Welcome to the Finfacts Blog

Saturday, September 27, 2008

Cowen's Trip to China- Marketing Spin has already Begun


The Opening Ceremonies of the XXIX Olympiad, Beijing, China, August 8, 2008 -- Fireworks light the sky above the latticed steel National Stadium known as the "Bird's Nest" where an estimated 91,000 spectators, athletes, executives and world leaders were gathered - - Photo: Xinhua

Taoiseach Brian Cowen is to lead a trade mission to China in October, in an effort to boost trade with the region and to encourage inward investment.The trade mission, which is being organised by Enterprise Ireland (EI), will take place from October 19 to 24, with a planned business events in Shanghai and Beijing.

Enterprise Ireland is no doubt feverishly working on planned announcements and deal "signings" as the fiction that the presence of a politician on a trade mission is like a magic wand conjuring up business, is easily sold to the media.

The Sunday Business Post said last month that previous trade missions, have resulted in a dramatic increase in trade between Ireland and the countries visited - more than €100 million worth of deals were struck during a mission to the Middle East last year.

Impressive indeed for gullible!

If it was true, the 4 ministers in the Department of Enterprise, Trade and Employment could have real jobs to do, for a change.

EI is likely currently engaged in trawling for business deals over the past year, that it can tie into the China trade mission.

This in itself is harmless spoof.

What is however a serious issue, is how State agencies like Enterprise Ireland, allow themselves to be used to feed the delusions of politicians who after almost 12 years of power, believe their own propaganda.

For example on Thursday, Health Minister Mary Harney said: “There are huge markets internationally for us to compete in and win: the pharmaceutical industry, medical devices, the high-end agri and food sector, information technology, communications, financial services, biotechnology, education services.”

“None of these real markets have disappeared… [So] let the message go out: ‘Brand Ireland is not broken,’” she added.

How convenient to ignore a pertinent fact. American companies dominate exports in most of these sectors!

Harney as minister for over a decade, has about 6 "helpers" on the public payroll doing constituency donkey-work; she hasn't had to drive herself anywhere in the same period and in addition, she has advisers and other gofors attending to her needs. Should it be a surprise that she would be somewhat divorced from reality?

The Sunday Business Post reported in August that "Irish exports to China are continuing to grow, according to EI figures, which show Irish companies had exports of €1.95 billion to the region last year, a 30 per cent increase on the previous year."

According to the CSO, these are the total merchandise exports to China in 2007.

As for sales by Irish companies i.e ones that are not foreign-owned, the amount may be as low as €150 million.

The job of Enterprise Ireland shouldn't be to feed the delusions of their political masters.

The result of the spoof is an absolute misreading of the challenges for Irish-owned companies, in doing business in China and Asia.

Even decisions on the destination of the exports from the likes of Intel and Microsoft, are not made in Ireland, never mind the fakery that they are "Irish companies," beyond the legal status of their Irish units.

Irish Economy: IBEC and understanding the world East of Suez

Saturday, September 06, 2008

Irish Economy - End of the Celtic Tiger and Credit where it's Due

Dan McLaughlin, Bank of Ireland economist with Health Minister Mary Harney T.D. at a Women In Banking and Finance (WIBF) Ireland forum in 2006 - - In February 2004, The Sunday Independent reported that Dan McLaughlin was the toast of the Society of Chartered Surveyors annual dinner at the Burlington Hotel: In a virtuoso performance, he declared that this country is currently enjoying an unprecedented "Golden Age of Construction" and - to thunderous applause - announced that "the Celtic Tiger is Back".

If the definition of an optimist is one who sees the bottle half full and a pessimist says it's half empty, the BofI economic guru left his audience of 1,300 property professionals in no doubt where he stands. "The economy in general has emerged from a period of sub-trend growth in remarkably rude health and is poised to enjoy a much more favourable global backdrop, which will propel Irish growth towards the potential of 6% over the next eighteen months," Dr McLaughlin opined.

Harney and her Progressive Democrats' colleagues became cheerleaders of tax cuts during the boom but were ineffective barnacles when at the pinnacle of power.

There is much attention these days to credit, given the impact on the international financial system of the US subprime loan crisis. There is also another form of credit that is often unearned.

The abrupt ending of the construction-fuelled boom in Ireland, has also highlighted how politicians and business folk alike, so ashamedly used the boom as a confirmation of their own business or political genius.

Now, the turn of events in recent times, can be attributed to international events.

The economists cum spin doctors who tried to provide an intellectual underpinning, to an economy built on quicksand, because their brief was to be artists who painted for the approval of their benefactors, should in a just world be on the dole, like the 73,178 additions to the Irish Live Register in the past year. Alas, there will always be a market for soundbite one-liners and who has ever called account on the forecasts of pundits? The simple truth is that a brass neck, is much more important than prescience.

Michael McDowell, a former leading light in the pre-defunct Progressive Democrats, during the heyday of its position as a powerless barnacle at the pinnacle of Irish political power, onetime made the bold claim that it was "credited with major responsibility for Ireland's economic boom by pioneering tax reform, deregulation and competition to end mass unemployment and emigration."

In 1997, Mary Harney and the Progressive Democrats tied themselves up in knots about public service reform because they were peddling soundbites about cutting 25,000 public service jobs, an approach that cost it seats. Since Dec 1997, the number on the civil service payroll increased by 80,000 according to the Central Statistics Office and there has been no public service reform.

In the Dáil debate on the appointment of the Cabinet in 1997, Alan Dukes said: "The Tánaiste said something very interesting to me on the last day of the previous Dáil. She commented: “I know Minister Dukes does not like soundbites, but if it can't be said in a soundbite it is not worth saying”. She should reflect on that because the electorate told her that in spades during the election. She was clobbered by soundbites and she is now a very junior partner in Government because of soundbites. People decided they did not want to fire 25,000 public servants, or oppress single mothers whose families are too numerous for them to live at home with their parents with another baby they did not expect, and so on. I hope for the sake of good government, if not for the sake of the parties in government, and for the kind of politics the Progressive Democrats is supposed to stand for — the party is supposed to be policy driven — that the Tánaiste has learned the lesson that soundbites are inimical to good politics. Life is more complicated than a soundbite and I hope she has found that out."

The PD's alas thought that cheerleading for tax cuts during a boom was radicalism and its legacy is basically akin to that of a person who walks across a field of snow and leaves no footprints.

It's said that a statesman is a dead politician and Dukes had provided essential support to Charles Haughey's Damascus Road conversion to fiscal responsibility, following the 1987 election.

Dukes was dumped by his own Fine Gael Party and Fianna Fáil took full credit for the benefit of its Fine Gael supported fiscal rectitude. The brave new Progressive Democrats refused to support Haughey until it joined him in government in 1989.

As for the public, it was a matter of appreciating Dukes' patriotism by some while a member of his own party dismissed him with the old canard that if it was raining soup, Dukes would be the one with a fork.

Stephen Collins in the Irish Times this week, said that 1987/89 government was underpinned by a Fine Gael Opposition under Alan Dukes that supported a strict clampdown on public spending in the so-called "Tallaght Strategy".

Minister for Justice Dermot Ahern suggested that the current Opposition should act responsibly and offer his Government similar support now.

The same suggestion has been made in recent months by other Fianna Fáil figures but the chances of it being adopted are zero, according to Collins. He says for a start Fine Gael and Labour roundly criticised Cowen's budgetary approach over the past four years but lost an election on the basis that Fianna Fáil was better able to deal with the economy.

Some joke indeed!

Green Party Minister Eamon Ryan wants an all-party consensus on climate change policy i.e. we cowards in government, cannot make tough decisions.

Statesman Alan Dukes lost his seat in the 2002 general election.

So why would any Opposition politician provide the current incompetents in government with a life raft while the same people would claim 100% credit for any positive results?

This is where the issue reverts to where the ultimate responsibility lies - the electorate.

If a significant section of the public is willing to put up with a system of limited accountability dominated by incompetent former schoolteachers, small-town solicitors and auctioneers, who deserves blame?

The most recent significant public demonstration against public policy was in 2003 when 100,000 took to the streets in Dublin. It was a protest against the planned invasion of Iraq by the United States.

We have to go back to 1979 for evidence of significant public protest against Irish policy, when an estimated 200,000 workers marched through the centre of Dublin in protest against an unfair tax system in March of that year.

In the interval, farmers have been effective in their public demands for cash and protections. Workers in the private sector, with more than 1 million without an occupational pension, are the ones who are now at the mercy of government incompetence and the most exposed to the economic downturn.

Isn't it time for public outrage on the death of the Celtic Tiger and the lamentable failure of the Government to prepare for the end of an unsustainable construction boom?