December 19, 2011

There is another way

Posted in Sunday Business Post · 139 comments ·

This can’t go on. The figures from our economy released in the past few days reveal that the medicine is killing the patient and killing it quickly. From July to September, we saw the biggest fall in the number of people employed in two years.

Some 46,000 fewer people we employed in this country compared with the same figure last year and a further 30,000 left the labour force. These figures are particularly worrying because they show significant numbers of people simply giving up looking for work, because they can’t see the point. When people give up hope, we enter a new phase of the crisis.

Tax revenue is obviously falling behind target and will continue to do so because if the number of people working drops, income tax and spending receipts drop. This means more expenditure cuts to hit budget targets.

Last Friday we saw that GDP fell in the third quarter by nearly 2 per cent and consumer spending for the year was down almost 4 per cent. These are called ‘lagging indicators’. They tell us what has already happened. There are other indicators, ‘leading indicators’, which tell us what is happening now and what is likely to happen. One of the best of these is monetary data. October saw the largest monthly falls in both money supply and domestic credit since the recession started three years ago. When there is less and less money around, it is impossible to hit budget targets because you are trying to extract more out of less. Put simply, things in this economy are getting worse, much worse.

Austerity is doing what it says on the tin: making the economy contract. The deal signed up to with the eurozone last weekend recommends more of this nonsense. But on the bright side, the country is now beginning to look like many others in the last months of a crisis, when the population realises that the game is up.

We all know that this can’t go on. Indeed, the great American economist, Herbert Stein, put it succinctly when he concluded that “when things can’t go on forever, they stop”. And the interesting thing about economic history is that when things stop, the rebound can be very quick and very robust, and the new economy that replaces the old one can look like an entirely different beast from anything that went before.

We have ample evidence from around the world that once a self-defeating policy is abandoned, like our euro commitment, a new dawn normally emerges. We saw this in the Scandinavian countries of the early 1990s that abandoned their currency pegs and allowed their currencies to devalue hugely.

Similarly, if we examine the experience of the Asian tigers in 1997, the British economy after the 1992 devaluation, Brazil after the 1998 devaluation or indeed Ireland after the 1993 devaluation. In all cases an old policy – which was practically an article of faith
- was abandoned and, rather than the chaos suggested by the mainstream if the policy were abandoned, the opposite occurred. In all cases the economies grew rapidly.

The reason for this is that economies grow because of the human capital of the societies. This has nothing to do with the exchange rate or the currency. A currency is only the price that a country trades at – an overvalued currency makes the country seize up, an undervalued makes it grow. If you deviate from that ‘golden rule’, you will find that the currency arrangement has feet of clay.

If a country is weak, it should have a weak currency because this allows it to compete. The currency regime can only work if it reflects what is happening in the economy. If a weak economy like Ireland has a strong currency like the euro, the economy gets weaker. Savers are rewarded, but risk-takers punished. Eventually the economy shrinks and
deflation sets in.

Then the argument becomes a battle between those whose living standards are protected and artificially boosted by the overvalued currency – savers, those on government salaries and the already well-off – against those whose prospects are stifled by the strong currency and deflation – borrowers, the young who have no savings, entrepreneurs and exporters.

But the real value in an economy is not whatever currency arrangement you are in, but what the people are doing and whether the people are given a chance to flourish economically.
Companies are created when good ideas are executed by good people who dream of something different. Now, with technology so cheap, it has never been easier to dream and conceive of ideas, and the difference is in the execution.

However, if you allow your people to dream and stop worrying, they cando amazing things. If you make your country competitive overnight, rather than by pummelling the population with years of grinding wage and price falls, the economy can bounce. We see these rebounds all over the world. One economy more than any other exemplifies the idea that countries can turn themselves around in a crisis. It is another small export-orientated country with a huge diaspora. It also has considerable direct foreign investment from US multinationals and a well-educated, small, mobile population. That country is Israel. I am writing today from a small cafe in Jerusalem on the Shabbat. This is a secular little place in an increasingly religious city. It, like the Israeli economy, is buzzing. The economy has transformed itself in the past ten years based on enormous entrepreneurial effort to build
small export companies.

Today there are more Israeli companies listed on the high-tech stock exchange Nasdaq than all companies from the entire continent of Europe. It has the highest density of start-up companies in the world. Venture capital investments – the lifeblood of start-up companies – are 30 times greater than the entire continent of Europe. To put this into perspective, more venture capital money flowed into Israel – a country of seven million people – last year than flowed into Germany and France combined.

Israel spends nearly four times as much as Ireland on civilian (not military) R&D. Today, this tiny country, with all its problems, accounts for 31 per cent of total world venture capital. Money flows to where opportunity is. That is the rule. When I hear people saying multinationals would pull out of Ireland if we changed our currency because they would be uncertain about the future, I ask myself how can you explain the fact that every multinational is here in Israel – a country that has changed its currency, fought wars and
where everything is uncertain?

There is no reason why Ireland could not replicate and even surpass this performance. We have the multinationals, we have the trading links, we have the workforce, the rest of Europe is lagging miles behind in this field and, more than anything else, we have the crisis. The crisis is an opportunity to rethink the country, to re-imagine it with a competitive exchange rate and a business environment that rewards entrepreneurship. Why can’t we copy Israel in high-tech? There is no reason at all.

Looking at the economic numbers in Ireland, it is clear that this can’t go on. We are heading to a depression, our people are leaving and many that are staying have given up hope. Something has to give. It is time for all of us to ignore the scaremongering and see that there is life after the crisis. If Israel with all its problems can turn itself around, Ireland can too.

  1. AthruMor

    Thanks David,

    Without saying it, I assume the implicit point here is that their success has been in some part due to control of their own currency…

    The question for Ireland is when will the fudge from most recent Euro crisis/collapse talks hit the markets?
    Its slowly being realised that the idea of a treaty within a treaty will take months and months to tackle which perpetuates the slow decline.
    Assuming some EU country/EU bank downgrade will trigger a hurry sooner rather than later, a split between core and peripheral Euro seems a realistic aftermath.

    Ireland may be better off in the peripheral zone, assuming it wont go back to punts on her own..but who will make the first moves to get this core/peripheral euro process moving to get the devaluation needed?

  2. Throw The Baby from the Bath

    Our Large Foreign High Tech Industries cannot be depended upon to save our very fragile economy any more and signs are that in the recent two months the trend of imports have reduced and this will reflect itself in these companies exports next year .

    • bridestream

      Does anyone really believe the present lot in Dail Eireann will initiate what it takes to fulfill David’s wishes?

      Anyway, I am convinced anything David suggests to get us out of the mess were in will not be acted upon.

      David, why don’t you go on praising the Government for their current policies and maybe they will do the opposite which is really what you want them to do!!!

      • Its worth giving a thought .If you cannot beat the political morass join them .

      • Steaf35

        Or…….there are enough informed people, on this site and other blogs… form some sort of an economic alliance/party/forum for the benefit of the country; to provide an alternative outlook…! Just a thought…!!

      • TJM

        As I’ve stated before Ireland has been ethnically cleansed of people with imagination and creative entrepreneurial spirit. Since the foundation of the state and may be back as far as the famine every 20 years or so we go through a destabilising down turn and the immigration relief valve trips resulting in the haemorrhaging of our best and brightest human capital. Those that remain are the cute hoers who get entrenched in the system and learn all the tricks of the crony to weasel there way up the powerbroker tree. The current bunch in power are the former bunch who sat on the collusion bench in the dial taking the pay rises and entitlements. In my opinion there a bunch of fools with an age profile over fifty, not one of them took the boat in the eighties. And I qualify fools with their explanation on the household charge. “It’s not perfect but it’s the best we can do for the time being” we will get something farer in the future. The idiots had a whole year to come up with this crap. I am incensed with this claptrap, what do they think we are. If I wasn’t tied to a mortgage Id be gone in the morning. Maybe that will be the saving grace this time that so many are stuck with mortgages that they won’t be able to leave and will stay and demand changes although I can’t see that happening we just don’t have a can do spirit here in Ireland.

        • bonbon

          Good point. Transportation was ethnic cleansing, followed by the 1846 Genocide – never mind what polite company call it. Then the civil war (document #2). Out of that came FF,FG eclipsing Sinn Fein. Most do not even know Arthur Griffith was the first Irish President.
          Matthew and Henry Carey, in the USA, are key American System Economists. Griffith based his economics on Fredrich List’s American System of Political Economy, a devastating rebuttal of Britain’s Adam Smith, point for point.
          Now with the financial system imploding the door is wide open.

  3. A government lacking in imagination put into power by a people lacking in courage. Our current lot are cut from the same cloth as the last lot. Listening to Eamon Gilmore on Newstalk this morning was an like an all out assault on honesty, transparency and logic. Depressing.

  4. Comical Ally

    If you ever watch the comedians take on Daniel O’ Donnell they usually have to meditate even go to sleep to secure the quiet laid back demeanour to project his unique persona .

    Somehow in Irish Politics it requires the same effort to enable the ruling parties convince the public that they are in control .And not in control of nothing as the facts really are because that would amount to political failure.Thus more economic malaise is better for Irish Politics cause it keeps the some of the people fooled some of the time and that seems good enough for now .

    • Deco

      Interesting point.

      I would extend your theory with respect to senior civil servants appearing “laid back” and “relaxed” about the place being in crisis.

      I would also extend your theory to media coverage in the binge era years, when the media celebrated all the endless, pointless borrowing…as if to say “everything is under control” while falling over the cliff. The fact that there is nothing under your feet is a “new experience to be embraced”…..

  5. bonbon

    Military Subsidies

    The USA, and European states do the following too, but AFAIK Eire is missing this. NATO non-membership also precludes a lot of R&D. Switzerland is a case of its own. The entire EADS-Boeing fight over subsidies is a obviously a farce.

    …The Israeli government has indirectly subsidized the tech sector by pouring tens of billions of dollars into defense R&D, and then allowing entrepreneurs to adapt for commercial use–free of charge–intellectual property developed by the military, says Yoram Oron, general partner at Vertex Venture Capital and the current president of the Israeli Venture Capital Association (IVCA).
    Most readers assume military R&D “is bad” and leads only to weapons. This policy in fact brought most of what we use in civilian life. The Soviet Union could not handle the interface with secret cities where top science was carried out, and imploded the economy by 1989.

    The USA has 13 national labs, Israel has its own, with all the known “spin-outs”. Israel has nuclear power etc, but has not, so far, applied this to desalinate and green the deserts – The Oasis Plan is 25 years on the table. With this approach there is no argument for territory based on the water table.

    The Oasis Plan is an example of military R&D to be used to STOP wars.

    With all the Israeli entrepreneurship, what is stopping this development? All the neighbors will benefit from dealing with the water question.

    • CitizenWhy

      Yes, military and weapons research has been and is a great part of the US ability to produce new technology.

      Medical technology and the space program, including bases on the moon and Mars, science based and mining focused and tasked with solving complex problems, was supposed to be a new way to generate technical innovation and lessen the role of military R&D. But it was gutted of most of its engineering challenges.

      • bonbon

        It was gutted of most of its funding. NASA lost its manned program only because Obama personally wrecked it. Now the USA must hitch rides on Russian rockets, with first-class tickets paid by tax dollars better spent building up NASA. Its as if Obama is bleeding the patient to death – the Shaman leech-therapy?

      • bonbon

        Specifically medical imaging – PET scanning is an example of civilian use of nuclear technology. However most even very large firms are skittish on the expense/risk factor by going it alone. The Israeli model might be the best way. China also adopted this model, and openly say they use the US ideas from the 1960′s with the latest advances to get a head start. Why has the US stopped – they ask bewildered.

  6. NeilW

    I take it you’ve all read Bill Mitchell’s analysis of Ireland’s current state today:

    “How’s poor old Ireland, and how does she stand?”


    Yesterday’s Times said that the “singer” Dickie Rock met Seanie playing golf @ a €130 per round golf course in Spain last week ! In the late eighties 1,000 per wek were emigrating to London, expect a similar figure this yr , Aus and Canada will take the slack.

  8. piombo

    David’s currency devaluation strategy is in fact taking place. The Euro/US$ momentum is heading toward 1.2 perhaps even parity in the coming weeks.
    This dynamic alone will give Ireland and the rest of the EZ the “internal devaluation” it needs to support competitiveness but also, and perhaps more importantly from the money markets persepctive, provide the non-EZ investors (US, China in particular) the motivation they need to support any solvency measures needed (aka reprofiling sovereign debt maturity profiles).
    I suggest David just waits a few weeks and he will get all he is wishing for.

    I like to think I know Israel from business experience over the years. Ireland and Israel are on different planets when it comes to investing. Israel has a defense-driven protected economy funded by the foreign aid from the US & EU in addition to the sentimental/religious/eschatological ties all Jews feel to the land of their forebears. This last source ensures that Israel has one of the most expensive real estate markets in the world and a well-organised and well-funded source of foreign investors across the globe.
    Also they have a Central bank with one of the most respected monetarist bankers alive, Stanley Fischer.
    Now if Ireland could only leverage it’s disapora using:
    1) Non-financial motivation eg., religion, identity-definition;
    2) Organise it’s disapora into an effective caucus especially in the US to ensure Ireland receives huge aid transfers because the Irish deserve it because we came across on the coffin-ships and if we don’t get the cash for Ireland we will vote for your opponent;
    3) Instill a sense into the Irish disapora that Ireland is under mortal attack from outside and needs the disapora support otherwise it’s the end!

    BTW, I doubt David broke the Shabbat whilst sitting in the Jewish quarter….more likely he was in the Christian Catholic or Armenian parts. I doff my hat to him if he was sitting in East J.

    • bonbon

      Strange, proposing an exact copy of AIPAC (AEPAC?) to interfere in US politics. AIPAC was tried for gathering illegal databases on US citizens for this purpose a few years back. (Homeland Security with the Defense Authorization Act are doing that now).

      Much better to openly acknowledge Arthur Griffith, Mathew and Henry Carey and the American System of Political Economy. Ireland contributed critically to this, and the real monumental criminal stupidity shared not just by the bankster servants in the Dail, is the suicidal obstinate refusal to pay tribute to our own thinkers. True they could only function outside the British Empire then as now.

      Israel’s people were forced over 70+ years to leave Europe to found another state. They took with them a cultural treasure (as well as the Jabotinsky faction). After all, that was Disraeli’s strategy to hollow out Europe.

    • Deco

      Piombo – anytime I get talking to people who left Ireland a long time ago, I find they have fondness for the ordinary people, but a stern resentment for the gombeens who are in control of the business sector, the state, and the media.

      They also resent contributing money to a system that is rigged to profit the gombeens who kept them out of employmnet, and drove them out. Ireland can be a cruel place, in the shadows of all the fake niceties and superficiality. And they well know it.

      We need to reform ourselves. And we have the tool to do this – the internet.

      • piombo

        Hi Deco,
        Ignore the gombeens! I’ve always done so. I grew up in the 80′s and emigrated in 1991 firstly to London and then to continental Europe. I consider myself fortunate in owning my own company and thank God for what I have so far.
        I also have two young sons to whom I speak of Ireland a lot. They love the music, hear the stories at bed-time, remember the warm and bright Irish people they meet each summer when we go home to Ireland.
        I prefer to exorcise totally from my life and also theirs the corrupt, the dishonest and the downright cruel both in Ireland as well as here in Italy.
        The gombeen is essentially a coward and a thief and like all cowards and thieves they do not like to be challenged. BTW, most civil servants I imagine also want a sustainable long-term future and in my opinion are more open to negotiation than people give them credit for.

        • Deco


          Gombeenism is based on the concept of being the middleman who performs no function of any economic value, but who places himself, so as to extract economic rent from the system, at the expense of those who create the value.

          Gombeenism is the economic ideology of the vested interests in this country.

          Classic example is the clique who controlled building land in Dublin during the boom.

          The fascinating thing is that the state owned a massive quantity of idle or partially used land in Dublin, but refused to release it onto the market in case it would drive down values.

          When McCreevy suggested decentralization, the auctioneering profession were enraged – but they could not be seen to be enraged – as they feared it would push down real estate pricing.

          We need two anti-gombeen parties in the Dail. One on the right of centre, and one on the left of centre.

          I am doing my best to call it as I see it, so as to undermine the gombeen element in Ireland.

          And it is not just an Irish problem – it exists in other countries as well.


    Another superb article.
    There is one thing that may be arguable. David says “Why can’t we copy Israel in high-tech? There is no reason at all.” Actually, there is a reason; Israel has superb cultural and intellectual resources. For instance, we struggle to supply industry with sufficient maths and science qualifications. Why is that?

    • Deco

      Something to do with the graduate profile in the Irish university sector perhaps ???

    • bonbon

      The mistake is to think the Uni can “drive” industry. It is the other way around – a manufacturing policy drives the Uni. “Service” and green economics drive the economies potential down, forcing a synthetic financial bubble blow-up, and burst. The mathematics of this are not taught to any economist in any Uni now. The principles of physical economy are beyond the usual Uni product which concentrates on finance.

  10. jfcassidy95

    As you articulate, it is becoming increasingly difficult to argue against devaluation. The issue is the impact on the Irish retail banking as well as the IFSC shadow banking system. Will the ECB cease to provide liquidity? What about ELA? Will it be Argentina overnight? What needs to be in place to preclude this? Or do we just go ‘cold turkey’ and hope for the best….

  11. molly66

    This government has it’s head so far up it’s back side that they are in total darkness I have said this before ,if this bunch of misfits are left in charge THEY WILL DESTROY WHAT’S LEFT OF THIS COUNTRY
    Liars they told lies to get into power and now they are still telling the same pork pies
    I think GDP is down more than 4 percent I spent 400 euros last Xmas on presents for family .
    This year I spent 200 anybody I talk to is spending a lot less this year.
    David is the 4 percent GDP based on last year because if it is we are worse off because of the bad weather last year damaged shopping if so the figures are hiding the true figure that things are in a terrible state.

  12. bonbon

    It has not Stopped yet. Here we go again lads!


    This week, the European Central Bank will be issuing an unlimited supply of three-year bailout cash to the hopelessly bankrupt big European banks. Reuters reported on Friday that “Europe’s intensifying debt crisis has forced the ECB to extend and expand support measures for banks in the euro area which have found it harder to borrow in the interbank market due to their large sovereign debt exposures. A rush by them to borrow the new money could underscore the scale of the problem.” The new cheap lending by the ECB, scheduled for Dec. 21, is aimed at inducing the banks to buy up European sovereign debt, to profit from the yield differentials. This new hyperinflationary bailout scheme is bolstered by the ECB’s lowering of collateral standards. On Dec. 15, Spain held a bond auction and sold twice the amount of four-year bonds as expected. On Dec. 21, European banks can turn in those bonds to the ECB as loan collateral for the cheap money.
    Another part of the bailout scheme is also scheduled for this coming week, as eurozone finance ministers confer by phone on Monday on details of a 200 billion euro bailout, to be channeled through the IMF. The plan is for European central banks to “loan” 150 billion euro to the IMF, and for those funds to be increased through an additional 50 billion euro in loans from non-European countries. The 200 billion euro will then be used to bailout the European sovereign debt.
    These wing-dings are doomed to fail in the short term. When the European heads of state met in Brussels on Dec. 9 and agreed that there would be no further write-down of the bonds, as had been the case with the Greek debt, it was a guarantee of hyperinflationary failure. The European banks, led by the Inter-Alpha banks, are all bankrupt, and the governments are also bankrupt–as the result, in part, of the first round of bank bailouts over the past two years.
    The dismal failure of the heads of state summit has not been lost on the criminal rating agencies. Standard and Poors is likely to cut France’s AAA bond rating this week, and Fitch announced on Friday that six Eurozone countries, including Italy and Spain, have been put on a watch list and will likely be downgraded in the next 90 days. In announcing the watch status, Fitch analysts wrote that “a comprehensive solution to the eurozone crisis is technically and politically beyond reach,” and demanded more bailout commitment from the ECB.
    Bloomberg reported on Sunday that the British government is going to announce on Monday that it has adopted the recommendations of the John Vickers-led Independent Commission on Banking. Business Secretary Vince Cable told BBC television today,“Tomorrow, the government is going to launch this initiative on the banks, accepting in full the Vickers commission. We’re going to proceed with the separation of the banks, the casinos and the business lending parts of the banks. We cannot risk having a repetition of that financial catastrophe that we had three years ago. We can’t have a position where the banks are too big to fail.” On Monday, Chancellor of the Exchequer George Osborne will go before the House of Commons to announce the fire wall between retail banking, and trading and investment banking. However, the implementation will not take place until 2019.

  13. Malcolm McClure

    Happy Christmas everyone. Let this be the season of Peace and Goodwill to all men.

  14. straboe1

    There are times when one is faced with a choice, to continue following a failed policy, because those that got us here are afraid to admit their mistakes, or we can do the right thing. The World Bank would allow us to burn the bond holders, The world bank would not charge us 8.2% on our borrowings, which our friends in Europe do. We must negotiate with he World bank so as to get out of the Euro, it is finished as a currency, and a unifying force for Europe. As David says we can do it differently to what we are doing at present. We need a government which respects the talents that we have in this country, we need to foster the assets that we have and get away from the concept that our best export is our people. Can we get out of the mess we are in? The answer is yes we can!

    • molly66

      If this government keeps on doing the wrong things it will get to the stage where we will be to far behind to catch up and we will be very far behind.

    • bonbon

      Argentina has been discussed many times here. They took action in 2005 and have been massively attacked by those same “friends” who decide the interest rates.
      Being invited to dinner by these “friends” means you are the menu!!!
      Buenos Aires, the Paris of the Atlantic. Why not tell of the recovery, now underway with president Cristina Fernandez de Kirchner, and her speech at the G20 on what Greece should do?

      Right now Argentina has a better future than Eire under FG/Labour. The financial Empire–and its current top cop Lagarde–has never forgiven Argentina for unilaterally defaulting on its debt in December 2001, imposing a 75% “haircut” on the vulture fund bondholders that had been looting Argentina for decades, and achieving record economic growth after that. Largarde finds what Argentina did as “odious”.

      Kirchner took action imposing a 75% haircut on bondholders in 2005 !!! Today 8% growth!!!

      The key as Kirchner just said in 28-Sep-2011 Argentina’s Greatest Fuel, its people!! Committed to scientific and technological progress opening Atucha II, its 3rd reactor.

  15. Deco

    David is trying to see if we can emulate Israel. The fact is that we have a massive proportion of the state infrastructure on the the job. Plus EU grants. Plus Local government busybodies. Plus an expensive third level sector. And now we even have the Dail telling the banks to lend money to such new enterprises.

    And the results in terms of numbers employed, are abysmal, compared to cost expended. The IDA is still the principal employment driver.

    The lifestyle factor has taken over. For most young Irish people the ambition for risk is met by taking a year out in Oz, and doin bungee jumping in NZ. Starting a business venture is for other people – too much responsibility involved.

  16. Now I might be clean stone mad but what if, after leaving the Euro, the Punt Nua actually appreciated against the Euro?
    Given our natural assets, the similarity to Israel with FDI, aflexible workforce post Croke Park, our assistance with Shannon airport, the Chinese setting up in Athlone etc etc, whats the liklihood of Eire Inc being viewed as a safe foothold onto the continent and thus highly investable.
    Add in commercially driven business development units chaired and driven by our host, Gerry Kennelly or Prof Gurdgiev (real businesspeople)then what price the Euro?

    Rather than being cast into devaluation limbo, we could be the Celtic Bull.

    Just a thought.

    Seasons Greetings to all.

    • bonbon

      With a new major deep-water Shannon harbor to service the ice-free Arctic for Siberian raw materials, and trade to China, plus tunnels from Ireland via the UK to Europe, Ireland will be a very different Entity.

      This is not the Tain Bo Cuailnge. The concept above may seem like magic to Celtic Tigers, like origin of those 2 bulls. But that is because of the pagan Euro religion rather than anything else!

      • There are an enormous amount of positives for trade in Ireland but we’ve been mired in negativity trying to make the Euro sows ear work.

        For example, the Scots are already pumping fresh water to England. The Home Counties regularly run dry of fresh water. Our western seaboard is a huge catchment area for the purest water in Europe and the by product being Hydro Electricity. Transport and sell both across the water.

        We’ve already got deep water harbours in Bantry and Cork which are under utilised.

        The Chinese are swallowing up all the lamb and milk that New Zealand can produce. There’s a very ready industry there, just to support our farmers with experienced marketing brains.

        Ireland could be a market garden for Europe with a little initiative and the removal of the French regressive agricultural closed shop.

        Given correct regulation, we can do financial services very well here. Not all the companies were cavalier cowboys.

        And don’t forget tourism. 60 million people next door who traditionally spend money when abroad. They just want reasonable value for money.

        We need to get away from this all pervading negativity and focus on what we can do, to release the people that will do, given the right assistance.

        We could start on this forum by exploring ideas. Some will be fanciful, but more will be workable. From small acorns and all that.

        • bonbon

          Shannon is different – it is the river feed. And Arctic capable ships are big! Better also to pipe water with high-power pumps. Still there should be no reason the West has polluted drinking water like last year!

          Getting a Punt Nu to work is also not the issue, getting the physical economy is. This is where Tigers were set up to be pussy cats.

          The whole economic picture is still what Arthur Griffith lambasted in 1905. No wonder financial bubbles appear.

    • Deco

      Furrylugs – I agree with your thesis that the punt nua will be underpinned by Ireland’s strong trade account surplus. However, given the transfer pricing regime, and mnc profit repatriation – it is highly dependent on the level at which the money is retained in various corporate treasuries. There is a level of unpredictability with regard to the volumes of currency that will be exchanged on a weekly basis.

      Of course, it the authorities continue to throw money into the drain that is the bank bondholder repayments, then we are in trouble. Basically this indicates low determination to efficiently manage our finances.

      Ireland’s junk bond rating, might mean that corporate treasury units might be reluctant to leave their reserves in punt form for long. Though they might be required to leave the monye in Ireland, for tax reasons.

      Happy Christmas to you also Furrlugs – good to have you on board.

      • Deco,
        Thanks for the comments. I’m not basing my theory on any science, just a gut feeling. Theres a lot of money out there looking for a safe haven. Look at Davids findings regarding VC capital inward bound to Israel.

        IMHO, when all the perambulations and complex arguments are done and dusted, it all boils down to someone with money looking to make a pound out of a reasonably safe bet. And I actually think Ireland is a safe bet, given that we’ve proved we can take the medicine in the form of austerity, we can get lean and mean but now these investors want to see us taking tough pragmatic steps to get our economy moving and thus investable. The Euro juggernaut populated by left leaning inefficient and naive politicos is a serious impediment to this.

        • Deco

          Well yes, there is panic, because the sovereign bond market is stuck when it comes to finding a safe place to invest. All across the Western world, countries are losing their rating, and showing themselves to be incapable of making any adjustment that might bring down interest rates. So you could have a point.

          When Japan, and the US start getting the jitters there will be panic. There is another logjam episode in the US Congress over the issue of tax/borrowing/spending. And Japan is stretching the possibilities of what counts as a stable sovereign bond market.

          The leadership in Europe is simply not up to the job that their own ineptitude has created.

  17. Deco

    Unemployment will rise in January.

    A lot of small businesses in the retail sector are now going through their last Christmas. They are looking at one more local authority rates bill, and are stuck for cash to such an extent that they are going to close up and not going to stay in business in the New Year.

    They simply have not pulled in enough cash in the last three weeks, to stay in business for 2012.

    Prediction for Q1, 2012 – unemployment to rise.

  18. Adam Byrne


  19. Lyndon Jones

    What David is really saying is that we leave the euro ! But he isnt brave enough to say it .
    For 400,000 people on tracker mortgages this would be a disaster .
    He wants the pain to stop and wants out. Merkel says it will take 10 years and the current government will continue to impose austerity until out borrowing is .5% of GDP, thats our future .
    No matter what way you look at it we have to close the gap between income and expenditure. Austerity will continue I promise you that. There is no way out lets be realistic , the bulk of people accept this and David has not .

    austerity => balance budget => repay debts in 10 years we will regain sovereignty then we will have choices but not now , we have to get our house in order first.

    • bonbon

      First Merkozy will not even be in Gov’t in 10 years.
      2)Not one forceast Merkozy made in 2 years had the value of the paper it was written on.
      3)The Euro is only a decade old and look at the mess – a World Record
      4)We wait with bated breadth next Summit Breakthrough!

      Glass-Steagall will deal with securitized mortgages as a footnote. With the banks split into functioning pieces, a currency is no problem. We will need then a Bretton-Woods type arrangement for stable finance to reconstruct out of this economic war-zone.

      None of this appears in the crystal ball Oracle the bankers (and dutiful foot soldiers) stare into.

      • Deco

        According to Mike Mish Shedlock, the current EU round of discussions will be number 20 this year devoted to the topic of “saving the Euro”.

        Imagine that. They have made 19 attempts to deal with the crisis, and they still are nowhere near a solution.

        Honestly, Stanley Laurel and Ollie Hardy would be better on the job than Barroso, van Rompuy, Trichet, the G-Sucks appointees, Merkozy, etc…

  20. CorkPlasticPaddy

    Of course there’s another way, but the dickheads who’re supposed to be running the country won’t listen!! Kenny and Gilmore prefer getting ‘pats on the head’ for being the ‘good boys’ of Europe then rolling their sleeves up and they telling Merkel and Sarkozy and the rest of the clowns in Europe to FOXTROT OSCAR!!

  21. paddythepig

    I like to keep things simple. Sometimes the less you bury your head in the books, and the more you open your eyes and observe what is right in front of you in your locality, you’ll see and learn a lot more.

    For example. I was living in North Kildare in the late eighties and early nineties. In 1988, I remember watching Wim Kieft head the ball past Packie Bonnar through the window of a little TV shop in Kilburn as all the pubs were closed during the match ; but all I had to do was walk from the Crown in Cricklewood to Biddy Mulligans, and I’d meet all the young people from the town where I grew up. We’d queue up for the payphone at the weekend, and there’d be lads I went to school with. Everyone was over there. In other words, there was no industry in North Kildare of any great consequence in 1988. There were big farmers, and stud farms, but for the rest of us who had no land, and who weren’t interested in horses, there was feck all else.

    The single biggest event to occur in that area was the arrival of Intel and later HP. Lots of young people who slummed it in London with the rest of us came back, and got jobs in those companies, and their spinoffs. That was 1989. No other event contributed to boosting that area as those arrivals. The devaluation of 1993 was irrelevant to the area.

    I remember the environment well in the media at the time. The most visible and talked about industry of the time was the beef export industry ; Larry Goodman was a regular on Today Tonight. It was these types of industries, in cahoots with their suppliers in the IFA, and the dying remnants of Irish manufacturing that made all the noise leading up to the devaluation, until they finally got their way.

    The tech sector was in it’s infancy, and not a single job was created because of the devaluation of 1993. Even without devaluation, Irish labour was very cheap at that time regardless.

    I can’t comment about the financial sector. But I do believe the following. A devaluation is only effective as a short term shot in the arm in an economy where there are a lot of highly price-dependent export industries. And even then, it’s value is highly questionable. One currency devaluation leads to another, and another, and another. And at the end of all that, you ask the hard question ; are we really helping anything, or do we need to reform more fundamentally.

    Economists, and especially monetarist economists, believe in maintaining the quantity of money, whereas they should be concentrating more on the quality of money, or the quality of investment. There is no point in attracting more money, if it will all be mis-invested. Sometimes there are benefits to having less money, but sharing it around more equitably, and investing it more smartly.

    • piombo

      @Paddythe pig,
      Your recollections of London take me back when I went there, straight from uni and within eighteen months chartered accountancy quals. I landed in Willesden Green, you probably know the Spotted Dog!
      Your observation is accurate.Ireland was cheap as a location then as Croatia, Poland, Turkey etc., are now. Back then, there was still little or no investment and hence no jobs. China’s entry into the WTO was five years away. I sincerely believe that had the 12.5% corporation tax been upped in these years, Google and all of the other multinationals were out of Ireland at the drop of a hat. So much for how they value the IP potential of Ireland.
      As I wrote earlier, there is a EZ-wide devaluation well under way and this will benefit Ireland on the trade account surplus. However, given the weak tax take on exports, we will be forced into a Morgan Kelly-style downsizing of the civil service to right the ship otherwise we are in for a lost decade.

    • Deco

      Your last two paragraphs make a lot of sense.

      A currency devaluation provides a short term kick. The price of domestic labour falls. This means that it is cheaper to hire. But a massive proportion of the non-food imports in this country are imported. Petroleum products, clothes, domestic products like washing powder etc… these would rise in price. So wages would have to rise to keep the gap between the wage levels and the cost of living.

      In the early 1990s, there were very few bottlenecks in the Irish economy. Every county in Ireland had 10% plus unemployment, with places like Cork city, and Western counties having nearly 20%. Labour was plentiful, and it was fluid – because the people were young, and they were able to rent cheaply in Ireland. People rented near the work. And people moved around a lot. And people were sober enough to do their work every morning, not like ten years ago, when Irish people were pulling the “one day flu” sickie.

      We dropped so low, that we could only pick up to meet the gap with the countries with which shared a trading zone.

      The simplification of the tax code in the early 1990s also made a big difference. At the time people were worse off working than on the dole. In many respects, due to social housing, and expensive property prices, many working people are now in the exact same predicament – except they od not have the option of a remdy, unlike in the 1980s.

  22. Claudia

    I usually follow your economics and find your articles informative. But it is shameful that you have opted to use Israel as an example of a successful economy while ignoring its human rights abuses and the fact that its economy could not survive were it not for the $3 billion it receives in US aid annually, the stolen land it sits on and the usurped resources of the native population.

    • ….it’s a feckin disgrace, but very much in line with the level of deliberate and targeted ignorance displayed on other issues as well.

      • redriversix

        I agree……

        Sometimes I wonder how David could not see the fact’s that Claudia has to point out…Quite incredible.

        • McW comments on global OCCUPY movements since September 17th…. ZERO!
          McW reaction on the permanent infiltration of this blog by Larouchepac …. ZERO!

          I couldn’t give a damn anymore!

          • redriversix

            I was trying to think of something clever to write , but like you Georg…..I really could not give a flying fcuk anymore…….

            It seem’s that everywhere you turn,their is spin interviewer or writer does not ask the tough question’s.

            Gilmore on Newstalk this morning was a stunning farce

            Noonan on 6-1 telling how ecb meeting’s and targets a success and on track…….

            Their is going to be some shitstorm in 2012 and most people have no clue.

            Cancel all debt..
            Financial Strike now..

            Families First

          • bonbon

            Come on guys, now is not the time to give up! The fight has only begun! Cleverness alone, spin, or hype, and simple moral imploring will just not cut it. As another poster said the Occupy Cork was “too cuddly” with hip music. Sorry, but the banksters just love the music (secretly).

            Human rights? Austerity is a human rights violation right here in Europe.

            Burn the BondHolders now! Glass-Steagall immediately. And lets rebuild from rubble as Germany magnificently demonstrated with the DM!

            RR6 : the key is : Now!

    • Dorothy Jones

      I agree Claudia

    • Juanjo R

      Its possibly more sinster than that too This a Naomi Klein article on Israel from a few years back talking about the nature of high tech start ups

      Israel is one of the biggest military spenders in the world it spends 8 per cent of its GDP directly on the military ( Ireland spend 0.6 or so ) and its in receipt of major financial aid to buy equipment from the US. They have happily upgraded 30 years ago – older Egyptian airforce planes with new avonics and weapons equipment the major arab airforce in the region so its not about threat. Isreal maintains since the late 1960s has an airforce of such size and capability that could defeat the RAF or German or French Airforce or any two of those combined probably hands down. Its ex-troops have trained death squad units that carried out massacres against all kinds of people – from left wing groups to innocent villagers all over central and latin America as paid contractors by US agencies by US backed regional dicators. More recently they have turned up in Iraq amidst the sectarian killing helping guess who? with extrajudical killings.They do the dirty work where America be seen to be acting. They supplied military weapons and spare parts to South Africa during the apartheid era embargo.

      Most major Israeli politicians were in the miltary as elite or highly ranked officers. Its completely intertwined there. Death is their business and if they have moved into a high tech version of that then I’m not surprised at all…

      • Juanjo R

        sorry about all the typos!…Kleins articles are great.

      • bonbon

        What worries me about Klein’s articles on Haiti is AFAIK no mention of the plan the USMC drew up and presented to Obama for a military logistic intervention to rescue Haiti after the quake. Obama refuse “because it would look like an invasion”. This insane attitude has resulted in unnecessary deaths. The massive USMC capability was not used.
        The same idiotic feudal outlook blocked another plan from the US Army to stop the BP oil-spill using a technique the Russians used in 3 major fires – Peacefull Nuclear Explosives, PNE’s. Because of this major Carribean environmental damage occured.

        The Military is not a killing machine (leaving out private contractors like Cheney’s Haliburton – The Revolution in Military Affairs, RMA). Massive capability exists to intervene in disasters like New Orleans, Red River, Mississippi flooding, and the Elbe in Germany.
        It is paradoxical or rather simply archaic, that a modern defense can only be used for war, in a time thermonuclear weaponry has rendered war obsolete.

        • coldblow

          I know nothing about this and have an open mind (so far). But here goes. Would the US have been discouraged from intervetion following what happend in Somalia? And the reaction to the Iraq invasion?

          • redriversix

            Hi coldblow,

            Specialist Engineering Battalions or Navy See bee’s could easily have been deployed to assist.

            These are specialist construction “team’s” used to repair infrastructural system’s or repair cities water or sewage,road’s on a temp basis until “area” more secure……unless,of course it is subcontracted than you don,t get shit unless their is money in it.!



          • bonbon

            Right – Obama had no problem smashing Libya (there were boots on the ground), but would not intervene in Haiti or against BP.

            The British Empire’s boy’s job is war after all.

      • Juanjo R

        @ Bon bon.

        “Military is not a killing machine”.

        What do they do they train soldiers to do then? shoot flowers out of guns and engage an enemy in free love?

        “PNE’s peaceful nuclear explosions.

        And what kind of explosion is peaceful? And in what kind of circumstances would a nuclear explosion be peaceful or acceptable? Are you seriously suggesting that it could be acceptable? in order to prevent pollution? Listen to yourself. Who are you kidding here?

        Here´s what some internet idiot had to say about it all – read this quote;

        He also notes that nuclear “plugs,” sometimes three times as powerful as the Hiroshima bomb, had been used five times successfully, with only one failure in 1972 that “mysteriously” left a mushroom cloud where the gusher was supposed to be. According to Nagowski, the risk of a mushroom cloud in the Gulf of Mexico is “only” 20%, so why not take a chance?¨

        Ahh I´ll answer as to why not take a chance; because a 1 in 5 chance of possible failure and a plutonium bomb explosion resulting in a mushroom cloud off THE CONTINENTAL UNITED STATES ( and also beside lots of other countries ) is far too high for Barack Obama.

        Alpha radiation contamination and water is a very bad combination for humans. Alpha radiation is around for a very long time you see. Alpha radiation contamination it can kill quickly if it gets into the body and the easiest way in is, yes, through your gob – in the form of water.

        Do you know anything about nuclear physics or bombs?

        Only absolute idiots on backwater internet sites and forums would seriously entertain this.

        If Klein was aware didn´t its because she is not an idiot. There is a good answer for you.

        And as for any plans drawn up by the miltary its normal – its called PLANNING. And sending an army into a foreign sovereign land uninvited it defined as AN INVASION.

        Never again!

        • bonbon

          Obama had a similar hissy fit. Unecessary deaths are occuring in Haiti because of his British orientation.

          As regards PNE’s, they work and have been used and will be used. The BP disaster could have been by a very good plan the US Army put on Obama’s desk.

          And if you know anything at all about nuclear physics, you would understand the advantages. Read the Russian report itself, not a western commentary. The BP problem, like the Russian one was the depth. Extreme deep drilling is highly risky, and the pressure/temp unpredictability combined with cost-savings caused BP’s problem. Because of the depth, the PNE can be located well below any danger level. It simply moves the reservoir cover over the bore.

          Obama’s delicate nerves are thus the reason for the pollution all along the US coast. He should have taken over BP as a clear and present danger, and sent the Army to fix it. But that’s American.

    • …Not astonishing though, not a sausage….

      Mc Williams:

      09/11….An Israeli friend of mine who advised one of the most embattled Israeli administrations of recent years told me …

      08/11…This week there were massive protests in Israel which, to my mind, were of much more significance for middle-Ireland than the riots in London or the demonstrations in Syria

      10/10 …The proposed ‘Week of Welcomes’ is similar to Israeli programmes that invite young Americans of Jewish heritage to come to Israel to learn more about who they are and how the state of Israel can be part of their lives.

      03/10…I’d thought about it before and I had seen how other countries cultivated relationships with their global tribes – particularly the Jewish tribe and Israel –

    • Hi Claudia,
      can you be clear and tell us uninformed what stolen lands you speak of and from whom they were stolen?



  23. Rory

    It is false to hold Israel up as an example for us to follow. Their tech is driven primarily by the military. Your stat about them spending 4 times more than ireland on non-military simply disguises that fact. The question is not how much in comparison with ireland but how much of their tech in total is driven by military spend both at home and abroad. I have no problem with military spend, it is just that to break into that market takes up to 30 years of application, technologically, politically and diplomatically, building trust and security systems that can be accepted by the world’s defence forces.

  24. Damage Limitations

    I have no doubt that devaluation will happen next year no later .Germany will not forgive the piggis and France is too big to allow to fail and Merkel will do a deal with Sarkozy.

    UK already will not cooperate and DSK will arrive in China soon to fake a chinese sting to be seen to give an antibody to the failing Euro .All in Vain.

    Devaluation will cause greater pain than we realise and will last three years that will seem a lifetime and none of us will be prepared for it .

    And we thought we were shocked .We know nothing yet.

    • redriversix

      pain will be minimized if People start canceling all their debt now,say pay 5% total and build up reserves of cash or worthwhile goods and get the confidence to put themselves first.

      Today is the start of the rest of your life.

      Do not wait for permission…

      DO IT NOW.

    • bonbon

      Hjalmar Schacht, Bank of International Settlements chief, became Hitler’s economics minister, introducing concentration camps based on the model used in the Boer Wars in South Africa. Schachtian Economics is known in polite company as Austerity. Schacht appeared at Nürnberg, but was not questioned, sitting in an ermine coad, smiling.

      FG is practicing Schachtian economics. Draghi is Schachtian, as is Monti.

      Anyway it took FDR to settle this issue.

  25. Deco

    Well, things must be serious, when even Pravda are open about the EU begging for help.

    • bonbon

      EU and USA (Obama) interference in Russian elections – blowback. Putin is not fool enough to bail out the Euro, after Kudrin (London School of Economics) pushed the BRIC swindle in Moscow and Medvedev fired him the other day.

      Trotting out Gorbatchev pushing “western” interests is simply too much. Kasyanov is noisy but not running.

      Lagarde can beg all she wants – the Transatlantic financial system is finished, including the wart on the rump – the Euro.

      • Deco

        Western policy in Iran between 1953 and 1979 – now that is “blowback”.

        There was an attempt at peaceful revolution. It might return. The emigre Iranian community certainly hopes that it will come about.

        • bonbon

          The MEK stationed in Iraq have other ideas. Right now Obama will try Iran as a spark for WWIII, either with Bibi throwing the Israeli handgrenade. I have posted here as much as possible the evidence for this. There is no wiggle room. Obama is the problem.
          The Libya assault was the receipt. France played along. Iran elements know exactly what is going on. Foreign interference is not new.
          Putin did a 4-hour interactive webcast after the elections. Russia knows exactly what is happening.
          War avoidance is now the absolute highest priority as the financial system crumbles.

          • redriversix

            America funding a proxy war against Iran on the Iraq border with Iranian dissident’s for the last several months.

            They are using simple hit and run tactic’s against Iranian Government Forces and returning to mountain border region.

          • bonbon

            Exactly. They are the MEK, with heavy armor. I can only imagine what Teheran thinks of this. On the other side Afghan Helmand heroin that Britain refused to control. Add to that the recent killing of 3 or more nuclear engineers and explosions, very likely orchestrated from abroad. This is all very dangerous, and Obama is heating it all up. The Senate has gone ape and passed sanctions, always a first step to war.
            Why now, one should ask. Why the mad rush?
            Financial collapse – this system is over.

          • bonbon

            Yousuf Ali Waezi, advisor of Afghan President Hamid Karzai, has accused British military in Afghanistan of being involved in the drug trade in Afghanistan, according to the Iranian news agency’s German website In an interview with Iran’s Press TV on Dec. 15, he said: “There is evidence that the British troops in Helmand are not merely not taking action against drug smuggling, but they are even involved in the drug traffic.” He added, that the British military were also “involved in opium cultivation and drug production in Afghanistan.” Irib says that “according to some reports, drug production has increased fortyfold, since the U.S. invasion of Afghanistan” in October 2001.

  26. Paris75013

    Interesting article. However, overly optimistic regarding Ireland’s trading potential. Competition is tough and there are many ‘hi-tech countries’ in this fast-moving industry.

    There are many drawbacks when it comes to doing business with Ireland. An example. One of the subsidiary companies of the group I work for in Paris recently tried to set up a joint research project with Teagasc in Cork. The whole project fell through for 2 reasons. Impossible to do a return trip to Cork from Paris in the same day. Only mid-afternoon flights. So a 2-3 hour meeting in Cork actually takes about 2 and 1/2 days (whether taking the direct mid-afternoon flights or stopping through London or Dublin). Another thing which was also a problem, after 5.00 pm you couldn’t reach any member of management at Teagasc. My French colleagues described the Teagasc team as very laid back, taking days and sometimes weeks to reply to emails, and asked me if this was typically Irish?

    This is just one of the big drawbacks when it comes to doing business with Ireland.

    • bonbon

      Why not Skype? I know some multis are afraid of it and try expensive VideoConferencing.

    • stiofanc02

      Your answer is Teagasc. Teagasc is a public entity. They dont have to get back to you as they will still be paid on time.
      Bloated wasteful incompetents will always be “laid back” They dont really give a shit.
      Pfizer on the ohter hand would return the call. Trip over themselves to get a competitvie edge. If you are looking to the government or any of its agencys to drag us kicking and screaming into the future that is what you will get, dragged.
      If you look to the private sector you have a real chance.

    • Deco

      Reminds me of a story concerning the Irish Dairy Board, in the early 1990s – during another national crisis.

      A Irishman working for an international trading business was doing business with the Russians. Then the Russians asked him for a massive quantity of butter and cheese.

      So thinking of how hard things are at home, he tries to call the Irish Dairy Board (who basically held a monopoly on the provision of Irish Dairy produce for export at the time). And he told them of the deal. The deal was USD in part exchange for butter, along with a massive quantity of bauxite (for aluminium) which is internationally tradable. The Russians had the money, and it was backed by the state who wanted the butter for the shops.

      Their response “we have never heard about you, and we don’t know you”.

      He then spent two days trying to convince various people of his identity, and trying to buy Irish butter. At the time there was a butter mountain in Europe. They simply were not bothered. It was much easier to sell the material into EU intervention – less work for all concerned.

      With the deadline coming up, he dropped the offer.

      He then called the NZ Dairy board’s office in London.

      The New Zealanders faxed him an offer for butter within 20 minutes. And were ready to sell as much as the Russians wanted.

      Now, this is how the gombeen element operates in this country. Basically you have quangoes, the EU procedures, and gombeens (and the politicians in the background who appoint them) all in one story.

      The story is called “Ireland does not mean business”.

      Subtitle – “how to lose in international trade”.

  27. Paris75013

    Skype is not always suitable for highly confidential science-based research projects. When you pay a lot of money for research, you need to go sometimes to check things out.

    • bonbon

      I am very familiar with that argument, believe me. The 128 or higher encryption via a broker, in theory could be broken by Google’s Cloud, but the backbone for the videoconferencing is closed? Not tapped?

      The key today is “open innovation”, so what happens to the security nuts? And the meeting is not recorded? Signing NDA’s is one way, but better to publish via doctorates etc… What I have seen is “competition” inside the same group more than with external firms – weird.

      • redriversix


        In reply to above post…

        KARZAI accusing British involvement in Drug trade is obviously a ruse,they are involved,but somebody low down on the “food chain” will take a fall for whatever breaks newswise in the New year.

        Drug Trade has been used for years in the Covert operation’s world for funding,some examples…..

        1st British adventure in Afghanistan was indirectly to control opium for Far east and “medicine”.

        Air America,Southeast Asia funded by CIA through Heroin and other drug trafficking to the States.

        1980 Afghanistan,supply of stinger missiles and training paid for in part by drug trafficking,CIA involvement.

        Iran / Contra Arms scandal…Col Oliver North / James Baker / Reagan payment sanctioned to include Narcotic’s as a form of payment.

        Narcotic’s is and has been big business for Western Nation’s involved in the “Liberation” of oppressed Countries and its handy to keep the “poor”population down.


        Cold War

        War on Organised Crime

        War on Drugs

        War on poverty

        War on Terror

        Humanitarian Aid

        Humanitarian Bombing [ Yugoslavia ]

        Humanitarian Action / intervention

        State sponsored terrorism. i.e UN Sanctions against Iraq in the Nineties.
        Over 1 million dead Iraq’s

        See Dennis Haliday for Ref.former UN inspector now barred from U.S and from speaking to Media.

        Financial War….ongoing

        Just say NO…




        • bonbon

          I posted in the previous theme Russia’s Ivanov speech at Georgetown on the narco finance. The numbers are all there. The banking system right now relies on this liquidity. Which means London. In other words the IFOR are protecting the banks. Soldiers are getting killed for this. And the main heroin market is the EU. Tell the German BKA they need that extra drug budget because German troops are making helping to leave this untouched.
          Kabul knows all about this. And that clip is from there.

  28. stiofanc02

    Paddy was stuck in traffic outside of the Dail, nothing was moving.
    Suddenly a man tapped on the window and said, Terrorists have kidnapped the new Government and are holding them for ransom, if they dont get money they are going to douse them with petrol and set it alight so Im collecting donations.
    How much are you getting on average? Paddy asked.
    About a litre and a half!

  29. bonbon

    I personally would be very reluctant to click on that link. I have had enough trouble with malware/viruses.

    Would it be possible to post a sanitized version?

  30. Praetorian

    a) there isn’t a history of innovation or risk taking in Ireland. It is an insider culture which you have been at pains to point out and look at what that has ‘achieved’. There will be no cutting of the Gordian knot.

    b) banks are primarily recapitalising, Christ himself wouldn’t get a startup loan.

    c) billions of dollars of subsidies and other items from the US help keep the Israelis afloat.

    d) saw a documentary where an Israeli owned company was operating out of the West Bank, clearly availing of cheap labour.

  31. StephenKenny

    The question raised is really “is it possible to take the venture funded growth model from Israel and build something vaguely similar in Ireland”.

    I don’t suppose that David was suggesting that the Irish army imitate Israeli army, or that they start to build settlements in Wales or somewhere, or any of the rest of it.

    The point that was being made was that given the funding and will, it is possible for a small country to do very well in the context of a global hi-tech economy.

    I don’t think that Israel is a good model for Ireland, simply because any increase in funding in Ireland would merely result in another property bubble, or something very similar.

    As yet, nothing has changed since 2007 except the names of the politicians. Nothing has been fixed, we’ve just seen about $7 trillion of the same old same old.

    It’s interesting that the Microsoft Kinect product was licensed from the Israeli company “Prime Sense”. David’s point is that it could have been an Irish company.

    • Realist

      Excellent view.
      Israel is sponsored heavily by the US and their economy is sponsored by their own government subsidies.
      They might be in the high-tech bubble themselves similarly as we were in the property bubble.
      Government cannot possibly know and decide in what to invest, neither do David.
      We need to allow Irish people to decide what to do, entrepreneurs that live in Dublin, Cork, Galway, ….
      That is called free economy where people save money for investments because they want to spend it in the future, entrepreneur sees the opportunity to employ such money together with unemployed labour and other resources and do the business.
      That to happen the government should reduce to miniscule, relax taxes and stop printing money from thin air.
      The best start will be Irish default and making sure Irish government do not get into the debt ever as most likely nobody will ever borrow money to them.
      they will be forced to privatize or rise taxes.
      People will not allow tax rise so they will hopefully need to go the other way into the free society and further from EU socialism.

    • Realist

      “It’s interesting that the Microsoft Kinect product was licensed from the Israeli company “Prime Sense”. David’s point is that it could have been an Irish company.”

      Only Microsoft, as entrepreneur would know that.
      David cannot know this, nor our government.
      What David and our government should know is how to make our environment better to compete for such and many more other projects.
      Nobody on earth can tell Ireland in this point in time should go high tech, or agriculture or something else.
      Such information cannot possibly be available centrally and this is why we leave people and entrepreneurs decide.

      • StephenKenny

        That’s only really partially true. The Israeli tax system encourages technical r&d, as do, strangely enough, the German & French systems. There is also a ‘falling off your horse’ culture in such places (you’re not a real horse person until you’re fallen off once = it’s OK to fail). The US has both, essentially, and the UK has neither.

        It’s also not really true that the elected representatives of the people (this may or may not be someone’s government) are unable to direct an economy. The Sputnik scare of the late 1950s in the USA sparked an education policy that encouraged a wide range of technology fields, via the education system.

        On a side note, there are many ways I’d describe Microsoft – very rich, excellent lawyers – but there’s no possible argument for them being entrepreneurial.

        • bonbon

          Exactly. Very good note.

        • Realist

          I only wanted to point that the government is distorting the economy and not helping it.
          So, any kind of subsidies any government is pushing means more resources in that sector and less in others, as somebody needs to pay for that.
          In Israely case r&d got it while other sectors that should be healthy suffer, till the day of reckoning come, similarly what is happening to our property bubble at the moment.

          I agree that Microsoft is not real entrepreneurship company, as it is well known it depends on the governmental support through the patent laws and other IP nonsense.
          But all of this discrepancies are coming from the governments wanting to take higher control while obviously getting corrupted in the process by businesses. I am personally for removal of patent law as it just causes more pain than gain for the society, but we can talk about this issue forever :)

        • Realist

          I also do not see how projects aka “send people to Mars” are driving economy (or Sputnik, or any other absurd project coming from the government).
          For example spending trillions of dollars on Mars project does not mean people wanted it, consumers wanted it ???
          Maybe it is better for the people to decide do they want people on Mars or maybe to have new iPad or nice holiday somewhere :)

        • bonbon

          NASA and the TVA are the best examples of how a Gov’t intervenes to drive the economy upwards. For Tigers, the $1 versus $14 NASA R.O.I is fascinating, but they miss the point that the $14 were in a totally different economy. The TVA is FDR’s New Deal agency, copied the world over.
          An economy left to its own devices gave us the collapse. And people loved every step of the way to hell.

          • Realist

            You are wrong that without the government and their interventions the economy will collapse.
            Governments created fractional-reserve banking and took us off gold standard, so we should say thank you :)

            Are you aware what happened in the countries with the total control, e.g. socialism and comminism.
            The democracy can only lead to either socialism or free society, as in itself is in unstable state.
            At this moment of time when ECB and FED are pumping trillions into the banking system it is hard to not say we are very very close to socialism.

  32. gizzy

    This government and its departments will not lead innovation. They are too old and settled without the personal hunger to do so. I was at a meeting with the Dept of Enterprise recentlty. There were four of them at the meeting, all senior people and all aged over 55. No offence to people of that age on the blog. But Enterprise of all departments should be staffed and managed by young energetic people in their thirties so I rule myself out aswell. Our leading politicians and civil servants are too old and too stale having ground their way slowly to the top of their own food chain. Start up entrepeneurs tend to be young and so should the people who deal with them. Can you imagine a thirty year old bright highly qualified person getting appointed to a senior civil service position.

    • coldblow

      My own experience within the CS is that bright, pushy staff who are willing to put in the effort (and let others know it) get up the ladder quickly. I don’t know if that has improved the situation, I doubt it. I doubt if it is an age/ energy thing really. Look at it this way, if these energetic younger people were put into these positions do you think it would make a significant improvement? Perhaps it would only mean a more efficient implementation of current policies. As I said here before, inefficiency within the Civil Service (and possibly the rest of the Public Service) may well be a saving grace as bad policies don’t get to do so much damage.

      • gizzy

        The younger people must be falling off the ladder somewhere before the top or must no longer be young people by the time they ger there. What in the average profile of a senior civil servant. Would it be male, fifties and in the same dept over twenty years.

        • coldblow

          It’s not uncommon to see Principal Officers appointed late 30s, early 40s. (I have played football against a couple and they have that extra spring in their step, which doesn’t necessarily translate into results.) POs and Asst POs basically run the CS. Sec. Generals and Asst. Sec. Gens. run the show in terms of strategy and, yes, in that case they’d usually be over 50. My guess is that anyone breaking into that rarified circle quickly becomes acculturized and won’t rock any boats. They have far more contact with the political machinery. Your ref to ‘male’ I am taking as standard pc piety.

    • coldblow

      Another related issue is how the public admin of other countries performs comparatively. Are countries such as Germany renowned for having an open, efficient civil service? France? My guess (and it’s a guess really) is that they’d be pretty similar.

      • Realist

        Comparing 2 public services that are dislocated and operate under totally different environments, location, …. is impossible in the economy.
        Sony TV in Germany is not the same product as Sony TV in Ireland, due to the transport cost from the factory, …..
        Also the other fallacy is to compare public services that have no competition.
        This is called the imposibility of calculating cost or efficiency in socialism and pubic sector.
        I bet that both German and Irish public servant is just drag on the economy and nothing more, both inefficient and sponsored by coerced money.

        • coldblow

          That may or may not be true. I am merely pointing this out as there is a stereotype that the Irish Civil Service is uniquely inefficient. Anecdotal evidence would indicate that this is not the case. I’m also pointing out that the CS is very small in terms of numbers compared with the Public Service.

          Re your point about the differences in price for Sony tellies in Germany and Ireland being a result of transport costs – do you really believe that?

          • coldblow

            Also, off topic, regarding the protection of so-called front line services my own (perhaps jaded view) is that such ‘services’ are often far from being an unambiguous public good.

          • Realist

            Is Irish CS more efficient because it burns more or less money than German counterpart ?
            Values are anyway subjective and it all depends how you value CS in Ireland and how some german values their own CS. I do not value either too high at the moment.
            That does not mean I do not value people, but the service is a different thing.
            It is entertaining to have CS who goes to Mars and brings me nothing except the joy of his journey on TV, but is it the thing I, you or other people wanted ?

            Maybe my Sony example is not an easy to grasp, but what I want to say that economic calculation depends on subjective values and depends on location and time when you are going to enjoy it.
            There are reasons why you go to Centra and buy the same bread around the corner for higher price even you know the same is cheaper in Tesco.
            In real sense they are the same products but in the economy they are regarded as different products.
            We all like to drink coffee in the cafe’s as we enjoy the ambient, even such coffee might be the same as in Tesco.

    • Realist

      The government or any public service cannot possibly be efficient except in the mind of politicians or somebody on drugs.
      They have no competition, nor the test of profit and loss. They are financed by coercion through taxes or cheap credit, like issuing bonds and inflation.
      The solution is privatization of most of the departments possible, or just dismantling those that are irrelevant and not needed as the sector will work properly the same without it anyway.

  33. gizzy

    By the way I worked for a while in a semi state. There was a constant work to rule on in some depts and it cost about 25 million to voluntary service about two hundred and fifty people with pension buy out etc. Now extrapolate that accross the civil service and ask why the government are not biting that bullet. But unless they bring radical change to their departments nothing will happen. As an American change consultant once told me. It is easier change people than get people to change

    • Realist

      Companies and people change only when driven by competition and possibility of their mediocry work putting them out of business.
      As public services at the moment have unlimited stream of financing coming from either taxes, or bond issuing and so called “invisible” inflation tax.
      Without ability for them to serve real customers and those customers being able to say your service is crap and I do not want to pay nothing will change.

  34. bonbon

    Why not look at Switzerland? Neutral, but the highest military spending-per-head in the world. Highly developed industries, Uni’s, Agriculture very heavily subsidized and a huge bankster sector (United Banksters of Switzerland). Most of the land is vertical, and without agricultural aid, would empty of all people, effectively destroying the country. The EU would never allow this and would smash the country. For instance 1 litre milk in Geneva costs over 11 times to produce. For EU bureaucrats or worse, technocrats, this would drive them into a hissy-fit rage.
    Unfortunately there also the suicidal nuclear-exit hysteria over the border infected the Gov’t, but is not a done deal.

    • coldblow

      Also, isn’t German agriculture very inefficient compared with, say, England?

      • bonbon

        UK agriculture gave us mad-cow disease, efficiently feeding herbivores with animal protein. Maggie-agro.

        Modern industrial agro can feed 82 million with less than 2% working in it. In 1900 it was more like 80%.

        As Arthur Griffith rightly pointed out in 1905 it is a mistake to concentrate on agro, with no manufacturing.

        The UK and Germany today do not make that mistake. Germany’s Bismark changed everything, and Britain (not the UK) started WWI.

        So it is incorrect to single out 1 part of the economy to compare to another. There is a harmony of interests, that the EU seems to have forgotten.

    • Realist

      Who can possibly know that ?
      Is it possible to have such information centrally, e.g. on this forum, or our beloved government ?
      When you look that 1000,000′s of entrepreneurs across Ireland and World are calculating where and how to eomploy money, land and labour to create prosperous businesses and when such information is in 1000,000′s of heads and driven by their specific calculations.
      They need to come up with what us, consumers want to do in the future.

      This is why the government should just stay away and leave the economy to pick it up.
      They should remove all obstacles for this to happen and not put more of it.

      • bonbon

        To remove a Gov`t is Monsanto’s dream. Also Cargill’s. These must be controlled, and self-policing like the bank stress-tests is a joke.
        Most of the so-called venture capital is hedge-fund and other bankster operations. All obstacles were removed and look what happened.
        The dot.communism was hailed as massive venture growth, and Facebook’s $100 bllioprce tag is seen as success!

        VC will not build nuclear reactors, loves wind turbines and solar. Why?

        • Realist

          I agree with you fully, but that should not stop us telling them that central planning of economy is the dream. It is not possible as it is based on econometrics that is wrong and not possible.

          Staying away might also mean not allowing banks to use fractional-reserve banking to do what you described above.
          All that abundance of money through the credit expansion that is not coming from real savings is just crazy.
          The society cannot invest into something without prior saving of resources, including money.

          Allowing banks to expand the credit from the thin air is the way to credit stupid governments and make profit, till can last of course :)

          As I know wind turbines and solar are usually subsidised by governments, so good to waste money on stupid projects :)
          They probably did not even bother reading books like “Sustainable Energy” –

          These are all malinvestments caused by government pushing in the directions they think is the best.
          But those projects are failing recently and some are even abandoned in the US.
          How on earth they can know ?
          What kind of data or intelligence our ministers and central bankers possess ?
          They use aggregates and averages, like GDP, to tell us the economy is doing well, while not caring about the productive structure and microeconomics that is probably destroyed.

  35. Alf

    “Under the commission’s proposed scheme a charge of €188 would be paid on houses valued at up to €150,000; €563 on houses between €150,000 and €300,000; €938 on houses up to €450,000; €1,313 on houses valued at up to €600,000; €1,699 on houses up to €750,000; €2,188 on houses valued at up to €1 million; €3,125 on houses up to €1.5 million and 0.25 per cent of the valuation on houses over that”

    This property tax looks like the final nail in the coffin of the Irish property market. This would lead to a bigger crash, more losses for the banks and a bigger bailout, ultimately, for the taxpayer. I believe property tax to be the most insidious of taxes. It forces those who have paid for their property to always have an income to support ‘ownership’ of their private property. This will be even harder on the older and weaker of society. In effect, it communicates that you do not own your property and are now an eternal tennant. However, I believe this legislation would be unconstitutional and violate Article 43 of the constitution.

    • Realist

      It is just awfully easy for governments to find the way to coerce more money from people and private sector.
      We are still lucking behind Denmark on sugar and fat taxes, and who knows what else :)
      And it is all to support fat politicans and their friends in banking sector who relentlessly printed and spent that same money on themselves and stupid projects of their own, while destroying the whole economy.

    • ….A residential property tax was introduced by a Fine Gael-Labour Party government five years later. It was based on a charge of 1.5 per cent of the value of a house when the market value exceeded a specified rate. The tax, which was based on self-assessment, never raised a significant amount of revenue, mainly due to lack of compliance. It was abolished in 1996

    • coldblow

      Those who have difficulty paying will, apparently, be exempt.

      Reminds me of Monday’s Indo report about a motorist in Laois whose car caught fire and who rang for the Fire Brigade. Two engines turned up and two crews. They charged him 4k, reduced later to just over 3k. Those who can’t pay are ok. Those on low incomes needn’t worry either: they are given some time to pay the full amount.

      There’s an odd psychology here, which must work with some: it’s ok, you see you don’t have to pay right now, so what are you worried about? There must have been similar thinking among those who borrowed heavily during the bubble. It hardly encourages prudent behaviour.

      • bonbon

        Is the fire service a private profit-firm? What about insurance?
        I agree with Alps heli-rescue charging off-piste holiday skiers in accident, but the fire brigade must be guaranteed.
        If they sell the ESB, foreign finance will charge at they like for power.

    • On the ‘Oirish Economy Blog” and afaik, long time Irish Times Contributor

      Sarah Carey Says:
      December 21st, 2011 at 11:56 am

      Second – I’ve no objection at all to a property tax, or water charges etc. This has to happen…..

      • redriversix

        Just don’t pay property tax…….

        SIMPLES !!!!!

        forget about it…waste of discussion.


        Next subject ?

      • —-ooO Ownership Ooo—-

        If you own something, only you have rights to it.

        If you have to pay a tax on something you “own” then logically you do NOT own it.

        Note: One of the tenets of the communist manifesto is to do away with private property.

  36. redriversix

    ECB only had to lend 489 Billion euro to Banks who requested loans….

    We are finally turning the corner !!

    Exports are record breaking…

    Now,..what was it that I was worried about..? I feel so silly…….

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