April 26, 2009

Chinese whispers down under

Posted in International Economy · 105 comments ·
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This is what Ballybunion is going to look like after a bit of global warming. Looking out at Bondi Beach as the big surf rolls in and the beautiful people catch the waves on a warm Sydney autumn evening, it is easy to imagine the west of Ireland in a few decades.

Apart from the fact that I haven’t felt this ugly and self-conscious since going to discos in the 1980s, being in Australia makes you think. It focuses your mind on the changes that are on going in the world economy and how they are going to affect us all.

The Irish accents in the bars and restaurants here underscore that we are at the beginning of yet another great era of Irish emigration. We are about to enter yet another period in which Irish governments regard the safety valve of emigration as the price we all have to pay for the mistakes of a few.

It was the same 25 years ago, when Brian Lenihan, the current Minister for Finance’s father, told us that there were ‘‘too many of us to live on this small island’’. The family firm is still in business, and the flight of the young will still be tolerated.

Yet again, Ireland is addressing its economic difficulties with the insider/ outsider solution. The insiders – those with reasonably secure jobs in the protected sector – will be fine and will simply suffer the indignity of being poor versions of the European middle-class.

The real pain will be suffered by the outsiders: the young, the unemployed and those without a secure stake in society. It will be like the 1980s all over again. And the 1950s.And the 1930s.

Given the way things are going, this new era might be a long one. As a member of the only generation that might have to emigrate twice in our working lifetime, this is a rather sobering prospect. Twenty five years ago, as self-conscious teenagers, we knew that, by the time we were 20,there was little chance of many of us remaining in Ireland.

Now, a new generation of Irish teenagers will have to prepare themselves for a similar exile.

However, distinct from the Irish angle, the headlines in Australia reinforce that the world is changing rapidly, and it is this world to which we in Ireland must adjust.

Last Friday’s editorial in the Sydney Morning Herald started with the line: ‘‘Once again, news from China will have an impact on Australia.”

This is about the huge demand for Australian uranium, following China’s announcement that it is going to dramatically increase the rollout of new nuclear plants in the years ahead.

This came after Britain, Germany and Italy signalled similar news, and Japan was making noises suggesting it was about to do likewise.

The Australians know that the world is turning nuclear, and it can, as the Herald suggested, expand its uranium industry from Aus$900 million toAus$9 billion.

The move to nuclear is a signal that China acknowledges that it has to wean itself off burning coal to drive the energy demands of that huge country.

However, there is also something else going on, something that suggests a change in Chinese tactics and strategy towards how it spends its huge reserves. This change will have significant ramifications for the US – and everyone else.

In recent weeks, the Chinese have signalled that they are fed up buying US Treasury bills. Last week, at the Asian Economic Conference, delegates from China commented on their unwillingness to increase their investment in such bills.

China holds more than $1trillion of US paper, and the US, by printing money hand over fist, has as good as said to the Chinese that the value of these ‘T-bills’ will fall. The US is going to inflate away its debt burden and, via an exchange rate devaluation, rob the holders of US debt via a weaker dollar.

This poses a huge dilemma for the Chinese. On what are they going to spend their entire current account surplus – the vast excess of the money they earn from exporting compared to what they spend on imports? They will spend a certain amount in China, but they need to buy overseas assets. This is where Australia comes in.

Australia is China’s quarry. Its huge mineral resources make it crucial to China’s continued growth. So the Chinese investment agency is considering taking strategic stakes in Australia’s mining companies, such as BHP and Rio Tinto. In addition, the Chinese are keen to sign long-term agreements with Australia to secure uranium, iron ore and coal.

But China can’t switch away from the US overnight. It needs the US spending to keep its factories open to produce goods for export to the US.

So the world’s banker is trying to play a tricky balancing act, diversifying sufficiently away from the dollar and the US to protect itself, but not diversifying so dramatically as to cut off funding to the Americans.

This process is going to define global financial markets and geopolitics for the next five years. If China is successful, it will manage America’s decline gradually and without incident. Countries like Australia will benefit as resource players.

If it fails and the US dollar falls too quickly or the US doesn’t recover, then the entire Chinese gamble will backfire. The Chinese gamble is to use the US as its growth engine until it is ready to spend its money at home.

The country clearly needs more time and is not prepared to pump-prime its domestic economy just yet. Thus far, China has avoided an implosion similar to Russia’s in the 1990s, and the politburo in Beijing is obviously keen to do things slowly and methodically.

Irrespective of the timeframe, it seems plausible to argue that that is the ‘big trade’ – the big investment story of the next few years. It will change all our lives. Not that you’d know here in Bondi.

Little do the surfers realise that, yet again, Australia looks set to live up to its moniker as ‘the lucky country’.


  1. goinghome

    A purportedly true story is told (from yellowbridge.com) about Henry Kissinger when he was in China in 1972, laying the groundwork for President Nixon’s visit. At a meeting with Chinese prime minister Chou En-Lai, Mr. Mr. Kissinger asked the prime minister if he believed whether the 1789 French Revolution benefited humanity. After mulling over the question for a few minutes, Chou En-Lai replied, “It’s too early to tell.” -

    One thing we can be sure about is that there will be pain. Everyone’s assuring us commitedly about this pain we’ll feel and how it is to be shared out, and how it is upon us this very day. Some say trust-cutting is as costly as fund-cutting, in complicated ways. Well, thanks a bunch for the cold comfort, Hegel! – http://www.crossroad.to/articles2/05/dialectic.htm

    • G

      I thought it was Mao who said ‘it was too early to tell’ – in any case – the Chinese with their history are certainly playing the long game and watching other countries like Britain and the US burnout………

      Interesting article David, a lot more people are going to be writing and focusing on China from now on – it will be their century.

  2. jim

    I think I highlighted this Chinese Interest in Aussie a couple of months ago here on the blog.There were delegations out my way in Perth looking to buy shares in the mines, that mates of mine work in.The locals are not under any great pressure to sell,so the Chinese wont buy anything cheap,that’s for sure.Some of the workers well laid off awhile ago,when prices dropped,but that was more to do with managing the long term resource value,than any financial stress of the Companies involved.I included a lot of this information in a piece I wrote about critism Paul Krugman recieved for His observations on US /Chinese relations after Hiliary’s visit if ye look back through the Archives.On a side issue spoke with some Irish blokes working on Road projects around Sydney couple of weeks ago,6 months in the Country,earning 2000 dollars a week,start 6am.overtime availeable.They told me they dont drink during the week ,only weekends.Their managing to save a few bob as a result of not drinking,thats good as it will provide a safety net ,when their so far from home.Not saying its the same for everyone arriving,but thats good news for them guys.Left my phone number with them in case thay needed any help or were out Perth way and could call for tae and talk shit about the good old days.Any way ye know how that works,were just one big tribe at the end of the day.

    • joe sod

      well australia may be the “lucky country” to an extent, it has plenty of resources to export and china to buy it, however it will learn that it can’t have things both ways, china will buy its exports but it will also look to buy into the resousces it is exporting and will also look for a relaxation in immigration from china, as china becomes more powerful and as the australian economy becomes more dependant on china, australia will have to allow this to happen, australia even today is still are very isolated continent, in the past it always looked to europe and america for markets, ideas and protection, now it is distancing itself from this so that it can take advantage of the growth of asia, however everything comes with a price

  3. severelyltd

    Being Self Conscious is a sign of genuine reflection whereas petty character assassinations are the work of cornered bullies. Lenihan and Co. are quite obviously scared senseless of whats going on, they are afraid to admit to reality as it would reveal the true state of their flimsy resolve. Instead they seem quite prepared to carry on regardless with advice gained from dubious individuals and institutions which benefits the limited few and not the majority . Your articles have been consistent ,realistic and relentless. If there is one thing that I have noticed from watching this site is that your ideas and opinions may not be universally accepted but are the seeds of discussion and fresh thinking and therefore shine a light on the path forward.
    I for one have noticed a rapid decline in the social fabric, increase in crime and general return to the 80′s. I have a relatively stable job but have been wondering recently if this is a place where I want my family to live, is it time for me to leave. On reflection that is not my character. I am an optimist and I can tell you are also. I believe there are many solutions to the problem’s we are faced with. The only thing in the way of future recovery is the current regime who are steering the ship into the rocks. The sooner the ranks of FF are pushed to the sidelines the better. The standards to which they live there lives is up to them ,but no longer shall traitors and thieves impose their will on the Irish people. We are a nation forged from stronger stuff than them. They abandoned their country in the name of profit at the cost of it’s people. We need a new breed of Politicians, people who are qualified to carry out their jobs, and can complete their work without the influence of lobbyist’s and special interests.We need an Obama style leader. A clear thinker, a great speaker ,someone who has the respect of the people and respects the people. David, are you busy for the next 10 years? Your Country needs you.

  4. Johnny Dunne

    The future which could become reality relatively quickly considering the ‘turmoil’ in global markets is for Ireland to be the destination of choice for companies from the ‘emerging’ markets such as China to use Ireland as an ‘operations’ and ‘sales & marketing’ centre to deliver their products and services to customers in Europe and beyond. Unfortunately, as John McGuiness has now confirmed the current ‘administration’ including top civil servants and their well paid advisers are not identifying the root cause of the problem and proposing ‘real world’ solutions which can be implemented now.

    The IDA is failing to attract enough companies and in turn jobs to turn the tide; why is this the case ? They are not even filling a ‘small hole’ as many more jobs are being lost in these internationally traded sectors than are being created.

    The reason so many are leaving especially US owned companies is not due to our high costs per se but the costs in Ireland with a strong euro look very uncompetitive to counties pegged to a weaker dollar.

    The IDA are ‘promoting’ that they have only secured 8 new projects this year. Looking at the investment numbers and job count they are not near enough activity. What are they doing with all the resources ? Are the focusing / marketing the wrong message ?

    See link to the announcements on their website – http://www.ida.ie/news-media/announcements/

    How could we still be pretending we are getting billions in foreign direct investment from these MNCs when you add up the ‘self assessment’ numbers from these lists and they don’t come to anywhere near the billions in publicly announced FDI numbers? Are they double counting the ‘expenditure’ in other EMEA markets used to minimise profits as FDI investments ? IDA announced Ireland secured circa €2 billion in FDI in 2008 ? I suppose it’s easy to make the numbers if you ‘announce’ €300m from Coca Cola when all that happened was a planning application was submitted for a new facility a sod was turned by the Taoiseach, it’ll take 5 years…

    One glimmer of hope is there have been 2 companies from China announcing the set up of operations in Ireland to service other markets. We have about 950 MNCs (down from 1,300 a few years ago). We should be attracting 100’s with the mantra ‘save tax’ and access new markets. If the Australians can benefit from China then we should be making sure we are the gateway to Europe. Maybe, if they are fed up buying US Treasury bills we should be selling them Irish Government debt? Let’s go one better instead of trying to raise €500 million in VC funds from US funds which have no interest in Ireland and can get money elsewhere, why not source this capital from China’s surplus?

    Fergus Burns a Web 2.0 industry leader has posted a list of investments into ‘Irish’ owned companies. Scary to see the small number of VC investments over the past year, the one notable exception again is a trading primarily from China providing sourcing and fulfilment solutions to the top technology companies in Silicon Valley and elsewhere. Liam Casey’s PCH International secured $20 million to expand their business soon to be the largest Irish owned exporter in the world !

    http://www.web2ireland.org/2009/04/24/irish-investment-activity-2008-short-analysis

    Unfortunately, the BES scheme secured only €55 million in 2008 down 50% – wrong direction!

    Let’s hope now John McGuiness has opened a ‘can of worms’ people with real influence start questioning the waffle and spin coming out of the Dept of Enterprise and demand ‘very unique’ policies are put in place for Ireland so we can turn the tide and be a ‘safe haven for doing business’.

    In my opinion, this is the ‘only’ way we will turn the tide and create employment opportunities directly in these companies and indirectly in increasing activity in the local economy to create jobs.

    btw, the reference to Ireland being the ‘Costa’ of Europe after global warning catches on gives us some hope for the many ‘dormant’ towns around the coast of Ireland and in picturesque rural towns. Unfortunately, this will be a long time coming to boost ‘tourism’ and has other obvious drawbacks!!

    • G

      McGuinnes was certainly sent in as a silver bullet to the political situtation, he sent clear signals on the Late Late to the ‘Business community’ and disaffected FF members that there are those within the party are aware of their concerns, the push is on for sure.

      There seems to be real problems with Coughlan – she just doesn’t seem to get it.

    • wills

      serious research here,. brilliant

  5. Ballybunion : This beautiful resort can be liken to Ireland today .In a yesterday year it had the creme de creme of Irish society visit it’s once beautiful hotels ( including Vincent Browne ) and the merchant class’s of west Limerick and north Kerry tried to emulate their counterparts in Kilkee , Co. Clare across the the mouth of the Shannon Estuary where the Merchants from Limerick ( including Richard Harris ) encamped and built a ‘Brighton sur Mer’ .Today , all that is lost .Ballybunnion has itself encamped in a time capsule that was never opened even during the celtic tiger years .Their local virus has been as in the ‘The Field’ by John B Keane except that in this case that namesake should now read ‘The Beach’.In this beautiful place greed proliferated and no one could agree to make the place a better place for the people living nearby.It does not need a climate change to make it a better place for people to visit it .It needs a new attitude and a trusting community to build on to show the world that their people do want the world to be in Ballybunnion.If they do that Ballybunnion will no doubt be the Irish Bondi Beach .

  6. More bearings : We are a western nation on the edge of europe .Well thats the official version .We are also an eastern nation also on the edge of europe , if you were to view it from Chinese persective looking across the pacific ocean and USA.Our name Ireland suggest we are a western nation ( eeeerland ).Today it does not matter how you look at it because the Earth is a smaller place ( Age of Aquarius – Internet etc ) and what goes round comes round and the boom a rang proves that .
    Shannon Airport was set up in a Bog a long time ago because people then had vision .There was a better more arable place on the Limerick side but De Velera chosed Clare for political reasons then.Either way a new Vision proliferated and the adaption of a new tax system started then that changed the west of Ireland forever .We need to adapt again but with new and better ideas to placate the problems ahead .
    In the context of the Rio Tinto principle we could do better than the Aussis .
    We could lease out to foreign powers Resourse Units for a payment devised as follows:

    1 10% of market price of finished product paid to Irish Revenue as a commodity ; and

    2 40% paid to the explorer to defray the costs of start – ups and development of a national supply chain ; and

    3 50% paid into the Irish Economy in Cash, but used specifically to subsidise the Manufacturing costs of production ( of a foreign company from the same super power state ) directly relating to local costs of Irish Labour , Rent of Industrial Buildings , Rates, Light & Heat ,and infrastructural costs to the value added unit to enable to set up its supply chain; and

    4 Corporation Tax remain unchanged ; and

    5 Special Sovereign Manufacturing Zones set up to hold special status of recognition .

    The above idea would entice countries like USA , China , Japan , Korea etc to think again .

  7. Malcolm McClure

    David said: “Twenty five years ago, as self-conscious teenagers, we knew that, by the time we were 20,there was little chance of many of us remaining in Ireland.” The same has been true for every generation since the industrial revolution.
    My first toe in the water was working in a frozen pea plant in Cleethorpes, where the money was good, overtime plentiful, and the majority of the temp. staff of several hundred, were students from QUB, TCD and UCD. The craic was good but the lesson was that the painful self-concsciousness about mixing across the social divides was completely forgotten once we got together outside this island. As Jim said above, we are just one big tribe at the end of the day. Exile reinforces that reality and becomes an adventure to be relished rather than a necessity to be dreaded.

    David’s “Insiders” are usually those who have not had this maturing and broadening experience, as they could rely on nepotism to cushion economic realities rather than becoming self-reliant. Consequently they sometimes resent and feel threatened by the exiles when they return. Indeed they adopt a superior attitude based on the idea that they tholed the discomforts and built the country, such as it is, while the exiles were enjoying a better standard of living abroad.

    Exiles are Ireland’s most precious resource, and if they are prepared to return and contribute their experience, insiders might remember that fact.

    • Well put Malcolm. I did return, tried to comply, lost a lot of money in the adventure, discovered on this site that many were in the same boat and now hold the dross that infests the country at the level of respect they deserve. I’m back to the comfort zone now but waiting for the herd at the door looking for a vote.

  8. Garry

    From farmland in Central Asia mines in Africa, oil everywhere, uranium in Australia, the constant theme is China securing resources.

    While the economics is interesting, the mathematics is much more compelling…the chinese know we live in a resource constrained world and are securing supplies. It doesnt really matter whether this is for export or domestic consumption….

    I wonder will our Ministers for Energy trot out the same old excuses they are using on the current crisis “Nobody say it coming” when the reality dawns that a few windturbines producing intermittent power are no replacement for the current energy backbone.

  9. Australia has been doing very well from increasing trade with China in recent years. In the past two years, it ran out of shipping facilities in Newcastle for exporting coal, such was the demand..

    Australia and NZ are also well positioned to supply the 10 Asian countries, which account for half the world’s population, as diet changes with rising income.

    Irish-owned exporting firms should diversify from the UK to the Eurozone rather than focusing on Asia.

    Over the years, there has been a lot of gab in the West about the 1.3 billion consumers in China but it has taken successful multinationals there, a lot of investment and perseverance to make money.

    French group Danone has had big problems with JVs in both China and India.

    Some Asians know of Roy Keane but Ireland is generally unknown.

    Freight costs compound the existing high FOB costs.

    Irish food groups would have to open plants in Asia to build a credible market presence.

    As for hosting Asian operations in Europe, there will have to be a big change in Irish costs, if it is to be significant. Getting the lowest price, sometimes at the cost of long-term potential, is in the DNA of Chinese and Indian traders.

    There will always be niche opportunities for Irish exporters but it would be foolish to view Asia as a big source for Irish business.

  10. Deco

    The Chinese seem to have a different concept of value. David is right. The problem is that most people do not have any concept of how to prepare for this. The emergence of a major economic power has ramifications across other players in the economic system. China is playing a long term game. Even by the standards of other semi-Chinese sucesses like Hong Kong, Macau, Singapore or Taiwan. And big on China’s concern list is infrastructure. Chinese infrastructure projects are large. Costs are maintained in a manner that would be aghast to the Irish legal profession.
    China reckons it will have the brains and the energy to provide for it’s material requirements – the things that it lacks it is now going after. Now in a way China is far more expansionist and agressive than democratic powers like Japan, South Korea or India. The Chinese authorities want to opt out of this idea of paying the market price for copper, uranium, iron ore etc. In a way China is the rogue in the international community, prepared to go to places like Darfur that would not be acceptable to either Western democracies, or Asian democracies either. And at a certain point Chinese diplomacy will be revealed as being rather disingenious.

    At some point China will have to make a transition to Asian democracy. Asian democracy is fundamentally different from Western democracy. It would be better for the world if this occurred. I think that this is at least ten years away from any significant milestones.

    China also ‘admitted’ to accumulating gold on the quiet over the past four years. Now this is very intelligent. Basically China behaved in a manner so as not to drive up the price. Contrast this to Gordon Brown who makes more noise than a mating baboon when he has to sell gold. Brown seems to stupidly undermine the price of the asset he is trying to sell. From the Chinese perspective, Brown must look like an absolute buffoon.

    China has decided that it will be the low cost producer for as much as possible of the world’s markets. Therefore it is trying to build it’s infrastructure on the cheap. And cheap means cheap in the long term. This ensures that the Chinese can maintain their long term economic power.

    We in Ireland must decide where we stand with respect to our industrial infrastructure. It required three generations to build up, and idiots like Dan Boyle seem to think that it is of less importance than saving the banks. It is interesting to see Coughlan in serious trouble. McGuinness is TD for Kilkenny. The main industrial centre imapcting McGuinness is Waterford city. And whereas Martin Cullen seems to have his head in the clouds, flying around in a helicopter, McGuiness seems to have realised what is happening. Waterford city is an industrial manufacturing city. And McGuinness knows what is going on in the Department responsible for Industry. So McGuinness is doing something about it. Admittedly it is late. But it might be use to other industrial centres. Coughlan is not up to the job. In fact she is a disaster.

    Unlike the Green Party, who seem to want to make electricity expensive on purely ideological grounds, the Chinese economic planners want to ensure China gets cheap electricity. Our industrial base has to deal with this type of middle-class nonsense.

    Meanwhile, we look at the EU. The EU is a modern version of the Roman Empire, and the Habsburg monarchy of Central Europe. And we should in particular pay attention to how imperial overreach, and bureacratic overintensification unwound the energies of both. The Irish Times are telling us that Iceland will apply to join the European union – though the BBC report that some elements in the new Icelandic government are in favour of it and some are not. There is a very large gap between these two reports. And I suspect that the BBC have their facts right.

    Last point – the FF backbench rebellion is happening. And it is focussing on the competence of the FF front bench. Coughlan is in trouble. But there is disquiet about Cullen, Dempsey, O’Dea, etc.. With a bit of luck FF will go into rebellion. The last time this happened was when Haughey shafted Lenihan Senior in the 1990 election. Lenihan Junior will surely be noticing the similarity. This could result in the FF front bench getting completely overhauled in a manner that has not been seen since Reynolds took out the chopknife. This will improve the competence level in Irish politics. Hilariously enough this is more likely than serial gaffes to get the Greens out of government. The Greens will find the new FF leader (possibly Dermot Ahern) more complex and shrewder to deal with than Cowen. The Greens are as happy with Coughlan running Industry, as they were with Gerry McCaughey running two state quangos. The Greens are using their influence to build a base in the state sector, as exemplified by their ESB policy. They are effectively purchasing votes with other people’s money. Everything is going well for the Greens – the last thing they want now is to be surrounded by more competent government ministers and a sober cautious FF leader, who admits that the country has been misgoverned for the last two years. It would make the sight of Gormless shedding a tear on ditherers departure look unbeliveably absurd. I expect the Greens to make threats to pull out if there is an FF rebellion. The last thing the Greens want is a FF leader who is cold sober, cautious and analytical. All that talk of putting the country first will be rhetoric as the Greens try to force FF backbenchers to back down from undermining the FF leadership.

    • Deco

      It might be a bit obvious, my concerning the sobriety level issue with the current FF leadership. The Greens are committed to five years in power. The by-elections are being fudged. Unfortunately, Joe Higgins will not contest Dublin Central. This means Ahern’s mafia will get the seat. Dublin South will probably go to FG. This means ‘as you were’ in the Dail. Stability in the current crisis is a disaster because it means more stupid mistakes. We need to urgently improve the competence level in the Dail. And that will happen in stages. Currently the problem is pervasive incompetence and ineptitude. All parties need to improve their intellectual competence. The current quagmire in the Oireachtas, will not solve the quagmire in the economy, or in the underperforming mismanages state sector.
      And even with the current FF front bench replaced – we will still have enormous problems.

    • Malcolm McClure

      David said: “there is also something else going on, something that suggests a change in Chinese tactics and strategy towards how it spends its huge reserves. This change will have significant ramifications for the US – and everyone else.”

      Deco said: China also ‘admitted’ to accumulating gold on the quiet over the past four years. Now this is very intelligent. Basically China behaved in a manner so as not to drive up the price. Contrast this to Gordon Brown who makes more noise than a mating baboon when he has to sell gold. Brown seems to stupidly undermine the price of the asset he is trying to sell. From the Chinese perspective, Brown must look like an absolute buffoon.

      China’s central bank now has the sixth largest gold holdings among monetary institutions, behind the United States, Germany, the International Monetary Fund, France, and Italy. http://www.resourceinvestor.com/pebble.asp?relid=49439
      Could China (backed by 1054 tonnes of the yellow metal) intend eventually to link the Renminbi to the gold standard? Is this the main reason for their interest in Australia?

      –Last September Ireland had reserves of a mere five and a half tonnes of the stuff, worth $29 millions, ranked 72 in the world, behind even Lithuania.

  11. Deco

    How do we adapt ? The sooner we drop the delusions that we hold concerning the value of the Western consumerist lifestyle the better.

  12. [...] David McWilliams shows in today’s Business Post what this all means for the ordinary joe. Emigration. Quite sad really. Possibly related posts: (automatically generated)God Help The Public After The Next Election- Armageddon levels of public de…Massive Strike Closes FranceWhen government calls the shotsTrading Places: China And The U.S. [...]

  13. Deco – I agree
    Also in relation to Exploration of Natural Resources in Ireland by super powers I believe is the only option we have because time is moving fast and proper adaption is the key to the change we are faced with .Our natural Resources need to be surrogated to super powers ie leased

    • Deco

      It does not help that
      i) scoundrels like Rambo sold hydrocarbon rights in the Atlantic for a song,
      ii) the ESB operates applies itself in a monopolistics manner in power generation,
      iii) we continue to convert agricultural land into building sites with low scale residential mode, golf clubs, shopping malls.
      iv) we stiffle aquaculture, agriculture and other sectors with bureacracy – who main function is to provide jobs for nepotists.
      v) the nations brain cells get killed off every weekend in order to improve the fat margins made by Diageo, etc…

      We need to learn how to apply our resources in a very cautious manner. Something which went out of fashion ten years ago.

      • gquinn

        “We need to learn how to apply our resources in a very cautious manner. Something which went out of fashion ten years ago.” :- We never did and that has been Irelands problem all along. We simply never have done anything right in its history and if the same politican stays in power, Ireland will never do it right.

  14. MK1

    Hi David,

    you touch on three interesting topics ….

    Emigration
    In a small open economy like ourselves, emigration should play a role. But the palateness of it is determined by choice, whether its mainly push or pull or just a way to avoid poverty. How many have left and have never returned ….. emigration and the Irish psyche is closely intertwined. There will be times when we need to do it. A new challenge for us are the recent immigrants. We will have a situation where immigrants will stay yet ‘Irish’ people will be ‘forced’ to leave. This is new.

    Resources
    Countries like Australia that have more resources than they need will do well, whilst those resources last of course. A clear example of this is the major oil producing/exporting countries. If it were not for oil there would be no wealth in Saudi, Kuwait, etc, etc. Naturally occuring resources is literally a ‘gold mine’. So there will be those countries/regions that have it and those that havent. C’est La Vie. But every country should do as much as it can with its natural resources. Desert countries have desalination plants, etc. We should be doing more with our resources.

    China
    This country/semi-continent in terms of population is in an interesting stage of development economically. It is being allowed to ‘play’ within the global market, and it has semi-grasped capitalism yet it is a managed economy by the state and it can ‘stage’-manage its cost advantages. However, all is not 100% rosy in China. eg: whither the life of a chinese worker further down the supply chain. Their standard of living, not material goods, but just in effort and time is way below that of many across the globe. They work 6 days a week, 10 hr shifts, they live at the factory, their social life is close to that of a labour camp. In some ways its nearly the equivalent of slavery in everything but name – and choice: the workers can leave at any time and can go back to the rural community they came from where they will have even less!

    And so we have come full circle, Chinese workers are internal migrants and move because they have no choice. And some Irish people may have to do likewise.

    MK1

  15. Philip

    Total world supply of Uranium are current burn rates(about 70Ktonne/year) is about 70 years. When China jumps in, that number could half or more and bear in mind everyone wants a piece of that action. So, this stuff is going to get very dear and may make it non-economic in jig time (so I would not turf out the windmills and the dinky electric cars yet). So, if they just acquired it and even if they did nothing with it except part it in a field somewhere, it would be better than rushing and making nuclear power stations (which take a huge amount of time to ramp and for which skillsets are highly unavailable – 5 to 10 year commission times).

    The treasury bills are becoming worthless. After all, they are just IOUs and China has to be careful they do not dump so fast that they cause a global run on them. They are sitting of a huge reserve of what could be mush and they need to convert it to unperishable commodities. Hence the move on Australia(which holds 20% of the worlds Uranium – 15 years worth), Africa etc. This is all about preserving wealth for the future as aquickly as possible – not so much about moving out of Coal Stations etc.

    I am going out on a limb here: I think export to the US will drop due to lowering demand rather than China not wanting any more bills. Indeed I see country intertrade falling not so much becasue of protedctionism but because it is starting to be cheaper to make things onshore and the reasons are due to advances in robotics and IT. Knowledge will be traded more than goods. Micro-manufacturing, quality management and new process management techniques are starting to gain a foothold. Transport costs are just too high. This is a well established norm in the electronics industry and while nichey, I think standardisation will allow niche and cross compatible products to become the norm. Do I see cars made in Ireland? Certainly for EVs.

    Emigration? Well, let’s differentiate between 2 types -Economic and Choice. In my opinion,. I would never allow a degree be bestowed by our colleges unless student did 2-3 year work abroad. Economic emigration is definately a pressure, but I fail to see where. Australia as a miner? Remember you’ll be jostling with all the other guys from other countries trying to get the same job. I see a lot of emigrants returning becasue they simply cannot get any foothold out there. The community is stronger back home and the chances for sucess may be better if a few other things change here in the next year.

    I think DMcW and some of you here are using very dated paradigms on economic development which was based on low cost of transport and a world that relied on moving material around instead of ideas. Even this blog (well populated by off-country contributers) illustrates how change can be made happen at a distance without any material transfer. The effects of these very recent technologies are only starting to be felt. As Nicholas Negroponte (IT populist said) we are moving from ATOMS (material) to BITS(data/knowledge) as our mode on inport export.

    • While I operate more than 10,000 miles from my main market, generally old-style seliing is still required whether the market is goods or knowledge i.e a level of face contact is usually important as is track record etc.

      • Philip

        Yes, but the need for face to face is falling year by year as IT tools (including Video Conf – look at HP’s HALO)becomes better and more cost effective. I manage 3 international projects running to millions in budget. I have only personally met 10% of the team and that was just for kickoff and my methods for monitoring progress and escalation are vastly superior to what could be achieved in an office. It’s down to the design of your operating environment, the tools used and some training.

        (By the way – I am no geeked out computer lover, I absolutely hate blackberries and mobile mail and always on availability – a fad I see rapidly dying out as quickly as the poor stressed out unfortunates who feel compelled to use these systems. All I see happening is professional evolution to environments that are cost effective and work with minmum hassle and values people’s time and private space)

        • I guess you’re not in a start-up hustling for work, grants, VC attention etc.

          • Philip

            To be honest, no and the tech is not there yet for the valued deal closers like yourself. But delivery should not require travel – and delivery is where the money gets made and the follow-ons kick in.

    • G

      Good comment Philip, the old mindset of being chained to the office or library has to go (I see it all round me people haven’t copped it), we need the virtual office, the virtual library, we are supposed to be living the IT revolution but then I imagine there were those who resisted the plough, the pen and the motorcar – we’ve got to adapt, come on Ireland!! Major opportunities out there, just wrong people plotting and plodding the course.

  16. SLICKMICK

    Did Lenihan senior explain how our neighbouring Island supports 60 million people in an area 3 times greater than the 26 counties?.With 2 billion people in China and India willing to work for peanuts-the public sector will account for one third of Irish employment within 3 years.

  17. G

    @ MH-Finfacts

    I’d have to disagree with your comments. I think there are major opportunities for Ireland in China especially in terms of education.

    I believe that so much that I borrowed money to fund my trip to China this year to pursue things. I hope it will lead to something for Ireland in the long run – but again the lack of government sponsorship for such ‘runs’ is appalling.

    I am taking lessons in Chinese customs, history and language – I am doing this off my own bat with no ‘assistance’ from the IDA or anyone else…….. I look to myself not bureaucrats who haven’t got the hunger to drive things on because they have guaranteed salaries, comfortable offices and ‘respected’ positions in D4.

    Culturally too we have a lot to offer, an RTE report highlighted that Irish culture (dancing, music, Patrick’s day is really catching on – obviously early days, I am not talking Darby O’Gill stuff here……..but high marketing of our culture)

    We just need to get out of the ‘property mindset’, short term/quick buck crap, which the cute whore pursues and look at the international game – maturely. Ireland of all the countries is I believe best placed. Sympathetic people and history, English speaking, good geographical location, work hard-play hard people – it’s all there, we just need a change of government and a few more dynamic people pushing things.

    The government only recently sent a large trade mission there – 10 years behind the game because we were focused elsewhere – and viewed as simple opportunism, it should have been done when China was emerging that would have been seen as wise by the Chinese not just more Westeners in suits.

    We should have a dedicated Institute of international politics and business, with our best minds working the ground internationally, chasing new leads, establishing contacts with India, Brazil, and China – the business school in Bangalore is enormous, one of the best in the world, why haven’t we established major linkages with the Indians? It is perplexing especially with our common history and views on life.

    We should dedicate serious resources to analysing every possible angle, every opportunity, and we definitely need to up our profile in these countries.

    We need graduates of Chinese Studies, we should have large Chinese Institutes in all our Univerisites, major twinning agreements with Chinese cities. I don’t ignore the human rights issue in China, it is a serious problem but I have come around to the point of view that berating them will only lead to a hardening of views. I don’t believe in isolation, my heart goes out to those who are being persecuted but maybe by meeting and working with the Chinese we can affect change.

    • I said there are opportunities in niche areas but in Asia, Ireland is almost unknown. Even in Europe, think of what the Irish would know of Finland without Nokia.

      As regards Irish culture and China, I guess you are referring to places like Beijing and Shanghai. Kuala Lumpur has an Irish dance group but it hardly translates to much in export earnings.

      Like a struggling company, a bankrupt State should target its resources wisely overseas.

      The countries Germany, France, Benelux, Italy and Spain collectively represent a GDP 3.9 times the size of the UK, yet the non-food exports by clients companies of Enterprise Ireland, for these countries is 40% of that of the UK.

      Eurozone GDP is four times that of China’s.

      On education, two years ago, the Indian government refused admission to an education trade mission because the Irish Dept of Education had not finalised agreement regarding remedies for abuses by such businesses in Ireland.

      This sector, which charged ridiculous fees of up to €10,000 annually attracted some students from the Developing World, because of the hope of getting an EU work visa through working for 20 hours per week.

      Those institutions which present themselves as universities in everything but name should be required to explicitly state on their websites and promotional material, that they are not recognised universities.

      There is income to be earned through education but the sector should adhere to strict standards rather than risk it longterm by having to get an extended family pool together a huge amount to fund education in the West, that may be effectively a scam.

      • G

        Regards Irish culture in Asia, I was thinking along the lines of the global phenomenon that was Lord of the Dance etc, China’s middle class is enormous and growing, a targeted cultural drive by Ireland may lead to interesting places and connections which may yield dividends for our society – Marco Polo had that vision and look what he achieved.

        I agree with you, we need to increase our profile in Asia generally, in reverse, the Japanese recognise this and their government has just emailed to say they are offering students from Ireland a trip to Japan which in their own words:

        “It is hoped that in the longer term, the applicants’ deeper understanding of Japan gained in the tour will contribute to strengthening future ties between Japan and European countries. The Ministry of Foreign Affairs will cover the cost of return flights to Japan, insurance for the duration of the tour, travel within Japan, accommodation, and breakfasts and lunches. Participants will be responsible for their evening meals, personal expenses, and any costs not related to the official programme of the Study Tour.”

        The Chinese are offering something similar, although they must pay a certain amount……….they are moving on stuff while we sleep and watch unemployment go up and up like a petrol meter…………..we are in the poor house because of our economic policies………….you know the rest………..

        Sure Europe is important for trade, always has, always will but we need to look at new markets, new areas of investment, the drive needs to go into overdrive if we are to save ourselves from economic oblivion…………I want action not articles saying ‘we must all take the boat again” – i find that maddeningly defeatist!

        The challenge has been put up to us, forced on us by the greedy and inept, we now need to respond………hence my trip to China……….

        I appreciate your insights though……….stimulating…………..

        • gquinn

          Why are you using Asia in place for Chineese people. This is incorrect. Asia are people that live in Pakistan, India and Bangladesh.

          People that live in China are called Orientels and China is called the Orient. I dont know why people are incorrctly refering to China as Asia.

          In the World the following types are:
          Caucasian, Negro, Oriental and Asian.

    • “why haven’t we established major linkages with the Indians? ”

      I’ve mentioned this here before. At a trade mission in Poland, I met Ms Rupa Naik, dynastical head of SME business in India. An important woman who was dismissed as, to quote, yer wan wearing the curtains. That was the sum total of global business intellect from Ireland sallying forth to build bridges.
      I still believe that Ireland has a lot to offer but only by those who have the cultural experience of working “off-Island”.

      • G

        Interesting insight Furrylugs – well it must be pretty obvious then that there are REASONS why we haven’t developed contacts abroad, if the attitude you describe above is prevalent then we are dead in the water. But we are out with the begging bowl now – as an Irishman I find it so humilitating that those in power have blown it so badly and won’t even take 1% of the responsibility, not even an apology, an address to the nation, no public meetings – it is astounding that business is conducted through the media and by press release.

        Peter Murtagh writing in yesterday’s Irish Times said that according to business leaders he knows, they were squirming with embarrassement when they saw Mary Coughlan battling for Irish jobs abroad – this is simply no longer good enough in tough times but Cowen is determined to go down with all guns blazing, backing those who can’t do business.

        It would seem self-evident at this stage that for whatever reason (simply not up to it) that we have the worst possible people in power at the worst possible time in our country’s history.

        The lack of cultural finesse (in light of your comments astounds me), but I wonder what are all those well paid, cultured people in the Department of Foreign Affairs, Department of Enterprise Trade, and Employment, IDA, Enterprise Ireland, Fas and any other number of government agencies and semi-state bodies doing? I hate to tar them all with one brush as there must be some honourable and hard working people there, but they just don’t seem up to the challenge we are facing. I mean we are 8 MONTHS into this crisis and I only just heard that a conference with international business figures is being organised. This is astounding slow even by government standards.

        We either get competitive, get with the programme or we will be left dead in the water – this is simply unacceptable, where is the dynamism and all the entrepreneurs that were talked up over the years? It seems that is all we are left with, talkers in the bloody bar!!!!

  18. G

    @ Deco as a follow up on his comments on infrastructure………..

    On Saturday April 25th, at 10.17, a woman in Buttevant, Co. Cork, with a green umbrella and white socks, brought Cork-Limerick traffic to a standstill when she crossed the zebra crossing.

    In Charleville Co. Cork, a man and his dog did a similar feat at 10.55.

    I love the environment and we should do everything to protect it, but I am appalled everytime I get into my car in Ireland. We are not at the races in terms of infrastructure when traffice between two major Irish cities can come to a halt because a woman needs to bring her shopping home.

    Broken roads, footpaths and run down cities reflect back on us as a people, we just can’t be taken seriously internationally with the kind of stuff we call infrastructure in this country.

    I can’t say anymore on this, just too angry.

    • Philip

      @G & Deco,

      You know, it’s not so much the lack of infrastructure, but the “Broken roads, footpaths and run down cities “.that irks. It reflects a culture of not being used to cherishing the wealth it already has.

      “Applying our resources in a cautious manner” starts with keeping what you have running well. That’s what really keeps costs under control and alters the community attitude towards their own back yard.

      If you want to smell wealth, ignore the bling and watch how well things are maintained down to how well people look after themselves and their comportment. I sound like a middle aged prude, but as far I see it, China can hammer away putting in motorways and power stations all over the place and if it does not preserve its old villages and fantastic culture, it’ll turn out to be another bankrupt, dysfunctional 1960s western style ugly industrial complex bankrupt of culture and massively unsustainable.

      The one thing that’ll do you in for sure now is the financial/economic orthodoxy of the last 20 – 30 years. We have to move from debt and consumer driven growth to sustainability and high quality of life – Wake up DMcW!!

  19. Malcolm McClure

    Sony played this mind-blowing video at their executive conference this year. Ireland doesn’t figure in their plans for these reasons:

    http://www.youtube.com/v/cL9Wu2kWwSY&hl=en&fs=1

    • G

      Great post, really useful. Ta, G.

    • Philip

      Be very careful with that YouTube extract . A lot of it is complete decontextualised american sales nonsense.

      Examples…
      There may be 10s of times more words around than in Shakepeare’s time, but it is what you do with them that matters.

      So youre out of date 1,5 years after you go to college…really? Maths, Physics, The Arts…exactly what goes out of date can someone tell me?

      The whole clip confuses data with information and knowledge and misuses statistics to a ridiculous level.

      If we are so energised by the internet and buried in geniuses how come the world is so screwed up.

  20. Greetings from a wet and windy Glanmire,

    I think David has got it wrong about global warming in Ballybunion. It’s more likely to rain and blow all summer and get drier during winters. All the surfing will be in wetsuits.

    But, it’s good to read a clear perspective on how China is playing the global game. Makes sense to me. I remember reading Marx & Engels on China: people have been predicting the power of China for a long time.

    For us who’ll remain in Ireland, the advance of thinking ability is, I think, crucial. We need every shred of independent thought, and a lot more controversy. I breathed a sigh of relief when I heard John McGuinness claim to have criticised Mary Coughlan’s behaviour as minister for enterprise.

    Of course, the hired hands of chief whip and cabinet member have rushed to deny there’s a difference of substance. Government supporters, who are also beneficiaries of its largess, seem to think they are doing Fianna Fail a favour by asserting there is no such difference of approach. I think Fianna Fail would be stronger if it proved itself capable of holding a fundamental debate in public.

    FF’s never had such a weak opposition. Reminds me of the disappointment I felt when the UK Labour Party wasn’t fit enough to oppose Mrs Thatcher’s Conservative Party.

    How easy is it to study Chinese in Ireland? Let alone Chinese business methods? Spanish too? Let’s do a lot more to cultivate knowledge and expertise of both these huge languages, because, in addition to the pleasure they give access to, they represent two big trading blocs for future reference.

    • Deco

      Paul – I agree 100% with your statement “For us who’ll remain in Ireland, the advance of thinking ability is, I think, crucial. We need every shred of independent thought, and a lot more controversy. I breathed a sigh of relief when I heard John McGuinness claim to have criticised Mary Coughlan’s behaviour as minister for enterprise.”

      I too was delighted. In fact, I hope that the pressure will mount, and that this will keep rolling. Coughlan is out of her depth. And her dire underperformance is costing everybody dearly. A good shock every now and then is needed. The current FF frontbench need to get knocked out of their arrogance. There is far too much security in the political system. And that needs to be changed. The first thing that needs to go is the “safe pair of hands” myth. Usually they are only “safe” in regards to being committed to protecting the interests of the vested interests.

  21. wills

    David’,
    really good read and jumping out for me is the american hegemony
    meltdown and China’s role in it,.. Big big story and open’s up the ‘ol
    chestnut surrounding Empires in decline and ascendancy and history
    repeating itself, ie, 1910 n empires folding and rising = War, and so
    i figure a good time to be reminded on what war is….

    http://www.scribd.com/doc/2624419/war-is-a-racket

    • Wills,
      Thanks for the link to a powerful case for peace against war. I’ve skimmed it, not done it justice.

      Do you know who wrote it and what their political allegiances were, please?

    • Philip

      Does not surprise me in the least. I’ll never forget an argument between 2 guys (policy makers in the European Commission no less) that took place about 12 years ago. One was saying how China were within a decade of ruling manufacturing within a decade. The other claimed that there country was too hopelessly underdeveloped to ramp that quickly. And the response was that US and European money would make it happen along with the can-do ride over rights attitude of the People’s Party. Indeed the process was well underway.

      It is important to realise that the Chinese are as much a victim in this mess as the US, Europe etc. This idea was to suck productivity out of US and Europe until it became unprofitable to do a restart. That way, China controls production in a non demopcratic environment. This is the stalemate that the US find themselves in and nothing (no debt renogiations, economic stimulus etc.) other that producing wealth via credible engine for growth is going to work.

  22. Original-Ed

    “It was the same 25 years ago, when Brian Lenihan, the current Minister for Finance’s father, told us that there were ‘‘too many of us to live on this small island’’.

    I’m absolutely shocked by that remark – I was around then, but under such pressure, that it must have passed me by. I know that that useless alcoholic was asking the Americans to take in more of our people, but to say that there were too many of us on the island, was nothing short of criminal – that’s something that you’d expect Hitler to have said. What a hypocrite, him and his merry gang going on pilgrimages to Arbour Hill and Bodentown each year.
    They were able to do what they liked back in the 80s, but I think, that this time round they’ll have to watch their step.

    I Googled the statement, and I see that the New Statesman picked up on it as well.

    http://www.newstatesman.com/society/2009/01/ireland-mass-tiger-economic

    • Deco

      I am reminded of the statement about the East German state in the 1950s – if the people are not in agreement with the state, the people must be dissolved….

      When a country is mismanaged by the likes of the various members of the Lenihan clan….he ends up being proven correct. These clowns are a bit of a self-fulfilling philosophy.

      The real problem has always been the brightest and most enthusiastic element in society gets disenchanted with all the gombeenism, market rigging, corruption and nepotism and ends up leaving. The clowns in control at home don’t like competition, or dissent – and sure know how to supress it. Just look at what happened to Dermot Morgan.

  23. oe1

    I spent 3 years in Aussie and Bondi Beach is a seduction for new backpackers and tourists. But the average Australian gets a little bored of it after a while. It truely looks like the promised land when travelling first on the route 380 from town.

    There are a few home truths about the Australians and one is a deep mistrust of Asia. Sure maybe slowly, they are being amalgomated, but there is a strong urge to keep a sense of a national identity outside of Asia. Also memories of the Japanese attacks in WWII is still very strong to this day.

    In recent history, 1996 Paul Keating and 1999 Victorian PM Jeff Kennett lost the elections because of their “asian courtship”, promising to grow Australia’s population with new migrants.

    Seconly, proliferation in nuclear energy on a world wide basis goes against the grain of the Australian psyche. Given its abundant uranium deposits, surprisingly Australia has no nuclear power stations. This is becuse popular opinion is still very much opposed to it. In fact, given Australia’s abundant solar energy and coal resources, it is unlikely ever to go down this route.

    Regarding Chinas policy on nuclear energy, I think that Philip is right on the money. China going nuclear will rapidly decrease a limited uranium resouce, that might last for 30 to 50 years. Certainly some nuclear stations are being planned, they are more likely to hedge their bets on a mixed energy resource and focus like everyone on demand and supply.

    Therefore I wonder could Ireland be considered a “lucky” country in Europe when it comes to having more wind, ocean and bio energy per capita. It is ironic that the 2 basket cases of Europe at this time, Ireland & Iceland (as well out laid out by DMcW in a recent article) have very good renewable energy resources.

    Food for thought perhaps…

  24. johnnyc12

    Very old news, the chinese have been at that for a very long time. But are we forgetting the green energy factor here. Technology is going to change the rules of game over the coming decades. I am not sure if Chinese have thought this through. We have all played ages of empires right?

  25. jim

    OOOOOHHHH MY GOD ,he’s stillin the Denial phase…………………………………………………………………………………….TAOISEACH Brian Cowen trumpeted the Government’s economic rescue plan yesterday and claimed Ireland would go down in history as one of the first countries to tackle the global recession.
    In his first address as Fianna Fail leader at the party’s annual Arbour Hill Easter Rising Commemoration, Mr Cowen used the opportunity to give a wide-ranging and robust defence of the Government’s economic actions and solutions.
    He told the party faithful that Ireland’s response had been “unprecedented in its breadth, its speed and its force”.
    “I firmly believe history will show that we were among the first countries to recognise the scale of the crisis and to put in place a comprehensive framework for recovery,” he said.
    “But most of all, we know that the path to recovery lies in prompt, speedy, consistent and forceful policy action by Government.”
    Ireland’s bank guarantee, which was criticised by many at the time of its introduction last year, has since been emulated in many other countries, the Taoiseach said.
    With the Government still committed to a “huge” capital programme of €7.3bn, Mr Cowen said the fruits of that programme will be “even clearer” next year, as inter-urban motorways are completed, and investment continues in public transport, airports, schools, hospitals, homes and farms.

    OOOOHHHH MY GOD ,he’s stillin the Denial phase.

    • wills

      A poster described the form of denial as classic displacement defense mechanism.

      • jim

        Economists often talk about “asymmetrical information” meaning that vendors have more information than buyers or visa versa.I’ve been following event’s pretty closely and unless Cowen is taking copious amounts of valium or shares some unknown genetic sequence with a Sloth,I’m just not seeing prompt,speedy,consistent and as for “unprecedented in its breadth” ….I tought at one stage we would need to pass a mirror over the mouth’s of the front bench to see if they were still breathing.Maybe John mc Guinness should have been checking Coughlan for a pulse as I’m sure shop owners in the border Counties while awaiting Her proposals for price reform must be concerned about Her present metabolic rate.

    • G

      Well now I know why Bertie and Brian were laughing so hard in the photo on the front of today’s Irish examiner, it was the absurdity of the speech that had both of them cracking up (yet again inappropriately) with Bertie saying ‘you outdid me there Brian, beats my socialist comment anyday of the week’

      F**king jokers! Out with them………….

      • gquinn

        Well, I think we better start that political party, you were talking about :-)

        A good name might be:
        ‘The Deomocratic Peoples Party’

        • G

          Time has come to do something GQuinn, because we are taking the master’s lash now!!!

          The name you came up with is good, I like the Social Democratic Party (or SDP Ireland)

          • gquinn

            Well the name is step 1.

            Step 2 is coming up with what we are about and your pointers you sent me is a very good start.

            I absolutly agree in what you said in the posts above and when you think about it Ireland is really in a very bad situation with the worse kind of people who are not cut out for the job.

    • Deco

      They are in denial alright. Just look at the public statements of Coughlan and Lenihan. Look at the reply that David McW got last week. We have a government that is under seige from without, and within. Cowen inherited a front bench of clowns from Ahern. And now these clowns are causing him trouble. The people are really uneasy and know that a higher level of intellectual performance is required. And the official response is to ‘provide reassurance, dismiss the sceptics, try some patriotism, plus the policies of ‘bread&circuses’. And then when things are really looking against the government we have the Tanaiste on Page 1 of the Sunday Independent-in the place where there is usually some 20 something model in a loose dress, and the reason you look is because you see the legs. And then you see her looking at you. And you remember – this is a married woman. And then you realise that this is attempt to get below your rational mind. What was all that about ? Ms. Coughlan posing for a photo on the front page of the highest selling newspaper when she should be running the department of Enterprise. This person is responsible for a crisis in our manufacturing sector, and all she can do is pop up on a newspaper and look seductive. Anyway we know she is married – so it does not work. Sex is supposed to sell. In this case it helps the competition.

      And it is not just us. But the Brits and New Labour have a more subtle manner to holding onto power. Harriet Harmon in Coughaln pose would not register a response in any case. So the New Labour sympathizers in the British media come up with a documentary to educate us on why it was the all the fault of the Tories. (No mention is made of the fact that New Labour “out-Thatcherised” the Tories). And this effort was presented by one of the few remaining media cheerleaders of New Labour, Blair’s key economics advisor – Will Hutton. The documentary was a collection of nice panaromas, statements from authority figures, new Labourites and wrapped up in a persistent tone of condescension and guilt. Hutton and New Labour are also in denial. It seems to think that if he can throw the blame on the bankers that he will save Gordon Brown’s reputation. Brown, it is to be believed, was not responsible for the calamity, except that he was too innocent for the scoundrels in the City of London. Hutton is an advisor to Brown, and is as responsible to anybody else for the mess that is credit crunch Britain. He was also fully in favour of the various bailout plans. Last night Hutton was vindicating the bailouts – and boost Brown by commenting how others copied Britain. This is a big loaded deduction. Like Lenihan, Hutton does not believe in capitalist consequences for capitalist misadventure. But whereas Hutton knows that these banks are run on the basis of excess testosterone and egomania, Lenihan sticks to the ‘respectable institution’ mantra. Like Lenihan, Hutton is seeking to blame ‘uncontrolled elements’ for the crisis. He even makes a comment at the end with regard to the necessity of saving. This is the same scoundrel who stated that the problem with the French was that they saved too much – if they saved less they could be like the British, he advocated. As if the French wanted to be more British :))) Only an absurd deluded Englishman could imagine that they would make such a miscalculated recommendation to the French !!! And now faster thatn you can say cul-de-sac he finds himself coming back down the path he meandered along, looking for a way out. Now, Hutton does get the fact that losing it’s manufacturing industry caused problems for Britain. And Hutton is 100% correct with respect to the necessity for better training in the workforce. Hutton is one of the few in Britain who advocates better workers rights. But Hutton was also a unrepentent cheerleader for the property bubble – and wants everybody to think that the UK property bubble, and credit card binge had nothing to do with the current crisis. Like Cowen, and Brown and Zapatero he points the finger at the US subprime mess. This is effectively a very complex and well presented coverup exercise. New Labour are good at this. In fact it is their core competence – deflecting responsibility for mismanagement to others – whom they need to chastise. Last night he was on one big coverup offensive. At the end you were wondering that maybe if New Labour were regulating the banks like they were regulating the British rail system that the crisis would not have happened. But we know that it would. But the Brown ‘rescue-plan’ is a slow motion disaster. And I get the feeling that Hutton’s real goal is to prevent Cameron becomming British PM.

      This is worth observing because our unimaginative civil servants have the habit of imitating the British – with the same set of disastrous consequences being replicated here. And we need to be alert to the flaws inherent in such policy decisions. I am just wondering will that be the next FF ploy – will the beseiged ministers blame the advisors, the inept department officials, the consultants reports, etc ??

      I get the sense that it no longer matters. Maybe the people are reached the point that they want truth more than they want deceit. Before we can solve the problem, we must acknowledge the nature of the problem. Denying it, or pretending it does not exist, fools nobody. The fact that people want the truth does in itself, represent a massive seachange in the mind of the nation, that has not been seen in a generation !! McGuinness gets it. The front bench of FF, and their best pals the Greens, clearly do not. This means that all political parties will find the electorate uncontrollable and fickle. And the media will be less influential in assisting the political blocs in this regard. Indo would be less able to drum up a swing in favour of FF. The Irish Times, the tribune etc would be less able to get believe to ignore the glaring deficiencies in the Irish Labour Party. O’Brien’s local radios would be less capable of ramping up support for FG. And the others would be more under pressure to be more than ‘tail to wag the dog’ operations.

      This would be an important step towards making the the country more democratic. And we need this. We need the people to be fickle. We need the people to be completely unswayed by the media and the political establishment. We need it as an essential step towards reform of the institutions of the state and an break up of the cancer that is nepotism in the Irish state structure. We need the people demanding performance from the state, and less tolerant of excuses.

      • Malcolm McClure

        Deco: Thoughtful and constructive, as always.
        I watched both Hutton pieces on C4 Dispatches. The first is now available at http://www.channel4.com/programmes/dispatches
        It is a reasonable overview of the steps that led us into this mess, seen from a UK perspective. Deco suggests that it was spun to Labour’s advantage but I didn’t get that impression from the second part last night, which showed Gordon Brown in a bad light, and with very unflattering photos. In the opinion of the LSE professor, he did too little too late and only provided the bailout and guarantee when forced into it. The next day Paulson followed, so Gord could claim to be the leader that saved the world. (Although Hutton mentioned that Ireland did it first.)

        Significantly the LSE man agreed with my earlier point that it will take three or four years to recover some growth and we have not seen the bottom yet.

        • Deco

          Malcolm – strange thing I agreed with Hutton about the soft regulation, being the source of the problem. The problem is that damage has been done. Britain was all over the place when the crisis first hit (Northern Rock) because the responsible state institutions did not who was supposed to solve it. Brown was instrumental in devising those institutions. There was a lot of positive spin at the end from Alistair Darling – and I would not be so sure that it adds up. In fact I think it will take Britain a long time to recover.

          I am not so certain that repeated bank bailouts were the best policy. An examination of the creditor list of Anglo Irish Bank indicates who is getting bailed out by the Irish taxpayer. I remember hearing when the crisis emerged – they are talking about tens of billions, and they squeeze funds to essential services to the point where they can no longer function….so much for “government cutbacks affect the old, the sick, etc…”. We are feeding decrepid institutions with resources and starving essential sectors. Dan Boyle indicated where government policy was going, when he made the comment about the Banks being more important than the factories. In fairness to Hutton he knows that equation better than Boyle. Boyle’s remarks went completely unchallenged in the media. I imagine the IDA must have been aghast at that inintelligent remark. I think that the government should have been prepared to kick some banks out of the bank gaurantee scheme because they offered poor value to the taxpayer, on just about any whim. Minister Lenihan seems to forget that he is doing a job for the taxpayer not the bankers !!! ….He will get reminded who is in charge in June :)))

          The problem with the current policy is that it designed to benefit the banks creditors. Current policy transfers of risk(losses) from foreign banks to domestic taxpayers in a manner that is completely contrary to Article 45 (thanks Furrylugs), and which has no popular support with the electorate. The loan between Permo and Anglo should have been used as an opportunity to kick both of them out of the gaurantee. Both would have failed instantly. But one has now failed anyway. And the survival of the other is still not certain either.

          • I still can’t my head around how AIB for example, is protected by the guarantee yet can borrow at will from the markets without some form of permission from the Govt?
            It would also appear that a lower cap will be set for NAMA. Only huge debts will be taken over and a few serviced loans pickled in to give added value. The banks will then presumably turn on smaller debtors like a pack of hyenas.
            Alan Bond was right.

          • Malcolm McClure

            Deco: Soft regulation is just a symptom of the problem, which was caused by the introduction of Special Drawing Rights after Bretton Woods in 1972. These were introduced as a substitute for gold by USA when it found itself unable to pay for both the Viet Nam war and Johnson’s social welfare program. SDRs completely detached the concept of money from the concept of value.

            As an aside, bloggers may be interested in an excellent review made in 2003 by Irish Central Bank of how the Irish pound became detached from sterling in 1979 and later entered the Euro regime in 1999.
            http://www.centralbank.ie/data/site/spring8.pdf
            It contains a good discussion of the advantages of staying with sterling, as 75% of trade was with UK.If this link had been maintained there would not be as much traffic to Newry at the weekend.

            When the Irish pound was originally established in 1927, it had a real and clearly defined value. The new unit was to be known as the Saorsta´t pound, which would be maintained at parity with the pound sterling. Convertibility to sterling would be ensured by a full backing by British Government securities, liquid sterling balances and gold, under the control of the Currency Commission, and was underpinned by a guarantee that Irish banknotes would be paid at par in sterling (without fee, margin or commission) at the Bank of England.
            What we have now, as I discussed earlier, is a Euro that was worth 78 pence in 2001, now worth about 13 old pence, considered just as specie.
            When they launched the Euro the bank produced €4 billion notes and €230 million in coins. Does anyone know how much money is in circulation in Ireland today?

          • coldblow

            I always enjoy Deco’s posts (joining the dots for me and my ilk) but I am not swayed by his analysis of Hutton. I won’t argue the toss about Hutton here except to say that I have read most of his articles in the Observer over the last few years and a couple of his books and have come to the conclusion that he is one of the few commentators who know what they are talking about. I don’t know much about his role as advisor to New Labour but would surmise that Blair and Brown didn’t follow his advice – however I am prepared to be corrected. I take the possibly simplistic view, shared by many, that NL had the problem of winning power within a Thatcher/ deregulated finance paradigm (ouch!) and made a “Faustian pact” with the City once there. I am waiting for Nick Cohen’s new book “Waiting for the Etonians” to get his take on how it has reached the point where no alternative can be seen but the Conservatives who still seem to believe in the nonsense (they haven’t disowned it to my knowledge). Certainly Hutton has always been strongly pro-Europe and he always advocated the European model in industry and finance whereas the Anglo-US model was severely criticised by him – for reasons that are now accepted by nearly everybody. As a Crotty-ite Europhobe (from the Irish perspective) I used to be irritated by Hutton’s arguments in favour of the EU but I was impressed by his arguments and knowledge. I also found him a curious oddity in this day and age: an old-fashioned liberal ably defending his position and I have long held the opinion that many if not most of our present intolerant so-called liberals (eg our Irish intelligentsia, as ably dissected by Deco in particular) are only liberal on the surface and liable to jump ship whenever it suits them.

            Here’s a link to his latest article in the Ob. where he sees a further 1.5m rise in unemployment in Britain and the end of their world power role.

            http://www.guardian.co.uk/commentisfree/2009/apr/26/britain-super-power-will-hutton

          • Wow, that article by Hutton is a real ‘wake-up-and-smell-the-coffee’ job. A proper eye opener for an economic amateur like myself.

  26. Aidan

    We keep telling ourselves that our education system is wonderfull the best.

    Well the time has come to prove that, is it fact or is it fiction.

    We talk about china and india and how they may help us and us them by providing a stepping stone into Europe as we have done so sucessfully with american companies.
    Well its time to think again because we have very little to offer either right now other than a market for their goods and even that isn’t looking so hot right now.
    If we are to have a future then its us who must make it happen no one will do it for us, and having squandered the last 10 years it will not be easy, quick or straight forward.
    Mr Cowen gives lip service to a knowledge economy, problem is he’s correct that is our future and while it makes a nice little sound bite for his speeches we as a nation are going to have to make it happen.
    When you think about it no one cares where there ipods i phones flat screen tvs are made all anyone cares is that they works well and looks good.
    Now as we face into a global flu pandemic no one will care where Tamiflu is made all that matters is the technology that made it possible.
    R&D is a notorious difficult, time consuming and extremely expensive business, but now is the time to make a grab for the high ground and start creating our own future and stop depending on someone else to do it for us.
    The world economy will recover, life will go on and people the world over will want to make a better life for themselves and their children.
    Its up to us to provide the technology to make that possible.

  27. G’Day David,

    You right about one thing Australia’s the lucky country. I came here less than three years ago. I have a thriving software business and a house in Surry Hills. The culture is a relaxed, laid-back version of Ireland’s. Add in the weather and can someone please explain to me why you wouldn’t emigrate here from Ireland.

    Meanwhile, I can’t hire a plumber or electrician for love or money. If you’ve lost your job on a building site in Kilkenny – come to Oz. Please!

    Darren

    PS: drop us a line David and we’ll go for a schooner!

    • jim

      Keep your eye out for the Irish over there in Sydney,easy spot them,Pale complection ,and bewildered look.LOL.Seriously they’ve taken a bit of a kicking in Ireland from dodgy developers et al and might just want a word of encouragement to get them going again.Best of luck with your software Buisness and please try if you can to hook up with people back on the old sod for a bit of trade if you can (just me touting for Buisness again).Well you gotta ask.LOL.

  28. Deco

    Australia might be the lucky country – but we had a lot of luck in the past thirty years. And for the most part, it appears that our irresponsible attitude and reckless thinking has blown it. We should be trying to modify our thinking. Instead it seems that we are playing along on a sea of emotion, with everybody defending their corner in the economy. The lies that were the hallmark of Modern Ireland have continued. This is evident in Hanafin defending the ‘record’ of Minister Coughlan. And Cowen’s attitude to McGuinness, Behan and Conor Caseby. McGuinness may get the cold shoulder, but BCF (Flynn) is welcomed back into the fold by ditherer – and we are informed that she is suitable material for mini-minister. Even Cowen had enough cop to not go down that road, ditherer !! Basically dissent will not be permitted. This is a feature of several political parties not just FF. But FF since CJH have made it standard policy.

  29. [...] ArticlesChinese whispers down underBanks giving us two fingers don’t deserve State bailoutBad debts could turn out goodLet us not [...]

  30. Malcolm McClure

    From Joe Brennan in today’s Indo:
    Mr Desmond recalled sending a chief executive of an Irish bank a particularly bleak outlook from an independent Irish economist of the property market a few years back. “He sent it back and said, ‘That’s nonsense. It’s a bit eccentric. Don’t believe it’.”

    DMcW scores again?

  31. Philip

    Not intending to divert from the main topic and indeed in an attempt to weave something in, can anyone think of a means of sustainable growth (in line with population and their increasing need – rather than want) which is not too debt driven or can start from a shoe string

    Things that come to mind:
    Quality tool Hire
    Repair and maintenance – of anything
    Agriculture & Horticulture – seasonal renewal
    Recycling, un-manufacture and re-manufacture
    Warehousing for seasonal and buffering
    etc.

    If I were to borrow anything from China or anywhere else, it would be their manufacturing jigs and tooling. International barter and we give them???

    We need to add value to our mines – stop exporting ore. Something that Australia may be thinking as well.

    • wills

      philip,
      We need to make the leap into a ‘knowledge based’ wealth system
      and leave behind the relic of the industrial based wealth system and
      it’s turf war politics for resources and the bank robbing POnzi schemes cartels that come with it and make a clean break with it
      all and tune up a vision, a vision for where Ireland fits communitarian wise
      into this imminent evolutionary next step presently underway irrespective of how elite
      interests engineer to preserve their place in the ‘industrial based’
      wealth system sun.

      • wills

        I think this leap will happen through
        creative collaborative action beyond the
        old political traditions and platforms and circuits
        and will infuse all with the infinite power of innovation and
        self confidence to live a life of simplicity and restraint and humbled
        appreciation.

  32. Aidan

    President Obama has announced that he wants U.S. to spend 3% of GDP on research.
    What are we doing?

    • G

      We are cutting money to univeristies, pay freezes, pension levies, cuts, cuts, cuts, but not at the top, not for those who have bled the country dry in terms of salaries for dubious functions and no cuts for people like this…………http://www.independent.ie/breaking-news/national-news/business/irish-nationwide-chief-to-get-euro27m-pension-fund-1722135.html

      No wonder Cowen and Ahern were laughing like jackals, they have the game sewn up for themselves, while the people on this island have been reduced to the status of plebs!!!! It’s like feudalism all over again, we need change and I don’t care how it comes!!!

    • Philip

      Agree with G here. Complete madness. That said, I have a suspicion of R&D focused as an output of academia for commercial uses. It drives a mentality of academic politics and self promoters getting all the cash for their pet important projects to keep their academic depts well feathered. It lacks spontanieity and creates unrealistic expectations. Look how long it takes drugs to hit the market. Funny how the biotech boom never quite took off. We are all too blown away by the disney TV like imagery of an amazing invention that saves the day. The link by Malcolm (http://www.youtube.com/v/cL9Wu2kWwSY&hl=en&fs=1) is another symptom of that malaise of over heightened expectations.

      They say necessity drives invention. In times of stress, I would not be surprised that the combination of so many people now networking with one another in an environment where the institutional apparatus is falling to bits will drive a new paradigm. Flash mabs, Spontaneous Non-Participation, Viral propaganda, e-barter. I am not denying the reality of the market, but until people feel they can participate in what we traditional call a market, alternatives must and will be sought.

  33. wills

    @David: “….china needs US spending to keep it’s factories open”
    “………….diversifying away from USA, balancing trick….”
    “..this process is going to define the global markets and geo politics for the next 5 years”

    Now can i ask all bloggers and David to look at link below,…

    http://www.marketoracle.co.uk/Article10272.html

    Ok, having read this rather devastating analysis i reckon JPMorgan
    will ensure all monies finding it’s way to China on buying their exports
    are about to come to a full stop, whence JPMorgan goes south
    and tip’s USA into a depression.

    So, china’s “engine for growth” – USA splutters out of gas and the great China takes the reins and ‘cowboy’s the fu@k up’ and saves
    the world from a global financial catastrophe.

  34. The urinals at the Sodoma bar in Reykjavik are now outfitted with photos of former bankers who’ve fled the country. All three of Iceland’s major banks collapsed late last year and the IMF had to bail out the government.

    We like this. Seems like a far more constructive response to the crisis than the one exhibited by Icelandic voters over the weekend. They voted in candidates from two parties pushing for Iceland to join the European Union. Yeah, that’ll learn ’em.

  35. Aidan

    OK here is one idea
    We have 200,000+ people who have lost there jobs in the last 12 months a lot of these people have a wealth of experience gained in there previous jobs some of them will have excellent business ideas that they would like to research & develop.
    We have Universities, regional colleges and Fas centers kitted out with the best Engineering, computer and Lab equipment that money could buy, and totally under utilized (come summer everything will be idle).
    Would it be at all possible to bring the people with their ideas and the equipment needed to develop them together.
    We need to support, nurture and assist people not throw them on an unemployment heap, expecting some foreign multinational.
    These are our problems that need real solutions.

  36. shtove

    Aus has a housing bubble too. Same troubles as the rest of the anglosphere, including Ireland.

    And China is going to get it in the nuts – their export figures will follow Japan’s, they have insane overcapacity in industry and commercial property, their GDP figures are bogus. Plus they have a politburo running a banking system that makes Wall St look like a choir of angels.

    How very dare you, Mr McW!

  37. coldblow

    Just a few rushed points:

    Global warming – James Lovelock was interviewed recently on RTE Radio 1 and saw Ireland as a practically unique “life boat” on account of its climate.

    Insiders and Outsiders – I share DMwW’s analysis here – this has always been the way siince the foundation of the state (and long before) and is not some recent aberration over the last few decades (see eg Crotty and Lee). What is happening is that with the credit flood receding the old structures are being revealed once again. Lee sees it in terms of performers and possessors – because of our historical circumstances possession (of land, property and jobs) was always seen as the important thing: Lemass set out to reverse this. Malcolm mentioned earlier the importance of the returned emigrants – David makes this point at the very end of the Pope’s Children and I suppose this is where the battle lines will be drawn, if and when.

    China – I go along with Hutton on this (“The Writing on the Wall”, the more interesting half of which concerns world economics and not :China itself) – China has to be handled sensitively but firmly. They need to stimulate domestic demand but this would imply democratic freedoms and liberal institutions – how can a one-party state manage this? Also, without these it would not be possible for China to move up from being an off-shore manufacturing facility. Reading Chang and Halliday it is clear that Mao’s China was the greatest menace to world peace in the second half of the 20th century and (as instanced by their amoral foreign policy) they will need to be watched very carefully. (eg without Mao the Vietnam war might not have forced the US to revise Bretton Woods etc etc)

    Re learning Chinese, this would be very difficult in view of the complicated writing system. With European languages you can learn the grammar and the sounds and then get the books to read. I’d say more and would revise this to knock off the hard edges but I have to rush.

  38. G

    No direct flight between Ireland and China, Chinese student told me she had to change twice to get here.

    The Irish can go via London-Beijing. Doesn’t strike me as a good enough. Wish Aer Lingus or someone would conduct a feasability survey, if they haven’t done so already, there must be opportunities for Irish business out there (?)

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