Can Irish Potatoes Save the World Economy?

For no other reason than it has an interesting title.

Can Irish Potatoes Save the World Economy?

A recent trend, a  move back to the way things used to be, might be the best news for Ireland and the world. A bloated worldwide market of institutional products, produced for their economy rather than quality, shipped hither and to in order that some profit, has put our one world economy into a tailspin. Meanwhile, it just may be, you and your next door neighbor are once again, the only ones capable of picking up the pieces.

Over in Ireland, some local hotels, business people, and organizations are showing us all how.

On of the countries hit hardest by this Great Recession, Ireland,  is of particular interest to me. My folks sailed over to America from Kilkenny back when, but this is not the main reason for my concern over the emerald Isle. Besides an affinity for Ireland, there’s another really good reason to pay attention to the Irish. If there’s anybody on Earth that can show us how to get past hard economic times, it’s Ireland. Rain or shine the Irish always seem to come out okay. Part of the reason being, I believe, Ireland is at its heart a local community first.

If you really want to you can read the whole thing.

Mortgage Arrears Update

The Central Bank have published the Q4 2011 update of the mortgage arrears series with the data for the full year also available.  The update shows that 9.2% of mortgage accounts, and more importantly 12.3% of mortgages by value, are in arrears of 90 days or more.

The total amount of owner-occupied mortgages in Ireland is now €113.5 billion, down from €118.7 billion when this series began in September 2009.  This reflects the very slow uptake of new mortgages and also the continued repayments on many mortgages which are not in arrears.

In fact, in the final three months of the year the stock of mortgages fell from €114.4 billion to €113.5 billion, for a reduction of €935 million.  Since September 2009, the amount of arrears owing on mortgages more than 3 monthly payments in arrears has increased from €354 million to €1,117 million. 

At the end of 2010 the Central Bank estimated that about 50% of the arrears were in the covered banks, 40% in the non-covered banks and 10% in other or sub-prime lenders.  It is not clear what has happened to these proportions over the last 12 months.

The rate at which mortgages are falling into arrears does not appear to be slowing.  Any slowdown would first be seen in the 90 to 180 day category but there is no sign of this. The continued entries into this category would be offset by the 6,700 who moved into the 180 day plus category (and a small number who may have exited arrears) but there was still have an increase of 1,200.

Friday Conference: Fiscal Policy

The podcast and slides from the session on fiscal policy at last Friday’s conference are below.

Podcast

Chair: Dan O’Brien (Irish Times)

Philip Lane (TCD
Ireland and the Fiscal Compact

John McHale (NUIG)
Strengthening Ireland’s Fiscal Institutions

Seamus Coffey (UCC)
Current and Capital Expenditure: Getting the Balance Right (Part 2)

Colm McCarthy (UCD)
Public Investment and Fiscal Stabilisation

Current versus Capital

Here are some quick snapshots from my presentation at Friday’s conference in Croke Park.   Some background information can be found in the following:

From 1983 to 2010 capital expenditure averaged nearly 12% of gross voted expenditure.  In 2011, capital expenditure was 8.1% of gross voted expenditure, the lowest since 1992.

For the four years from 2012 to 2015 it is planned that capital expenditure will be 6.4% of gross voted expenditure.  For every €100 of voted expenditure, €93.60 will go to the current budget (transfer payments, public sector pay, and other non-pay expenditure on goods and services) and €6.40 will go to the capital budget.  Would this satisfy the equi-marginal principle?

2015 Government Bond

The NTMA offering circular for the 4.5% 2015 government bond can be read here.

Update: NTMA release on the results can be accessed here.