufacturing output in November. I thought there would be a thread on how big a deal that is.
P. S.
Anyone got a link to any recent North-South economic comparisons?
@DOCM
You are the one who used the term “performance data” and talked about it being fed back to some centralised government office. I don’t know what you think that might mean other than that the “performance” is going to be managed based on the data. Why would you collect it if nothing was to flow from it (rewards and punishments, say)?
In my line of work, here’s the sort of performance I and all of my intelligent colleagues care about: intelligence. As in: how intelligent is so-and-so’s work? As in: how intelligent is the argument that this student has produced? These are qualitative evaluations. I don’t care one jot about how many (unintelligent, usually) performances a person manages to churn out. My “superiors” (the idea of which is itself a perversion of the university) don’t see things that way. They can’t be arsed to actually have expert panels read and report on academic work. So they do it the easy way: tot up numbers of publications (which are all held to be of equal worth) and student evaluations (which are all held to be equally valid).
Those are the performance metrics in higher education. They take an army of bureaucrats to devise, implement and interpret. And what they measure is idiotic and has nothing to do with what actually matters, not just for me but to the public.
@ casimirtheimmortalmonster
http://www.independent.ie/irish-news/disgraced-fas-chiefs-14m-hike-in-pension-26565875.html
In 2010, the C&AG estimated that the cost of an additional year on pension entitlement for judges and ministers was a net 62% of salary after payment of the 2009 public sector pension levy and the normal individual contribution.
We should not forget that the quangos were created to allow the continuation of nepotism, cronyism and favouritism when it was being curbed in the Public Service.
As the Germans say “One hand washes the other.” and the British say “You scratch my back and I will scratch yours.”. The Irish have a long history going back to the pre-tribal days of the Clans, we are evolving slowly. Do not expect the concept of governing for the public good to sweep across the land in our lifetimes. Shure dancin wit da wan dat brung youse is da rite ting ta do. “twas always thus and what was good enough for our grandparents should be good enough for us. Down in Kerry we have almost enshrined it in poetry.
@MickeyHickey
Not sure about that history of QUANGOs Mr Hickey, the original justification for bodies of these nature goes back a while and seems to have been motivated by ideas about freedom from “political interference” (aka “democratic legitimacy”), the sluggishness and bureaucracy of the public service in responding to change (aka “accountability”) and the philosophical undesirability of having semi-state bodies at all (aka “right wing dogma”)
In other words QUANGOs are firmly in the realm of neoliberal/orodliberal reforms. The fact that they have lent themselves to corruption is an added bonus but their wastefulness is a feature, not a bug.
@ MH
Thanks. Annoyingly the figure is attributed to two unnamed “independent pensions experts”. (Catriona Ceitin is named in the next paragraph but it’s not clear if she was one one of the people who gave the value of €1.4m)
It looks like the €1.4m was based on a total value of €4m (about €111k p.a. times 36) and the fact that he was credited with 4.5 years after serving about 8 with FAS. (€4m x 4.5 / 12.5 = €1.44m) This takes no account of previous service, so I suspect that €1.4m is an overstatement of the value but no doubt he got a good deal.
@ Ernie
Keep it up.
The MBA toolbox is far less effective than it says on the tin.