Reminder: Labour Markets During Crises Conference on Wednesday

The debate in the US on the conference topic as seen by one professor.

http://online.wsj.com/articles/casey-mulligan-a-recovery-stymied-by-redistribution-1404075655

The article was also carried by the FT.

@DOCM

Just as a counterweight to the views expressed in the link you provided, below are recent quotes from Mark Carney:

http://www.huffingtonpost.ca/2014/06/01/mark-carney-market-fundamentalism_n_5427653.html

“Just as any revolution eats its children, unchecked market fundamentalism can devour the social capital essential for the long-term dynamism of capitalism itself,” he said.

“All ideologies are prone to extremes. Capitalism loses its sense of moderation when the belief in the power of the market enters the realm of faith,” Carney continued.”

Casey Mulligan, on the other hand, seems to believe that people who exist compliments of food stamps, should be deprived of those food stamps and incentivised, through impending starvation, to work for whatever wage is obtainable, however low that may be.

Perhaps, deprived of food stamps, the poor can “eat their children” to lessen the economic burden on the rest of society, and allowing Mr Mulligan some more relaxed dining.

With Dominique Strauss Kahn having a get out of jail free card he is working on a political come back. Hollande will be spurred into action before he is shunted to the sidelines. The French intelligentsia want the ECB to turn on a flow of funds to the real economy, SME, major public works. Funds are now flowing from ECB to Central Banks to be parked in interest bearing accounts pegged to manipulated rate instruments. The French are likely to mount a put up, or we will establish Euro 2, which will not be subject to the whims of citizens traumatised by memories of hyperinflation in the 1920s’.
This article covers the salient points as they relate to the little countries.
http://www.voxeu.org/article/why-europe-needs-two-euros-not-one

@Aedín Doris

Ta for links.

Labour, especially at the lower end, has been sacrificed, often for life, to placate odious Financial Capital.

No amount of ‘fiddling’ can avoid this labour ‘market’ fact.

On Wednesday, the second day of his nation

It looks like some of the functionality of the site is down. OPs are not going up. Here is something on the CSO releases (absent the links I had originally included)

The CSO have published the 2013 National Income and Expenditure Accounts along with this explanatory note highlighting the impact of some of the methodological changes.

Real GDP growth in 2013 was 0.2 per cent which is a revision of the previous estimate of

It looks like some of the functionality of the site is down. OPs are not going up. Here is something on the CSO releases (absent the links I had originally included)

The CSO have published the 2013 National Income and Expenditure Accounts along with this explanatory note highlighting the impact of some of the methodological changes.

Real GDP growth in 2013 was 0.2 per cent which is a revision of the previous estimate of

Great GDP/GNP data today. And good revisions to last year’s data as well.

Doom yesterday and doom tomorrow. But never today it seems.

@ Carson

Answer (116.1) on Seamus’s own blog.

http://economic-incentives.blogspot.ie/

@ Carson

Correction! The WordPress site is working; after a fashion.

GDP in 2013 is now €174.8bn and therefore €10.7b higher than previously published. As noted , the debt ratio is now 116.1% for last year (was over 123%)and the deficit is 6.7% instead of 7,2%. Real growth in q1 is now 4.1% so I suspect the consensus forecast for 2014 will now move higher. Nominal GDP is not rising as strongly ( largely due to falling export prices) but may now end the year around €180bn, as against a Finance estimate of under €171bn, which would reduce the 2014 deficit ratio to 4.5% of GDP assuming the actual deficit emerges on target.
One caveat. The surge in GDP in q1 (up 2.7% on the quarter) was due to net exports and stock building, with domestic demand falling. Consumer spending remains limp(up just 0.2% on an annual basis) so is unlikely to be anywhere near the Finance forecast. Wage income has also been revised higher so the implication is that the savings ratio is higher than thought and it is also clear from recent data that household deleveraging has yet to run its course.

tullmcadoo,

According to the national accounts the volume of spending on items such as drink and tobacco have fallen sharply, so higher tax rates are providing some support for the exchequer .Also spending by tourists rose strongly last year which is subtracted from retail spending to give Irish consumption ( Irish spending abroad, which is weak, is added). That said, I agree the consumption figures still seem on the low side.
Re chemicals, the CSO now say that the output of that industry actually rose marginally in 2013 , perhaps reflecting a greater impact on price than previously thought, rather than volume so was there a Patent Cliff?
That price issue is important on a broader note. Economists always refer to real variables but of course most variables are nominal and so have to be deflated and the latter is tricky. For example, the CSO estimate that government spending on goods and services was flat in nominal terms in 2013 and so actually rose in real terms by 1.4% on the assumption the price component fell. Similarly, Govt spending was down by an annual 1% in q1 but in real terms grew by 2.6%!

@ JF

A current example that suggests that the answer might – just might – be yes.

https://www.irishtimes.com/news/social-affairs/changes-to-one-parent-payment-will-discourage-work-1.1853887

From the 2010 MOU with the IMF

“To reduce long-term unemployment and to facilitate re-adjustment in the labour market, we will reform the benefits system and legislate to reform the national minimum wage. Specifically, changes will be introduced to create greater incentives to take up employment.”

The problem is that the action in this instance fills in only one part of the picture; the rest – notably in relation to provision of child care organised by the state – is still blank. This is characteristic of Irish policy-making; we wear the T-shirt without ever being at the concert! The only element actually taken from the countries in Scandinavia – that have filled in the full picture – is the institution of Ombudsman; examining systems that do not actually exist! An Irish solution to an Irish problem!

@ All

FYI

http://www.thejournal.ie/enda-kenny-angela-merkel-good-friend-berlin-1552042-Jul2014/

[Kenny] praised the decision of German bank KfW to back the establishment of the new Strategic Banking Corporation of Ireland which will lend to small and medium enterprises in Ireland.

Ehm … guaranteed by the Irish State?

Great friends! Enda the best friend of all – supinely kowtowing to the Citizenry taking on +40% of cost of EZ banking crisis. And he wore the ‘fiscal corset’ – very becoming ….

Face facts – on a ‘banking deal’ this Irish admin has been as gigantic a failure as the previous one. FACT

Unilateralism anyone?

Today’s figures are the final nail in the coffin of Morgan Kelly’s reputation.

Contrast the actual outcome with what Morgan Kelly forecast a few years ago:

Morgan Kelly – Jan 2008:

“Ireland will see more demolition than construction of houses in the next decade.”

Morgan Kelly – May 2010:

Ireland’s economic contraction is far from over.”

Morgan Kelly – May 2010:

“Its not a question of whether Ireland will go bust, but when.”

Morgan Kelly – Nov 2010:

“Ireland is on the cusp of social conflict on the scale of the Land War.”

Morgan Kelly – Nov 2010:

“The Irish Patient (formerly known as the Irish Republic) is now clinically dead. There is no prospect that the patient will recover.”

Morgan Kelly – Nov 2010:

By 2015 both Civil War parties will have been brushed aside by a hard-right anti-Europe anti-Traveller party.”

Morgan Kelly – Nov 2010:

Next year (2011) there will be no more mortgage lending and house prices will collapse accordingly.

Morgan Kelly – May 2011:

“Ireland is facing economic ruin.”

Morgan Kelly – May 2011:

“Our current slump is not temporary.”

Morgan Kelly – May 2011:

“A chaotic national bankruptcy is now inevitable.”

Morgan Kelly – May 2011:

“Ireland has no hope of borrowing in markets again.”

Morgan Kelly – May 2011:

“The holders of regular Irish government bonds will be wiped out.”

Morgan Kelly – May 2011:

“By the time the dust has settled, Ireland’s reputation as safe place to do business from, will have been destroyed.”

Morgan Kelly – May 2011:

“The eventual outcome will see Ireland as an EU protectorate, Europe’s version of Puerto Rico.”

Morgan Kelly – Aug 2011:

“We are very far from the bottom of the property market.”

When these forecasts were made, one person on this site was not afraid to call them sh*te.

And sh*te is what indeed they have turned out to be.

Today’s figures show that Ireland’s recession ended in Q4 2009.

Since then there has been steady growth, with the proviso that Ireland’s quarterly figures are prone to volatility.

However, taking the period from Q4 2009 to Q1 2014 in its entirety, the growth is clear and unambiguous.

Between Q4 2009 (the bottom of the recession) and Q1 2014:

Ireland’s real GDP increased by 8.0 per cent

Ireland’s real GNP increased by 12.8 per cent

This compares with real GDP growth in other EU15 countries between Q4 2009 and Q1 2014 as follows:

Sweden +13.0 per cent
Luxembourg +9.3 per cent
Germany +9.2 per cent
U. Kingdom +6.6 per cent
Austria +5.9 per cent
France +4.5 per cent
Belgium +3.9 per cent
Denmark +3.8 per cent
Finland +3.4 per cent
Netherlands -0.5 per cent
Spain -2.0 per cent
Italy -2.3 per cent
Portugal -4.2 per cent
Greece -15.2 per cent

So:

based on GDP Ireland had the 4th highest real growth in the EU15 between Q4 2009 and Q1 2014

based on GNP Ireland had the 2nd highest real growth in the EU15 between Q4 2009 and Q1 2014

So, at the time when Morgan Kelly’s rants were getting worldwide attention and severely damaging Ireland’s reputation, Ireland’s real economic growth was actually much higher than the vast majority of EU15 countries.

In addition. this high real growth is confirmed by a host of other economic statistics: the PMI surveys, the surge in employment, the fall in the Live Register, the surge in tax receipts, etc etc.

Apart from being totally wrong on Ireland’s economic growth, there have been numerous other events that are turning out to be the exact opposite of what Morgan Kelly forecast: for example the fall in bond yields to just over 2 per cent, the resurgence in the property market, the total lack of civil unrest, the fact that the two Civil War parties came first and second respectively in the recent elections, the developing housing shortage, the exit from the bail-out etc etc.

But, Morgan Kelly is not the only one to blame.

JTO,
Welcome back!!!! Like FF you have risen from the depths.

Guys, I have to point out that there was no mention of Dublin 4 in that post.

Who are you?…and what have you done with the real JtO!!!??

This week the pension without penalty age was reduced to 63 in Germany. The Left has bargained successfully.

We can no longer say that Germany is under cutting us on minimum wage or retirement age.

Now, if they would take their thumbs off Draghi’s jugular, we could love them.

@ Mickey

I’d agree with u if it weren’t for MKs drive-by style of forecasting where no one really gets to debate him, yet a large constituency views him as a prophet because of his accurate predictions in 2006-07. I’m afraid his time has passed and he did not seem to be able to predict a recovery with the same success as he saw the downturn (a trait shared by many “successful” forecasters).

Mickey,

before you get too excited about “pension with 63”. This is only for people who have paid 45 years into the system, means working wiht only short times of unemployment since age 18, and the age criteria rises with every year by one month, just like the normal pensions.

Nice to see JtO and Bond here.

Most people can only one side, either optimism or doom&gloom,
therefore balanced, quantitative arguments do not sell well either.

In 2005, when all the major decisions in Germany were implemented we also had on the one side many doom sayers, HW Sinn “Can Germany be saved”, Sarrazin “Germany abrogates itself”, etc. , demanding more dramatic steps

Gabor Steingart (“Deutschland, Abstieg …) demanding nothing less than a new state foundation

And on the other side the hard left like Lafontaine and Albrecht Müller, those nachdenkeseiten folks, who declared the end of the social system.

@Tullmcadoo

I agree that Morgan Kelly is not exclusively to blame. He is merely a symptom of the problem. It should not be personalised. The real problem is the fanatical hatred and loathing that the Dublin 4 academic/media elites in general have for traditional Church-going GAA-supporting conservative rural Ireland, which has reached such an extent that those affected are no longer capable of balanced analysis, accurate forecasting, or saying anything intelligent about Ireland at all. The main object of their loathing is Fianna Fail, the GAA and the Catholic Church, but their loathing for Fine Gael and the other Christian Churches is only slightly less.

Because they loathe these organisations they couldn’t accept that one of the greatest economic booms in world history took place in Ireland between 1986 and 2007 (on top of an earlier boom between 1958 and 1983). The second boom led to a tripling of real GDP, a doubling of the number in employment and turned a country, which had (uniquely in world economic history) seen its population fall by 60 per cent while under foreign occupation between 1841 and 1922, into the demographically-strongest and with the fastest-growing population in the developed world. They couldn’t accept that this was a real boom because it happened while political parties (Fianna Fail mainly, but Fine Gael too between 1994 and 1997), with their roots and most of their membership in traditional Church-going GAA-supporting rural Ireland, were in power. So, they invented the theory that it was all a mirage, a bubble. It never happened. It has been excised from history.

Then, when after 21 consecutive years of record growth, Ireland went into recession, as did virtually every country in the developed world (and I don’t dispute that Fianna Fail made mistakes, although the causes were overwhelmingly global), they invented the theory that Ireland was not so much in recession (like other countries were), but in total economic apocalypse/meltdown/ruin from which there would be no recovery. Other countries were in recession, but would recover. But, Ireland was doomed, fu*cked beyond belief. a hopeless case, its economy utterly ruined and destroyed, with no possibility of recovery for decades, if ever. Or, at least, that is what the Dublin 4 media/academic elites have been telling us, incessantly, repeatedly, day-in day-out for the last seven years.

The significance of yesterday’s figures is that all this has now been shown to be utter sh*te, just like I said at the time. The probability is that Ireland is now in the early stages of another couple of decades of high growth, another boom to compare with the 1958-1983 and 1986-2007 booms. All the fundamentals look good for this. The balance-of-payments is in heavy surplus, there has been a large improvement in competitiveness, the government budget deficit is disappearing fast, the savings ratio is exceptionally high, the construction industry is at the bottom of the cycle and can only go in one direction in the next few years, foreign investment is pouring in, the outlook for agriculture and tourism looks exceptional good. This boom is likely to occur regardless of whether Fine Gael or Fianna Fail lead the government during the course of it. I’d prefer the latter for non-economic reasons, but can live with the former (especially if they can free themselves of the ghastly Labour Party).

My only regret is that Ireland’s third great economic boom may have started too late to affect the result in Scotland’s coming freedom referendum, although I live in hope.

Is it cyclical, Tull? It may have more to do with CB helicopter drops

The indicators are not particularly comforting

Dow Jones 17068 – very high
Euro/chf 1.21 – indicates ongoing crisis
UK official bank rate 0.5% – 10 years before it gets back to 5%
gold per oz 972 EUR – very high
Brent crude – $111 per barrel- very high

If it’s cyclical we should expect growth to pick up . Maybe the DJ has already priced all that in. There are an awful lot of one way bets on growth turning up.

JTo’s green jersey- ireland has the best growth in the EU- (a whopping 8% over more than 4 years ) highlights the problem- growth is a problem everywhere.

@JtO

+1

Next Irish Government might be a dream team for you – coalition of FF and FG, maybe with Lucinda’s party tagged on!

US unemployment is slightly ahead of target,

taper is on target, -> short term rates expected to rise a little faster

@ JTO

Welcome back!

Who gives a hoot about what MK did or did not predict? He was just another “celebrity economist”.

On one point, however, he was correct. The country did become dependent on the “kindness of strangers” (if my memory serves me right, his quotation). The Irish economy has certainly outperformed many others but this is largely due to FDI, mainly from the US.

Wild swings in economic performance are attributable to political and economic mismanagement. All the established political parties are equally guilty.

Amazon’s Luxembourg tax arrangements under scrutiny. Luxembourg mentioned 12 times and Ireland 3 times. I am biased, do you think it is fair to mention Ireland in an article dealing with tax avoidance in Luxembourg.

http://www.ft.com/intl/cms/s/0/3f4d6332-01f6-11e4-ab5b-00144feab7de.html?siteedition=intl

‘Are we now seen as toddlers in our green carpeted play pens, needing adult supervision 24 hours a day’
Yes

@Mickey Hickey
Excellent link to Robert Reich talk. I just listened to all of it. Outstanding contribution, imho.