Ultra posse nemo obligatur, anyone?

@DOCM

Your sneering contempt is fooling no one. These guys have put the fear into you or your employer or both. That tells me they must be doing something right.

See Michael Taft’s recent analysis, which is right on the money.

I saw that interview. Well done, Paul Mason.

Although one got the impression that the deputy Finance Minister was not entirely comfortable with the policy he was espousing.

According to AEP (Guardian blog, the Greek proposals were given to Declan Costello (EC Commission ) at midday. The blog also has what can only be described as a plea from Legarde to ease up on Greece ( at approx 5.00 pm).
The Greek cabinet meets in the morning. The Eurozone ‘phone call’ tomorrow pm.
After the Greek cabinet meeting they can either stand up and sing
‘Hymn to Liberty’ or stand up and sing ‘Deutschland Uber Alles’.

I hope Manolis Glezos does swing the argument. It will be a real irony if he does. That it finally took a 92 year old veteran of WW2 to make a stand against aggression in 2015.

@Kevin O’Rourke

Mad Oul Jozie down_the_road is impressed. As a neu fan of Brehon Law, the principle of ‘eric’ related to compensation for injustice [as in her case to the ECJ re ECB bullying] she is now looking for a copy of Justinian’s Digesto as she seeks further legal arms from Roman Law.

She has also been in touch with Fratzscher in Berlin – a German Pragmatist Political Economist a million miles from the antics of Sinn.

Moral: Greece cannot pay unsustainable debt.

@DOCM

Yes – you poor dear – democracy can be such a bitch! A threat to ur ideal elitist ordoliberal dictatorship? Your ‘political imperative’ suggests that democracy is to be simply ignored; the cultish doctrine is all.

Your guess is essentially worthless; ordoliberals do not DO empirics.

@KO’R

I don’t deny the accuracy of the graphs on p.175. The isolation of the 2008-12 period, and any conclusions drawn from it, is running the risk of being specious, however. It tells us where various economies were when the Gates of Hell opened; it tells us nothing as to how they arrived there.

“They have a few more weeks to do so. If their banks can stay open that long!”

That’s really hilarious, DOCM. Imagine you’re a bond quant and you are trading EZ bonds . What data will you use for your strategy so you don’t blow your money up in the case the EZ market has another politically induced meltdown ? Maybe some German Mr Bean videos ?

I would suggest to those advancing what Varoufakis said on the reason for the delay as a definitive statement of what happened consider the fact that what was at issue was not a grocery shopping list but a document designed to start the major task of the recovery of trust between the two sides and which, had it not proved acceptable, would have given rise to major problems this morning. The idea that there have not been intense contacts over the weekend, and dispute over the content, is IMHO not credible. Jockeying for advantage right up until the last minute was to be expected.

Of course, others are free to have a different view.

http://www.socialeurope.eu/2015/02/greek-deal

The two sides did not IMHO strike a deal on Friday. They agreed a process to allow an acceptable arrangement to be struck. Insofar as there has been movement, practically all the substantive movement has been by the Greek side, a fact that is to be welcomed as it is in the interest of the Greek people.

I must admit the term “comprador bourgeoisie” is new to me; what we are wont to call shoneens. It’s sad how so many Irish europhiles have degenerated into something similar.

“Syriza programme, post-deal, looks far more like traditional social democracy than a radical left package.” That’s Duncan Weldon’s summary on Twitter and, if it turns out to be right, then kudos to the Greeks. That’s the makings of a good start for Syriza.

The Greek letter (courtesy the Guardian blog).

http://clamo.ftdata.co.uk/files/2015-02/24/GREEK%20GVT%20REFORM%20AGENDA.pdf

On a quick reading, it should pass muster in the Bundestag as it simply puts the existing programme into language more acceptable to the Greeks without any real change in substance. The problem, as identified by Simon Nixon, is that Syriza has spent the past three years dissing it.

@docm

Howzat for a few ‘facts’?

http://www.irishexaminer.com/sport/other-sports/john-mooney-ireland-are-now-world-class-314297.html

From a quick look at the Varoufakis letter it seems to me that:
• the list of individual commitments looks very like what ought to have been in pre-existing agreements with the Troika. If not, then the previous agreements must have been very vague. We need an item-by item checklist.
• There will be a need make some estimates very quickly of the actual money amounts implied by various individual commitments in the letter. Otherwise it night be regarded as all smoke and mirrors.
• If they actually succeed in getting large sums from tackling tobacco and fuel fraud and smuggling, maybe our Revenue and Garda could hire in some Greek consultancy services. (Which just says how sceptical I am on this one).

@DOCM

Nothing from the Daily Mail today? Or Brendan Keenan – Morgan Kelly’s opposition just before our banks collapsed?

There were strategic errors made by Tspiras and Varoufakis at the outset. They naively assumed that pulling the plug on extend and pretend would work and that the rest of Europe actually cares about the suffering of the Greeks. It is a defeat and there is no way to put lipstick on this pig. They are also on a very short leash and this drama will go on and on. If I were in their place I would do the following in order:
1. Reform the tax system, going after the Swiss money and the oligarchs. If they can get even half of the 76 billion said to be outstanding tax they have a buffer at the next food fight.
2. Learn how to work the system. Find out who their friends are in the EU and how far they would go. Also develop administrative competence and gain the confidence and support of their civil servants.

4. Prepare for a Greek exit from the Euro. They need to have a plan in place if they are to make credible .

Hmm so it seems that WordPress doesn’t like the word for a card game rhyming with joker? Apologies for the barrage of posts. Here is a post by Ian Welsh who says the same things as Kevin but with the gloves off.

http://www.ianwelsh.net/syriza-and-greece-seem-to-have-been-owned/

Re: Game theory aspect

The important thing, is not to over complicated, game theory. The chances are, that one’s grand mother exercises a lot of the theory, every time they decided to go and shop in one store, versus another. In fact, the older generations learned stuff like naturally. They had to, to survive.

They naturally exercised many of these muscles – academics forgot how, and had to invent a fancy name for it – before they could allow themselves, to embrace it again.

As we moved into the modern academic age however, and we ended up with ‘systems’, or ways of doing stuff, that worked off of a theory that was close to the mechanical universe, or the way that the human body functions, as in the idea of medicine, our most clever people discovered that their techniques omitted important facets, such as an ability to gamble.

Game theory, in short depends upon ones ability to choose the game, to begin with, not to mind, what happens after that. If you are able to choose the game, you are also able to choose in advance, what some of the likely outcomes might be. After that, you can even go off and read a book, or go to sleep. Get some one to wake you up, when you’re all done.

I.e. It’s the idea, that instead of our being constantly there, to manage and maintain something (as in the idea of a system operative, that it is more hands off, and less direct. Like I mentioned, the older generations operated in their lives and society, in such a way, that it incorporated all of this. And as we moved into an age, that was more to do with science, and systems, we had to discover a way, to re-integrate some features back in.

The best example, by a long shot, of game theory, that you will discover in modern Irish economic history for example, is the one where the debate, about the Irish banking crisis, . . . was framed as a certain kind of game, in advance, . . . participants, without even knowing it, were instructed in the rules of the particular game, as conceived, . . . and guess what, half the intelligent population on the island of Ireland, ended up getting sucked in to, that game that was pre-laid out for them.

The game was: were Irish banking institutions, insolvent, or were they il-liquid, when the ‘crisis’ occurred.

By defining the whole game, in that respect, most of the brightest, of the economics profession in Ireland, all got sucked into playing a game, that essentially guaranteed, they could never even get close to discovering any decent insights.

The thing with game theory, which is important, is probably best described, using a term like counter-game theory. That is, realizing that you are wandering around inside of the restricted maze, that has been provided for you, which effectively restricts your effective intelligence (as opposed to potential intelligence), below a much lower ceiling than in should have.

The post-banking crash, public debate here in Ireland, is a classic example of just that.

Another example, which is provided to us, by an economics history, named Kevin O’ Rourke, . . . is as follows. In relation to the ‘gold standard’, Kevin reminds us in one of his talks, that back at the turn of the 19th and 20th centuries, . . . most really bright, sophisticated, intelligent economists, would have viewed, the ‘gold standard’, as the best standard to work with, to manage global trade etc. Kevin goes into a little more detail, in how some of the better things about the gold standard, got thrown out, when they finally decided (each country, at different times), to abandon the gold standard, during the 1930’s period.

In fact, Ireland was one of the earliest to do so, as it turned out.

But what professor O’ Rourke reminds us, is that John Maynard Keynes was one of the only ones at the time, to reject the notion that a gold standard was the future. But as he explains, Keynes was able to see a few more angles, than the average bear, at that time.

In regards, to this European debt crisis at the moment, the game theory, aspect to it, isn’t activated by staying in, or leaving the euro, European monetary union.

The game theory is activated, when a small nation such as Greece, begins to do what politicians in places such as Great Britain are doing, at the moment. That is, members of the British house of parliament are inviting folk, from different currency areas entirely, in to their living room, and telling them, we’d like to do business, with you.

You’re essentially returned back to the grand mother and the grocery bag again. But the trick is, to see an overview. Know when one has defined the game, or where the game, has been defined for you.

Game theory, is such an excellent complement to economics study, because without it, economists, constantly find themselves upside down, at the bottom of all the same kinds of bear traps. Always. It’s almost freaky. BOH.

Greece may get the visitors, but even the money the tourists bring in is being siphoned. Guess by whom.
http://www.fraport.com/en/press-center/reports—publications-/archive/2014/fraport-consortium-wins-tender-for–14-greek-regional-airports-.html

The Fraport deal, will now go through, as one of the privatisations that must not be reversed. [IMHO, that deal was a deal-breaker in the negotiations.]
A forty year lease to manage the airports!!!
The creditors want the money back, but they also want to to keep extracting money from the most viable industry Greece has.

As for Dijjsselbloem’s ‘trust’, he was so willing to start the process of building trust, that he wants to take back control of the ‘bank’ contingency fund. Now there is trust building for you.
I hope the Greeks did not concede that.

@ JR

They did indeed “concede” it. The funds had been sitting idle for a while and Syriza’s pre-election manifesto proposed using them for public spending. Germany requested that they be taken back as no longer needed for their intended purpose. Persumably if Syriza had spent the funds, the amount would have been added to Greece’s public debt. Of course if Greece defaults on the whole lot in the end anyway, that wouldn’t matter (to the Greeks!)

They can force Greece to comply but it just means the crisis will be back in a different form in another while.
Without growth the EZ is finished.
Greece is just the most extreme example.

France and Italy are supposed to reform while in depression. Savage intergenerational struggles over access to resources are de rigueur

http://www.ft.com/intl/cms/s/0/12482bb6-81d9-11e4-b9d0-00144feabdc0.html
“There is a generational split in Italian society where workers over 50 have significant salaries and benefits but those under 25 find it hard to get any job. Italy’s unemployment rate stands at 12.6 per cent, with 43.3 per cent of those under 25 without a job. The divide is reflected in union support. Italy’s union members tend to be older workers while unions are losing support among the young.”

Italy is just a few years behind Greece on the curve.
The UK isn’t much different either. Young people are being hammered while Government pension spending is protected.

And the holy bond market is oblivious to deflation. Thinking a limited QE programme will generate growth. The whole thing is incoherent.

Irish 10 year now below 1%

http://www.rte.ie/news/business/2015/0225/682645-bonds/

That is a fabulous return under deflation

Meanwhile

http://www.nybooks.com/events/whats-wrong-economy-and-economics/

Meanwhile Tull over in Shangri La Ms Yellen has admitted that wage growth is not strong enough to justify interest rate increases.
So those equity prices look very ambitious
And 1% bond yields- how much risk is priced in at that level?

@ Tull

stop drinking the kool aid. Its the rampant emigration that is causing that spike in employment figures. And Jobbridge. And temporary minimum wage water meter installation jobs from the Oligarch Dinny.

30k y/y employment rise is pretty good, not sure it will save FG and Labour though.

@ Ernie Ball

Poor Michael Taft. I remember on this blog commenting that it was ironic that Michael and I were both wishing for a shinner victory in Greece. Michael wanted it because he envisaged a domino of shinner victories culminating in the original of the species here in Ireland becoming the “first progressive government in the history of the State”. I wanted it because it would make clear to Daft followers that shinners hold a busted flush.

I hasten to admit that I am not always right.

otto,
Economy is too strong for current to be re-elected. Country will vote for a Irish version of Syrizia – coalition of Shinners & Lord Ross. That will not end well.

The jobs news is very much to be welcomed, and it seems to be spread across most occupations.
It could, of course be about 20,000 at least better, if the government tackled the Dublin housing shortage, using more robust methods than throwing sugar, smiles, and money at failed developers, bearded but unbowed. And of course if they took the gloves off with land hoarders, including NAMA.
But there is now a very obvious regional imbalance, that could be but will not be corrected any time soon. Jobs, even building jobs, in Dublin are of little use to an unemployed building worker in Longford. Even Norman Tebbitt might consider that too much of a bike ride.

The real reason for jobs growth here is our links to the British and US markets. If we were dependent on mainland Europe, the outlook would be very different.

[The other jobs bottleneck is of course FG and Labour TDS in North Dublin, who seem determined to throw away over 300m and the potential that a BA link would bring. Surely it would be better in the long run to bribe each of the recalcitrant TDS with a million or so each, but of course they would not be tempted.
I hope Aer Lingus workers never come back looking for any more than statutory redundancy in a few years time, if the inevitable happens.]

@Nocense

Very well put together and very close to the bone.

Some structural issues and historical dynamics underlying the Greek deal. Demographic decline meets 21st c. central banking. It’s like another planet.

http://edwardhughtoo.blogspot.com.es/2015/02/eurogroup-money-for-nothing-and-your.html

What will the leftists do to attack the QNHS employment figures this time?

Last time they claimed the figures were unreliable due to ‘sampling error’.

The unemployment rate has now been falling at a steady 0.15% per month for 2.5 years. So, on a strict arithmetic basis, its on target to hit 5% by December 2017. However, I’d expect the rate of fall to accelerate somewhat as the oil price fall and tax cuts work their way through the economy, so I am sticking to my forecast of last month that the unemployment rate will hit 5% by September 2017.

What is interesting is the number of ‘doom’ economists/commentators who simply failed to mention the QNHS figures in their tweets. Quelle surprise!

@DOCM

So! Privatisation is unwelcome in Greece but to be applauded in Ireland?

I have no problem with privatising that which has no strategic interest or which has potential contingent liability to the state.

Ports and airports (and beaches) are strategic, not airlines.
Also strategic are Coillte (for timber and recreation) ; Bord Gais, electricity, telecoms and other networks.
Commercial banks are also strategic because they are unable to manage the simple process of taking a nations savings and recycling it to national investors, without gouging out exorbitant cuts for themselves and gambling the savings on every mad cap adventure they or their friends can think of.

PS Air Lingus is already private and it is a pity that those Labour and FG TDs did not concern themselves a little more with what the strategic national interest in many of the decisions made over the past three years, particularly those in relation to protecting favoured interest groups.

PPS. I am against extremes myself, but the question of who are now the extremists and who are now the centrists is very much a debatable point.

@ PQ

Thanks for the link to a very informed, and evidently expert, commentator. He certainly makes clear why there can be no rush for the exit as far as the euro is concerned. Varoufakis has just said on Bloomberg that Greece will make every effort to stay in. He has a strange way of going about it.

http://www.irishtimes.com/news/world/europe/yanis-varoufakis-interview-anything-s-better-than-austerity-1.2117500

His view of what constitutes democracy is not shared by the chairman of the Eurogroup.

http://www.lefigaro.fr/conjoncture/2015/02/24/20002-20150224ARTFIG00131-grece-le-coup-de-gueule-du-patron-de-l-eurogroupe.php

To describe what Dijsselbloem had to say as a bit of a rant, as Le Figaro does in its headdline, is not quite accurate. He was defending what 18 other finance ministers find to be the correct view. If democracy means that a minority party that gets into government must implement an election platform that was clearly un-implementable – except with the money of others – then Greece is, indeed, headed in the wrong direction. Schaeuble has already made clear that either all the commitments entered into are kept or not a cent will be forthcoming. The Eurogroup does not do “constructive ambiguity”.

@ seafóid

Fantastic data from the ONS today you’ll be pleased to hear. Wages rising at a clip, low inflation, full employment, strong business investment, deficit nose-diving… Gideon has certainly engineered an economic miracle. Latest polling data suggests the UK electorate will give the Tories the second term they deserve.

Great news Johnny.
Will the benefits trickle down to UKIP voters ? If they don’t there’ll be a hung parliament.

http://www.ft.com/intl/cms/s/0/88227ee6-7729-11e4-8273-00144feabdc0.html

“Yet the second phase of fiscal consolidation will take place against a very different economic background from 2010-12.
Then, budget consolidation was part of an integrated plan with the Bank of England to change the mix of fiscal and monetary policy. The Treasury accepted that fiscal tightening in isolation would reduce the growth of aggregate demand, but believed that quantitative easing by the bank, and a weaker exchange rate, would restore growth and rebalance the economy.

Whether this strategy proved successful is still a matter of dispute. Those who, like myself, supported the new policy mix, must concede that the economic recovery was initially very subdued, only gaining momentum when there was a pause in fiscal tightening.
The bank presumably thinks that monetary conditions are already expansionary, and that the private sector is now growing robustly enough to allow both fiscal and monetary policy to be tightened together. But that is doubtful.

Back in 2010, the private sector was so risk averse that it was running an enormous financial surplus. It had responded to the crisis by increasing savings and reducing investment to an unprecedented extent. As confidence was restored, its surplus was run down by 10 per cent of GDP from 2010 to 2014. This boosted consumption and investment, creating conditions in which fiscal policy could be tightened without holding back an economic recovery.But, from here, it would be rare for the private sector to shift substantially into financial deficit by increasing its expenditure further relative to income. Growth in private activity will therefore need to come from a rise in income, especially wages, not from falling savings ratios. That will be a more difficult process, especially if fiscal policy is being tightened at the same time. The second phase of the fiscal correction may therefore be even harder to attain than the first. A simultaneous contraction in both fiscal and monetary policy looks problematic: something will surely have to give.”

“Full employment” presumably includes 700K on zero hours contracts.

http://www.theguardian.com/uk-news/2015/feb/25/zero-hours-contract-rise-staff-figures

And how will pay rises work now that inflation is below 0.5%?

Watch out for the precariat.

Could I ask a favour. Would those of you who need to use the terms ‘Left’ or ‘Right’ substitute the terms Port and Starboard – and see how quite un-informative and confounding the former two terms actually are: things political have changed quite some in the last three decades.

Our political economic situation is now a Twitter pi**ing match between those pols who are proposing lower levels of taxation, versus those who are proposing the opposite. The irony is that the former also propose increased expenditures in social transfers, health care and education and a few other worthy boondoggles, whereas the latter propose the exact same – but more carefully ‘targeted’. So-called privatizations are political boondoggles! The insiders maintain their status: the taxpayers pay up! Privatiziations mostly convert into a nett increase in taxes – but simultaneously, and at the same time, the advocates of privatization propose a parallel reduction in taxes! Don’t believe me?

Then please listen (or read) attentively to the various spokesmodels for the opposing groups as they peddle their political propaganda. Its a tad amusing – were it not so unplesant for the taxpayers – and their dependents. And the other irony is that these two groups are the opposite sides of the same political coin and represent the awful choices we have to vote for at election time. At some point the electors will plump for the extremists – but that will not work out any better than choosing one of the so-called centrist groups.

Example: If the Irish healthcare system’s costs continue their annualized log-arithmetic increase – at what point does the system seize up? That is, it is consuming as much as is raised in tax revenues? The latter appear to be increasing at a low, arithmetic pace, so the trend lines between the two are … …?

There appears to be a severe logic deficit somewhere above. Anyone?

Pay also starting to rise in Ireland; weekly earnings up an annual 2.3% in q4 last year, which given CPI inflation of zero means strong increase in real earnings. Pay increased in 9 of the 13 sectors in CSO survey.

fyi

A publication from the European Trade Union Institute (ETUI).

This book is a follow-up to the ETUI 2012 volume ‘The triumph of failed ideas’. The focus of the book is the weight attributed to the different economic and social development paths in ten individual EU countries, and their interaction with the austerity regime established at EU level which in fact is deepening the crisis rather than paving ways out of it.

The main message of the book is that a gradual recovery is possible only if there is a change of course in individual countries that then triggers reactions in the policies of other countries and perturbations at the EU level.

https://www.etui.org/Publications2/Books/Divisive-integration.-The-triumph-of-failed-ideas-in-Europe-revisited

Download free; h/t Social Europe J.

Dan,
so weekly earnings up 2.3% plus and employment up 1.5% = wage bill up 3.8%. Moreover we have a fiscal stimulus and an easing in monetary conditions. The Celtic Phoenix is taking win.

M1 and M3 in the EZ are also picking up. How long before the deflationists are forced to go stand in the corner with the doom porn merchants.

Apples share by back case is very strange, sitting a huge cash pile they decide to go into debt to buy their own shares. Why not use your cash pile!, for tax reasons because if they repatriate it they would owe some US taxes. First of all the logic of buying your own shares what if you take it to its ultimate where they spend all their cash buying their own shares hence boosting the value of their last remaining share and then they borrow enough to buy that share for say $600 billion who owns them then? The bondholders. Hence all this is doing is transferring ownership from shareholder to bondholders, reality to future earnings. Creating an entire bureaucracy of financial advisers, bond paper work, legal debt paperwork doing absolutely nothing and eating up in the process Apples cash pile, investment and everything else in the process. Even the guy or institution with the last share for $600 billion will probably bank it in a cash haven where it will sit as a number of digits on a computer doing absolutely nothing other than paying golf club membership fees and buying the odd luxury jet and upping the value of the USD. This is killing productivity and nothing else.

fyi

The Alternative in Greece
Posted on February 26, 2015 by Yves Smith

‘As regards the debt, the text mentions that “the Greek authorities reiterate their unequivocal commitment to honour their financial obligations to all their creditors fully and timely.” In other words forget any discussion of “haircuts,” “debt reduction,” let alone “writing off of the greater part of the debt,” as is Syriza’s programmatic commitment.

Any future “debt relief” is possible only on the basis of what was proposed in the November 2012 Eurogroup decision, that is to say a reduction in interest rates and a rescheduling, which as is well-known makes little difference to the burden of servicing debt, affecting only payment of interest that is already very low.

But this is not all, because for repayment of debt the Greek side is now fully accepting the same framework of Eurogroup decisions of November 2012, at the time of the three-party government of Antonis Samaras. It included the following commitments: 4.5% primary surpluses from 2016, accelerated privatizations, and the establishment of a special account for servicing the debt — to which the Greek public sector was to transfer all the income from the privatizations, the primary surpluses, and 30% of any excess surpluses.

It was for this reason too that Friday’s text mentioned not only surpluses but also “financing proceeds.” In any case, the heart of the memorandum heist, namely the accomplishment of outrageous primary surpluses and the selling-off of public property for the exclusive purpose of lining lenders’ pockets, remains intact. The sole hint of relaxation of pressure is a vague assurance that “the institutions will, for the 2015 primary surplus target, take the economic circumstances in 2015 into account.”

But it was not enough that the Europeans should reject all the Greek demands. They had, in every way, to bind the Syriza government hand and foot in order to demonstrate in practice that whatever the electoral result and the political profile of the government that might emerge, no reversal of austerity is feasible within the existing European framework. As European Commission President Jean-Claude Juncker stated, “there can be no democratic choice against the European treaties.”

http://www.nakedcapitalism.com/2015/02/alternative-greece.html

“NO DEMOCRATIC CHOICE”. WOW!

P.S. on the QT: Blind Biddy is in contact with HRH … hmmm discussing cricket of course!!! Patricia the Irish_sovereign_in_exile (R.I.P) got on well with HRH … treatment of Greek Democracy simply ain’t cricket! The Unthinkable is often feasible and plausible … These Islands …

@ Nocense

The issue under discussion in the instance related to the nature of democracy. The version advanced by Varoufakis, like so many of his utterances, does not coincide with the generally accepted version (including that accepted by his 18 Eurogroup colleagues).

@ All

The limits of “constructive ambiguity”.

http://fortune.com/2015/02/26/why-greece-caved-in-two-simple-charts/

@ DOCM

Glad you liked Edward Hugh’s piece. As they say in Ulster, he is no dozer. For me these are the takeaway points.

‘Now lets turn to Europe, and Greece: the country with the second highest gross sovereign debt level globally (175% of GDP). Now the change in government in Greece has bought to the headlines the fact that this sort of debt level is not sustainable, unless someone else makes your debt effectively interest free. The Greek finance minister wanted to declare the country bankrupt, and accept the debt could not be paid.

But the Euro Area partners rejected this, and preferred to maintain the fiction of sustainability. More money for nothing and your debt for free is the solution that has been found to maintain that fiction. The significance of the recent Greek deal is that things are essentially going to remain that way’

‘Billed widely in the press as a “great” victory for Germany, and a major humiliation for Syriza the outcome is in fact neither. The main victors (if such a name be relevant) have been – oh irony of ironies – the Troika (henceforth known as “the institutions”). In fact we are talking about the ECB (Mario Draghi), the IMF (Christine Lagarde) and the EU Commission (Jean Claude Juncker).

There is basic agreement between the leaders of these three institutions that Greece was subjected to excessive austerity at the time of its first programme (the IMF have even made self-criticism over this), and that at a time of extended low inflation/deflation and worries about the settling in of deflation expectations further austerity is inappropriate’

‘So some sort of coherent policy is now being implemented in Europe in response to the regions long standing low growth issues. It’s not clear that the measures being taken will serve to remedy the issues they were brought into being to address, but they will have long term consequences and they will make the currency union participants act more like one coherent whole, and in that sense they are to be welcomed.

It may be that there is no real “solution” to the long term deflation issue, in which case other measures will eventually have to be found. But neither is having one weak country after another sliced off and savaged in the bond markets any more satisfactory as an outcome.

What we could be seeing is the birth of a transfer union with the specificity that there will be no actual inter-country transfers. If things are happening in this peculiar way then that will be because this is the EU, and this is how things are done here’

End quotes

Draghi and his elves really are magicians. They are working in the world of social expectations to make debts disappear up his sleeve. Credit also means belief. Knock knock.

It’s all in there in Modern Monetary Theory and also in the classic works of sociologist Pierre Bourdieu. The knee bone connected to the thigh bone…. 🙂

http://www.hup.harvard.edu/catalog.php?isbn=9780674510418

On the 18 finance ministers vs. 1 thing—how come group think was bad pre-crash in the central bank, regulator’s office, department of finance etc., but is now good in the Eurogroup?

This is my favourite sentence of all time. So much to ponder.

“For this gift they need the remaining structures of civil society, the police and legal systems to enforce their debt liens and ensure that they can enjoy their days on the super-yacht off Cannes while the rest of us have to scrape by watching the petrol while our governments send in the bailiffs to insure that in Irelands case last year nearly 40% of our taxes are interest payments, money taken from us so we can’t upgrade our educational establishments or pay for our health is shipped off.”

JF,
That sentence should be shown to a school children as an example of how not to write. It is too long, badly written, hyperbolic and factually incorrect.

The QNHS employment figures make nonsense of some claims made by the doom pornists in recent years.

First, they support the view that economic growth has been every bit as high as the CSO figures for GDP and GNP indicate. The doom pornists have been peddling the notion that the GDP/GNP figures are all artificially inflated because of contract manufacturing. The employment figures show this is nonsense, as follows:

total employment Q4 2012: 1849.9 – Q4 2014: 1938.9

increase of 4.9% between Q4 2012 and Q4 2014

however, all the increase was in full-time jobs:

total full-time employment Q4 2012: 1398.7 – Q4 2014: 1492.6
total part-time employment Q4 2012: 450.2 – Q4 2014: 446.3

if we count each part-time job as 1/2 of a full-time job, we get the following for the number of full-time equivalent jobs

total full-time equivalent employment Q4 2012: 1623.8 – Q4 2014: 1715.8

increase of 5.7% between Q4 2012 and Q4 2014

Historically, productivity growth in Ireland has averaged 2-3% annually – let’s assume (just because I’m in a generous mood) that between 2012 and 2014 it was lower and in the range 1-2% – that would leave economic growth between Q4 2012 and Q4 2014 in the range 7.8-9.8%.

GDP figures for Q4 2014 are not out yet – but, between Q3 2012 and Q3 2014, the CSO put GDP growth (reduced by the pharma cliff) at 5.4% and GNP growth at 7.6%. For the theory that the CSO have been exaggerating GDP and GNP growth in the past couple of years, labour productivity in Ireland would have to have either fallen or to have been well below its historic norm, something for which there is no evidence whatever.

Second, the doom pornists have been claiming the CSO employment figures have been inaccurate (they claim all CSO figures they don’t like are inaccurate) because a disproportionate share of the increase in employment was in agriculture. They deduce from this that the CSO must have made sampling errors.

But, the latest CSO figures show that of the 90k increase in employment between Q4 2012 and Q4 2014, only 15.9k was in agriculture and 74.1k in non-agriculture.
In the most recent year between Q4 2013 and Q4 2014, employment in agriculture fell sharply. The most likely explanation is that thousands of people in rural Ireland work both in agriculture and in construction. When the construction industry is in the doldrums, a greater proportion of their working hours will be on the farm, so they will describe themselves as ‘working in agriculture’. When the construction industry takes off again, a greater proportion of their working hours will be on the building site, so they will describe themselves as ‘working in construction’. Figures for total employment are not affected. The Department of Finance figures for income tax receipts totally support the CSO employment figures.

Based on all this, I’ll stick my neck out and make the following prediction:

Over the next few years the GDP/GNP growth figures between 2012 and 2014 AND the employment growth figures between 2012 and 2014 will BOTH be revised UP.

No wonder the doom pornists don’t comment on the economic data any more.

@Johnny Foreigner

“Latest polling data suggests the UK electorate will give the Tories the second term they deserve.”

I agree with you that that would be a sensible and desirable outcome and, as you suggest, it may happen.

However, the electoral boundaries in the UK are rigged in favour of Labour. As a result, the Conservatives will need to be miles ahead of Labour to form the next government. That could happen, but will require a bit of a collapse in the Labour vote compared with what the polls now show.

The electoral boundaries are supposed to be redrawn every few years to take account of the drift to the suburbs, but Labour failed to do this when in power between 1997 and 2010 and the Lib Dems vetoed it when in power between 2010 and 2015. Shades of Derry 1922-1969. As a result, if the Conservatives and Labour get the same number of votes, Labour will get far more seats. Something similar is true with regard to UKIP and the Lib Dems. UKIP are around 15% in polls and Lib Dems on 7%, but the Lib Dems will probably get more seats.

It is perfectly possible that the UK will vote decisively for the right (Conservatives + UKIP on 48% , Labour + Lib Dems on 42%) but end up with a coalition of Labour and Lib Dems. That, of course, is perfectly democratic. If it was the other way round, it would be called fascism.

I myself will be voting DUP for the first time as the nationalist parties in N. Ireland are currently various shades of ultra-left liberal marxist. Although, in the unlikely event of FF or the SNP running candidates in N. Ireland, I’d vote for them.

@Seafoid

When investors and people (their is a difference, I suspect!) wake up to negative yields, what course of action will they take?
Will the alternative to holding bonds and cash be to keep bidding up land, real estate, gold, commodities and so called blue chip equities?
Or maybe, finally, some people will start investing in the real , small business, economy again?
There is also the fact that a huge % of investments must be rather passive and will take a long time to react to negative yields.

@Dan

That is a massive developing theme. Greece was bankrupt and the IMF got involved in a bailout of banks and insurers.

I presume the IMF was overruled in the Troika.

The Republican party didn’t like it and they were right. Europe had enough money to bail out Greece. The German insistence on following dead rules is a big part of the problem.

There is more here. The comments are also interesting.

http://www.ft.com/intl/cms/s/0/9026530c-821d-11e4-a9bb-00144feabdc0.html

@JR

The logic of investing at negative yields escapes me.
Maybe we need a big dose of inflation to wash all the dumb and pointless money out of the system.

jTO,
IMHO, SNP are to the left of the Shinners and Syrizia. Anti business and more welfare spending to beat the band. If the Scots were an independent nation, the SNP would have to bring in austerity budgets due to the collapse in the oil price. If I was in UK, I would be voting to keep LAbour out.

@ tull

Labour are hamstrung by all the light touch stuff Balls did at the Treasury that blew up in 2008. RBS has just been downsized again.

I can’t see the Tories getting a majority either. Osborne promised to get the deficit down to zero and he didn’t. Even halving it was hard- he had to shunt off a load of spending onto the PFI credit card. Which is very expensive long term.

@Dan McL, seafoid

Fully agree. There was no need for IMF involvement in EZ; a political decision to provide cover to Angela & Wolfgang while they ruulled …

Even more so in Ukraine – where IMF are ‘bending’ their ruules ….

Michael Hudson: Has the IMF Annexed Ukraine?
Posted on February 15, 2015 by Yves Smith

Yves here. Ukraine is going into an IMF program in even worse condition that Greece with its various loans from the Troika in 2010, and we can see how well borrowing more when you were already overindebted worked out for Greece. In addition, this interview with Michael Hudson makes clear that the loan to Ukraine is wildly out of line with IMF rules, making it painfully obvious that this “rescue” is all about propping up the government so it can continue to wage war rather than economic development.

http://www.nakedcapitalism.com/2015/02/michael-hudson-imf-annexed-ukraine.html h/t Paddy Zhukov in Kharkov

@ Tull
I don’t think the SNP are that lefty. They will do whatever the big banks in Scotland say. They won’t nationalise anything.

The Guardian had this to say at the time of the referendum

http://www.theguardian.com/commentisfree/2014/aug/25/guardian-view-scotland-debate-salmond-darling

“The reality for modern nation states is that they all face a global economic order in which corporate power is in the ascendant, threatening the livelihoods of the poor and averagely well-off with no respect for borders, and against which most elected politicians can only deploy limited authority. This is what modern politics is fundamentally about.”

Labour in the UK and in Ireland are similarly constrained .

The poor Daily Telegraph seems to have gone through the wringer as well.

Yesterday’s Bild newspaper front page says it all:

http://www.bild.de/politik/inland/griechenland-krise/keine-weiteren-milliarden-fuer-die-gierigen-griechen-39925224.bild.html

i give up!!!!

@seafoid

Let them eat GDP growth.

Is there any reason to believe the figures for Ireland would be any different? Oh, I forgot: there won’t be any such figures for Ireland because all the Irish economists are busy calculating how much more a janitor working in the public sector earns than one in the private sector.

This article by Paul Gillespie deals with the argument as it is generally couched.

http://www.irishtimes.com/opinion/varoufakis-highlights-battle-between-rules-and-macroeconomics-at-the-euro-group-table-1.2120382

The problem is that it misses the point. What is at issue is not a dispute between economic policies – such are never likely to disappear – but the capacity of a government to make an agreement and stick to it. Agreeing one version in Brussels, or, at least, giving the impression of having done so, and selling the opposite version for reasons of political expediency at home, is not tenable in the long run.

There is a third possibility i.e. the legislative actions listed may not be that costly and Athens is following the “Irish formula” while trying to hide the fact that it is doing so. This is only feasible if the rhetoric is toned down. Of which there is no sign.

@ BEB

If I could put seafood’s question somewhat more naively. If there is a borrower of last resort who is prepared to issue paper money earning 0% why would I not put my cash under the mattress rather than on deposit earning negative yields?

@ Ernie

Too much debt
Too much income going to the rich
Short term data irrelevant
It’ll end in tears

@BEB
Hunting yield is fine but below zero ? Surely QE is pointless now.
Where does this leave:

-Basel 3 with its risk weightings of zero for rich country sovs
-The capital asset pricing model which assumes that risk taking deserves a reward
-Bonds if oil takes off towards 150 again

@tull

Greeks disinclined to live within their means? I guess you missed the part about them running a primary surplus.

But I’m sure they’ll be open to getting lessons from Irish rentiers.

Varoufakis is opening the debate on what to do about the scheduled repayments later this year. His comments are provocative, but his previous comments about the bailout extension deal were also provocative and the Greeks nevertheless accepted a compromise. So it looks like he and Tsipras adopt maximalist positions in public mainly as a negotiating stance. The key question is whether they can/will actually implement compromises after agreeing to them.

It’s not surprising that he brings up the repayments now since re-financing them is the only thing that can bring any relief to the Greeks this year (apart from economic growth, which Syriza has probably destroyed).

@BEB

“Securing an income on a pot of cash, that is at or above the depreciating purchasing power of the original investment, with little or no risk

How plausible is little or no risk under deflation ?

“At least moderate inflation is or has been the norm now for the last few hundred years of modern economics or finance, if not longer”

Except during periods of deflation. And what happened to debt during these periods of deflation ?

“ie the original pot of cash depreciates in value unless it is able to earn some sort of counterbalancing income.”

Moderate inflation keeps debt from strangling the wider economy. It’s why all modern macro economies have an inflation target of 2%. None of them can reach it now either. why ? Too much debt.

“However, in a deflationary world, which is, rightly or wrongly, now a genuine issue to contend with given global DM deleveraging,”

Very little deleveraging going on anywhere
http://www.cepr.org/sites/default/files/news/Geneva16_0.pdf

” the long term impact of the global financial crisis, and strong deflationary pressures from both increasing Asian productivity as well as the massive prior investment in technology, real estate and medical advances,”

Very little investment anywhere . It’s all share buybacks .
Tech winners make monopoly profits. Eg apple’s 60% margins. Virtually no tax paid either…

” a pot of cash may have an INCREASING purchasing power, ie just leaving it there means you can buy more with it in the future. ”

This logic means CBs can’t achieve anything with negative rates.

“Additionally, many of the people willing to accept this negative yield are also simply reserve managers of developing nations trying to ensure the ‘value’ of the massive export reserves they have built up over the last decade and a half. ”

I would like to see the stats. My impression is that a lot of debt is OECD. How much did the CBs pump into QE in UK, US, Jap? 9 trillion dollars. How much is in sovs now ?

“They know their fragile economies could easily collapse again under a domestic investment bubble, so do not wish to use it domestically. So they export this capital to overinvested DM economies, pushing down the price of this capital, and resulting in deflation.”

Debt has been driving down the cost of capital.
https://research.stlouisfed.org/fred2/data/GS10.txt

Start in 1982, the year Bill Gross did

Blaming the EMs misses the elephant in the spreadsheet

If Varoufakis knows what he is doing, the evidence has yet to emerge.

https://hbr.org/2015/02/what-greece-has-to-do-now-fix-its-economy

The author of the above knows his Greece. What he does not comment on is the likely impact of a continued slow run on the Greek banks which will accompany the likely excruciating process under which the country will “complete its programme”. Only this seems capable of jolting the Greek electorate out of the fools’ paradise that Syriza has succeeded in conjuring up.

Incidentally, if one was asked to assess the German media reaction in one word, it would be; incredulity!

@ skeptic01: This is just plain wrong: “(apart from economic growth, which Syriza has probably destroyed).”

Economic growth – such as it is, is a much misunderstood process. If the Greek economy falters in its “steady advance” – it is not alone!

Tull: This is completely unnecessary – it adds nothing. “Better to dump the Greeks now before they do more damage.”

The ‘damage’ you may be alluding to has already occurred and is ongoing. Dumping any state will not change the facts nor alter the trajectory nor lessen the human misery.

@ DOCM: What in God’s Holy name are you on about? Greece is not the cause: its the effect. Is this so difficult to grasp? At least the PM and his FiMi have demonstrated they have ‘moxie’ – which is more than you can allege about our lot of homogenized pap.

I no longer pay any attention to any post with the ‘DOCM’ heading….life is far too short…..

What do you reckon: could DOCM or Tull pass a Turing test?

@BWS

– This is just plain wrong: “(apart from economic growth, which Syriza has probably destroyed).”

Well, the Greek economy was expected to grow a litte this year before Syriza came to power. The uncertainty since their advent has likely knocked business investment on the head, and may have also damaged household spending although the latter effect might be offset by the lower rate of tax collection (20% below pre-election expectations according to reports).

If Syriza succeed in getting more relief from the EZ then the effect on the economy could be very positive.
If they fail, and remain in the EZ repaying all debts as they fall due, then the Greek economy will end up significantly behind where it could have been.

That’s the gamble they have chosen to make. And it probably is a dominant factor in Greece’s fortunes for this year.

@ BWS

This quotation from the link I posted above may help you understand what “I am on about”.

“The problem is that Greece needs operational, transformative changes in the short term, and a revamping of its productive base, starved of investment as it is, in the medium term. The Greek problem isn’t, as Krugman insists, a classic problem of macroeconomic policy. It’s primarily a problem of an economy rendered uncompetitive from state inefficiency and political turmoil.”

I agree with this view.

I would suggest that those that do not are looking at the problem from the wrong end of the telescope and that events in the coming months will bear this view out. Greece is not the tail that is about to wag the European dog.

It seems that Schaeuble has decided to tone it down. With any luck, Tsirpas and Varoufakis will reciprocate.

http://www.rte.ie/news/2015/0301/683626-greece/

Here’s what DOCM calls “Schauble toning it down”: “We made a clear agreement in the Eurogroup. Mr [Alexis] Tsipras made a promise. If Greece doesn’t stick to that, there will be no further aid.”

I suppose compared to full-on annexation, that does count as toning it down.

And longer reportage article from everyone’s favourite class traitor Ambrose Evans-Pritchard.

‘Humiliated Greece eyes Byzantine pivot as crisis deepens’

http://www.telegraph.co.uk/finance/economics/11441482/Humiliated-Greece-eyes-Byzantine-pivot-as-crisis-deepens.html

Sound money is meaningless given the amount of debt in the system. It is all fiat money, all value depending on credibility.

Just saw this in the FT

http://www.ft.com/intl/cms/s/0/0baccb9e-be34-11e4-9d09-00144feab7de.html

“The ECB is set to announce the terms of its expanded QE plan next Thursday. This QE plan is very different from the previous one launched by the Fed. Among the main reasons, the eurozone is not running a substantial deficit and this means bond supply is limited. ”

There was enough money in the EZ to bail out Greece (and Ireland) and stick it to bondholders without bringing the IMF into the farce.

None at all would appear to be the case.

http://www.ft.com/intl/cms/s/0/2084b68c-c003-11e4-9708-00144feab7de.html?siteedition=intl#axzz3TAFbuXH8

@Tull
“I would also advocate the confiscation of all Greek assets overseas and the imposition of sanctions.”

Strong stuff, especially coming from Ireland, with its second hand aircraft.

http://en.wikipedia.org/wiki/List_of_aircraft_of_the_Irish_Air_Corps

A volatile Greek minister for defense and 60 fighter jets might make that an unwise option for the local sheriff.
Wouldn’t it have been better, and cheaper, to let capitalism take its course in 2010.
Must Europe we go to war to recover the money the bondholders lost.

The organisers of this site and the site’s posters need to be reminded that the title of this blog is ‘The Irish Economy’ and not ‘The Greek Economy’.

In this vein:

Just out this morning: Ireland’s manufacturing growth at 15-year high in February:

http://www.rte.ie/news/business/2015/0302/683797-manufacturing-pmi/

ISEQ just a smidgeon short of 6,000 – it was at 1,800 in 2010 – any Irish stock market investor who has not made a large profit between 2010 and 2015 is seriously useless.

Bank of Ireland 920 million euros profit in 2014.

Ulster Bank 750 million euro profit in 2014 – meantime its parent company, RBS, made a 4 billion euros loss in 2014 – and to think that these morons wanted to sell Ulster Bank a few months ago.

Any one who thinks that the Celtic Tiger has not returned is an idiot. All statistics (output, employment, tax receipts, surveys) confirm it.

@JTO
Interest rates are on the floor and if the Tories win they will run a referendum on EU membership. It’s not a Tiger. It looks more like Frosties.

@ skeptic01

I would say that both sides are beginning to box a bit more cleverly.

http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_02/03/2015_547774

Getting the magic wand back from a collection of sorcerers’ apprentices is a job of some delicacy and it is far from obvious that Dijsselbloem has the necessary touch. It all hinges on the speed with which the Greek electorate wakes up to the fact that their new government has reversed the trajectory of their economy in comparison with others, including of those countries that have successfully exited programmes.

One element will certainly be a degree of revisionism in the view that Greece is symptomatic of a wider European economic malaise when the evidence is mounting by the day that it is not.

@ JtO: “Any one who thinks that the Celtic Tiger has not returned is an idiot.”

Count me in there John! Let’s assume (cert par, as they say) that the 2007 GDP was 100 and decreased by 3% annualized, compounding for 6 years to bottom out at 83 (round figures) – approx a -17% decrease.

The GDP ‘drop’ from 2007-2014 seems to have been approx -3.8%, whereas the 2009-2014 difference is -17%. These values are calculated from some quite dodgy stats but Michael H would be able to provide more reliable data.

This means that for the CT to ‘return’ to 2009 levels of GDP our annualized, compounding increase in GDP would have to be +3.3% or +3.4% for 5/6 years in a row, or alternatively, approx +20% in one year. That latter value is a tad optimistic, but a 3% uptick is possibly possible. So, what was the actual 2014 increase then? If its >4%, then you might be on to something.

However, we are in the advent of a parliamentary election so just lets hang in there until 2019/2020 and see what eventuates. Aggregate energy costs will surely rise – but no one is sure how, or when. Someone pencilled in 2024 for crude to top $200 bbl – based on 2013 production and usage predictions. Maybe? Hope not.

@ skeptic01

I spoke too soon!

http://www.focus.de/finanzen/news/staatsverschuldung/griechenland-krise-500-000-fluechtlinge-aus-griechenland-polizeigewerkschaft-befuerwortet-grenzkontrollen_id_4512932.html

At this stage, it is impossible to imagine a negotiation conducted in such an atmosphere ending successfully.

@joseph ryan

A Metron Analysis poll published on Saturday showed popularity ratings for the prime minister’s radical left Syriza party at an all-time high: from the almost 36% it won in snap polls on 25 January, support for Syriza has jumped to 47.6%, a record for a movement that only three years ago was on margins of Greek politics.”

That might be because the GreekMedia sold the extension deal as a massive climb down by the Germans. We looked them in the eye and they blinked!!!

Eventually the Greek people will realise that’s not quite what happened….

Great headline for JtO to rejoice over. From BBC website to-day:
“Ireland’s manufacturing sector buoys eurozone output”.

http://www.bbc.com/news/business-31690198

I thought only the US could pull the wider world out of recession!

@Sarah: Have the Irish people realized that the bank guarantee was an unmitigated disaster? Beam, mote etc.

As Bank of Ireland has been mentioned, let be positive:

The most relevant figure from an operating point of view was the improvement in interest margins from 1.84% in 2013 to 2.11% in 2014. [p 32]
[God only know where the impairment figures are pulled from these days. ]

http://www.bankofireland.com/fs/doc/publications/market-news-and-analysis/boi-results-pres-dec-2014.pdf

Year Pre-Impairment Profit Impairment

2012 224m 1769m Result: a whopping loss
2013 1070m 1665m Result: a whopping loss
2014 1301M 472m Result: a good profit.
( p30)

The improvement in the interest margin is key and doing well at 2.11%. Fundamentally, if a bank does not have an interest margin > 2%, then trouble looms. The ‘impairment’ guestimates, would do John Bowe proud.

However: Of the 89 billion in assets, the bank has just over 14 billion in tracker mortgages and according to the bank :
“Net interest margin from ECB tracker mortgages is broadly neutral” (p36).

In plain man’s language, 14 billion of assets (tracker mortgages) out of a total of 89 billion, make no money at all for BOI, even before administration costs. At an interest opportunity cost (subsidy) of 2.11 %, that’s about 300 million per year of a subsidy to BOI tracker borrowers. Extrapolate that for say 16 years remaining in the mortgages and that gives a lifetime subsidy remaining to BOI trackers holders of 5 billion. Lets say AIB have the same and PTSB have about 2, we are looking at a grand total of a 12 billion euro subsidy to tracker mortgages holders over the lifetime of existing mortgages.

Its a great little country that can afford it.

The bank has a further 15.2 billion of property assets, with a default rate of 46.5%.
The upshot of all this is that of the total 89 billion in assets, 14 billion trackers make no money, and 15 billion property assets are 46.5% defaulted. (p 38)
In such circumstances the bank has done extremely well to achieve and interest margin of 2.11%, but this can only have been done at the expense of gouging non-tracker mortgages and other borrowers, as well as paying little or no interest on deposits, and jacking up fees.

The bank is doing well, however. But the fact that the country (ultimately) will have to subsidise trackers, some of whom are very well off indeed, is a bit too much to bear.

Lets be positive, and yes things are improving, but lets never again take bank headline numbers for anything other than the PR exercise that they are.

Here’s Janet Yellen channeling Dick Roche

https://www.youtube.com/watch?v=XYw0xYFBnn8

JPMorgan’s fortress balance sheet – sure it’ll be grand

@s

I am also a sceptic on QE . The ECB do not do policy mistakes ( anyone ever hear them mention the two rate increases in 2011?) and QE is perfect in that any recovery can be attributed to it even though the theory behind it is non-existent and the evidence very mixed (e.g. US bond yields ended higher after every episode ). I particularly like the ECB’s argument against replacing QE with a direct injection of cash to the public- that would be fiscal policy, which the bank does not get involved in, even though they have just agreed to buy up to 33% of EA governments’ debt.

@ JTO

“most European countries are growing”

Which ones are growing and how does GDP compare to 2007 ?

The indicators themselves are indicative of a certain detachment from the economic concerns of most people.

@ Ernie: ” ….who are able to afford new cars.”

I believe the question is … … ? No Deposit; ? Zero Finance; and ? Trade in. Look at all those lovely exorting banners decorating the exteriors of car salesrooms.

“Will that be cash or charge, madam?”

? Hire purchase; ? leases. How many are actually paying cash? Hmmmm.

Increasing consumer (personal) debt is hardly an indicator of a boom – or is it? Depends on one’s indicator status, I suppose.

Parental discretion advised for the doomsters – and keep the smelling salts handy.

http://www.irishtimes.com/business/economy/tax-revenues-surge-by-over-900m-1.2124577

“The reduction on the exchequer deficit is driven by increased tax receipts, reduced net voted expenditure and earlier full repayment of loans from the exchequer to the social insurance fund,” said the Department of Finance.
The department said the State collected €6.74 billion in taxes in January and February, an increase of €925 million or 15.9 per cent on the same period in 2014 . The overall return was €345 million or 5.4 per cent ahead of the target set out in the October budget. The figures, released this afternoon, show that the Revenue collected €2.89 billion in income tax in the first two months of the year, €183 million or 6.8 per cent more than one year previously. The return in February was €91 million or 7.1 per cent ahead of target.
The improvement in income tax returns follows separate data last week which indicated that the rate of unemployment is on course to drop below 10 per cent this year.”

Climate change is going to hurt q1 numbers in the US again this year . Last year the contraction was 3% annualised.

http://www.ft.com/intl/fastft/285922/post-285922

“obsurce and outdated political theory”

I would be more worried around “obsurce” (is that a Saxon word?) and outdated economic theory, Tull, to be honest

@Dan McLaughlin

The numbers look very positive, at the outset, but there are a few caveats.

The actual income tax collected Feb YTD, is up 6.58% according to the published figures, but the income tax collected for February 2015 is 1,383,000 exactly the same as Feb 2014. [exactly the same !]

[Working off the alternate presentation for last year, I make the Income tax Feb ytd up by 10.2 % on last year. I can only conclude that there has been some last changes / adjs to last years figures]

This means that as far as income tax is concerned, the big impact (increase) was in the January returns. i.e the Dec 2014 payroll, indicating hefty bonus payments / seasonal employment in Dec 2014, perhaps.

The corporation tax figure is up hugely, but this may not indicate a a sustained increase, as it must be remembered that many domestic corporations are carrying forward huge tax losses. The Corp tax may have more to do multinational tax payments, whose linkage to the ‘real’ economy can be somewhat tenuous.

On the expenditure side, social welfare is down hugely ytd. Almost €240 million down on 2014, a bit more than one have suspected even with job reductions?
Nearly all other depts have increased expenditure. This is surprising in that there has been no wage ’round’ as of yet, and still the dept expenditure (most of them) are well up on 2014.

Very good results, but the income tax figures may not be as positive as they appear at first glance. [In addition if I am correct, the DOF might like to indicate their policy in relation to changing the allocation of prior year published figures to the various months].

JR,
If an MNC pays CT to the revenue, surely it is linked to the economy.

Seafoid,
Fair cop.

jF,
I recommend a diet of thin gruel with bitter tears for the doom pornsters.
I see the Tories are pulling ahead in the UK. That will lead to rending of garments and wailing and gnashing of teeth in your typical sociology dept.

I don’t know if any stats are “real” with all the debt sloshing around the system . Modelling can’t get it.

Here’s one possible reason the fall in the price of oil was so violent . The actual fall in demand was relatively slight.

http://ftalphaville.ft.com/2015/02/07/2114141/bis-theres-an-the-oil-debt-dealer-nexus/

I wonder if oil inflation isn’t a risk a few years ahead with all that might mean for interest rates…..

And John Plender with an interesting thought

http://www.ft.com/intl/cms/s/0/4b22da54-abcc-11e4-b05a-00144feab7de.html

“It is conceivable that investors, nursing losses on bond portfolios whose value has been savaged by rising interest rates, will lose their appetite for the paper of over-indebted governments. If the central banks are then forced to finance government deficits directly, the switch from deflation to inflation could happen very fast.”

Japan’s deficit is insane . Even the UK can only get by with fiscal easing.

A highly informative blog post by Frances Coppola.

http://coppolacomment.blogspot.in/2015/03/greek-myths-and-legends.html?m=1

Unfortunately, while she demolishes her opponent’s argument, the result does not get us very far; Greece still has a major problem, aggravated by the arrival of Syriza in power.

http://www.ft.com/intl/cms/s/0/d8f0efde-c192-11e4-bd24-00144feab7de.html#axzz3TFuiVWAM

The disappearance of private sector bank deposits is the most remarkable feature. The idea that the taxpayers of other countries can be expected to volunteer to pony up to remedy this situation is politically unrealistic, both at the domestic and European level.

@ Tull

Deflation followed by inflation when the bond market joins the dots.
The problem is too much debt.
That’s what props up a lot of the asset prices you rave about.
I bet US yields won’t go up this year either.

Traders have to trade and feel chirpy- that’s why warning signs are always missed.

Sorry about the broken record- have you tried MP3s ?

Here’s the problem, Tull

http://www.ft.com/cms/s/0/a4d97068-7c78-11e4-aa9c-00144feabdc0.html
” The central banks of the US, UK and Japan all adopted easier policies and were rewarded with an upturn. Given weak wage growth and a lack of fiscal support, such stimulus ought to continue. ”

The FT misses the point.
Weak wage growth is the problem with debt worship. It’s a debt trap. The Phillips curve is broken too. Low unemployment is not generating adequate wage inflation.

Japanese wages are not rising to the required extent . Neither are US wages.
Equity prices assume they will.
They won’t.

Probably the most interesting economics article of the last 3 months was the IT editorial on EZ QE.

http://www.irishtimes.com/opinion/time-for-bold-ecb-action-with-quantitative-easing-move-1.2072874

” The European Central Bank is failing in its mandate to keep the rate of inflation in the euro zone close to 2 per cent. Therefore it needs to act and looks likely to do so on Thursday, announcing a programme of quantitative easing (QE) to try to boost inflation”

Pure regurgitated hopey changey economics waffle. There is no evidence whatsoever that QE can bring overindebted economies back to target ranges of inflation.

Here’s a good laugh from the Fed

http://www.ft.com/cms/s/0/4fee1f1e-be8a-11e4-a341-00144feab7de.html

“Mr Fischer said the Fed’s decision to swell its balance sheet to $4.5tn and hold rates low for six years carried financial stability risks, but he defended its actions. The research suggests the effects “are only now manifesting themselves in full, reflecting the inherent lags in the monetary transmission mechanism”, he told a conference in New York. ”

If you think I’m wrong throw up a few arguments. But not PMIs or what the market thinks about interest rates. The market has no idea what is going on in the bowels of the system.

It is not interested as long as EPS scams are generating cashflows and bonuses are going out .

If Spain is right and the Eurogroup is contemplating another loan to Greece, this time €50bn, I wonder how long the solidarity of some Irish political parties with Greece will last if the Irish exchequer has to stump up €0.85bn?

“The standardised unemployment rate (SUR) in February 2015 was 10.1%, down from the revised figure of 10.3% in January 2015″

Good to see it coming down but it was 4% in 2007 and it went up at warp speed within a year
http://ec.europa.eu/ireland/key-eu-policy-areas/economy/irelands-economic-crisis/index_en.htm

so it’s taking a long time to clear.
42,000 a year would need another almost 5 years to get back to 4%.

What sort of jobs are being created ?

How long did disgraced doom porn economist Morgan Kelly say the reverberations would last ? I think he said 10 years, didn’t he ?

@seafoid
What sort of jobs are being created?

1. Private sector jobs.
2. Jobs where you aren’t on the dole any more and you pay tax.
3. Jobs that cover a wide range of sectors and aren’t all concentrated within a clear and unsustainable bubble (e.g. housing).

From the perspective of repairing the State’s finances, those are three excellent qualities. Think of how many non-jobs in the public sector, or bubble jobs in housing were ‘created’ over the period 2000-2007. This recovery is in many ways far more healthy than the supposed boom we had in the period preceding the crash.

This article in the FAZ deals with the growing disaffection between Berlin and the Commission under Juncker. The latter has not covered itself in glory in the context of the Greek crisis. It is not putting up the money. The Member States, and notably Germany, are. It should adapt its behaviour to both the legal, financial and political realities.

http://www.faz.net/aktuell/wirtschaft/eurokrise/berliner-unmut-ueber-junckers-eu-kommission-13464095.html

Oops:

‘Between 2007 and 2017’ should be ‘Between 2007 and 2013’.

@ Johnny F: The situation is that our economy has – for the time being at least, stopped falling. There are some quite nasty issues still lurking in the undergrowth (pun intended).

A list of indebted developed economies put Ireland at #2, behind Japan.* Debt – if it has to be repaid, is negative future income, hence is also a negative on G*P. I do not believe the macro models include this negative variable (I am open to correction on this point).

And what have our great leaders decided is a sensible proposal to keep economic activity in positive mode? Why to emit more debt (as QE)!

The raw employment numbers are a mish-mash of somewhat dodgy aggregate estimates – which probably conceal as much as enlighten. A forensic autopsy is needed there.

The overall stats on private residential mortgages are dreadful. An unhealthy private mortgage market is not indicative of a positive economic advance. If, or when, the delinquent loans are cleared out then one God-awful political mess will be disclosed.

Healthcare costs appear to be – for the moment, beyond control. Increases have to be kept <3% p/a. Think this is possible? I do not.

Only a small number of determined folk will take the time and effort to dissect out the CSO data – provided the raw data is available. Meaningless means are no way to conduct meaningful analyses or draw conclusions.

Cost of money is essentially zero. Energy costs have decreased by 25%-35%. So where is the economic bounce from there factors of production? And the Baltic Dry Index?

* zerohedge 23rd Jan.

Salaries, Johnny
What sort of salaries?

Great excitement from the likes of yourself over job numbers in the UK and the US but very low salaries if you dig deeper. Distinctly underwhelming. Wage inflation is a huge problem in both the UK and the US.

Can people raise kids on the salaries of these new irish jobs or not?

Numbers of jobs created is as insightful as PMIs.

@DOCM
“It [the EC commission] is not putting up the money. The Member States, and notably Germany, are…”

My understanding, in terms of ECB, ESM and Eurogroup country bailouts, is that members contribute according to the capital key, which in theory relate to each country’s GDP, that in a perfect union, would be in proportion to the population of each country.
So each country, by and large even though the union is clearly not perfect, contributes an amount proportionate to its population. Such being the case, to apply the term ‘paymaster’ to Germany, an expression that I have seen repeatedly in various media is somewhat misleading. As a citizen of Ireland, I am operating on the assumption that I am paying pretty much the exact same as a German, French, Italian, or Spanish citizen.
One further point in relation to the ‘paymaster’ term, while in no way not associating the term with you.
Ultimately, strange as it may seem, the paymaster in a trading union is the country that runs a trading deficit. That reality needs to be kept in mind.

@JTO

That there is a pickup is excellent news, but do not get carried away.

Most tax numbers are positive, but the income tax numbers are not as positive as they are being hailed, nor should they be given that tax cuts are already working their way into the YTD income tax take.
In fact the misreporting spin put on the Feb returns will be highly damaging in the run up to an election.
[Both income tax (YTD) and VAT YTD are largely dependent on the Dec 2014 payroll and consumer spending.]

Already today we have the Tániste talking about tax cuts, and Eoin Roynane looking for abolition of the pension levy and restoration of pay cuts.

Items one (low inflation) and two ( Euro collapse vs Stg) of your list were / are extremely important, but I very much doubt item 8 (pent up domestic demand being unleashed).

The lack of housing, particularly in Dublin, is nothing short of criminal, and it not a victimless crime, but I doubt that house prices in many parts of Dublin are 30%-40% off 2007, and in any case, as a nation, we should measure nothing except insanity from the 2007 housing peak prices.

@JTO

“an unprecedented fall in the euro v dollar and sterling”

QE
But is it just beggar my neighbor currency devaluation ?

@ JF: “Of course prices for health goods are still high because of the rampant inflation we suffered in the boom years. We need more deflation in this sector at least.”

Deflation in the health sector???? Where? How? Good luck with that!

” … at that rate our competitiveness in sectors like IT and finance will be eroded fairly quickly.”

Try being ‘competitive’ with India? The domestic sections of these sectors are ‘shielded’ – they are merely competing with themselves. How much in subsidies and tax incentives are given by Irish taxpayers to both these sectors?

How much in tax revenues are forgone by allowing income relief on interest paid on debt? How many other tax avoidance boondoggles have we?

Recovery, whatever that means, is very, very slow.

@ JTO

In my rural neck of the woods, the rosy picture you paint is just that! The economy is picking up but the impact is very uneven.

Are you sure about the BOP figures’ history? Looks more like boom and bust to me; as orchestrated by Fianna Fáil. The risk is of a return to the same pattern.

http://www.tradingeconomics.com/ireland/current-account-balance-percent-of-gdp-wb-data.html

@ BEB

The facts are nowhere near as transparent as you imply. Spin everywhere.

http://trueeconomics.blogspot.ie/2015/03/4315-irish-manufacturing-services-pmis.html

@ JF: OK. But those trolly figures and closed-up wards are indicative of what? Overfunding? Underfunding? Management dysfunctions? What?

‘They’ (usual Oliver Twist-like – “Minister, can we have some more!” whingers) want to assault the problem with … … how much moolah? 25 mil? 50 mil? 100 mil? Are these sums ‘one-offs’ or ongoings, the latter with a built-in annual percentage escalator? Hmmmmm.

Oh! And some demented political folk are allowing we shall have tax reductions – any day now. Unbelievable!

Now should we petition the Vatican to sanctify the men (it was hes?) who invented the QE Credit Card?

@BWS

The health budget has to grow just to deal with (i) an increased population (ii) an increased population of dependents (young and old) (iii) increased coverage rates that come from both the ageing population and the expansion of free access. There are some obvious structural reforms that we need to push through the vested interests in order to partially solve the trolley problem but we also need to spend more money to resolve it.

@ BEB

the numbers are good but just saying x jobs were created doesn’t say anything. It’s all about bringing demand back up and if workers aren’t getting decent pay awards demand is going nowhere.

Just noticed that the comments section of that link is intriguing.

A little peep into the dystopian future, and a rare sighting of the Dork :).

Another sensational stat from the CSO today.

Monthly services index UP 12.7% y-o-y in January.

http://www.cso.ie/en/releasesandpublications/er/si/monthlyservicesindexjanuary2015/#.VPiWZjmIHVo

By far the highest y-o-y increase since the CSO started this index.

Fully in line with the PMI for January released a month ago.

And AIB turn in a profit of 1.1 billion euros.

re; AIB

The AIB results are not that strong, and are nowhere as good as BOI.
The outgoing Chief Executive has kitchen-sinked as much profit into 2014 as was humanely possible.
http://investorrelations.aib.ie/content/dam/aib/investorrelations/docs/resultscentre/resultspresentation/annual-financial-results-2014.p

1. Net interest margin still struggling at 1.69% (BOI is at 2.11%), although Frank Daly is doing his damnest to help by paying back NAMA bonds before they are due.
2. Other income (non-interest) at 843m is flattered by almost 430m of one-offs. Most of those will not be there next year, but that will be the problem for the incoming CE to explain.
3. Loans to customers earn an average 3.33%!!. That’s an average that variable rate mortgage holders and people with personal loans, should weep over.
4. A write-back (no less than that) of 188M in loan provisions versus a provision of 1904M in 2013. Where do these numbers come from? John Bowe of Anglo had some places in mind.

If this is the best AIB can do, with ELG now virtually gone, then it has a long way to go.

After all the hoopla and disaster, bank results are just as much a guessing game as ever, and depended to a very large degree on house prices rising.
But the banks and government did an excellent job in getting those house prices up. ‘They would do, wouldn’t they’, they were counting on it.

@ PQ

Here’s a good example of markets/Fed/FT versus reality

1.
http://www.ft.com/cms/s/0/c5fb2146-d1ed-11e3-8b5b-00144feabdc0.html

check out the “almost there” chart. 8.6 m jobs created in US 09-14 so employment is almost back to full level

2. http://monthlyreview.org/2014/01/01/the-plight-of-the-u-s-working-class/

A trawl through the BLS stats (Sept 2013)

Unemployed 11.3 million
Marginally attached to labor force—did look for work in last year but not in last four weeks because
a) thought none was available 0.4 million
b) of illness, lack of transportation, lack of daycare, etc. 0.8 million
c) working part-time for economic reasons 7.9 million
Total BLS Estimate Un- and Underemployment 20.4 million
Number of people that would be in the labor force if participation rate had not declined from 67.3 to 63.2 percent (minus the 1.2 million not in labor force but counted above as marginally attached). 8.8 million
Total jobs needed for full employment 29.2 million

Maybe 3 million jobs created since- how many joined the workforce ?

Still a long way to go.

The Varoufakis letter to the chair of the Eurogroup.

http://greece.greekreporter.com/files/Greece-letter-to-eurogroup-PDF.pdf

One wonders how long this extraordinary performance by the current Greek government can continue.

http://www.independent.ie/business/personal-finance/property-mortgages/numbers-in-longterm-mortgage-arrears-continue-to-rise-central-bank-31045972.html

More sensational stats for the gold fish merchants!

“I apologise that I am unable to answer all your points tonight with my usual detail and precision”

A predilection for self-congratulations is clearly not just the purview of Enda & Co.

Contrary to your implied branding of me being fraternal with the “loopy left” I have no objection in principle to property or water charges. What i have is a probably with people representing an increase in tax receipts as definitive and “sensational” evidence of an economic miracle”. If you tax more, then all else being equal, taxes increase – its not rocket science.

€183m increase in income tax receipts compared with 2 months the previous year is church gate collection ‘sensational’ when compared to returns this economy is required to make to draw its ‘odious’ debt.

If you are going to crow about a 10% unemployment rate then extend your gratitude to the 100+k net migrants that has made this happen since 2010. It would not be unreasonable to assume that at least half the achievement owes its success to the airports of Ireland.

“Things like unemployment, mortgage arrears, debt/GDP, net emigration that are a legacy of the recession are now improving.”

I’ve never denied this – I would question the motive of those that get too excited about pretty modest improvement after what will be, barring a monumental improvement in the next year or two, the lost decade that as some above referred to, morgan kelly anticipated it would be. So we’ll have lost a decade that when its over we will be saddled with a massive (and unjust) debt burden (by order of the Euro-facists), a dysfunctional property market, no political reform to speak of, 10% unemployment, marginal tax rates of 52%, a water infrastructure that is on the brink of disaster (I am assured of this by a friend in Dublin corporation), a health service in serious crisis and an education system that is worse than pre bust.

I don’t have a problem with optimism but please lets leave the hyperbole of success to one side for another few months – we’ll have to listen to enough it come election time.