Getting paid for creative work: US Video; F*ck You. Pay Me

Speaker at the March 2011 San Francisco, CreativeMornings (creativemornings.com) was Mike Monteiro, Design Director, and co-founder of Mule Design Studio (muledesign.com).

Ireland's unfair society of insiders and outsiders

Ireland is no longer a society mainly marked by the division between rich and poor but it is an unjust society of insiders and outsiders.

The insiders can be multimillionaire lawyers and public staff with premium pay, pensions and job security, while the outsiders, without the support of powerful vested interests, are on their own.

In Ireland today, the vested interests are part of the machine politics system; from traditional trade unions on the Left to their counterparts on the Right representing wealthy medical consultants and lawyers, they make common conservative cause in opposing reform and change.

The main culprits of the cataclysmic dénouement have got gilt-edged meal-tickets for life and David Begg, the general secretary of the Irish Congress of Trade Unions, who was a director of the Central Bank from 1995 to 2010, like the bankers, rejects any personal responsibility for the banking crash.

As for the employers' body IBEC, we said last February that it may seem strange that given the ostensibly pious aspirations for reform of both the "the country and the economy," that IBEC director general, Danny McCoy, would avoid the issues of reform of the protected private sector which imposes more cost burdens on business than for example commercial rates.

What is striking is that some people are outraged by perceived unfairness when it's seen from afar but not so when it's close by.

In the Financial Times today, Lorenzo Bini Smaghi, executive board member of the European Central Bank argues that Ireland should share the pain of the banking crash.

This has prompted a thread on the Irish Economy blog, which I have responded to.

I would agree that Bini Smaghi's general tone is akin to a red rag to a bull but I return to an old refrain on we seeing what suits us.

The Irish Examiner in an editorial today hits out at the Allied Irish Banks' signal that it would be “reasonably generous” on severance packages. The newspaper says figures based on up to eight weeks pay per year’s service, plus statutory redundancy, were bandied about yesterday:

“One of the most provocative things about our economic collapse is the inequity of it all. Some people seem unaffected yet others struggle to survive.

Figures like those suggested at AIB are unheard of in most of the economy. They are even more bizarre when you consider that the bank depends on taxpayer bailouts for funding. Payments on this level would add to the sense of injustice simmering right across this society as they are the exception rather that the rule. A similar argument can be made about semi-state staff expecting windfalls if those companies are privatised.

AIB staff from the boardroom to the cash counter may not like to hear it but sooner or later the Government is going to have to take a stand on creating a more equitable society and this is as good an issue as any. It is not about punishing bank employees but about redressing some of the terrible wrongs in this country.”

In contrast with the United States, the largely invisible unemployed in conservative Ireland  and the issue of the development of a credible jobs strategy, evoke tepid reaction compared with the heat generated on burning bondholders.

Facts, Ireland and the Euro

Aengus Fanning, the editor, has an article in today’s Sunday Independent: ‘We need leaders who will ignore the eurobabble and just say no’

“In my (no doubt ignorant) opinion, we should be threatening to kick the table over and leave the eurozone while remaining in the EU, joining Britain in an Atlantic alliance that will still have the clout to maintain access to the single market.

There’s no hope of that happening — we’re too inherently Anglophobic for that. It is 38 years since I listened to government officials in Brussels telling me that our future lay with the deutschmark, and that our curse was the link with sterling.

It is surely strange that, after all these years, the perfidious Brits are still our biggest trading partners.”

Interesting argument expect for the strange fact: exports to the Eurozone in 2010 at 38% of total exports (goods + services) are double the level to the UK.

In the Irish Independent in Sept 2010, celebrity economist David McWilliams, used false export data to also argue against the euro.

He wrote:

"The most damning statistic of our entire euro venture is that from 1990-2000 when we had our own currency and we devalued in 1993 to get competitive, Irish exports grew by 360%. Between 2000 and 2009 with our overvalued new euro currency, Irish exports grew by 0.3%. That says it all really and yes, that figure is 0.3%, not 30%!"

Absolutely wrong!!

We at Finfacts take facts seriously and it's very important when commenting on economic trends and policy.

There is the simple support for an argument by citing relevant facts. There is alternatively the selective use of facts to support a position and there was a classic example of both in the Irish Independent.

In 2000, tradeable goods and services exports were €102bn; in 2009 they were valued at €144bn - yes, an increase of 41%! McWilliams said 0.3%!

There was a 10% devaluation in 1993. So that is a fact but it is not credible to claim that an export boom depended on a small scale currency revaluation while ignoring a key fact that with 1% of Europe's population, we were attracting 25% of US greenfield investment. Besides, a paper published by the Central Bank in 2005 shows that the trend of exports from Irish-owned firms in the period 1990-2002, hardly changed. Have a look at a chart here which shows the true facts.

Intel, Dell, Hewlett-Packard, Microsoft and a raft of world-class pharmaceutical companies triggered the export boom not the Minister for Finance Bertie Ahern who was left with no choice but to agree to a market-forced devaluation in 1993.

We need leaders who will ignore the eurobabble and just say no

Ireland and leaving the Euro: 10 questions for pub-stool economists

Irish professors say enough of spending cuts; Status quo is a comfortable place

Karl Whelan, professor of economics at UCD in South Dublin argues that enough has been cut and he claims to have taken a 30% cut in salary since 2009.

Kevin O'Rourke, professor of economics at TCD in Central Dublin, calls critics of the lack of public service reform and change in the protected private sector 'economically illiterate commentators.'

A colleague of O'Rourke used to make money producing reports for developers cheerleading the boom; now he is advocating unilateral default.

In 2007, Taoiseach (Prime Minister) Bertie Ahern wondered why critics didn't commit suicide.

The conservative vested interests eager to protect existing benefits will fight tooth and nail despite the economy being bankrupt.

Among several contributions, I say: "Why do you think that the traditional trade union movement, headed by an individual who was a central bank director for 15 years - - all through the boom and beyond - - has had nothing to say on change and reform of the system controlled by their wealthy counterparts along the spectrum, representing protected professions also dependent on tax funds?

Is it that there is a tacit understanding by the conservative groups along the spectrum where all fear change and thus the Mexican stand-off?

Why do you refer to those on benefits?

What is needed is a jobs strategy to provide people with worthwhile jobs not public sector trade unions wanting the status quo for insiders with unique protections (maybe everyone in the economy should have their job guaranteed?) while supporting more welfare payments for the private sector unemployed."

Irish Economy Blog: Behaving Like Teenagers? 

Hans Rosling and the magic washing machine

What was the greatest invention of the industrial revolution?

Master statistician Hans Rosling makes the case for the washing machine.

With newly designed graphics from Gapminder, Rosling shows us the magic that pops up when economic growth and electricity turn a boring wash day into an intellectual day of reading.

Milton Friedman on Greed

Milton Friedman was an American economist who became an icon of the conservative movement and he was interviewed in 1979 on a chat show presented by Phil Donohue.

Friedman's research focused on monetary impact in the economy and he was generally regarded as a crackpot until the emergence of Ronald Reagan and Margaret Thatcher.

He was more of a libertarian than a conservative.

I admired both the liberal John Kenneth Galbraith and Milton Friedman, two of America's best known economists of their time.

Does that sound strange?

They both died in 2006.

Nobel Prize Winner and renowned American economist Milton Friedman dies at 94 -
- Influenced economic policies of President Ronald Reagan and Prime Minister Margaret Thatcher

Renowned iconoclastic economist John Kenneth Galbraith dies at 97

Ireland: GDP or GNP? Which is the better measure of economic performance?

UPDATE Sept 09, 2014: The idiot/ eejit's guide to distorted Irish national economic data

UPDATE: May 26, 2013: In recent years, Accenture, the US management consultancy firm, has been among several big international groups that have moved their headquarters to Ireland.

They may engage in little or no economic activity beyond an office in Dublin but their results are included in Ireland's national accounts and the GNP metric in particular has been distorted.

Reported profit in one year can eventually be moved out of the system via dividends but the impact on data continues as these firms are big compared with the Irish economy and there are a flow of new entries and exits.

Steven Rattner wrote this week in The New York Times:

WHILE a Senate report detailing Apple’s aggressive tax sheltering of billions of dollars of overseas income grabbed headlines this week, little notice was paid to a surreptitious thrust at tax minimization that was announced at nearly the same moment.

In a news release, the American drug maker Actavis announced that it would spend $5 billion to acquire Warner Chilcott, an Irish pharmaceuticals company less than half its size.

Buried in the fifth paragraph of the release was the curious tidbit that the new company would be incorporated in Ireland, even though the far larger acquirer was based in Parsippany, N.J.

The reason? By escaping American shores, Actavis expects to reduce its effective tax rate from about 28% to 17%, a potential savings of tens of millions of dollars per year for the company and a still larger hit to the United States Treasury.

Actavis is hardly alone in fleeing to lower-tax countries. For example, Eaton Corporation, a diversified power management company based for nearly a century in Cleveland, also became an “Irish company” when it acquired Cooper Industries last year.

John FitzGerald, an economist at the ESRI, an Irish economics think-tank, recently produced a paper on the impact.

Bottom line....

Both GDP and GNP are now unreliable measures of Irish economic activity.

Irish Economy: No growth in 2012; 6,500 direct jobs account for 52% of services exports

The original post below dates from March 2011

Ireland's national statistics office, the CSO, says Gross Domestic Product (GDP) and Gross National Product (GNP) are closely related measures. GDP measures the total output of the economy in a period i.e. the value of work done by employees, companies and self-employed persons.

This work generates incomes but not all of the incomes earned in the economy remain the property of residents (and residents may earn some income abroad). The total income remaining with Irish residents is the GNP and it differs from GDP by the net amount of incomes sent to or received from abroad.

In Ireland's case, for many years past, the amount belonging to persons abroad has exceeded the amount received from abroad, due mainly to the profits of foreign-owned companies, and our GNP is, therefore, less than our GDP.

State agency Forfás said last year that GNP is a better measure than GDP of the value added accruing to residents of the country. In Ireland, GNP is now considerably lower than GDP because of income flows to non-residents, especially profits and dividends of foreign direct investment enterprises. In 1970, the reverse was the case with GNP higher, because of income flows to Irish residents from abroad.

As a result of this turnaround, GNP growth has been somewhat slower than GDP growth. Since 1970, real GNP has increased about four times. In the year 2008, GNP decreased by 2.8% while in the five years (2003-2008) it increased by an average annual rate of 3.8%.

The growth in exports has been especially noticeable. Since 1970, the value of exports has increased over twenty times in real terms. The other demand components making up GDP have increased to a lesser extent over the same period, e.g. personal consumption over four times, public expenditure about four times and investment about five times.

Some of the growth during the bubble resulted from increasing numbers at work. While GNP at constant prices increased by 19% between 2003 and 2008, the increase per person in employment was much less at 1.3%.

GNP was until recent times about 82% of the value of GDP. however, the National Recovery Plan 2010-2014 forecasts a level of 73%.

During the boom, the per capita GDP data did not chime with reality.

Even allowing for inequality, it just wasn't credible that we were among Europe's wealthiest and when Bank of Ireland had us as runners up to Japan as the wealthiest on earth it seemed more bizarre - - Japan had at the time about 35% of its workforce as temps, earning less than the Irish minimum wage.

In recent times, we have seen pharmaceutical exports jump without any impact on jobs and we know that the MNCs have profits of sales from Ireland inflated to maximise the benefit of the low corporate tax rate.

We have about 500 employed in the leasing sector and we manage over 3,000 aircraft from Ireland; in 2004, the 2 biggest companies by revenue were owned by Microsoft and were operating from the offices of a Dublin law firm. They still operate to channel patent and other income from other overseas Microsoft units to Ireland. They now have unlimited status and their results are not publicly available.

A leasing company with 20 people can have huge revenues but it does not reflect economic activity in Ireland.

The other side of the coin are Irish companies earning income abroad.

CRH for example, is only Irish because its headquarters are in Ireland and because of its background -- up to 90% of its shareholdings are held by non-Irish and only about 2,000 of its 80,000 staff are based in Ireland.

On paper the outward stock of foreign direct investment is greater than the total for inward investment.

Danny McCoy, the director general of the business lobby group IBEC, told his conference last November: "However, what we see is the extent to which Irish-owned assets are working for us overseas and creating that €50bn in wealth that flows back into Ireland.

Ireland's stock of direct investment overseas (ODI) in other words, Irish owned assets abroad was just shy of €190bn. The stock of FDI assets here in Ireland was just below €170bn.

Ireland therefore has a net Direct Investment asset position of €20bn.

This number shows the growing impact of large Irish multinationals many of them represented here today operating in the international sphere: companies like CRH, Smurfit Kappa Group, Glen Dimplex, Kerry Group, Glanbia, Paddy Power, Creganna-Tactx and Greencore indigenous companies growing their international reach and acquiring new businesses overseas."

This is of course another example where the bragging/bullshit does not chime with reality.

Foreign firms are responsible for more than 90% of our tradeable exports.

The American management consultants, Accenture, moved their hq to Ireland from Bermuda and I would think that some of the €50bn referred to by McCoy includes profit from activities in for example the US that shouldn't affect Irish national accounts data.

GDP and GNP for most countries are at similar levels. However, Ireland is exceptional for its dependence on FDI (foreign direct investment).

The difference between the 2 measures has widened during the recession.

I would think that the GNP level is more a reflection of reality today.

Employment in the FDI sector is back to 1997 levels when the workforce was 25% smaller.

This issue of GDP v GNP was raised by economist Michael Taft in a blog comment response to a Finfacts article on Wednesday.

Richest EU countries have the highest taxes; Irish tax burden will be as high as Denmark's by 2014

Irish National Debt: Public spending was 57.3% of GNP in 2009; Deficits in 2008-2013 will amount to €95bn

University College Cork (UCC) economist, Seamus Coffey, estimated last December that with GDP (gross domestic product) measured at €159.6bn in 2009, total government expenditure equates to 47.1% of GDP. The equivalent GNP figures (gross national product: excluding for example the profits of multinationals operating in Ireland) are €131.2bn and a staggering 57.3%. He asked: is there a higher figure in any country? Blog post

Seamus Coffey said this week that the National Debt will be €192.8bn by the end of 2013. This is 113.5% of the IMF’s nominal GDP forecast for 2013. Here is a breakdown of the debt and the proportion attributed to each category.

• Pre-crisis (2007) National Debt - €37.6bn, 19.5%
• 2008-2013 deficit-related Debt - €94.9bn, 49.2%
• Banking-related Debt - €60.5bn, 31.4%

The economist said at the end-of 2013 we will have a huge debt. One-fifth will be what we brought with us into the crisis. Less than a third will be due to the bank bailout. About half of our debt will be due to our own deficits. By 2013 the bank recapitalisations will be over, and we may even see some small return on the money poured into AIB and BOI, with the toxic property loans NAMA process also well advanced. However, our Exchequer deficits will remain and will continue to require further borrowings. With the annual deficit still estimated to be 7.5% of GDP in 2013, the 113.5% Debt/GDP ratio at that stage will continue to increase. Blog Post

Below is one of my contribution's to a thread on the Irish economy blog.

Fianna Fáil with various hangers-on was elected in Irish General Elections in 1997, 2002 and 2007 - - they had democratic mandates all through the bubble period.

The party on its own in the period 1977-1981 trebled the national debt and in 1978 a budget deficit of almost 18% was recorded - - the largest according to the IMF in the period 1970-2008.

The results of reckless mismanagement was misery for tens of thousands of people in the 1980s and large scale emigration.

You refer to ‘immorality’ but surely that should largely be levelled at the people who left a legacy of 200,000 job losses and a generational calamity?

It was an Irish government in 2008 that guaranteed existing bank debt without consultation/negotiations with the EU institutions, before firm positions were taken on saving banks.

We joined a currency union which has positives and negatives. The ECB supported the banks and it’s easy to view the seductive alternative of just walking away from debt and believe that a banking system in a bankrupt country could be funded from thin air.

The annual budget deficits in the period 2008-2013 will result in €95bn in debt according to Seamus Coffey.

Any outrage for that?

Ireland and Iceland: Did Devaluation boost Iceland's Exports?

The following is a contribution to a thread on the Irish Economy Blog, comparing Iceland and ireland during the Great Recession.

Iceland’s total export value is split about 40% each between marine products and the aluminum industry, linked to its geothermal resources.

The biggest annual changes in exports in recent years have been in 2008.

The banking system collapsed early in Q4 2008.

In 2008, marine product exports jumped 33% in value on a volume rise of 13%. This was against a backdrop of global food prices rising to record levels.

Aluminum exports jumped 127% in 2008 and volume increased 71%. US giant, Alcoa, opened a new smelter in East Iceland in mid 2007.

Fish export volume fell 4% in 2009 but the export value jumped 22%; aluminum export volume rose 6% in 2009 but the value of exports fell 6%.

Fish export volume fell 5% in 2010 and the export value rose 5%; aluminum export volume rose 1% in 2010 and the value of exports jumped 30% - - the average aluminum price on the London Metal Exchange in 2010 rose 24%.

As for marine products in 2010, the movement of large shoals of mackerel north to cooler waters off Iceland and the Faroe Islands prompted both countries to unilaterally hike their catch quotas.

Iceland raised its 2010 quota from 2,000 tonnes to 130,000 tonnes and to 147,000 tonnes in 2011.

Without the mackerel windfall, the volume of its fish exports would have fallen more than 5% in 2010.

So the big export volume and value changes happened before the currency collapsed; the price of aluminum fell 40% in Q4 2008.

Paul Krugman identified six ’supertrading’ economies as existing in 1990 - - Belgium, Hong Kong, Ireland, Malaysia, the Netherlands and Singapore and the OECD added six more in 2000.

These economies are dependent on the “slicing up of the value added chain” on an international basis.

US multinationals based in Ireland mainly export to their units in other European countries, Exports to Asia are insignificant and short-term exchange rate movements would not impact supply decisions.

Iceland has an unemployment rate of 7% — almost half the Irish level - - and about 9,000 are employed directly in the fishing and aluminum industries.

This is only 5% of the total workforce.

The equivalent Irish ratio for the internationally tradeable goods and services sectors is almost 13%.

Comparing Iceland and Ireland

Ireland, unilateral debt default and worst case scenarios

A thread on the Irish Economy blog (see below) in response to an article this wee, in the Financial Times by its economics commentator Martin Wolf, has prompted a number of Irish academics and others to recommend unilateral debt default if the European Union institutions will not agree to Irish debt restructuring.

It's striking that despite a thread of many words, no advocate of unilateral default has detailed a worst case scenario - - which should be an essential aspect of consequential decision making - - be it for the aspiring entrepreneur or political leader.

It’s easy to be on the sidelines making proposals without having any responsibility.

The Irish banks are dependent on funding from the European Central Bank.

The ATMs would be shut down if the ECB also pulled the plug on its lifeline.

“Ah shur, that would never happen” would be the typical excuse to avoid having to address what should be done if the “what if” materialised.

On Sept 29, 2008, the night when a blanket State guarantee was provided to Ireland's banks, it’s very likely that Taoiseach Brian Cowen did not consider the consequences of the builders' bank Anglo Irish Bank collapsing because in his mind, such an eventuality would have been so GUBU that it would have been crazy to even worry about it - - now the price to pay for negligence and incompetence is very steeep.

Irish Economy Blog: Martin Wolf: Ireland Needs Help With Its Debt

Finfacts article: The Irish debt burden and the market for simple solutions

2010 US Presidential Medal of Freedom Ceremony

President Obama presents 13 exceptional individuals with the Presidential Medal of Freedom. Honorees include former President George H.W. Bush, German Chancellor Angela Merkel, author and poet Maya Angelou, financier Warren Buffett, and Boston Celtic great Bill Russell.



Website

Irish debt default and 'burning' bondholders

The European Central Bank opposes cutting the debt of senior bank bondholders because of the fear of contagion across the Eurozone; many Irish people say taxpayers shouldn't carry the burden of bank debt.

The European Union's Economic and Monetary Affairs commissioner, Olli Rehn, said on Tuesday that EU finance ministers have 'simply no appetite' for Irish bank senior bondholder 'haircuts' - - forced cuts in the amount of the debt owing.

The commissioner said the restructuring of Ireland's banking sector should be done in line with undertakings already agreed with the EU and the IMF.

"We only expect that this will be done according to the memorandum of understanding which sets the frame for restructuring and reform of the Irish banking sector so that it can become again healthy and resilient," Rehn told reporters after a meeting of the Ecofin council of European Union finance ministers in Brussels.

He added: "There is simply no appetite for considering senior bondholders in this context because we want to avoid any kind of potential contagion effect and therefore this issue is not at the table and that was made very clear yesterday in the meeting of the Eurogroup."

The Fine Gael party's election manifesto, which was published on Tuesday, says imposing losses on senior bondholders in Irish banks would only be extended as part of a European-wide framework and would focus on Anglo Irish Bank and Irish Nationwide Building Society, which are being wound up.

Would we be burning ourselves:

UCC economist says more than half Irish bank bonds owned by investors in Republic of Ireland

Irish Economy Blog Threads:

Burning Bonholders

Gormley On the Guarantee: The McWilliams Option

Ireland when cost of 1 Dublin house would buy 9 similar in Houston, Texas

In 2006, an international survey compared over 300 metro areas using the standard of a 2,200 square foot, 4 bedroom, 2 ½ bath home that would be typical in an area favoured by a management level family. It found that for the cost in Dublin, Ireland at US$1,406,497, you could have bought nine similar houses in Houston, Texas, three in Amsterdam, two in Sydney and almost two in Tokyo.

We hadn't even struck oil; we were host to large American companies and a lot of us were deluded into believing that the fairytale of riches from selling each other houses, would keep going.

A year later, the nternational house price comparison index for 2007 ranked Dublin, Ireland and Beverly Hills, California in top ranks for world's most expensive comparable management level family homes.

Finfacts 2008: International house price comparison index for 2007 ranks Dublin, Ireland and Beverly Hills, California for world's most expensive comparable management level family homes

Finfacts 2006: Global Survey: Cost of typical management level house in Dublin, Ireland, could buy 9 similar houses in Houston, Texas, 3 in Amsterdam, 2 in Sydney and almost two in Tokyo (old format page)

Seven things you should never do on Facebook

Stuart Miles of Yahoo! News says there are some things that you should never do on social networking site, Facebook:

Click here

Ireland: Debt default on sovereign and bank debt or not?

Apart from an adjustment of the interest rate in the EU-IMF bailout terms, agreement with the European Commission and European Central Bank on defaulting on both sovereign debt and senior bank debt will not be forthcoming in the short-term.

Basically, before reforms are implemented, as with Greece, the argument that we cannot sustain debt of say 130% of GDP, will not wash.

If the EU-IMF reform programme is implemented, the then view of the IMF on growth prospects and the debt burden, would hopefully have some weight in Brussels and Frankfurt.

The following are reports and presentations from the current week:

Presentation by Lorenzo Bini Smaghi, member of the Executive Board of the ECB, London Business School, 9 February 2011: Slides from the presentation (pdf)

IMF staff report on Ireland: Lingering domestic perception of inequitable burden sharing persists

European Commission’s staff report on Ireland is available here

Goodbody Stockbrokers arguing for debt sharing: Debt Dynamics - With a little help from our friends (scribd)

Irish General Election 2011: The 'Democracy Now' soufflé

Sarah's Carey's op-ed article in today's The Irish Times: Angry men lack the courage of conviction

This is my comment:

This is an excellent article as it forensically debunks the excuses put forward for the collapse of the 'Democracy Now' soufflé.

It also comes from a commentator who is not an insider in the cosy media club.

I term it a soufflé because there was not much of substance to it; it is easy to be against villainous bankers but if there is an avoidance of inconvenient truths for voters, then it's a repackaging of Bertie Ahern's politics, albeit with some transparency.

Late last year, Fintan O'Toole addressed a public protest organised by the trade union congress, ICTU, and standing beside him was the general secretary who was a board member of the Central Bank from 1995 to 2010.

This is conservative Ireland after all, where the buck stops nowhere system!

The Dublin Chamber of Commerce calls today for “root and branch” reform of the public sector but it has zero to say on a system where lawyers as public contractors can get paid more per day than the claimed bribes they are investigating, while becoming multimillionaires in the process.

Yes to public reform but also for reform in the protected private sector where the Sate is the biggest supporter.

There is no evidence that these 'Democracy Now' folk were going to be iconoclasts and according to Colm Keena's report in the IT on Tuesday, when 5 putative candidates dropped out, the project collapsed.

Credit where it's due to Shane Ross, but the other big names found that it's easier to be a hurler on the ditch.

There was a confusing newspaper headline this week: 'David McWilliams plans Obama-style campaign' - - showing the conflict between the pull of the public limelight and hard choices, including fear of failure - - and Colm Keena also reported that Elaine Byrne, IT columnist and political scientist, got the impression after 3 meetings that McWilliams was planning to stand in the election but he apparently is giving a contrary impression.

Prof. Kenneth Rogoff of Harvard University and co-author of the celebrated book, 'This Time is Different,' in 2002 when he was chief economist of the IMF, wrote an open letter to Prof. Joseph Stiglitz, highlighting how easier it is to be a commentator than a policymaker.

"Joe, as an academic, you are a towering genius. Like your fellow Nobel Prize winner, John Nash, you have a 'beautiful mind.' As a policymaker, however, you were just a bit less impressive."

Open Letter

Finally, I could be fairly termed a hurler on the ditch myself. However, I have stood in a national election and I have the experience of leaving the security of a multinational and starting a business myself - - it takes more stamina than a 4-week campaign!

The Finfacts General Election Page 2011

Michael Lewis on the financial crashes in Ireland, Greece and Iceland

Former bond trader, Michael Lewis, author of "Liar’s Poker," "The Big Short" and "The Blind Side," has written for Vanity Fair on the financial crises in Greece and Iceland. In the March issue, he turns his attention to Ireland.

“The Irish became obsessed with their own property market,” he says. “The Icelandic tycoons got obsessed with conquering the world outside of Iceland.”

Lewis said he found it “amazing” that the Irish government has “socialized” the banks—some $80bn in senior and subordinated debt—and made it the financial responsibility of Irish taxpayers, who didn’t create it.

During that period, Lewis said, Merrill Lynch received hefty fees to underwrite bonds by some Irish banks. When a Merrill Lynch employee in London characterized some Irish bankers as “irresponsible,” said Lewis, the firm fired him.

Quoting one of his interview subjects in the Vanity Fair article, Lewis said, “The problem with the Irish, you push them, you push them, and they take it, and one day they go wacko on you.”

When Irish eyes are crying

First Iceland. Then Greece. Now Ireland, which headed for bankruptcy with its own mysterious logic. In 2000, suddenly among the richest people in Europe, the Irish decided to buy their country–from one another. After which their banks and government really screwed them. So where’s the rage?

Beware of Greeks Bearing Bonds

As Wall Street hangs on the question “Will Greece default?,” the author heads for riot-stricken Athens, and for the mysterious Vatopaidi monastery, which brought down the last government, laying bare the country’s economic insanity. But beyond a $1.2 trillion debt (roughly a quarter-million dollars for each working adult), there is a more frightening deficit. After systematically looting their own treasury, in a breathtaking binge of tax evasion, bribery, and creative accounting spurred on by Goldman Sachs, Greeks are sure of one thing: they can’t trust their fellow Greeks.

Wall Street on the Tundra

Iceland’s de facto bankruptcy—its currency (the krona) is kaput, its debt is 850 percent of GDP, its people are hoarding food and cash and blowing up their new Range Rovers for the insurance— resulted from a stunning collective madness. What led a tiny fishing nation, population 300,000, to decide, around 2003, to re-invent itself as a global financial power? In Reykjavík, where men are men, and the women seem to have completely given up on them, the author follows the peculiarly Icelandic logic behind the meltdown.

Q&A: Michael Lewis and the Irish Politicians That Sank Ireland

Sovereign debt exposure and confusing Bank for International Settlements data

We shouldn’t be confused by the ‘facts’!

Bank for International Settlements data is often quoted in relation to sovereign debt exposures but it adds confusion to an issue short of hard facts.

In March 2010, Germany’s top bank, Deutsche Bank, had a combined €14.8bn of gross sovereign debt exposure to the “peripheral” EU states of Greece, Spain, Portugal, Ireland and Italy, of which €10.4bn was to Italy.

The FT Jan 31, 2011:

French and German banks have the largest exposure to Greece, according to the Bank for International Settlements, with €59bn and €40bn respectively as of last September. German banks are also among the most exposed to Ireland, with €154bn outstanding.

The FT Nov 25 2010:

The Bundesbank also played down German banks’ exposure to Ireland, estimating direct exposure at about €25bn. This is much lower than the Bank for International Settlements estimates, which suggested about $140bn.

Officials said the difference reflected some indirect exposure such as business routed through Dublin-based special purpose vehicles or subsidiaries.

These Are The 20 Banks Most Exposed To The European Sovereign Debt Crisis

Deutsche Bank have broken down the debt threat facing Europe's banks, and it isn't pretty for many of them.

However, the level for Bank of Ireland does not seem correct, if it is just sovereign exposure.

Irish General Election 2011: Irish Waste Policy and Gombeenism

The Fernwärmewerk Spittelau incinerator/heating plant, Vienna. It supplies more than a quarter of a million houses and over 5,000 industrial consumers with heating and is also a tourist attraction. Source: Wikimedia Commons

Click for Finfacts Irish General Election 2011 Page

Former Irish environment minister John Gormley who is also Green Party leader, in office since 2007 until last weekend, spent much of his time trying to counter the economics of a government decision in 2007 to build a waste incinerator in his constituency of Dublin South-East.

In recent weeks, Gormley wrote to his constituents informing them that the incinerator “cannot go ahead” because of planned new levies.

Meanwhile, Dublin City Council has said that it is implementing Government policy.

The cocktail of gombeenism and Nimbyism (not in my backyard syndrome), means that according to 3 State agencies - - Forfás, IDA Ireland and Enterprise Ireland - - in a submission to the Department of the Environment, Heritage & Local Government in April 2010, that in terms of municipal waste treatment, while Ireland has made progress on recycling, rates have slowed in recent years.

Ireland continues to have a high reliance on landfill for municipal waste treatment, landfilling 62% of municipal waste in 2008 (compared to the Eurozone average of 32%). The submission said that it is notable that Ireland currently has no municipal waste-to-energy incinerators and limited incineration capacity (3%) compared to the Eurozone average of 24%. It said it is also worth noting that many countries that are currently expanding waste-to-energy capacity, such as Denmark and Germany, also have the highest recycling rates.

In Germany in 2009, 35.4m tonnes of waste were disposed of in landfills, 6m tonnes or 14.8% less than in the preceding year. As reported by Destatis, the federal statistics office, this week, this is the lowest level since the amounts of landfill waste began to be recorded in 1975. Thus there is a continuing trend to treat or burn waste instead of dumping it.

According to Evridiki Bersi of the Greek newspaper, Kathimerini, Germany had around 50,000 landfills in 1970. Now, in a country of 83m inhabitants, there are less than 300 and they don t take unsorted garbage. They only accept what is left after recyclable items have been removed and the rest has been subjected to various processes that compress it into an inert mass. In 2020, those landfills will be out of operation because by then Germany plans to make use of all garbage and the energy produced by it.

Landfill is a serious threat to water supplies.

The German Business Institute (IW) estimates that Germany saves €3.7bn a year thanks to recycling and the production of energy from waste.

Proper waste processing saves the German economy 20% of the cost of metals and 3% of the cost of energy imports.

The 55,000 old garbage dumps have been replaced by 70 incinerators, 60 biological and mechanical waste-processing factories, and 800 units producing compost from organic waste.

Dublin City Manager John Tierney said in February 2010, that he was implementing Government policy! He said €59.5m had already been spent on the project -- €34m on acquiring the site of the former Poolbeg power station and €25.5m in consultants’ fees.

Consider a well-run country in contrast, Austria, where the unemployment rate is just over 4% - - among the lowest of the EU27 countries.

There is of course a fat chance of the Irish acknowledging the lamentable record of public project implementation and looking to what can be learned from countries like Austria.

Small minded politicians and much of the public who want to have their cake and eat it, leave the country always racing to catch up with standards thankfully set by the reviled bureaucrats in Brussels, where there is claimed to be a “democratic deficit.”

Of course, we are blind to the deficits under our noses.

We had to be shamed by the EU and the contamination of the water supply to the city of Galway to get action on water quality.

It’s always the same old story: respond to a problem only when there is a crisis…sorry…I should say: a dire crisis.

Vienna has three incinerators according to an Irish Times report and one of them supplies more than a quarter of a million houses and over 5,000 industrial consumers with heating.

A total of 9 incinerators in Austria are only one aspect of a sophisticated waste management and recycling system.

In 2010, Austria will generate 78.1% of its electricity from renewable sources - - the highest in the EU - - compared with 13.2% in Ireland.

Forfás, IDA Ireland and Enterprise Ireland Submission to the Department of the Environment, Heritage & Local Government, April 2010

ESRI slams Gormley's gombeenism on incineration; Irish waste policy has “no underlying rationale”; Likely to impose “needless costs on.. economy"

Irish Jobs and FDI

Irish jobs in the exporting FDI (foreign direct investment) sector are back to 1997 levels.


Every time Tesco opens a new shop, the United Nations' agency UNCTAD's data includes it as a ‘greenfield’ FDI investment, which of course it is but our surplus on food and drink trade with the UK is evaporating fast and as Ireland’s exports in the sector dipped 15% 2009, the UK posted a 6% rise.

It's good to have services export growth.

However, data from for example the aircraft leasing industry can distort the picture.

Goodbody estimated in 2007 that the aircraft leasing companies based in Ireland were managing a combined fleet of 1,600 across global markets.

Nearly 500 jobs are anticipated to be created over the next three years in the aircraft leasing industry in Ireland, according to the Irish Aviation Authority (IAA). In 2010, about 1,000 people were employed in the leasing industry and the authority predicted a growth of around 45% - - that may well be the usual bs from a state agency!

Avolon, the aircraft leasing group headquartered in Dublin, today announced an additional capital raising of US$465m, bringing the total value of funds raised since it was established in May 2010, to in excess of $2.5bn.

Irish Economy 2011: Rising Irish exports, the 'smart economy' and a jobless recovery

Foreign-owned firms accounted for 91% of Ireland's tradeable exports in 2009; Food & drink exports fell 15%

ECB Director Bini-Smaghi: ‘Ireland’s meltdown is the outcome of the policies of its elected politicians’

September 2010 Executive Board, European Central Bank: Back row (left to right): Lorenzo Bini Smaghi, José Manuel González-Páramo, Jürgen Stark. Front row (left to right): Gertrude Tumpel-Gugerell, Jean-Claude Trichet (President), Vítor Constâncio (Vice-President).

The Irish Times published an interview with Lorenzo Bini-Smaghi, a member of the Executive Board of the European Central Bank, on Saturday, Jan 15, 2010.

The following is one of Michael Hennigan's contributions to a related Irish Economy Blog thread.

Bini-Smaghi is correct when he implies that there was strong public support for boomtime policies and the slow-motion response to the banking crisis resulted in the eventual collapse of market confidence.

1. If the global credit crunch had been deferred to 2013, the most likely result of the 2012 Irish general election would be a Fianna Fáil-Labour coalition.

While I don’t buy the argument that the whole population had been transformed into a shower of eejits, absent a global downturn that would be much worse than 2000/2001, fiscal prudence was never likely to be popular with the majority of the electorate who had become obsessed with the paper-profits of the bubble.

For older people with their mortgages paid off and the attraction of equity release, they no longer had to dream of summer days competing with pushy Germans for deck chairs on a tacky beach in Spain but they could aspire to their own place in the sun — even if it was somewhere they had never heard of.

2. The credit crunch broke out in early Aug 2007, 7 months after HSBC Bank announced big subprime losses in the US and revealed the rickety state of the US housing market; by mid-Sept 2008 when Lehman Bros. collapsed, Irish political leaders and the Department of Finance were still relying on reassurances from the financial regulator and the banks themselves on the strength of the banking sector.

Using the Pareto 80/20 rule, how long would it have taken to establish the true state - - who was meeting interest obligations etc? One week?

Anglo made a powerpoint presentation to DoF officials days after the Lehman collapse and Fingleton of Irish Nationwide was also reassuring; liquidity not solvency was the problem.

3. Whatever was discussed on the Trichet-Lenihan phone call a week before, the Irish government was the only member of the Eurozone to guarantee existing bank debt and it was presented as a fait accompli to the ECB and both the Ecofin and Eurogroup. The decision of Sept 29/30 was made without access to crucial information by the political leadership or their advisers.

4. Anglo was nationalised in Jan 2009; in Jan 2010, the head of NAMA said on the detail of property loans presented by the banks: “We opened it up and said, ‘Oh, my God,’ What they are telling us is not the reality.”

5. I have seen no credible analysis to support the case that outside of the euro, the same individuals who were responsible for the economic crash would have behaved prudently at a time when the carry-trade would have been attracted by Ireland’s ‘miracle’ economy.

6. All the wealth hasn’t evaporated; some €60bn was invested in commercial property mainly in Europe; investments were made in prime properties in for example New Bond Street in London, where values have recovered and tenants are usually sound PLCs.

The focus has been on the transferring of homes in Ireland; there are surely many overseas investments in shelter vehicles that are difficult to source.

Irish per capita GNP is at the average of the EU27.

7. As for restructuring, in March 2010, Germany’s top bank, Deutsche Bank, had a combined €14.8bn of gross sovereign debt exposure to the “peripheral” EU states of Greece, Spain, Portugal, Ireland and Italy, of which €10.4bn was to Italy.

So depending on the number of countries involved, German banks should be able to handle bond losses well in coming years.

While it should be easy for Greece to make its case for a ‘haircut,’ with a public debt GDP ratio of over 150%, how could Ireland’s case be accepted without including say Italy and Belgium?

Include private debt and argue that Irish consumers weren’t as prudent as Italian counterparts during the credit boom!

8. If parliamentary pay and allowances are an indicator of public costs, Ireland has still some road to travel.

Sweden is one of Europe’s fastest growing economies and the members of the Riksdag receive a basic, monthly pay of SEK 56,000 (€6,200), a sum that is subject to income tax - - and is at a higher level than Ireland’s.

Members living more than 50 kilometres from the Riksdag are entitled to reimbursement of up to SEK 7000 (€780)/month spent on overnight accommodation in Stockholm. However, the Riksdag has about 250 overnight apartments which are provided free of charge for members.

Fifty TDs only get the basic Dáil salary of €92,672 and their overall earnings in 2010 were at an average of €112,000

A TD living in the range 60-90km from Leinster House can claim €30,350 annually with effect from March 2010.

Chart here of Irish bond yield spreads since early 2008:

http://www.finfacts.ie/irishfinancenews/article_1020984.shtml

Battle ahead in developed world with public sector unions

Weekly sick leave in Irish public service

The Economist says in its current issue that while union membership has collapsed in the private sector over the past 30 years (from 44% of the workforce to 15% in Britain and from 33% to 15% in America), it has remained buoyant in the public sector.

Public-sector unions combine support for higher spending with vigorous opposition to more accountability. Almost everywhere they have demonised competition, transparency and flexible pay.

While union membership has collapsed in the private sector over the past 30 years (from 44% of the workforce to 15% in Britain and from 33% to 15% in America), it has remained buoyant in the public sector.

In Britain over half the workers are unionised. In America the figure is now 36% (compared with just 11% in 1960).

The Economist says people in the private sector are only just beginning to understand how much of a banquet public-sector unions have been having at everybody else’s expense. In many rich countries wages are on average higher in the state sector, pensions hugely better and jobs far more secure. Even if many individual state workers do magnificent jobs, their unions have blocked reform at every turn. In both America and Europe it is almost as hard to reward an outstanding teacher as it is to sack a useless one.

In many countries including Ireland, there are also powerful combinations in the protected professional sectors, which act no differently to public sector unions.

The Economist: (Government) workers of the world unite! Public-sector unions have had a good few decades.  Has their luck run out?

Finfacts:

Sick leave in Irish civil service almost doubled since 1980s; Average employeeabsent for over 11 days in 2007

Could the Irish public sector benchmarking fiasco provide a case for the DPP?

Irish trade union boss David Begg, 'status,' denial and the economic crash

Irish public sector pay/pensions to rise 16% in period 2005-2010; Pay up 11%:Pensions up 66%; Pensioner numbers rise 43% to 103,400

Irish taxpayer to provide €1bn bail-out of FÁS and university pension funds

Hans Rosling's 200 Countries, 200 Years, 4 Minutes - The Joy of Statistics

The growth of global wealth and well-being over the past 200 years.


Finfacts article: Sweden's Gapminder shatters economic and environmental myths with online animated graphs

The Joy of Stats: Hans Rosling says there’s nothing boring about stats, and then goes on to prove it. Only with statistics can we make sense of the world and harness the data deluge to serve us rather than drown in its confusion.

A one-hour long documentary produced by Wingspan Productions and broadcast by BBC, 2010.

Finfacts article: Global population to grow to 7bn in 2011; Family photo of all humanity could be taken in area of Los Angeles city

An Angry Irishman and the [Expletive Deleted] Celtic Tiger

Clip of an angry Irishman venting about Ireland's economic woes with a rich lacing of expletives!

Taoiseach Brian Cowen says sorry!

Ireland's Bertie Ahern and inventing the Free Lunch, March 2000

The clip below illustrates how difficult it was in 2000, to challenge conventional wisdom, self-interest and the likes of Taoiseach (Prime Minister) Bertie Ahern, a former hospital bookkeeper, sailing against the wind that the free lunch hadn't been invented in Ireland.

Irish Economy: The 2001 economic consensus that paved the road to economic ruin

Irish Economy: Ahern, Harney, McCreevy, Cowen and the other individuals/ group swith responsibility for the economic crash