Senior Lecturer in Economics at the University of Limerick.
Meant to post this earlier. The CSO released its figures for August on the 13th of this month, inflation as measured by the HICP is rising at 2.6% year on year. The live register and the related unemployment picture released on the 5th is, frankly, horrendous. I haven’t seen a discussion of these figures on Irish Economy. Constantin has a nice post showing inflation stats in an historical perspective.
This chart is still shocking, despite there being essentially no new information within it.
Last week I spoke in Iceland (.pdf of slides) about the similarities and differences between our two countries.
Both countries had experienced booms caused by inflows of cheap credit, and both had experienced societal upheaval as a result of the inevitable crash. Iceland differed sharply from Ireland in its approach to resolving the crisis. Where we are currently floundering, praying for a deal on our banking debt from Brussels, Iceland is moving on, with a set of relatively clean bank balance sheets, a falling unemployment rate, an increase in economic output, and a national sense that the economy and the society is healing.
What can we learn from the Icelandic experience? Should we even compare ourselves to them? I think there are many lessons to learn, but you have to look a bit beyond the numbers.
Have the Troika’s 2014 targets on jobs numbers have already been met? This new working paper by UCD’s Niamh Hardiman and the IPA’s Muiris MacCarthaigh seems to suggest it has. The 2014 target is here on page 64 of the national recovery plan.
From a recent Dail question:
The numbers working in the public service have continued to fall, with the provisional outturn for the end of last year now standing at 296,900, which means we are now at close to the 2005 staffing levels. This is a year-on-year reduction from the end of 2010 of more than 8,500. The employment control framework ceiling for the public service in 2011 was 301,000. To exceed this target by more than 4,000 is impressive.
The authors make good use of the new department of public expenditure and reform’s databank in their work, and it produces this figure.
Last week’s bond-stravaganza was very welcome and, for once, a relatively good news story. The effects of the return to the bond markets by Ireland can be seen below. In the figure below, country by country and relative one to the other, you’re looking at changes in indicative yields for 10 year bonds (Ireland actually has an 8 year bond, but let that pass) by European country. Green is bad on the horizontal, but good on the vertical, in terms of spread differential vs other countries (ht Eoin B for the clarification). Not much else to say really, except you should click on the image for a bigger and easier to read table.
The WSJ has a really good piece by Gabriele Steinhauser and Matina Stevis on the core story of the Eurogroup meeting, which seems to have slipped past the domestic media somewhat. Yes, yes, they’ll get to Ireland’s debt in September/October. Grand. The key issue of just who pays for any losses within the ESM is not settled, nor is it likely to be any time soon. From the piece:
Germany’s finance minister said that even once the euro zone’s bailout fund has been authorized to directly recapitalize struggling banks, the lenders’ host government should retain final liability for any losses.
Wolfgang Schäuble’s statement early Tuesday indicated disagreements on how far the currency union needs to go to protect countries from expensive bank failures. His declaration, which followed more than nine hours of talks between euro-zone finance ministers here, clashed with those of other officials, who insisted that banks’ host states wouldn’t have to guarantee any support from the bailout fund.
The issue is hugely important for Spain, which risks being locked out of financial markets amid concerns over how a European bailout for its banks will affect Madrid’s ability to repay investors.
Fun times ahead.
