“Have We Learnt Anything from the Crisis?”

The Bank of Latvia organised a conference on this topic last Friday: materials here.

The speeches by Coeure and Weidmann on the euro area are quite interesting;  I can recommend the presentations on Greece;  there were presentations on Ireland by myself and Craig Beaumont.



112 replies on ““Have We Learnt Anything from the Crisis?””

Structural reform presumably means measures to boost supply and hence raise the potential growth rate. Fine, but for many EZ countries lack of demand is the problem short term. According to the IMF database, the respective output gaps in 2014 for selected countries are as follows: Greece -9.4, Spain -5.0, Italy -4.3, Portugal -3.5, Cyprus -3.4, France -2.8.

What is the solution to this lack of demand?. A currency devaluation might help but the euro area as a whole is fairly closed, the euro has proved fairly resilient on the FX markets (reflecting a large current account surplus on the Balance of Payments) and it would probably take a substantial fall to make much difference. An internal devaluation is proposed for many but is self-defeating if most are trying this at the same time-domestic demand has to be rising somewhere to absorb exports.
Monetary policy has been the main policy response but effective real interest rates are still too high in many countries, despite the zero lower bound on nominal rates. Moreover, monetary policy involves re-leveraging the private sector, which in many cases is keen to delever. The public sector initially provided some offset to the latter but that is now deemed verboten so the final throw of the dice is that the ECB will now provide the leverage itself, via a boost to its own balance sheet, by initially buying private sector debt and, possibly, government debt.
Hard to see the end-game. Is QE with us for ever, and can central banks ever sell QE assets back to the private sector?

The sight last week of Andy Haldane telling markets it was too early to increase interest rates would appear to indicate that a lot of prices are fak

Going back to Romford shouting lager, lager, lager
And remembering nothing.

Let me re-phrase the Q – into a more meaningful form.

“Have those individuals in high positions, those who precipitated this Great Financial Crisis (not caused it) learned anything?” Not a damn thing! On second thought, maybe they have – just carry on with their fraudulent financial behaviour. It works! – for them!

I’m reading through the Jens presentation and I would also have to read the two EC reports he cites. But my first impression – “I’m kinda underwhelmed!” – especially with his comments about the situation in Germany – and the nature of any German non-response. Like, we are on our own on this one – a group of shipwrecked survivors in a lifeboat. Some will have to ‘sacrifice’ themselves, so that the remainder will be rescued ‘alive’. Indeed.

You could hardly make up this drama. As that man said; “It nearly worth this downturn, to find out just how little those great men know.”

Yellen bemoaning inequality


Roubini on the big picture


Karl Marx had it right, at some point capitalism can self-destroy itself. That’s because you cannot keep on shifting income from labour to capital without having an excess capacity and a lack of aggregate demand. We thought that markets work. They are not working. What’s individually rational . . . is a self-destructive process.

And it’s that squared for the EZ. In ruder economic health than either the UK
or the US, the EZ is tearing itself apart over some ridiculous economic theory that the Germans can’t let go of.

Maybe not even as far back as Karly baby. How about Paul Sweezy and Harry Magdoff?

‘Economic History as it Happened: Vol iv: Stagnation and the Financial Explosion’. (1987 and 2009). Monthly Review Press.

Maybe it is not that complicated!


To recall the aphorism of the new president of the Commission, when PM of Luxembourg, on the topic of structural reform, “we all know what to do, we just don’t know how to get re-elected after we have done it”.

Sooner or later, the reality of a country’s economic situation strikes home. This is currently the case in Ireland with regard to the imbroglio aka Irish Water.

The whole Irish Water debacle is just daft.

At root, the logic for metering water supplies is based on there being a shortage of untreated fresh water. The variable costs of turning untreated fresh water in a lake or river into treated fresh water coming out of a tap are small. What is very expensive is the water distribution infrastructure, whose cost is pretty much fixed regardless of how much water each household uses.

Metering water, and charging households directly for its use, comes at the cost of a large capital and operating overhead from meters, meter reading, billing, extra maintenance, management etc. This makes sense where it is necessary to ration out the supply of untreated water. If there is no real shortage of untreated water, it is just an exceptionally costly and inefficient way to raise taxes.

In contrast to all the other countries whose example the Government is following, we really don’t have a shortage of untreated water in Ireland. There is some long term threat of needing to bring additional sources into the system if we don’t cap growth in consumption, but the water is there and if it turns out to be necessary it will not really be that expensive (or environmentally damaging) to capture it in comparison to the cost of Irish Water’s pricey performance art.

The sensible thing to do, both as a matter of politics and policy, would be to shut down Irish Water as a commercial entity now, and put the costs of Irish water infrastructure and operations back where they belong in general taxation.

@ DOCM: ““We all know what to do, we just don’t know how to get re-elected after we have done it”.”

Eh! So, they DO know! That’s what I have always believed. But …

Shredding one’s own arse – even if its for the the general good is a very impractical career move. So, let’s just git along – little dogies, git along. That was a song?

Irish Water, even in its the Gaelic version is one, Mother-of-All political custerf*cks! So who learned nothing then? And, please do not enquire about the sale price of an electricity generating plant in Cork. Or the costs associated with the build-out of excess electricity generating capacity. You really, really could not make this stuff up.

Thanks for that confirmation, by the way!

It would appear that those proposing sterlingized Scottish Independence from the UK, without a central bank, can definitely be said to have learned nothing.

The implication, given the amount of literature and written discussion available, is that plenty of people – including people who aim to run countries – are not interested in learning anything.

And to develop the point made by BeeCeeTee: Once we all have our meters installed, and make an effort to reduce our bills by cutting consumption (shorter showers, fewer toilet flushes, no more watering the garden…), what will happen to the per litre cost of water? It will go up of course, to restore Irish Water’s lost revenue. And since the idea of a standing charge to at least partially reflect the fixed cost nature of the service was considered anathema by the government, the per litre cost will be the only way for them to make up the shortfall, unless they lose a few thousand employees. Then the fun will start!

Tenants in blocks of apartments, with no individual water meter, are getting notices to sign up as “customers” of Irish Water, to be billed for water ‘used’.

Imagine the ESB giving you a bill for electricity, without having any individual meter installed for you, and then you begin to realise the sheer brilliance of the new Uicse Eireann quango.
Such bills will not be paid, and there is not a court in the world that will insist of payment of any bill for water that is not tied back to a calibrated meter.

Uisce Eireann was just a super quango from the word go. They needed a billing system for water meters, but they failed even to get that much right.

Oops! I should not have mentioned the subject of Irish Water. For the record, water is a service on a par with energy for heating, food preparation and light. It should be paid for and supplied under parallel conditions; with provision for those unable to pay under normal social protection provisions. Irish politicians have been running away from the inability of the Irish electorate to accept this for decades. When forced to confront it by the country’s creditors, they dealt with it with their usual capacity for clear and decisive action.

If we had learnt anything from the crisis we’d have bank recap processes, jailed bankers, limits on bank leverage, financial stability and bubble management as a goal of the fed( not Yellen saying it’s not her problem), a complete revamp of Basel 3, the end of the notion that bonds are risk free, strict regulation of incentives for financial c-suite, coherent regulation by asset class and so on. Instead we got business as usual.

Martin wolf says finance is a doomsday machine.

“There is only “what is” and that’s it. “What should be” is a dirty lie”.
Lenny Bruce

@ DOCM: ” … water is a service on a par with energy for heating, food preparation and light.”

No, you should not have mentioned it. However as a metaphor, it’ll pass.

Water (the potable stuff) is NOT a service. A daily supply of it into your home, is. So what is one paying for? The infrastructure + the commodity + variable costs? And how will the replacement or extension of the infrastructure be funded? Ah! Yes! You mean that Regulator everyone thinks will protect them (the consumers) is in reality, actually, protecting the profits of the supplier. Nice one! That’s one ‘captured’ Regulator.

And guess who funded the existing reservoirs, filtering and cleaning equipments, testing facilities, pipeworks, etc., etc. Ah! Yes! Those ubiquitous citizens again. What men! What women!

I thought I might read the Jens Weidmann speech at the Bank of Litvia conference, the subject of the thread.


It makes for depressing reading. There is no point in anybody looking to or waiting for Germany to change stance; if anything it seems as if Germany wants more of the same.

There are a few comments of Weidmann worth looking at:
“Germany is not in need of stimulus either …”
“But even if this were the case, the periphery’s share of German imports is very low, which suggests that spillovers would remain very modest – all the more as the import content of public investment is especially small. ..”
“And we should focus on shifting priorities in public expenditures. There is no need for a debt-financed fiscal stimulus, but for a structural shift of government expenditures from consumption to investment.”

In summary, Germany is at capacity and does not need fiscal stimulus. Germany does not buy much from peripheries anyway and public investment by Germany would not increase demand in the periphery. But investment is no harm, and while keeping to the principle of ‘Die schwarze null’, Germany should shift expenditure from current to capital investment (which will not leak out of Germany).

Weidmann introduces his speech with a laudatory comment on Latvia’s role in the Hanseatic League. But the Hanseatic League failed. According to wikipedia one of the reasons for its failure was “The individual cities which made up the League had also started to put self-interest before their common Hanseatic interests”

He pins his hopes on “structural reforms”, a common digital single market that “In Germany, for example, this could imply an additional 427,000 jobs over the period 2015 to 2020”, and getting the yanks to buy more. (the EU/US trade deal).

And he is no slouch when it comes to rewriting the first draft of history. Referring to the proposed expansion of the ECB balance sheet / purchase of asset backed securities etc he says:
“In the end, this could amount to a transfer of risks from banks to the taxpayer. And this would run counter to everything we have strived to achieve in banking regulation over the last years.”

Which taxpers were being saved? Certainly not Irish taxpayers.

One final point made by Weidmann should sent shivers down the spine of bondholders and governments alike. He wants to remove the zero risk rating of sovereign bonds on bank balance sheets.
Such a move would destroy both the banks and the sovereign of any weaker State.
It would, like an expert marksman, kill two birds with one stone each time a shot was fired. Perhaps that the objective.
Perhaps Germany is intent on keeping Europe in a state of permanent disarray, much as Putin seems to want to keep the Russian near-abroad in a state of permanent upheaval.


You lost me there! The entire developed world (Northern Ireland included) has accepted the truth of what I have just described and has acted accordingly (for well over a century in many cases).

Any debate on Irish Water is just plain silly unless it is split between two principles (i) acceptance that water – and potable water in particular – is a scarce resource and must be paid for and (ii) adopting the best method of achieving this payment in terms of efficiency and social justice.

Only lip service is paid to the first in Ireland (Republic of). It is hardly a surprise that a total hames has been made of the second.


See also:


There is a constituency in the markets which believes that the ECB is just a slightly slower moving version of the FED, and that QE to infinity is scheduled to begin shortly. Every rumour, such as today’s is seen as part of the countdown to that inevitability. There are very, very large speculative short positions in the Euro, partly based on that belief.

Of course the CB will never sell the QE assets back to the private sector. That should not even be contemplated. What should be contemplated is terming to about a huge chunk of the excess sovereign and personal debt into a 100 year bond at 1% held on the ECB balance sheet. Then we can discuss a proper fiscal compact. No deficits ever again – none of this true the cycle BS. And proper mortgage origination as well in the old fashioned way. The CB rules are not a bad place to start.

Water has to be paid for everywhere. The question is whether it is better policy to pay through general taxation or at higher cost through a utility. In Ireland’s case, the raw unprocessed material is not scarce enough to be treated as a scarce resource. As the marginal cost of delivering it to most households is close to zero, the question as to how it should optimally be charged is about how best to finance the very expensive infrastructure. It is simply daft to put in place an elaborate expensive system to charge households for this, when it can be done at much lower cost through general taxation.

It is a scandal that the ECB and other members of the troika forced the Irish government into the economically irrational and politically toxic policy choices it has made on charging for water. This is a case where, unless the Government caves in, the opposition parties should be able to destroy them for implementing a policy that is not only deeply unpopular, but also deeply stupid.


“In summary, Germany is at capacity and does not need fiscal stimulus.”

Demographically Germany is on a shaky scraw.

And Weidmann does have a pragmatic aspect even if he believes in economic fairies the rest of the time

“Jens Weidmann, the president of the Bundesbank and the ECB governing council’s arch hawk, said he could support the purchase of government debt by the central bank under certain conditions should the bloc’s fledgling recovery falter”.


The problem with your thesis is that it does not respond to the need to treat water as a scarce resource. If it is paid for through general taxation there is no restriction on use, or wastage, and therefore no incentive to treat it as such. You also overlook the fact that water used for industrial purposes, including farming, is already metered and paid for on that basis.

The rest of the developed may well be wrong, of course!


I missed this bit in your exposition.

“In Ireland’s case, the raw unprocessed material is not scarce enough to be treated as a scarce resource.”

Do you have the data to back up this claim?

I’m not ignoring anything. I am specifically talking about household use, not industrial, commercial or agricultural.

For households, there is virtually no benefit to treating water as a scarce resource in the Irish context. You can keep saying it should be treated as scarce as often as you like, but that does not make it true or logical. There’s no need to theorise about what will happen if household water is paid for through general taxation because we can observe this empirically. We know, based on empirical observation, that there’s enough water to go around at current population levels. We also know that the system will not cost significantly less to run if we cut consumption. On top of this, we know that the effective supply is rising as leaks are fixed, so there is a good prospect that we will not need to add new sources to, for example, Dublin even as population rises.

Every household in this country pays in the region of €560.00 for water already through direct and indirect taxation. So no its not free and just because others pay a third party to supply them water which they already own does not make it the right thing too do. Then you have what is really happening in Ireland, the government are taking an Irish national resource and turning it into an asset that under EU law will have to be privatised. I and most right thinking people do not think this is right. Most people realise that when this comes to pass the cost of water will rise and rise. In the UK the cost has doubled in 10 years and here in Ireland it will do that and then some more. We are already starting out at one of the highest prices in Europe and like gas and electricity it will lead to just more rip off Ireland.

Also, we know that a large amount of supply for the Dublin region can easily be added at a capital cost of about €450m (Shannon scheme) if it turns out to be necessary. That’s roughly equivalent to the cost of single year’s regular capital investment in water infrastructure at the current rate, so it’s not something that should dictate the shape of policy.

This table from the World Bank (link below) indicates that Ireland has a significantly higher volume of renewable water per capita than most of Europe

It would seem to bear out the proposition that the fundamental water supply issue we face is not a lack of the basic resource but rather a lack of infrastructure

In many places even in the developed world (parts of California come to mind), there is an absolute need to restrict consumption because depletion of aquifers that supply the water is occurring faster than replenishment. Fortunately not a concern in Ireland


Even to argue that we should contribute to solving a worldwide problem doesn’t hold water, excuse the pun. Unlike global warming, where every little reduction in carbon emissions contributes to a global effort, in the case of water, since we can’t practically export our surplus to areas in deficit, it doesn’t achieve anything for us to economise our local consumption in the hope of helping water deprived regions

@ JR: I read it. Its dreadful tripe – except the bits about Germany. No doubts there!

Did you ‘catch’ his fascist comments about a ‘single digital market’ involving EU and USA. Fan of Dr Josef there? Maybe, he wants to pull a stroke along the lines of the Trans-Pacific Partnership (TPP) Intellectual Property Rights Chapter.

He knows what he wants. He has the power and the organization to do it. If he’s not stopped, there will be trouble.

Re this potable water lark: its in short supply – seriously! And shrinking. We need to be very careful with our supplies.


Nicely done on disecting the poor economic logic (never mind social logic) of domestic water charges. It is thick headed neoliberal orthodoxy dressed up unconvincingly as environmdntal awareness.

The effect of the Troika’s enthusiasm for consumption charges (and freeing up taxation for financial sector debt repayment to the Deutsche bloc) will be hundreds of millions wasted on water meters and an elaborate and intrusive billing regime to artificially allocate the cost of the water network. These resources will all be wasted in the name of meeting arbitrary and foolish EU fiscal targets (and preparing for privitization).

A very EU policy indeed.

It is difficult to understand why the economics of commercializing water provision did not a few OPs here.

1. The Irish Water fiasco reveals the limits of Enda Kenny’s management skills and level of interest he has in the detail of policy making.

Memories of the launch of the HSE and the reaction to bin charges would have alerted a more engaged political leader to the risks.

2. The people running Irish Water come from a system of little public transparency.

So why bother give the public access to financial information in a user-friendly manner on its website?

There was a public consultation that ended on Sept 1 but there was no data on the budgeted cost of the Irish service and related comparisons with other countries and UK regions; Northern Ireland, Scotland etc.

3. Replacing 34 water authorities with one organisation should be an improvement both in relation to investment, transparency and accountability.

“should be” 😕

4. In 2011 Eurostat, the EU’s statistics agency, said that in terms of water abstractions per inhabitant, EU Member States had annual rates of freshwater abstraction between 30 m³ (cubic metres) and 150 m³ – see Figure 3. The extremes of freshwater abstraction reflect specific conditions: for example, in Ireland (141 m³ per inhabitant), water was not directly charged.


5. Remember Galway in 2007 and in recent months some 23,000 customers have been on Boil Water Notices due to potential contamination of supply.

6. Irish Water says there is just 2% spare capacity (headroom) to supply water to the Greater Dublin Area.

7. Increasing weather extremes mean that avoiding water shortages during periods of drought will require more reservoir capacity.

Paul r
Not every household pays 560 euro towards water through general taxation. This bill is carried by the top 20% of households that pay direct taxes in excess of transfers…, in the main. They also pay for most of the other public services.
If the lefties want to introduce a Nordic model here it involve steep tax raises on the bottom half of the income spectrum…good luck with trying to sell that model to the can’t pay/won’t pay.

A further point to add is that the evidence on water metering from other countries is more nuanced than one might expect from the way it is presented by its Irish proponents. For example, in the UK, after the first bloom of enthusiasm for installing meters everywhere, water companies realised that for large swathes of the country they did not make economic and water management sense, so they stopped incentivising or insisting on installation for many of the homes they supplied. Even now, fewer than half of all households are metered. There is currently a drive to get more households to take meters, but it is focused mainly on parts of the country where there is a clear-cut shortage of water, especially the south-east and south.

Any possibility we could stick with the topic of the thread – that is, the nature of political and economic responses to the latest in the series of economic ‘downturns’ – like, our Rate-of-Growth hegemonic economic paradigm is (apparently) stagnating. Why? And are we addressing the causes, or perhaps the symptoms only. And what might be the political options available to deal with a stagnating (rate-of-growth <3%) economy?

Water is not uninteresting, but some other time?


“For households, there is virtually no benefit to treating water as a scarce resource in the Irish context. ”

What kind of water are you talking about; that falling from the sky or in the bird bath? What is at issue is treated water whether coming from the tap or shower or ultimately flushed down the toilet to a publicly owned treatment works. The argument that this is already being paid for on a fair basis through general taxation is poppycock. It would be equally logical, according to this approach, to have the supply of electricity and gas paid for from general taxation.

The current system is an open invitation to private personal extravagant use and wastage and through un-repaired leaks because of the lack of the necessary investment which, in turn, is due to the lack of a funding system that allows such investment to be raised.

An inept government and administration have made a mess of moving to a system of payment on the basis of consumption which is practically universal. How this is to be corrected can be discussed. But calling the entire approach into question defies all logic. It is just as well that the government cannot acquiesce.

“Some other time” would be fine if the interests of the excellent economists posting here stretched to water. That said, one final factoid and I’ll let up.

In 2010, 562 domestic properties out of almost 2.5 million in Scotland – a country arguably comparable to Ireland in its water endowment – had water meters.

@ BWS et al

The title of the thread is “Have we learnt anything from the crisis?”. One of the lessons, if the question is to be answered honestly, must be that government debt has to be brought down to manageable proportions. How the cost of water is dealt with in the public accounts is directly relevant to this. If the approach suggested by some above was followed, it would leave an immediate gap of some €800 million.

The issue is “here” and not “there”.

As the commenter on behalf of the interest of the ECB is being provocative, I’ll stretch to one last comment. Gas and electricity have to be charged by consumption mainly because the cost to the utility varies more or less directly with consumption, but also because the resources are scarce. Neither of those is true for water in Ireland. I’m not going to say any more on this thread, but if DOCM keeps up with her/his off-the-shelf speaking points, I would encourage anyone trying to imagine how I might respond to re-read my earlier comments.

BeeCeeTee out.


The Scottish model could well have worked in Ireland if (i) we had a properly funded system of local government (ii) a willingness on the part of the electorate to relate the cost of local services to local taxation and (iii) a government which could manage the public finances without ending up in the bind of having to keep the cost of supplying water “off balance sheet” to quote the MOF.

The party responsible for the abolition of domestic rates is now adopting the position that there should be no need for anyone to pay, at least not for the moment. Now, that’s what I call chutzpah!.


One of the key aspects of the stagnation process is low to zero salary increases as capital beats labour to a pulp. Meanwhile anyone who doesn’t like it can look at Kim Kardashian’s birthday pictures.

Anyway, I wonder what the long term implications of zero salary increases will be for

a demand
b asset values
c debt dynamics
d popular support for the system as is

re debt dynamics

Ireland’s debt ratio is projected by the Department of Finance to end 2014 at 110.6% . The average interest rate on the debt is now well below 4% and nominal GDP is forecast to grow by around 5% over the next few years so that configuration would itself reduce the ratio by around 1.5 percentage points a year. In addition, the forecast shows Ireland running a large primary Budget surplus which rises to 4% of GDP by 2018 by which time the debt ratio is at 95%.
Few if any countries have succeeded in running very large primary surpluses over a long period, given the electoral cycle, and that aside, growth is clearly the key. As I have noted before I am still puzzled by bond yields in Europe on that basis; very low long term yields in Germany implies expectations of deflation/secular stagnation but that would play havoc with the debt dynamics of many high debt countries. Implicitly, as some have pointed out, the market appears to believe the ECB will but a lot of debt and tear up the bonds.Otherwise merely buying it does nothing for the debt burden

@ Dan

John Authers has a video called Panic Over which I viewed here


Vix down to 16 from 31 vs last week
Everyone expecting more goodies from CBs in terms of easier monetary policy
Topline revenue for S&P looks good
Market expectation for inflation looks like deflation. Every time this has dropped Fed has pumped out easy money
Always possible there will be a surprise on inflation in the other direction

The system is still in crisis with potential big risk build ups and I think those DoF projections have to be taken with a pinch of salt.

I love the “water is free argument”. Rain water falls from the sky and we can drink it & use it to wash dishes. Great. What about purification, transmission, maintenance of the network and disposal/recycling of the waste water. It seems to me that there are variable costs and fixed costs in there that need to be paid for. I do not see free there!

As to the “we pay already through general taxation”. To me that is a porkie. A minority pay for their own water and then other peoples water. Lots of people pay between zero and not very much for their water and a great deal of these are far from destitute.

@ Seafóid: re your rate-of-growth Q:

My pontifical opinion, based on the nature of the Irish economy – which is 50% – 60% domestic consumption and taking into consideration;

(a) our extraordinary public debt,
(b) our extraordinary housing debts and negative equity,
(c) non-financial commercial debt,
(d) private non-secured debts,
(e) wage and salary expectations (low) … would be:-

10% compounding, per annum, for 10 years in a row, with NO ADDITIONAL BORROWING for day-to-day expenditures!

I would also like to point out (its too long to explain now) the issues of …

(a) fiat currency and credit creation,
(b) prices of foods and energy.

I mention these (in passing) only because there appears to be little or no attempt to clearly separate the two: ie. amount of currency being emitted versus the actual ticket prices of necessaries. They are humped together in a confusing mess. Very un-economic.

Look, this list could go on, and on. And yes, I would like to see more discussion of all of these matter son this site.

What concerns me is, the more I experience some of our Great Persons, is how poorly and ill-informed they are, economically and politically. As in; they do not seem to have read, or even have any interest in, the key scholarly works which detail the historical development of Monopoly Capitalism since – say 1800 or even 1859 (the beginning of the oil era) where periodic economic stagnations are a guaranteed, built-in, feature. This current ‘crash’ is just the latest, and perhaps the greatest, we have experienced to date. And worryingly, there may be an even worse one to come (when we experience oil supply and cost shocks).

What IS different now, is the sheer global scale of the thing. Its a global, financial Hydra.

Zero wages and salary increases (the medians, of the 1st (lowest) -> 7th deciles) – if prolongued, would be a political nightmare – of Frankenstein proportions. Our politicians do not have their heads-in-sand. Nor are they fools. They just have zero interest in attempting to engage in any meaningful intellectual or practical manner with the nature and extent of this crisis.


ps: Glad to see this thread back on track. Its very, very important.

Martin Wolf makes pertinent points on labour/ welfare reforms and demand.

On Tuesday public finance data from the UK showed that income tax receipts were stagnant from April to Sept (there was an increase in the tax credit during this period putting some outside the tax) despite a big rise in jobs.

However, the key statistic is that demand in the EMU was down 5% from Q1 2008 to Q2 2014.

Q1 2008 was the tail-end of a big credit boom in many economies, boosted by significant cross-border flows and surging demand in emerging economies led by China.

The link between GDP and income broke down in the US in the late 1990s and the question for the Eurozone is what is the likely sustainable growth rate in a period of growth that cannot replicate in the medium term the pattern to 2008.

Irish Times link:


“And Weidmann does have a pragmatic aspect even if he believes in economic fairies the rest of the time”

Perhaps he does but the FT quote re Weidmann is from last March.

““Jens Weidmann, the president of the Bundesbank and the ECB governing council’s arch hawk, said he could support the purchase of government debt by the central bank under certain conditions should the bloc’s fledgling recovery falter”.”

The EZ has not done so well since then. Weidmann would hardly get the ‘Canary in the coalmine’ award for 2014, and he has definitely not been listed for the preventative maintenance engineer award.

Both income and wealth have become concentrated to such an extent that consumer demand has been pummelled, perhaps for years to come. I am not certain that ABS purchases will help, if anything it will just shore up the wealth of the haves. But it might keep the show on the road for a while more.
Telling people to tighten their belts, so that the better off can accumulate more somehow lacks the Churchill effect in terms of rallying power, but that does not prevent the neo-liberals from trying it.


Tim Harford had a great article in the FT in August about the problem of too much fiat money sloshing around


Too many people trying to save and not enough wanting to borrow so rates stay on the floor.

Finance is too big now compared to the real economy.
What is logical at an individual company level appears to be insane systemwide.

Another reason not to believe those DoF projections

@ JR

I think absent a change of direction a very likely outcome would be the collapse of neoliberalism.

A second crash will be the end for a lot of banks and finance houses. There is no safety net, there are not enough safe balance sheets for mergers, there is very little public support for an industry that “really doesn’t give a f*ck” . This is a global issue, not just a Euro thing BTW.
Weidmann should cop on while there is still time.

Finance proceeds with the blessing of the people.It’s their money.


@ seafóid: Thanks for those links. Interesting!

Learning lessons? Behavioural psychology will tell you that’s a mighty tall order – for adults. Usually only occurs after some significant epiphany. Less likely from ‘mature reflection’. We have the former in the on-going financial crisis – which is at base, a classical stagnation event, characteristic of Monopoly Capitalism.

These stagnation events were predicted. And they happened – maybe not on-time, but they happened. However, this one is definitely different: its a Financialized economy, not a Productive economy that has stagnated. If it were the former, then fiscal and monetary stimuli might eventually get the economy moving (1933 -1936), but no guarantees: 1937-38 was a nightmare.

The stagnation of a Financialized economy cannot be solved with fiscal and monetary stimuli, since it is the overuse of both of these that were at the root cause of the stagnation! But this nasty truth is neither recognized, nor understood, so the Great Men keep trying, and trying, and trying but end up failing, and failing and failing.

The unpleasant solution: Jubilee most debts. This lifts the downward pressure on wages and salaries (which are inevitable impacted by a financial stagnation). Effectively, you re-set your economy – but about 50 years back! That’s a political disaster, which is why it may never be tried.

We will just have to carry on as best we can. I see no other way at the moment. But the situation is like Dry Rot. Everything seems OK, until it isn’t!


Some great stuff appears in comments after FT articles these days


“There is plenty of money about, it is just used to buy the same piles of bricks for ever greater sums and for companies to buy their own shares for more.There is a need to think away from the aggregates.”

Who needs reforms?When previous stimulus fails, double the stimulus and fail again.Repeat until the whole system blows up.”

This is a big one when you think of what people like Roubini and Wolf were writing in 2009.

“If we are going to debate ‘magical beliefs’ here are a few I’d like included on the list: you can print wealth, you can print jobs, you can spend your way out of debt, debt doesn’t matter.I suspect that in the not too distant future we will look back at the ‘J’ curve of debt that has erupted since the seventies, debt that one way or another we are all complicit with, and ask ourselves how such a bunch of ‘numpties’ managed to dress themselves.”

“The balance sheet recession is now global in nature and scope.The most likely scenario is that growth will remain low for a very long time, that is, until the reduction in private debt is completed.”

The system has met its own limitations, I think. And then climate change on top.

I think the biggest problem with more stimulus is that it doesn’t do anything to reduce the risk in the system. And that’s why Solvency 2 and Basel 3 are useless.

from Learning to Un-Learning – the latter too often ignored ….


…. the European dream has continued its gradual metamorphosis into a dystopian nightmare — one whose ultimate goal is to slowly, softly snuff out all lingering remnants of Europe’s centuries-old democratic traditions.

[…] As the Daily Telegraphcolumnist Peter Oborne noted in a fascinating review of the late Peter Mair’s book Ruling the Void: The Hollowing of Western Democracy, anti-EU parties are on the rise throughout Europe:

[…] As the Transnational Institute notes in its working paper “Privatising Europe: Using the Crisis to Entrench Neoliberalism“, the dark irony is that “an economic crisis that many proclaimed as the ‘death of neoliberalism’ has instead been used to entrench neoliberalism.”

[…] Since the EU bailout frenzy began the prime ministers of Ireland, Portugal and Spain are now little more than branch managers for the European Central Bank and Goldman Sachs.

[…] Of course none of this would be possible if it weren’t for the abject failure of modern nation-state democracy — not only in Europe, but around the globe. As Mair wrote in the first paragraph of his book, although the political parties themselves remain, “they have become so disconnected from the wider society, and pursue a form of competition that is so lacking in meaning, that they no longer seem capable of sustaining democracy in its present form.”


Is it the real world or just a pantomine of failed actors arguing over the bits of the same failed script. The audience has switched off. Soon they will start throwing eggs. Other than war for the past 6 years could they have managed to do any worse. But like old Genaral Haig, they managed to look after themselves very well indeed.

Does Enda earn as much as a GS branch manager? I heard the average GS pay was about $350000. Enda must be on the GS level- one lift operator scale.

@ seafóid + DO’D Thanks for those laughs. Finishes the day nicely! Hot toddy and beddy-byes!!!

We’ll be back at this. At the very least, some folk around here seem to know what is going on: or as my electrician colleague would have said- “They’re grounding straps ARE connected to ground!”


The safety net is the cancellation of debt. Thereafter rentiers will have to earn their bread by the sweat of their brow. Its called structural reforms! I wonder how well those structural reforms will be received.

@ JR

The real world can only be found by reference to reports on what is going on in it (and, quite often, direct observation with regard to national developments).

Fascinating as blog discussions are on whatever takes the fancy of those participating in them, what the masses, including yours truly, will be reading in the morning is these reports.

@ JR

Deflation is rentier friendly.
But we might end up with inflation.
They can’t stop going too far.
The next few years are going to be very interesting.
Last Wednesday was an amuse bouche.


It is post-dated: our X-AG matrixsQuid EZ fixer & X-Taoiseach captured by the IFSC – true blues both – will smooth the pathways ….


‘… reduce government debt ….’

Wonderful idea!

You might give the nod to your Pals in Brussels and the ECB to buy up that 50% GNP of odious financial system debt foisted on the Irish Citizenry!

‘… the masses …’ maternalistically touching … let them eat ‘reports’.

finally – bit off thread re an amendment to the Constitution on Privatization of H20

‘A little-known US investment fund called Waterfund LLC recently announced that it had signed an agreement with IBM (NYSE: IBM) to develop a Water Cost Index (WCI). What this effectively means is that the world is about to witness the financialisation of the most valuable commodity on the planet: water.

In the words of Scott Rickards, the President & CEO of Waterfund (emphasis added):

“By calculating the unsubsidized cost of freshwater production using IBM’s Big Data expertise, Waterfund can offer the first flexibly-tailored financial tools to investors in water infrastructure. The Rickards Real Cost Water Index™ highlights the energy costs, interest rate risk, and capital expenditures required to build and maintain large-scale water treatment and delivery networks.”

The move is just the latest chapter in the financial sector’s ongoing takeover of the global commodity markets.


Meanwhile over in the “well run” UK (copyright mcadoo consulting) Tesco have just told the city that they can’t give any profit guidance for this year. Prices are falling as the peasants and middle classes they sell to aren’t getting any pay rises. Another structural problem that the one percenters in the west end of london are unable to shift despite their trojan work spending in Bond St pour encourager les autres.

In Socialist France where they are administering a continue fiscal stimulus financed by cheap OPM the PMI is nose diving. Clearly more fiscal and monetary coal needs to be loaded on.

I would rather live in the well run cultural powerhouse that is the UK than spend a day in the beaten down broken society that is run by M. Rice Pudding.

As a respectable member of the middle class Tull you’d be better off in France. Just for wine and weather.
I think the UK is not much better off than France TBH. A house price boom doesn’t do much for sustainable growth.

That Tesco thing is a shocker.

Tesco is very Zeitgeisty really

Financial engineering, debt to paper over earnings cracks, EPS fetish, took its eye off the ball


“Cash flow plunged by £700m to £1bn in the first half, reflecting the 41% crash in operating profits. Net debt rose by £500m year-on-year to £7.5bn. And the deficit in the pension fund has risen from £2.6bn to £3.4bn since February.”

Who signed off the accounts? What is the point of auditors again ?

Focusing on EPS is lethal in a stagnant economy

Janan Ganesh, the FT’s perceptive political commentator, says British miserablism could be a serious threat to the UK economy and the country’s politics:


“We are still learning,” Patrick Honohan said last night in his tribute to John FitzGerald of the ESRI.

There will likely be some enduring lessons from the euro crisis and while it’s worth a bet to have QE and some stimulus spending, and prayer for business investment, the honest answer to a question on it’s likely impact is nobody knows.

Have we learned anything from the crisis?

Good question.

I recall, over the last few years on this blog, people being outraged that banks were allowed to lend to those who subsequently got into negative equity – “There should have been limits! Where was the regulation?! People should have been protected from the temptation to borrow so much. Why weren’t people protected from the themselves and the (spit) banks by the authorities… etc.

Less than 3 weeks ago the central bank broke cover and announced it was going to apply Loan to Value limits and Loan to Income limits. Given the track record of allowing the Buy to Let and to a lesser extent the PPR mortgage market to become defacto unsecured, it was amazing. I was a bit cynical about this getting past the politicos – as I observed, somewhat ironically, on Philip’s thread about “central banking boundaries”:

“Central Banking boundaries presumably should work in both directions.

CBI today announced LTI and LTV policy. Is there a possibility an Irish politician might suggest offering “A GOVERNMENT GUARANTEE” to the banks, to make up any deposit shortfall, on behalf of certain electorally active potential purchasers?

How about ring-fencing some tax revenue – say VAT on new houses – to label and, temporarily you understand, park as “government deposit contribution”…

Am I being too cynical?”


Fast forward to today:

“First-time buyers will be able to get onto the property ladder as the Taoiseach HAS BYPASSED THE CENTRAL BANK’s strict home-loan rules.

Mortgage deposits of 10pc will be available for ‘young, credit-worthy families’, Taoiseach Enda Kenny said as he made the public intervention in the developing row over the Central Bank’s plans to cap mortgage lending at 20pc.

The Government is planning to get around the Central Bank proposals through a new insurance scheme, the Irish Independent reveal today.

The scheme will be based on similar set-ups in Canada, Finland and the UK.

The plans, which have yet to be completed, detail how a portion of any new home loan to first-time buyers WILL BE GUARANTEED BY THE STATE.”


So, if anyone tells you “You couldn’t make this stuff up” – they are wrong, you can.

On the same subject, anyone remember the Nyberg Report on banking? There is a thread on this blog from April 2011 with over 200 replies about the report. Here is a pithy one from PH (no, not that one!) that resonates today:


…”and (4) the Irish penchant for not seeing a rule without considering ways to bend it or break it:”

[from the Nyberg Report]

“5.5.9. Fourthly, adhering to either formal or traditional, often voluntary, constraints and limits on banking and finance, does not seem to have been greatly valued in Ireland during the Period.”…

Obviously people will make sure that sort of thing doesn’t occur again, Ted.

Although it distresses me greatly to say it, not being an FG supporter, this is a very good move by the government (to act as guarantor for 10pc deposits). Full credit. It will probably be very popular with the electorate too. I’d like them to go further and make it 5 per cent. Ideally, it needs to be combined with measures to boost housing output and to curtail nimbyism to keep prices under control. I read in the Irish Times, although I can’t verify it, that other countries like the UK and Denmark have similar schemes. If this is so, it makes unfeasiblycharming’s racist comments even more absurd.

I see the usual suspects are up in arms against it.


Let’s face it. Nearly all left-wing politicians and economists hate the concept of a property-owning democracy. They much prefer people to rent, preferably from the state, thereby creating a dependent class that is voting fodder for left-wing parties.

We should be encouraging as many people as possible to own their homes. If someone, for ideological or other reason doesn’t want to and prefers to pay rent, that is fine. I have no problem with that. They should not be penalised for it. But, if a young couple want to own their home, and haven’t got a 20 per cent deposit to hand, it is perfectly proper that the government assist them. They are not getting welfare benefit or sponging from the taxpayer, but simply having the government act as guarantor.

When I bought my first house back in the 1980s, I got a 95 per cent mortgage from Halifax (this was in the UK). In addition, I borrowed 2k from Nat West Bank to pay for the deposit on the house (I told Nat West the 2k was for a car). But, I never had the slightest problem repaying it, even though interest rates were 13-14 per cent. It helped that I didn’t drink, smoke, take drugs, gamble, have a number of ex-wives, or leave a trail of women bearing my child, which seems to be increasingly the norm in modern liberal societies, and which obviously makes repaying the mortgage more difficult. In the first couple of years, the repayments took 40-50 per cent of my annual disposable income. But, thereafter this percentage declined rapidly. In the final decade of the mortgage the repayments only took 5-8 per cent of my annual disposable income. And, having paid off the mortgage completely back in 2009/2010, assuming I live to be 100, I’ll have 40 years without paying a penny towards accommodation costs. I really feel for those that are having to fork out a fortune to some shyster landlord, knowing the payments will go up every year and that they’ll still be paying them when they are 100.

Eurostat publishes figures for what it calls the ‘Housing Cost Overburden Rate’. That is defined as the percentage of the population whose housing costs take up more than 40 per cent of their disposable income. These are the figures for selected countries it gives for 2012.

Cyprus 3.3%
Finland 4.4%
Ireland 6.6%
U. Kingdom 7.3%
Belgium 11.0%
Sweden 12.1%
Netherlands 14.4%
Germany 16.6%
Denmark 18.2%

EU28 11.2%

So, Ireland’s figure is very low, less than half that of those EU countries where renting is the norm.

unfeasible: The Irish residential property ‘market’ is well and truly shagged. The only folk who do not understand this, are those who deliberately choose not to.

John, you really and truly are full of …… (fill in gap). You display an astonishingly naive, mono-rail view, of the Irish residential property sector. Its deeply dysfunctional and will remain so for a considerable time. The knock-on effect of the private residential sector will also be to increase its social problems. But sure, who the hell cares that home ownership (or home renting) has been adsorbed onto the Financial Economy? Ah! Yes. “Those, usual suspects.”

However, on one thing you are 101% correct – the new mortgage deposit guarantee scam (as in Political Scam). Its not brilliant, nor novel – just a plain political scam. And you know what John – I and the rest of the Irish Sheeple will have to pay for this scam. Paying for the banks to gamble – again! “Now how will that work out for us!”

John, by any chance, you’re not one of those wanker bankers in drag? Now would you? You sure sound like one!

“Although it distresses me greatly to say it, not being an FG supporter, this is a very good move by the government (to act as guarantor for 10pc deposits).”

The new mooted FTB deposit guarantee is of course a bank guarantee, the FTB gets nothing except a bigger loan to put around his or her neck.
It is not only a cop-out, it is a complete abdication of responsibility by the government on housing policy. In reality it is a full-on cheer for higher house prices and landlord rent gouging.


Some of the statistical drivel you come up with is burdensome.
The true housing overburden in Ireland is borne out in the mortgage arrears stats for Owner Occupiers. [BTLs are a simply a protected investor species] See how they compare with EU norms.

You are correct in promoting home ownership as it makes for a fare more stable society, but you seem to have completely lost touch with the reality of Dublin house prices.

Try this terraced house in Terenure for instance.
Advertised for €750,000 just a few weeks ago, now ‘down’ to €695,000. Any builder will that house, with good profit, for about 225,000. implying a site cost, [aka a rentier/ gouging.mal administration/corruption charge] of >€500,000.
If the deposit guarantee comes in that will put probably it back up to €750000.
The only relevant measure of housing cost, as far as I am concerned, is average wage to house price.
Ireland (including Dublin) should aim to have an average house price to average income of no more that 5 times.
Any thing else is just CIF / Tom Parlon/ PRTB Board (landlord quango), TD (majority of whom are landlords) PR speak.

The new landlord friendly report (we want tax breaks for landlords) is not on their website.
Take a look at the board of the PRTB.-Private Residential Tenancies Board.
I wonder how many are tenants? Just asking.
http://www.prtb.ie/docs/default-source/annual-reports/annual-report-and-accounts-2012-tuarasc%C3%A1il-bhliant%C3%BAil-agus-cuntais-2012.pdf?sfvrsn=0 [Page 10]

Another 10 million quango. Get rid of it, and use the money to build some houses.


The Financialization of Life

Posted: 23 Oct 2014 12:09 AM PDT

Yves here. One of the efforts the Naked Capitalism community has been engaged in is trying to understand and map our emerging political and economic order. Over the last four decades, massive changes have taken place in social values, in job security, in the importance of communities relative to other networks, like professional associations, and in the role of the state. Economists, social scientists, and laypeople have used various frameworks for describing this period. Understanding the driving process is important not merely for the purposes of description, but also for analysis, since a major question remains open: is this a last gasp of large-scale industrial capitalism, or is this the starting phase of a new economic order? We’ve tended to see this period as a self-limiting finance-led counter-revolution against the New Deal, but that may prove to be too optimistic a reading. This Real News Network interview with Costas Lapavitsas, a professor in economics at the University of London School of Oriental and African Studies, takes a different perspective. Lapavitsas contends that financialization itself constitutes a new form of capitalism, which is supported by neoliberal ideology. Independent of whether you fully agree with Lapavitsas’ framing, this talk gives a good overview of the major economic and political changes since 1970. His summary would be useful for those who could use a historical perspective on these shifts, or want a high-level understanding of the restructuring of modern economies without having to get too deep into the weeds. But even though this interview is designed to go down easily, it offers a lot of grist for thought.


from the above:

‘So non-financials have financialized, banks have changed, and households have been drawn into the financial system. These changes together have basically transformed the economy, transformed the foundations of the economy. This is a new type of capitalism.

At the same time, we’ve had changes in institutions and in ideology. These you would have heard about and you would be familiar with. The changes in institutions are very clear. We’ve had wave after wave of deregulation. Labor market has become more deregulated, and financial markets have become more deregulated.

And in addition to deregulation what we’ve had is the rise of the ideology of neoliberalism. Deregulation goes hand in hand with neoliberalism, the idea that the market is good, the state is bad. In this country, this is a very powerfully held idea, more powerfully here than anywhere else. Actually, it’s extraordinary how powerful this perception is and how a lot of social issues are understood in this way.

The point I want to make you is that neoliberalism is very, very powerful and sustains financialization, but neoliberalism is not really about asserting the merits of the market over the state. Actually, it’s more complex than that and it’s more crafty than that, because neoliberals are not the enemies of the state. Neoliberals want to take over the state. The actual content of neoliberal ideology is to take over the state and to use the state to protect the market, to make the market bigger, to effect market-favoring, market-conducive changes. So this has also been going on the last three to four decades. And that to me is the core of financialization.’


Be careful branding people racists – at least careful enough to notice where the quote you are attempting to take umbrage at originated.

@Joseph Ryan

You are obsessed with Dublin. it has only 17 per cent of the population of Ireland (32 counties), although probably 99 per cent of the posters on this site. Look at the wider picture.

You can buy this extremely attractive 4-bedroom house in Sligo for 129k euros, which in my N. Ireland money is only 100k sterling, which frankly is absurdly cheap. If you can find a house of similar price and similar quality anywhere in Western Europe, please post a link.


On the same site you can find modern apartments on offer for 70k euros (this site only allows one link per post, I think, so I can’t give another link to it). No wonder all the Belfast SF leaders have second homes across the border. At current prices, one very modest robbery in a bookies office in Belfast circa 1992, topped up with the interest accrueing since, would easily provide the wherewithal for a top-class house in any of the border counties and beyond.

So, housing affordability is not currently a problem in Ireland outside Dublin. If Dublin has a problem, let the Central Bank apply its restrictions to Dublin only. There is no reason why people outside Dublin should be made to suffer since there is no affordability problem outside Dublin. The Housing Cost Overburden Rate is calculated for Ireland as a whole, and the Eurostat figures show it is extremely low.

I’m all for examining why prices in Dublin are much higher than outside Dublin. I can see that people like ThatsLegal who have the misfortune to be stuck in Dublin are suffering. Its the same in the UK, where London prices are much higher than outside London. Offhand, I can think of two reasons:

(a) For many years Dublin local government has been far more left-wing, nimbyist and wacko-environmentalist than in rural counties. Currently, local government in Dublin is far to the left of North Korea. Hostility to builders and developers is their hallmark and such people always produce shortages, of everything. I’m starting to believe that the reason the most affluent areas in Dublin keep voting socialist is that they know the socialists are a sure guarantee of a housing shortage and consequent high prices.

(b) Over-concentration of economic activity in Dublin. One of the best things the 1996-2011 FF government did was decentralisation. Lots of government offices got moved to rural Ireland. Between 1996 and 2011, for the first time population growth in counties like Donegal, Monaghan, Cavan, Sligo, Galway, Mayo, Clare, Tipperary, Carlow, Kilkenny etc exceeded that of Dublin. But, they got dog’s abuse for it for the Dublin 4 media/academia elite, who have always been hostile to any economic development outside Dublin, and the FG/Lab government has stopped it.

So, if you want to level out house prices across the country, the solution is to increase new house building in Dublin, combined with relocating chunks of economic activity and population from Dublin to rural counties, not artificial and unjust restrictions on mortgage lending.


Very well. My mistake. Apologies. I read your post too quickly and though you were making the comment, rather than just quoting.


What on earth is your point? Have you never heard of “location, location, location”?

If a house is in an area distant from poles of economic activity, as in the examples you give, the price will be lower, assuming that one can get a buyer at all. This is invariably a reflection of poor regional policy. France, and to a lesser extent, the UK are glaring examples with Ireland rapidly following a similar path.

Maybe you should consider buying a house in Brittany!


more learnin!

‘The data expose a dangerous malfunction in capitalism’s engine room. Banks, mutual funds and investment firms used to ensure that citizens’ savings were transformed into technical advances, growth and new jobs. Today they organize the redistribution of social wealth from the bottom to the top. The middle class has also been negatively affected: For years, many average earners have seen their prosperity shrinking instead of growing.

Harvard economist Larry Katz rails that US society has come to resemble a deformed and unstable apartment building: The penthouse at the top is getting bigger and bigger, the lower levels are overcrowded, the middle levels are full of empty apartments and the elevator has stopped working.

‘Wider and Wider’

It’s no wonder, then, that people can no longer get much out of the system. According to polls by the Allensbach Institute, only one in five Germans believes economic conditions in Germany are “fair.” Almost 90 percent feel that the gap between rich and poor is “getting wider and wider.”

In this sense, the crisis of capitalism has turned into a crisis of democracy. Many feel that their countries are no longer being governed by parliaments and legislatures, but by bank lobbyists, which apply the logic of suicide bombers to secure their privileges: Either they are rescued or they drag the entire sector to its death.’



Describing rural Ireland as distant from economic activity is bonkers and shows great lack of knowledge. Try reading something other than the Irish Times or the scribblings of Dublin 4 economists occasionally.

number at work in Dublin in Q2 2014: 576,400

number at work in rest of Ireland in Q2 2014: 1,325,200

About 70 per cent of those at work in Ireland are outside Dublin and about 70 per cent of Ireland’s GNP is outside Dublin.

Have you ever been to Connaught/Ulster?

Location, location, location. It might surprise you to know that most people in Connaught/Ulster have cars and, because of the good roads Bertie Aherne built, you can travel to work much more quickly than in Dublin. My cousin lives in the countryside outside Ballybofey, but works in Donegal Town, a distance of 13 miles. Takes him all of 15 minutes to drive to work. How long would it take to travel 13 miles in Dublin. What is the average commute time in Dublin?

Overall, average house prices outside Dublin are about half of those in Dublin.

The very obvious point (illustrated by numerous examples in my earlier posts) is that since housing is extremely affordable outside Dublin and there is nothing that could be remotely described as a housing bubble outside Dublin, there is no justification for artificial mortgage restrictions outside Dublin.

I am not arguing for them in Dublin either, but, if people feel they are necessary in Dublin, because house prices are higher there, they can go ahead and have them, but that’s no reason to have them outside Dublin as well. So, at least as far as outside Dublin is concerned, the decision of the FG/Lab Government to circumvent the Central Bank restrictions by bringing in its own guarantee is extremely sensible and wise, and will be very popular, regardless of how much Dublin 4 economists or posters on here oppose it.

FF’s regional policy was excellent. Between 1996 and 2011 population growth in Ireland was not only very high but almost equally spread across all regions. The population of Donegal, Cavan and Monaghan rose by 30 per cent in that period, almost identical to the national average, and higher than in Dublin. This was unprecedented. Decentralisation was a key part of their regional policy. Since FG/Lab took over, there has been some slippage in regional policy, with population growth being more concentrated in Dublin. FG/Lab have abandoned the decentralisation policy and this was a big mistake. To relieve housing pressure in Dublin, they need to bring back decentralisation asap. Did you support FF’s decentralisation policy? If you didn’t, you have no right to be critical of their regional policy?

Thanks for the link to the Brittany houses. Unfortunately, I can not afford to buy any of them. The Brittany houses seem a lot more expensive than the Connaught/Ulster ones. This is a 2-bedroom for 238k euros, which seems very expensive compared with the ones I gave above.


@ DO’D + TL: Yep! Thinks always get ‘worse’ before the tipping point is reached through overreach. But I’m sure you already realize that “things getting better” is another matter entirely.

I do not expect thing to ‘improve’ – either materially or politically. But we will experience lower incomes, more part-time and contract employments to improve both our competitiveness and productivity, which will, going forward (into the past) boost residential prices and rentals further, which will lead to demands for increases in wages and salaries which will lead to increased layoffs (less employees = stagnant wages for the residuals), politicians will announce that a ‘recovery’ has recovered, the ESRI will concur and J-you-know-who will have another statistical orgasm!

Lovely little country! Our Big Men* have learned nothing – sure they’re such Big Men they know it all anyways – so what’s to learn here! Quite!

* Both, who are particularly challenged in their testicular and ovarian departments.

@ unfeasiblycharming

Whatever about the motivation, after one of the world’s worst property busts, giving a partial State guarantee of the mortgage deposit, seems bizarre.

It’s unlikely that a private insurer would take on the business.

The housing measures are ad hoc and NAMA says it wants to offload “expeditiously” its remaining €17bn portfolio even though the agency will return less than 1.6% in total after getting a 57% discount.

Irish Economy: Government’s band-aid measures reveal rising strategic deficit


“It’s no wonder, then, that people can no longer get much out of the system. According to polls by the Allensbach Institute, only one in five Germans believes economic conditions in Germany are “fair.” Almost 90 percent feel that the gap between rich and poor is “getting wider and wider.””

I think we are looking at serious capital overreach and there’s probably going to be crash that the CBs can’t fix. They didn’t fix anything in 2009. Fragile by design.

If ordinary people don’t see any benefit in putting money into DC pension schemes (and this goes for people all over the rich world) we could see serious ructions.

Anger is an energy


One of the Lydons from outside Tuam


“You are obsessed with Dublin. it has only 17 per cent of the population of Ireland (32 counties), although probably 99 per cent of the posters on this site. Look at the wider picture.”

For somebody who is clearly adept at statistics, you seem to ignore any that does not fit your argument.
From the 2011 census: (Table 4 and Table 11)

No of private households in State (2011): 1,649,000
Owned with Mortgage 583,000
Owned outright 566,000
Rented 475,000

Dublin Private households (table 11) 466,000 28.2% of State
House ownership in Urban areas 61.6% 287,000
Implies renting households Dublin at least 179,000

Right now due the exorbitant rise in rents, that is 179,000 Dublin households, at least, a large percentage of whom are just one more rent rise away from being on the street. Rent that had fallen by 8% from 2006 to 2011 and has probably risen by at least about 20% since then.
The rental increases are the equivalent of having mortgage interest rates at twice the 2007 level of 4%. Now just try to imagine what kind of screams mortgage interest rates of 8% would be causing.

Of the approx 449,000 rented properties in the State the following info is relevant:
Rented to Private Landlord 320,000. Average weekly rent €214.28
Rented to Local Authorities 129,000. Average weekly rent €71.40.

You must try to realise that people are not cardboard boxes that can relocate themselves to Cliften just for the fun of it, leaving work, schools, family and friends just to occupy houses left empty by some long departed developer, and thereby prop up a bank balance sheet or two.

As for the PRTB (Private Residential Tenancies Board) you will not find any statistical information on their site. Their sole purpose appears to be to act as a very landlord friendly arbitrator to landlords stealing deposits from tenants.
Now they have recently come out with two reports:
One on an FTB deposit guarantee, and yesterday, if they ever publish it, one that wants to give more tax breaks to landlords.

The board is stuffed with civil servants and ex managers earning a nice little sinecure for themselves.
Do they for instance have their own in house economist? Have they asked, for instance, Ronan Lyons to sit on the board. I doubt it.
They are not interested.
A landlords quango run for the benefit of a landlord packed Dail.


Look at the comments underneath Issing’s ráiméis

gchiarelli 8 minutes ago

“It seems mr Issing forgets the efforts and implicit costs Europe faced to support German reunification.
If this is the mentality probably it would be best if Germany left the Euro”


I don’t buy this notion that collectively the Germans are aware of what they are doing and that force of character will save the day.

I would point you in the direction of George Kennan

“that there is more respect to be won…by a resolute and courageous liquidation of unsound positions than by the most stubborn pursuit of extravagant or unpromising objectives.”

and Galbraith

The conventional wisdom ” gives way not so much to new ideas as to the massive onslaught of circumstances with which it cannot contend”.

@ seafóid

Blog posts are one thing, what our great leaders are deciding is another. Not very much if the relevant extract from the conclusions of their most recent meeting is any guide.

8.”To pave the way towards a strong sustainable economic recovery, Europe needs to invest in its future. Low investment today erodes tomorrow’s growth potential. The European Council supports the incoming Commission’s intention to launch an initiative mobilising 300 billion euro of additional investment from public and private sources over the period 2015-2017. We need to encourage full use of all existing and allocated EU resources. The European Council welcomed the establishment of a Task Force, led by the Commission and the European Investment Bank, with a view to identifying concrete actions to boost investment, including a pipeline of potentially viable projects of European relevance to be realised in the short and medium term. It invited the Commission and the Council, in close cooperation in particular with the EIB, to take this investment initiative forward without delay, and to report to the European Council in December. ”

This is evidently as far as Berlin is prepared to go.

The most recent economic data is good, especially from Germany. Persuading people that German economic policy is one grievous error is an uphill task!

There were 40,000 BTL mortgages in arrears at end Q2 2014.

An estimated 70% track the ECB rate which plunged from 4.25% in mid-2008 to 0.15% in Q2.

There were 23 repossessions via court order in Q2 and arrears 2 years or more were at €4.5bn.

One third of Oireachtas members are landlords including 9 ministers.


If Issing really thinks policy should be tighter than it is otherwise and that the current setting is inappropriate for Germany, there is an obvious remedy and that is for Germany to leave the EU.

so what are we to conclude from your dog whistling that a large proportion of TDs and Senators are in strategic default?

@ Tull

I have to agree with you . But they like the discount that the Euro gives German exports- they don’t want to be hamstrung like the Swiss.

Back to that comment by some Yank fund manager in the white heat of crisis in 2011- those Euro bozos will only make the right call when their backs are to the wall.


Yes. Big, Big Krash on the way in the financial system … Wall Street is running our of wars to prop up the $

@Brian Woods Snr.

It is now very difficult to lease prime development land from NAMA for growing spuds – the vulture fund competition is too much …

I’m now mowing a half mile of the long acre via grazing the pair of goats and hope to plant next spring … that extra bank of turf is proving to be very useful, as was that timber storm last spring, and I’m drawing on Mad Oul Jozie’s well for the elixir of life – the poitin stihl is simmering away and proving to be very lucrative for local bartering …. Slainte!


Issing is an adept of the matrixsQuid … nuff said.

Most lefties would prefer to see more affordable housing. I’d like to see your evidence for an anti-property owning tendency.

The fan is running and le merde is heading in the direction of the draft. Time to load up on EZ risk?
I winder will there be a new tribunal set up,to administer victors justice to the Germans who seem intent on destroying Europe. The German Supreme Court would be first up.

I’ve learned that the people running this country, the EU and the ECB aren’t particularly clever, and furthermore they refuse to learn from their mistakes.

Mary, the ‘truth’ is stranger than fiction. These chaps and lassies are both intillegent and clever. However. Organizational psychologists will tell you – from bitter experience, that such folk, once in positions of authority begin to display characteristics which a normal person would classify as ‘dumb’ – that is, they behave as if they are thick and have learned little.

Its being a member of an organisation that does it. If they want to remain a member – they have to adopt the organizational ‘knorm’! And they do want. And the more pyramidal, the larger, the more rule-bound, the more bureaucratic that orgnization – the ‘worse’ their behaviour becomes. Once removed from the organization they are observed for what they are – astute, self-serving time-servers.

Comments are closed.