Quarterly National Accounts

It gives me tremendous pleasure to highlight that JtO correctly forecast this outcome, repeatedly, over the last couple of months. His return to these pages has been long overdue.

Question
“Although all components are up (consumption +1.2%, government expenditure +5.2%) much of the increase is driven by investment which is up 11.3% year-on-year”
Is that housing?

The fact that Ireland’s balance-of-payments is in huge surplus after such high growth is a strong indication that (barring some global political, military, economic or natural disaster, which is unlikely, but always possible) the growth will continue at a very high rate for several years at least. In contrast, UK has huge balance-of-payments deficit. Can’t see anything other than Ireland growing at least twice as fast as UK for next few years. What a tragedy for Scotland that the impression of Ireland’s current economic performance they were fed by the traitorous ‘no’ campaign was one taken from the comments in recent years of Morgan Kelly, Column McCarthy, and others, and not the actual one. My pleasure in these figures is tempered by sadness for Scotland, although I hope I am wrong.

@JTO

“barring some global political, military, economic or natural disaster, which is unlikely, but always possible”

Disasters that are both economic + natural really hurt

http://www.ft.com/intl/cms/s/0/f1855fd2-fc65-11e3-98b8-00144feab7de.html
“The US economy faces a steeper climb back to positive territory after one of the country’s worst winters on record helped push first-quarter gross domestic product figures down an annualised 3 percentage points more than original estimates.”

Seafoid,
If you are in full on doom porn mode it is all unsustainable or a statistical chimera. If you are more honest, it is impossible to say . Re pay it is a mixed bag- some up/some down.
JTO,
The govt has been scrupulously silent on Scotland or at least FG has. I would be sceptical as to whether a one party sectarian state is good for Scotland. It worked well in your patch. Mention the Pope in certain SNP circles and stand back.

@TullMcAdoo

SNP are anti-sectarian. Some sectarianism in Scotland, but its nearly all from ‘no’ side. Rangers supporters and Orange Order. All staunch ‘no’. Orange Order had anti-independence march in Edinburgh last Saturday. Your Celtic supporter friend (that you mentioned on other thread) should have joined it if he’s so pro-Union. Vast majority of Celtic and Hibs supporters are pro-‘yes’. Working-class Catholic Glasgow will vote ‘yes’ for certain. Next time he’s at Celtic-Rangers match, he shouldn’t complain if Rangers supporters wave Union Jack in his face. After all, its flag he voted for (assuming he didn’t change at last minute). Actually, he should consider transferring his support to Rangers, More appropriate if he’s a ‘no’ voter.

FG/Lab government didn’t have to intervene. All they needed to do was do what politicians usually do, and highlight their achievement in bringing about resurging growth in Ireland. The news would have trickled to Scotland weeks ago. But, they kept mum, until this morning when its too late. I notice BBC still hasn’t reported Ireland’s growth figures. Surprise, surprise.

JTO,
my Celtic pal would probably wave the tricolour at a push. But he is Scottish unlike you and he has a long memory. SNP is ambivalent at best on issues of Sectarianism. you should know that given you are a student of history. Look up Billy Wolfe. It is true that Salmond has courted the Catholic Church in particular Cardinal Keith O’Brien-less said about that the better.

JTO- timeo danaos et dona ferentes!!!!

@SeamusCoffey.

OK, agree totally.

After two monumental economic busts in a generation it’s a little early for crowing and the old habit of drowning out dissent should be kept in check.

Michael Noonan says: “The turnaround that we are seeing in the Irish economy is a direct consequence of the policies pursued by this Government and the sacrifices made by the Irish people. Consolidation of close to 20% of GDP has been introduced along with major structural reforms designed to boost the competitiveness of the Irish economy. The specific measures introduced over the past three years to repair and grow key sectors of our Economy have also made a significant contribution.”

That is self-praise whether valid or not.

When I suggested that annual job creation in 2013 was more likely 30,000 than 61,000, I wasn’t guilty of that serious sin of “talking down the economy” (end June 2014, the number of jobs added in 12 months was 31,000).

So it should be possible to acknowledge a recovery while pointing to some caveats.

1. The smallest quarterly rise compared with the same period last year was in personal consumption at 1.8% compared with public spending at 7.9% and gross capital formation at 18.5%

2. The GNP is boosted by tax inversion companies and by the year end these firms will have a payroll of 600,000. Changes in undistributed earnings impact GNP and the Balance of Payments (BoP).

3. Goods exports value for BoP purposes are €7bn higher in H1 2014 compared with the ‘external trade’ release, less of an adjustment for imports giving + net exports in Q2 – I assume this is related to the new European accounts standard.

4. Per euro of exports, indigenous firms have much greater economic impact.
5. Chemicals + medical devices account for 60% of goods exports and in capital intensive sectors, export value is four times material imports. Being capital intensive, payroll has been in the low 40,000s for a decade.

6. So it’s foolish to view a Balance of Payments surplus as cash that is in local Irish banks. The trade surplus fell by €1.54bn in July which is temporary.

7. Aviation leasing in Ireland employs less than 1,000 people but the companies own over 3,000 commercial aircraft that were valued by the Department of Transport in 2011 at €83bn – almost half the value of annual GDP.

Add in over 300 aircraft in Ryanair’s fleet.

Purchases and sales do create volatility in the data.

8. By the end of the decade, the various distortions in the national accounts will likely disappear because of global tax reforms but even in the US since 1999 GDP per capita is not a good indicator of the standard of living of most people there.

9. Absent a big jump in personal incomes including adding what would be viewed as ‘real jobs’ (income and security that would get a mortgage and have some surplus to spend ) amounting to a net 250,000 to return to an unemployment rate of 5 to 6%, there will not be guaranteed high growth.

Mortgage approvals in April-June were at the lowest since 1974.

10. There has been a delayed recovery in many places but the usual pattern is to experience a spurt in growth when it does happen.

11. The Government’s annual target for FDI exporting jobs is 7,000 to 2020.

Further detail here on understanding Irish economic indicators:

http://www.finfacts.ie/irishfinancenews/article_1028148.shtml

@ tullmcadoo

Thanks for that tip.

A coward like you always has the advantage because I cannot know what’s your interest and so on.

I was used of your type during the bubble but most had the cojones to identify themselves.

Having got a master in economics degree, I don’t need any help from you.

I should have allowed for pig-ignorant folk and referred to the average turnover of commercial aircraft in developed countries in particular.

The point here was in respect of the very high capital value per employee and I used verifiable official data but I didn’t have an annual breakdown.

MH,

I would have agreed with you in the mddle part of the first decade of the century.. I do not feel the need to make myself known as I am not into self promotion.
You shoudl not assume that anybody who disagrees with you is thick. I have the same degree as you but see things from a different perspective.

Seafoid,
how many to you want? Authers is quite right but at least policy makers are aware of the risks now. The uber fiscal and monetary conservatives are in Colditz.

“Mortgage approvals in April-June were at the lowest since 1974.”

@Michael Hennigan I do not see why this is a negative factor. There is growth in the economy, this is obviously not being driven by excessive mortgage lending. THis is a good thing, as even a movement towards normal mortgage lending can sustain the growth without creating dangerous personal debt.

Didn’t minister howlin say we’d abandoned tee boom bust cycle? This seems fierce boomy

Also, I think it’ll be a real trick for the government – and Noonan was at pains to do this today – to acknowledge that good numbers mean nothing to the thousands unemployed, emigrated or earning a lot less than they did 7 years ago. They can’t crow about a % of GDP – that means nothing to people worrying about Christmas….

@MH
You are right to point out that it is too early for crowing, and indeed no time for crowing at all. The success was achieved largely on the backs of less well off working in industry who have seen little of the gains.

The ship has been steadied for the benefit of those on the upper decks, and thats where the loudest crowibg is coming from.
On a positive note, I can say that the revival that started in Dublin as a commercial investment splurge (following purchase of buildings at fire-sale prices), has spread out a little particularly since about last March. Some indigenous exporters are doing well into the UK market, where the strenghening of stg has been a major benefit.

@Dearg Doom
You surely cannot be serious. Why in a growing economy should banks not be giving mortgages at normal 2014 levels versus 1974 levels. Why is bank capital tied up in loss making BTL investments, depriving younger people of mortgages?
Somebody has clearly decided to protect certain failed property investors and landlords by manipulating supply and forcing rents up. Imho, NAMA in cahoots with the banks and DOF have done a real number on this, jointly. Even the minister who says he does not want a boom bust economy, wants house prices to rise another little bit!
Could it be so simple that most of the decision makers, and their advisers, are heavily invested in property?

All we need is jobs, less stagnation in wages and some proper residential property, preferably of the reasonably priced, high density, family friendly kind. In other words, until I see the Celtic Phoenix I won’t believe. My takeaway from the last decade is that when it comes to medium term forecasting, no one really has a clue.

@Carson

Am I correct in thinking today’s figures set a new high watermark for Irish GDP?

I think its still a couple per cent short. But, one interesting thing is that this years’s growth could put Ireland’s GNI per capita about 12 per cent higher than UK. GDP per capita is much higher still in Ireland, but GNI is the one used most for comparison. Need to qualify that by saying UK still has to revise its GDP figures to meet new EU rules. Ireland did it in June. Economists estimate these revisions might add 3 per cent to UK GDP. Could be more, could be less. However, given Ireland’s much better balance-of-payments situation, the high probability is that Irish economy will grow much more rapidly than UK in next few years, just like it has done since early 1960s. In which case, we could easily see Ireland’s GNI per capita 25 per cent higher than UK within 5 years.

@Sarah Carey

May I make a suggestion? Invite Morgan Kelly on your program and (a) ask him for an explanation as to why his forecasts have proved so hopelessly totally wrong and (b) will he apologise for the damage he did to Ireland’s economic reputation will his wild apocalyptic and now-proven-wrong forecasts?

Scotland looks like a ‘no” and per RTE “The British pound surged to a more than two-year high against the euro”. Just shows the markets can’t price this sort of thing.

Which says a lot about future asset price volatility as the economic situation continues to destabilise political arrangements. I think this vote was partly a consequence of how the UK managed the post Lehman moment.

And Cameron is too much of a PR wonk to be a decent leader. He badly misjudged by not having devo max on the polling slip.

http://www.ft.com/cms/s/2/aa365d5e-38e5-11e4-a53b-00144feabdc0.html

“Lord Lester, a Liberal Democrat peer and barrister who was special adviser on constitutional reform to Gordon Brown when he was prime minister, said: “It was Cameron’s failure to allow that second question [on the ballot] – and Labour’s to press for it – that has led to this situation. There is only one question and it is not the right question – and it is an extremely dangerous question. If answered Yes, it is going to lead to the weakening of Scotland and the UK.”

And he threw all his toys out of the pram over Juncker, to no effect.

‘A damned close run thing’, but great for democracy.

The next question is do losers matter, even when 46% are losers.

@ BW2

“The only way to achieve a result which is rejected by the ballot box is by the bomb and bullet.”

What about sanctions ? Or lobbyists ?

The outcome was no real surprise except in its decisiveness. It is to be hoped that Cameron and the Conservatives will learn the international as well as the national lesson that it brings; it is contradictory to be against disunity in the UK and to be almost actively promoting it at an EU level. Putting perceived party political interest above almost all other considerations is a disaster-prone approach to politics.

The last thing that Europe needs is a return to a domination by – often jingoistic – nationalist sentiment.

Common sense breaking out all over the place!

https://www.irishtimes.com/sport/golf/royal-and-ancient-golf-club-of-st-andrews-to-allow-women-members-1.1934230

(The fact that Cameron felt that he needed to justify agreeing the referendum in the first place says it all).

JTO

You remind me of Ferris Bueller’s teacher , Mr Ed Rooney

Battle of the Giants:

Morgan Kelly – 09 March 2014:

“Ireland is facing disaster. We could be facing something really, really terrible, quite soon.”

David McWilliams – 03 September 2014:

“Something is stirring in the Irish economy. The place looks like its about to take off.”

Ireland’s CSO 18 September 2014:

GDP up 7.7 per cent y-o-y – GNP up 9.0 per cent y-o-y.

OK, which one of the giants got it right, and which is now a laughing-stock?

@The English

Go on; now is the time for a referendum on English Independence. You know you want it …

@John TheOptimist

Scotland loses a battle with England; the neighbourly war goes on.

@ Dearg Doom

Mortgage approvals will of course rise as the recovery proceeds.

However, it will remain difficult with flat pay and insecurity for some people to get a mortgage given the risk averse culture now in the banks.

The IMF said in its report on Italy on Thursday that 70% of new employment contracts are temporary – this trend based on the experience in Japan and South Korea is bad long-term for an economy.

@ JTO

You’re in danger of making the same mistake as Bank of Ireland did in 2006 and 2007 when Japan and Ireland were called the world’s wealthiest economies.

GNI per capita would not be the most useful measure of Ireland’s standard of living.

Actual individual consumption (also called Household actual final consumption) using the purchasing power standards is viewed as a better measure and Ireland ranks with Italy.

It is the sum of the total value of household final consumption expenditure, non-profit institutions serving households (NPISHs) final consumption expenditure and government expenditure on individual consumption goods and services.

Rossa White in 2010 when at Davy produced an interesting note on Ireland’s Celtic Tiger era capital stocks:

https://www.davy.ie/research/content/pubarticles/economy20100219.pdf

He said:

“GNP per capita is an income measure, but measures of wealth are more difficult to grasp. Probably the best way to compare the wealth of countries is to look at the capital stock. Years of high income c an be turned into physical wealth if invested properly. Let’s take three small nations as an example: Belgium , Finland and Ireland. The three are closely matched in the euro – area income per capita table , albeit that Ireland slipped behind in 2009. But no Irish resident who has visited Belgium or Finland would have the audacity to claim that this country is wealthier. Transport infrastructure is vastly superior in those countries, as is the telecommunications network, and public services are delivered from higher – spec schools and hospitals.”

You may disagree but this is using data by looking behind it.

In 2012 Conall Mac Coille, his successor as chief economist, produced a report which showed that only around one-third of pharmaceutical export revenues count towards GDP.

@JtO right to point out how MK has been proved totally wrong in such a short space time. Totally wrong to hail DMcW a hero for something he said 2 weeks ago. DMcW was the main culprit in the doomsday solutions – leave the euro, default, forgive all mortgages etc.

@Brian Woods 2

As you probably know, I was always hostile to David McWilliams on here. Many posts back in 2009-2011 to prove it. Actually I was a lot more hostile to David McWilliams back then than I was to Morgan Kelly. So, I agree with what you say about the David McWilliams of a few years ago.

However, in my philosophy I believe in forgiveness when the person changes (that’s why I voted for GFA and was very sad last week when Paisley died and actually came to admire him a bit, whereas in autumn 1968 when he was yelling anti-nationalist abuse at us outside Queens University Students Union, that would certainly not have been the case).

David has gone up in my estimation in recent months for two reasons: (a) he admitted that his earlier pessimism was wrong and he came to conclusion economy was resurging (b) he actively supported a free Scotland. So, I forgave him instantly for his past sins. Same would apply to Morgan Kelly.

@ JTO

Where did you get the idea that I was worried about the UK leaving the EU? I think the chance of that happening is, and remains, as slim as Scotland voting for independence (an outcome which I predicted; not that this required any great prescience).

Your view of the advantages of independence is, to my mind, more than a little bit skewed. Sovereignty has become a relative term in the modern global integrated economy. Ireland, the vast bulk of whose manufacturing exports are produced by footloose foreign multinationals – mostly American – and whose agricultural exports, and the income from them, are dependent on a common agricultural policy decided in Brussels, has very little to crow about, other than the stoicism with which those that carried the burden of adjustment, including those no longer working in Ireland, turned the situation around.

I am not yet certain that those who carried very little of it will – yet again – get away with. But they probably will.

http://www.irishtimes.com/business/economy/brendan-howlin-offers-600m-in-spending-across-departments-1.1932673

This is an extraordinary way to run a country! The Dáil is the body responsible for raising revenue and seeing that it is correctly spent. If sovereignty Irish style allows this kind of conduct to continue, it also has not much to crow about.

There was a very interesting discussion at FT Alphaville last December about what is going on at the macro level .

http://ftalphaville.ft.com/2013/12/11/1717992/secular-stagnation-and-the-bastardisation-of-keynes/

eg

Credit is the transfer of capital from low performing uses to higher performing uses. The housing crisis was a period of extreme breakdown in that function. The market and the individual decision makers were incorrect in their allocations of capital. While not all debt is bad, debt created by credit that was used to increasingly pursue diminishing returns is bad, and that is what both consumers and industry did during the housing bubble. The values of these future-funded current account obligations were questionable then and negative now. We are still pulling capital out of our current and future economy to service the debt of past cheeseburgers, vacations, and over-inflated home prices of the past. How is this NOT deflationary if this capital is not then reinvested into the economy?

We can expect that capital, in the form of structured debt will be continue to be pulled from consumers to repay lenders who now have very limited options for re-investment. The breakdown is not that investors are happily sitting on safe government protected assets- flowing into the equities markets where corporations are buying back their stock, the breakdown is that corporations who are the beneficiaries of this capital flow, lack demand. It seems fairly inane to assume that the irrationality of markets, that precipitated this crisis, will now become rational and efficient to solve the crisis.”

@DOCM

You simply don’t get nationalism or what it means for a country to be free. Its not about some perfectly-sensible agreement between nations to obey certain budgetary restraints and then having their freedom of movement restricted in order to keep to them. All that is perfectly normal. A nation’s independence is more than about its economy. Its about its identity, culture, freedom and its standing in the world. Dublin 4 economists and politicians don’t understand that. Gobsh*tes like Conor Cruise O’Brien certainly never did. Scotland is a nation as much as Ireland, but this morning its a cowed broken beaten dispirited depressed nation, ruled by its conqueror England for another decade or two at least, and with a native Labour-dominated lickspittle political class of sycophants, knaves and traitors (ironically some with Irish names like John McTernan and John Murphy), whose political ideology is based on the principle that the Scots are too stupid to run their own affairs and need Mother England to do it for them. Alex Salmond made a great and heroic effort to try and break the mould, but he just failed. Ireland had a similar class once, but the men of 1916 succeeded where Alex Salmond failed and got rid of them in one fell swoop. They’ve never dominated in Ireland since (hence their perennial hatred of Fianna Fail. the main (but not the only) political successors of those who got rid of them in 1916, although unfortunately they still hang around in their Dublin 4 redoubt, bowing twice-daily in the direction of London, popping up regularly in sites like this, and hoping one day for a comeback. They had high hopes that the 2007-2011 global recession would pave the way for their comeback. That’s why they milked it so much and inundated the country wild false apocalyptic claims about ‘Ireland being destroyed, ‘Ireland being bust’, ‘Ireland finished’, and so on. They hoped it would all lead to rejection of the 1916 project and a return to the embrace of Mother England. Now that its unravelling and Ireland is back at the top of the global league table for economic growth, they are so so so angry, as any reading of this site would show..

So, even if it brought no economic benefit, I’d still want Ireland to be independent. As it happens, however, it does bring economic benefits. Lots of them. Ireland has progressed far more as a free and independent nation than the other Celtic countries that remain in the UK. In 1922 Belfast and surrounding area was miles ahead of Dublin in population growth, wealth and economic innovation. Now its a backwater. In 1922 Scotland and Wales were much richer than Ireland, were far more industrialised and had had a century of population growth while Ireland’s fell. Now free Ireland is way ahead of them in every area. That’s what comes from being free and having sovereignty over your own affairs. The fact that a small proportion of that sovereignty is freely sacrificed for things like the Stability Pact is neither here nor there.

Ireland and Scotland are both making the world news headlines this morning. Ireland because its the fastest-growing economy in the developed world. Scotland because it didn’t taken the chance to regain its freedom and preferred to be ruled by its conqueror. This morning, Ireland is euphoric and full of hope after yesterday’s growth figures. Scotland is broken and depressed, seeing no hope for the future. You don’t need to be a genius to see which of them is going to forge ahead more in coming years. That’s the difference between a free nation and a conquered nation. But, Teachfaidh ar La for Scotland. They will lick their wounds, regroup and fight another day.

@ Seamus Coffey

https://www.davy.ie/research/content/pubarticles/patentcliff20121128.pdf

@John Corcoran

“The Scottish serfs voted for their landlords, a noble Scottish tradition.”

I don’t think that’s fair. Wasn’t it the poorer districts in Glasgow who voted Yes and the toffs who voted No?

@JtO

Have you your space reserved in the Republican plot in Glasnevin? 😉

Worth looking at Lord Ashcrofts polling on his website. The SNP did well in Labour heartlands (Glasgow) but did relatively badly in their strongholds.
That suggests that Salmon may have over-cooked the move left to capture Labour votes with promises ofmore Welfare State. In so doing, he may have lost the disillusioned middle class Scottish Tories who have migrated to the SNP in droves in recent years.
Politics is the same everywhere. As the American’s say “you gotta dance with the girl you brung to the Prom” Salmond’s eye seems to have wandered.

@BW2

I missed that about DMcW. I was totally preoccupied with Scotland’s referendum this past few weeks and didn’t see any other news. If what you say is accurate, I agree with you that it was a daft suggestion. If MK is so sincere, why doesn’t he now withdraw his absurd forecasts and apologise for the damage caused? Then he can be forgiven. Been googling and I see he’s now a member of something called the Royal Irish Academy. Is it the Queen who appoints people to that organisation? The only reason any organisation would call itself ‘Royal’ in Ireland is that they are hoping the ‘Republic’ is temporary. I think that gives a clue as to the motivation of his forecasts.

@SC, TMcAD

While class was a factor, age was a bigger factor. Some 54 per cent of those aged under 65 voted ‘yes’. The older generation that grew up during and just after World War 2 have been indoctrinated into believing they are British and not Scottish. Meet the type all the time in Northern Ireland. But younger Scots feel different and will one day liberate their country.

http://www.zerohedge.com/news/2014-09-19/was-scottish-vote-rigging-caught-tape

We played with the idea too

http://www.sueddeutsche.de/bayern/wunsch-nach-abspaltung-bayern-die-neue-grossmacht-1.2126585

Bavaria separating,

and then Franconia separating from Bavaria, with about 4 Mio people about the size of Ireland, and only 206 years temporarily occupied.

@ JTO

Not sure where you’re visiting in Finland. I frequent it regularly and lived there for a while. My experience is that it beats Ireland on public transport, child care, schools, public space, apartment living, tenant rights, civic engagement/pride, policing and urban planning.

Not that Ireland is practically bad at these things, just not (in my experience) better than Finland. We do of course have many geographic/climate/cultural/demographic advantages over her, which, either we haven’t leveraged enough (yet) to be better at these things or we don’t value these things as much. We are also way better at attracting FDI, tourism, hospitality (hotels are better here) and small chat, though they’re better at directness, and with age I find the latter somewhat refreshing, you know where you stand. I digress.

You mentioned housing. I have to say that any apartment I’ve visited there (Helsinki/Kuopio areas) is of twice the standard of anything here. I have seen ZERO that are built without young families in mind. Perhaps they’re there, but I’ve never came across them. While in Ireland raring a child in an apartment is seen as a form of child abuse and probably for good reason.

Perhaps we do have a better housing stock than the Finns (on average) but I suspect that it’s cos we built a lot of high quality 3/4/5 bed semis in the middle of nowhere during the credit boom. I’d suggest we wouldn’t beat them on a ‘quality accommodation where people want to live’ index.

@JtO You have probably wondered why DMcW’s “print and give” proposal bothered with the technicality of interest free loans. As D explains his proposal had the potential to become inflationary but then Mario could simply ask folk to pay him back – ingenious what? The amazing thing is he gets away with this stuff, any other profession would have defrocked him or sumfin but it seems in economics any chancer can spoof anything.

Sorry, something happened my laptop and I sent post too soon.

HOUSING: Masses of stats in Eurostat database say Ireland better, mainly because iis much more modern, although Finland good too. Average house size higher in Ireland. Both way ahead of UK, for instance. But, I agree there is an element of subjectivity here. Finns, like most Scandanavian and northern European countries (except Ireland and UK) go for high-density apartment blocks in cities. These are usually very well-designed. No doubt about that. Irish prefer houses, often on outskirts of towns, often detached, frequently with large gardens. No way of reconciling different points of view on this. Environmentalists like Frank McDonald hate the sort of housing Ireland has. But, for my own personal choice, its Ireland all the way, as I prefer to live in a modest detached house, on the outskirts of a small village in Tyrone, with a large garden where I can practise my putting and picnic in summer, and with the river and mountains nearby, rather than live in a 4th-storey apartment in the middle of some city, no matter how well its all planned. But, I agree other people may prefer differently.

So, overall I’d say Ireland and Finland are close, just as the GNI figures indicate.

John the Outrageous
Why dont you ring up Morgan Kelly ( here is his contact details : http://www.ucd.ie/economics/staff/profmorgankelly/) and talk to him. Of course, that would require courage, which an anonymous troll on a website is by definition lacking.
Email me and I will mediate your call 🙂
Your paranoia is disturbing, frankly . And hilarious

@That’s Legal

I valued your comment about layout of blog on the other thread. It was all a rush to get it out before Scotland referendum. Literally worked all night last weekend. So, no time to design it properly. Will give it complete revamp next week. As you seem to know much more than me about such things, any suggestions welcome.

@Seafoid

When you make an accurate forecast, then you can talk. Haven’t seen one from you yet. I’ve gone out on a limb twice on this site with specific forecasts. First, in 2010/2011 I said ESRI’s net emigration estimates (let alone forecasts) were rubbish. Then, in summer 2014 I said forecasts of GDP/GNP growth in 2014, both government forecasts and private organisations’ forecasts, were ‘far far too low’. I have been proved spectacularly correct in both cases. What’s your record? I realise the pain you must be suffering, however, that someone from rural Ireland can get it right, while the cream of Dublin 4 keep getting it wrong.

Off to bookies now to bet £50 on Donegal for Sam. Lets bring him north of the artificial border yet again. Would be better if it was Tyrone, of course. Hope I’m as good at forecasting this as I was at the other things.

Less than two years ago the common reaction of individuals who echo the official line was to treat criticism of the Irish corporate tax regime from people like myself as a threat to jobs/ unpatriotic.

Interesting news today that Ibec has accepted my advice to embrace reform and now wants action next month on closing down the Double Irish Dutch Sandwich tax dodge scheme 😀

So the elimination of fake services exports of over €40 billion will be a start in getting clean national accounts.

In the meantime the trade unions should press for pay rises using the Dept of Finance data that unit labour costs have fallen by 21% since 2008 😳

@JR I did not mean to offend you, apologies. D has made it well known to me that he takes offence and has responded in spades both personally and in blogosphere .
Let us remind ourselves that D roundly condemned the LTRO program as printing money no less.
We all know that one of the problems is getting the liquidity flowing from the banks to the punters. D’s solution of bypassing the commercial banking sector and doling out interest free loans directly to the punters is as ridiculous as his suggestion that the solution to the mortgage debt problem is to wipe all mortgage debt clean. If you don’t see that I could become in danger of causing you further offence.

@ BW2

“We all know that one of the problems is getting the liquidity flowing from the banks to the punters. ”

How do you think they can fix the credit transmission system ? It seems a lot of stuff is going via the shadow banking system , which has the same problem as banking- long term lending against short term assets- but none of the regulation.

Anyone? BW II?. Just how statistically reliable are those G*P estimates? Seem to me, not very.

They fail to measure – presumably in a reliable quantitative manner:

income changes and distributions
un-waged labour activities
actual savings – not the repayment of debts
uneven price increases (decreases) – asset or property ‘bubbles’
transactions in the grey and black markets

If the EZ continues to stagnate, at some point it will be necessary for Ireland and other deeply indebted countries to do a deep root and branch pruning of our fiscal and monetary regimes.

Bill Abram a high school teacher outlines the contribution of Gerald Grattan McGeer to Canada’s Bank of Canada Act of 1934.

“Historically, the Bank of Canada functioned as the financier of Canadian public deficits in the Federal, Provincial, and Municipal budgets providing loans to fund government spending at interest rates as low as 1%. This practice allowed for public debts to be repaid more quickly, but at the cost of higher inflation.”

These conditions pertained from 1934 to 1974.

Here are some links.
en.wikipedia.org/wiki/Bank_of_Canada
https://www.youtube.com/watch?v=O8Zl1Wax8MI
https://www.youtube.com/watch?v=lgyqz5eLXhU
https://www.youtube.com/watch?v=rELeYyU0gho

I would expect that a system that arose in the dire circumstances of deep depression in 1934 would only be contemplated in Ireland as a last resort. It may not come to that but if it does there are more ways than one to skin the cat.

@ Seamus

I think a lot of MNCs need tax avoidance to make the numbers look good and keep those bonuses coming. Inappropriate management incentives are one of the main flaws in the system as is. You get companies borrowing money at low interest rates to fund share buybacks – zero strategic use but it gets the share ratios looking good and justifies more bonuses.

Systemic Risk in Europe
Voxeu

Deutsche Bank tops the list!

voxeu.org/article/systemic-risk-europe

@ JTO

RE: Finland.

I take your point on stats vs. personnel experience. There’s a popular national sport of taking ANY experience abroad and using it support a case against self rule. X is so good in Y place, we make or would make a balls of X in Ireland etc etc etc. IMO The biggest distributors of Paddy whackery are the Irish themselves.

No doubt we have better motorways. Bertie certainly delivered on that. Though theirs are adequate, they also have more trouble with maintenance of course, with those tough winters. Cost of living is on balance more expensive. Property not so much, but hotels/eating out/taxis/trains definitely. Though childcare, education, medical treatment is cheaper/’free’.

As you say a lot of the ‘better’ ‘worse’ than comes down to your priorities. Day to day I enjoy city life, living near where I work, having access to good services within walking distance, being close to friends and parks and not needing to spend a chunk of my life in a metal box. Not that I don’t enjoy ‘the country’. I’m a Sligo man and love getting ‘home’ when I can.

A lot of Irish people enjoy a proper house with a garden. Each to their won. Though currently we pay a price in terms of the viability of certain services as a result. Public transport being the obvious example. If Dublin wasn’t such an urban sprawl we’d have built a rail link to the airport by now. More SMEs would also viable with more population density etc etc

Then again, in 10 years we might all be flying around in self driving, carbon fiber, fully automated, electric cars running at 300km/h and powered on wind blowing in off the Atlantic. With a 100k trip taking 20 minutes and costing 50 cent. In which case, public transport will be a fleet of auto cars, rail links will be a stupid idea, one off housing a great one (economically speaking) and the west of Ireland would see a population boom.

By the way I’m with you on the child care. I too am glad my mother raised me. I’m glad my parents could do it. Nowadays though it’s not really an option. Most mothers simply can’t afford to stay at home. In the short term they’d be no worse off financially because of the high cost of childcare but in the long term they fear for the difficulty of rejoining the work force. Housing is so expensive for most that 2 salaries are a necessity. Hence Irish women are having fewer children, later and getting the grandparents or cash economy involved where possible.

It’s the neo-liberal dream. The more worker bees as debt slaves the better. Next stop inter-gerenational mortgages. Drop the kids to work instead of childcare.

GDP fetishism is the opiate of the masses: Have you heard the news?! GDP is up!. Never mind who benefits. Eventually, after the wealthy have had their fill of new Range Rovers and BTL property, some of that wealth will trickle down to you! Hell, if this keeps up, we might even be able to “afford” Special Needs Assistants (not before the Anglo-Irish debt gets paid off in 2045 or so, mind). In the meantime, let’s cut that top tax rate. The people have suffered enough!

Never said or implied that. Back to the reeducation camp with you.

@ Tull

http://www.ft.com/cms/s/0/7fb43b0a-3ead-11e4-adef-00144feabdc0.html

“Sales of US corporate bonds are increasingly reflecting lower credit ratings as companies take advantage of historic low interest rates and yield-hungry fixed-income investors to borrow record amounts in wide-open debt markets.
Much of the borrowing is being used to return cash to shareholders or finance acquisitions, in a move that is boosting leverage levels at many American companies. At the same time, bond investors appear to be ignoring ostensibly weaker corporate balance sheets in their hunt for higher returns.
That could come back to haunt them if interest rates rise and spark defaults – at which point investors could rue their failure to differentiate between credits.”

Share buybacks instead of investment is stagnation friendly.

Surpised by all the high fives and backslapping. Unemployment is what, 10-12% not including those who have emigrated, 6 years after the crash, 3 after the IMF..why is this so good ?

The best educated government in the world makes its move.
China implements Short Term Lending Facility (SLF).

http://www.zerohedge.com/news/2014-09-16/china-launches-cny500-billion-stealth-qe

@Michael

“Both conservative and socialist governments are publicly committed to a crackdown on avoidance.”

I’ll believe it when I see it. Vodafone can be the test case.

@ JTO et al

FYI this piece by Eilis O’Hanlon which IMHO is as good a commentary on the Scottish referendum from an Irish perspective as one is likely to find.

http://www.independent.ie/world-news/europe/who-we-are-is-more-of-a-feeling-than-a-hard-fact-30602951.html

The one major reservation I would have relates to her apparent unquestioning acceptance of Ireland as a victim solely of outside forces. (“On the other hand, if someone had said to Ireland at the start of the financial crisis that we could wrestle control of our own destiny from those who had brought about ruin, even if it took a few black years in the meantime, I’d have gladly taken it, because there’s something innately appealing about the idea of going it alone”).

As the premise is fundamentally faulty, it is just as well that no one did!

The “victim of outside forces” syndrome is universal. Notice how Americans believe they are being victimised on all sides to the point of paranoia.

In Ireland we have elevated it to a fine art after centuries of refining it under British rule. It is the first crutch we reach for. God forbid that we should ever admit we did it to ourselves. The bank bail out for example was as a result of intimidation by Brussels, Frankfurt, Berlin and others. It most definitely was not the result of expensive consultant advice out of New York and we surely could not blame the Gov’t, D o F, Bank regulator for being helpless spectators.

@ DOCM / seafóid

There is no world government yet and no “legal instruments binding all the countries of the OECD” nor can the European Union force any member country to change its tax system.

So you could be right or wrong if you think the G20/OECD project could end up nowhere.

There has been a definite “sea change” and a “clear break” from a culture of aggressive tax avoidance, Frank Haskew, head of the tax faculty at ICAEW (Institute of Chartered Accountants in England & Wales) said in 2013.

The sceptics have been surprised so far.

In 2013, Jesse Drucker of Bloomberg News wrote:

“Google Inc. (GOOG), Facebook Inc. and LinkedIn Corp. (LNKD) wound up in Ireland because they could reduce their tax bills. Their success is leading European and U.S. politicians to label the country a tax haven that must change its ways.

The grand architect of much of that success: Feargal O’Rourke, the scion of a political dynasty who heads the tax practice at PricewaterhouseCoopers in Ireland. He advises both multinational companies and the government on tax policy and has emerged as his country’s leading defender.”

Feargal O’Rourke is a tax expert who sees the BEPS project as a game-changer.

1. The Netherlands, Ireland, Luxembourg and Switzerland, Europe’s main facilitators of corporate tax avoidance, have signed up to the project. They could reverse course!

2. The US have gone after Swiss banks for facilitating evasion by its citizens while Germany’s foreign intelligence agency, the Bundesnachrichtendienst (BND), in 2008 was involved in purchasing a DVD with details on German evaders at a Liechtenstein bank. Lander governments have also put pressure on Switzerland as has the French government and the European Commission has forces it to change its corporate tax system.

3. In the UK public tax protests against Philip Green, owner of the Arcadia fashion group, and Starbucks, were factors in getting the attention of politicians in the UK.

There was cross-party support on the House of Commons Public Accounts Committee of criticism for tax avoidance by Google, Amazon and Starbucks.

4. Local companies in countries are beginning to realise that they are held to account while foreign companies can uses various schemes to evade or avoid taxes.

@ All

FYI an FT editorial to lift the spirits, especially of JTO.

http://www.ft.com/intl/cms/s/0/e2ac239a-3ff6-11e4-936b-00144feabdc0.html#axzz3DyKoOYh4

Seafoid,
You have been singing that tune since about 666 on the S&p so if there is a correction it will be now where near enough to vindicate your bearishness. You have called 5 out of the last zero market crashes.
You are on the cusp of being awarded the JTO duff forecasting award.

You have been saying that for years. Eventually there will be a bear market but the trough will be well above the level at which you turned bear.

http://www.ft.com/cms/s/0/81a008ae-f7f9-11e3-90fa-00144feabdc0.html

“The ability of US companies to deliver faster revenue growth this year has met with scepticism from Wall Street analysts, indicating that the economy faces a challenge to sustain a broad recovery in the coming months.
Since the start of April, analysts have lowered second-quarter revenue growth estimates for S&P 500 companies to 2.8 per cent from 3.5 per cent on a year-on-year basis, according to FactSet.
The drop of 0.7 percentage points for growth estimates is running at above the quarterly average decline of 0.3 percentage points seen for the past four years, said John Butters, analyst at FactSet.
The pullback in revenue, or top line, estimates shows how companies are relying on cost-cutting to propel their earnings higher and justify record stock prices. Some investors worry the sluggish revenue backdrop is a signal that the economy, dominated by consumer spending, faces headwinds from high food and energy prices against the backdrop of modest wage rises as companies focus on controlling costs.
“The cut in revenue estimates is very disturbing,” said Jack Ablin, chief investment officer at Harris Private Bank. “Revenue growth reflects the economy and is a variable that management cannot manipulate, it’s the purest measure of a company’s growth rate.””

@ BEB

There is no point in saying it’s going to crash on Wednesday because it probably won’t. One of the problems with the system is that the safer the CBs make it the more risk punters take.

The usual thing is a build up of pressure that explodes. A lot of assets turn out to be crap and then it’s pass the parcel as the panic develops.

Why might this happen in the equity market? Because companies are not investing in their businesses and using the wrong metrics to measure progress. Incentives are a massive issue .

http://www.ft.com/intl/cms/s/0/f098df90-3fef-11e4-936b-00144feabdc0.html

Remember what Greenspan said in 2008

http://www.ft.com/cms/s/0/aee9e3a2-a11f-11dd-82fd-000077b07658.html

“Alan Greenspan, the former Federal Reserve chairman, said on Thursday the credit crisis had exceeded anything he had imagined and admitted he was wrong to think that banks would protect themselves from financial market chaos. “I made a mistake in presuming that the self-interest of organisations, specifically banks and others, was such that they were best capable of protecting their own shareholders,” he said. ”

Fair enough if you want to think it’s My Little Pony next year and on into infinity. That’s your right. I just think the whole thing is extremely fragile.