Welcome to the Finfacts Blog

Sunday, May 29, 2011

Finnish ice hockey team heroes return home drunk


After winning the Ice Hockey World Championships, many players of the Finnish ice hockey team returned home drunk this month.

The Finns and Irish share a love of the bottle and Lahti’s Etelä-Suomen Sanomat newspaper reported that tens of thousands of cheering fans were in Helsinki to greet the heroes who had just returned from humiliating archrivals Sweden 6-1, in the finals in Slovakia.

The state of stupor of the team was evident when team captain Mikko Koivu, his gold medal hanging on his chest, held up the trophy.

The trophy had been damaged by a drunken assistant coach who did a faceplant as he descended the steps of the airplane. Apart from him, almost all the team on the platform were “staggering around in a drunken stupor.”

The newspaper said that in Finland “people have nothing against getting a little tipsy.” But that level of drunkenness was just embarrassing - - particularly for young men who are supposed to be “heroes and role models.” Those responsible for the team should have “made sure that nobody was drunk on the plane ride home.” As it is, the hockey association “has an apology to make” to the Finnish people.

World alcohol country rankings

Monday, May 23, 2011

Jon Stewart: La Cage Aux Fools and Dominique Strauss-Kahn

Jon Stewart on The Daily Show responded to supporters of Dominique Strauss-Kahn such as Ben Stein, who is lawyer, actor, newspaper columnist and Nixon speechwriter who opined earlier last week: "The prosecutors say that Mr. Strauss-Kahn 'forced' the complainant to have oral and other sex with him.

How? Did he have a gun? Did he have a knife? He's a short fat old man," and "Can anyone tell me any economists who have been convicted of violent sex crimes?"


Bloomberg article, May 24, 2011: Strauss-Kahn Case May Curb Libertine Ways

Tuesday, May 10, 2011

Irish Men without Work

Brendan Walsh, emeritus professor of economics at UCD, writes in the Irish Economy Blog that the rise in the Irish unemployment rate reveals a grim picture of the impact of the recession. The overall unemployment rate has risen from 4.4% at the beginning of 2007 to 14.6% today. Male unemployment is now 17.3%, while unemployment among men aged 20-24 is 32.3%.

Concentrating on the situation of males in some key age groups, unemployment rose dramatically in all fours age groups, but younger men were most severely affected.

Irish Economy thread

I wrote: This is an impressive presentation and there are interesting parallels with the US.

Economists at the Hamilton Project of the Brookings Institution, say that up until the early 1970s, virtually all prime-aged men were gainfully employed - - regardless of whether they had a high school diploma or a college degree. Over the last 40 years, however, the United States has witnessed a dramatic change in the employment situation for men, particularly for less-educated workers who have faced greater challenges finding jobs and have increasingly dropped out of the labour force.

Separately, Prof. Michael Spence and a colleague have produced research which shows that in the period 1990-2008, almost all the additional increase in US employment was in the non-tradeable sector led by government and health care.

Almost all US jobs added in 1990-2008 were in non-tradeable sector led by government and health care

In the last decade of the Irish boom, almost all the new jobs were in the non-tradeable sector.

To me one of the enduring problems at policy level in the jobs area is that spin invariably trumps an unvarished assessment of the challenges.

In the FDI area, because we already host most of the top firms in high-tech, health/pharmaceuticals and financial services, it's evident in recent years that new projects tend to be small and while only 10,000 jobs were added in the tradeable sector in the period 1998/2007, recent job losses have reduced employment in the tradeable goods and services sectors (FDI + local) to about 268,000 - - back to 1997 when the workforce was 25% smaller.

The number of Irish firms involved in exporting is much lower than comparable firms in other small economies. Irish SMEs do not grow to a size that is considered essential for developing overseas markets.

There is very little useful data on firms. Stephen Kinsella has done some work on firm mortality but there is no useful data on startups, survival rates and no longitudinal studies tracking growing firms.

According to Forfás, science related public spending across 39 government departments and agencies rose from €1.2bn in 1999 to €2.5b in 2009. €500m could likely be chopped off this sector without impacting outcomes.

The so-called smart economy has got the lion's share of Irish enterprise public funding in recent years with research and development spending in higher education almost trebling from €322m in 2002.

While research can have several benefits, direct commercialisation is an insignificant one. For example, in the US the income from intellectual property is 4% of university research spending and in England in 2009, only £73m was earned.

The officially policy is a muddle but the goal to create a jobs engine from research is a delusion.

A UCD study shows that in 2009, firms supported by venture capital companies, employed 9,700 people; according to Enterprise Ireland, 100 spinouts from research created 1,000 in 10 years.

Given the growing world population, there should be focus on food and commercial research should prioritise this area.

In the EU in 2006, manufacturing as a percentage of total employment was 18.2%, 13.3% in Ireland and 22% in Germany.

Despite the recession, the costs of doing business in Ireland are still excessive.

Irish Economy 2011: The Jobs Initiative and a promised ambitious long-term strategy

Sunday, May 01, 2011

Ireland's anti-banker chameleons: Shane Ross and David McWilliams

Time magazine reported in April 1973 that the Nixon Administration had
developed a new language—a kind of Nix-speak. Government officials were entitled to make flat statements one day, and the next day reverse field with the simple phrase, "I misspoke myself." White House Press Secretary Ronald Ziegler enlarged the vocabulary in that month, declaring that all of Nixon's previous statements on Watergate were "inoperative." Not incorrect, not misinformed, not untrue —simply inoperative, like batteries gone dead.

Time said euphemisms notwithstanding, the Nixon Administration's verbal record on Watergate was enough to turn ardent believers into skeptics.

In Ireland's small insider elite, flip-flops may take longer than a week but a brass neck can work wonders because other insiders are afraid to challenge hypocrisy directly. Who knows when one may need a back scratch some time? After all, it's a country where resigning on principle is viewed as bizarre; the concept of conflict of interest hardly exists; local councillors with commercial property interests can vote on land rezoning decisions and the State broadcaster, RTÉ, has publicly declared that there was no problem with its highest paid staff getting free luxury cars from private companies.

Tammany Hall here we come in the land where for some, the buck stops nowhere!

In the recent Irish general election campaign, Alan Shatter, now Minister for Justice, challenged rival candidate Senator Shane Ross over the claims in the latter's election literature that he had ‘‘a 15-year record of challenging bankers.’’

Ross has been both a politician and business editor of the Sunday Independent and has delivered a book, 'The Bankers,' to the angry mob looking for a tooth for a tooth.

The floatation of the Irish State-owned telco, Eircom, was the first big manifestation of tulip mania in the Celtic Tiger period and in September 2000, the then Sunday Business Business Post journalist Emily O'Reilly lambasted the then Senator Shane Ross for what she termed the former stockbroker's pitching of the shares in the public floatation and later heading a public crusade against the company.

O'Reilly wrote: "Ross has made a virtual third career out of board bashing. As business editor of the Sunday Independent and part-time commentator on Today FM's Last Word programme, he and presenter Eamon Dunphy have developed a neat double-act. Outrage is the theme as the two handsomely paid media buddies rail against the handsomely paid business buddies on various company boards."

Alan Shatter challenged Ross about his praise of the two most notorious
bankers of the bubble: Seán FitzPatrick of Anglo Irish Bank and Michael
Fingleton of the Irish Nationwide Building Society.

Ross took the prudent course and ignored Shatter's bait as this non-response as usual worked wonders in conservative Ireland. The anti-banker Ross headed the poll. All his previous statements had become "inoperative."

As a newly elected TD for South Dublin, Ross is a scourge of nefarious
bankers and is advocating Irish default.

Vying for populist appeal where inconvenient truths do not have to be told, is celebrity economist David McWilliams.

McWilliams has claimed to be an architect of the September 2008 calamitous blanket bank guarantee that ranks as one of the most inept but consequential decisions made in the history of the Irish State. He too has reinvented himself as a spokesperson for the economically illiterate and now distances himself from the guarantee that he once termed a 'masterstroke.'

Dr. Conor McCabe, a historian, has published a devastating critique of the populist chameleon.

McCabe challenges apparently made up 'facts' in the book 'Follow the Money' and he adds: "The footnotes, though, pale into insignificance when compared with the attitude, analysis and conclusions which are presented to the reader. ‘Out in our new suburbs, a new generation - the Juggling Generation - is sinking under the weight of huge debts, negative equity and the trauma of failure’ writes McWilliams.

This is a mere four years since McWilliams opened up The Pope’s Children with the line: ‘Ireland has arrived.’

In that book he talked of little else but the new generations and the profound changes Ireland had undergone in the previous 25 years. Now, 48 months later we have a new generation. Not even The Borg could regenerate that quickly."

Bankers are not the only ones who are running away from their past.

Conor McCabe: David McWilliams: Merchant of Guesses

Sunday Business Post: Shatter critical of Ross election claims

Irish Times: Shane Ross, Alan Shatter, Dublin South and the banks

The median across 12 advanced countries of government-guaranteed debt issued by banks is about 6% of GDP. Ireland was the outlier in 2009  with a sovereign exposure of 55% of GDP.

The issue of ECB President Jean-Claude Trichet and the Irish State bank guarantee of Sept 2008,is reminiscent of arguments about London-Dublin cable traffic during the Treaty negotiations in 1921. The main story of course was why the head of the revolutionary government had decided to stay in Dublin not communication problems.

There was no official ECB policy in Sept 2008 on issuing blanket guarantees and neither had EU finance ministers promoted it.

Ireland was the ONLY Eurozone country to issue a blanket guarantee and a week later Denmark made a similar move.

According to the IMF, the median across 12 advanced countries of government-guaranteed debt issued by banks during the crisis or in the case of Denmark/Ireland including existing debt, was about 6% of GDP.

In ascending order, US (2.5% of GDP), Germany (3%), Portugal, Spain, France, Austria, Sweden, Netherlands, UK, Australia, Denmark and Ireland.

Denmark’s exposure was 20% of GDP and Ireland was the outlier with an exposure of 55% of GDP — all the others had an exposure below 10%.

The news on the Irish guarantee was presented as a fait accompli to the ECB, Ecofin and Eurogroup heads on the morning of Sept 30, 2008, coinciding with the issue of the news to the markets.

Once the announcement was made, it would have been very difficult to reverse it.

As regards the Lenihan-Trichet phone conversation a week before the guarantee was issued, I doubt if Trichet gave the go-ahead on a blanket bailout. Unlike his gaffe-prone predecessor, he is always measured when speaking on policy issues.

This story is akin to a unit of a multinational making a major decision without any consultation with headquarters but assuming that everything would be grand because of a conversation a week before with the CEO.!

Decisions made in a panic situation seldom turn out right.

The banks had access to the ECB’s emergency liquidity program which was in place since Aug 2007.

The unlimited deposit guarantee could have been issued and the issue of guaranteeing debt could have been discussed with the ECB in a calmer atmosphere.

If the blanket guarantee was issued to save Anglo, it was an absolutely reckless move to make in the absence of detailed information on the state of the bank.

Remember the context - - yes the crisis had intensified in the previous 2 weeks after the collapse of Lehman - - but it had been 13 months since the onset of the credit crunch; the world’s biggest insurer had to be rescued by the US government and the prospects of an Irish soft landing had evaporated and what did the Department of Finance have?

A Sept 18th PowerPoint presentaion prepared by Anglo and the financial regulator both chimed with the mantra on ‘resilient’ banks.