July 1, 2013

Caught in a capital trap

Posted in Banks · 242 comments ·
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Our economy is going backwards. Latest figures from the CSO reveal that the economy has shrunk since last summer.

We are now contracting at a pace last seen in 2009, when the wheels really began to come off. The Irish economy has contracted now for three quarters in a row.

Throughout recent recorded history, recessions last on average ten months. This recession is completely different, both in terms of its scope and its depth. We are seeing a massive double-dip recession led by a depressed local economy, which is compounded by the delayed effects of austerity in Europe.

Domestic consumption is cratering. According to the figures, in January to March of this year, consumption fell by 3 per cent. This is the largest fall in the whole recession – even including 2009 and 2010. Investment, too, is down 7 per cent and even exports, usually the bright point on the Irish economic landscape, were down 3 per cent in the first few months of the year.

Traditional economics tells us that, in a recession, as unemployment rises, wages fall. And as wages fall, the cost of labour falls. When you go back to Karl Marx (not a bad launch point), you will know that in any economy, there is the return to capital and the return to labour. If one goes up, the other goes down and vice-versa

The return to labour is wages. If wages are falling, then the implication is that the return on investment – profit – must be rising.

Thus, the way the economy rights itself is that wages fall and profits rise. As profits rise, the return to investment rises. Eventually, investors will come to see that they have a ‘one-off’ opportunity to invest their capital and get more for each euro invested than was previously the case. This should trigger an increase in investment and the economic cycle kicks off again.

So why is this not happening now anywhere in Europe, let alone Ireland?

The most obvious answer is debt. There is simply too much debt, which is strangling investment opportunities.
Take Ireland, for example. Many small businesses are starved of capital and are offering investors double-digit returns for working capital. Many small businesses are surviving due to the dexterous management of this cashflow, deploying a bit here and there to keep all the balls up in the air.

We know from the US that in the past few years it is these small, young businesses that create jobs. Indeed, large companies are net job destroyers, so these cash-strapped small businesses hold the key to the future.

So why are they not getting the capital, if the return on capital is rising? The reason is that the capital is trapped in the banking system and it is not being released into the economy. Now, maybe the new capital might come from outside the country in time. Foreigners may well decide that Irish businesses are worth backing, but it seems fair to suggest that foreigners will only buy trophy assets, rather than recapitalise the entire economy. Providing working capital is still the job of local capital, and it is not working.

Maybe one way of attracting capital out of the banks in the next few years is for this coming budget to be truly pro-small business. Maybe the government could think of giving a tax holiday to local investors investing in local companies.
Such a tax holiday could apply to the investor’s income or property tax. These are just obvious ideas. At the moment, there is over €90 billion in deposits in the banking system. Getting even a fraction of this money into the local economy could work wonders.

Without such initiatives, we end up with an economy with plenty of potential working capital, but no actual working capital. This explains how the return of capital can remain in double-digits without investors taking up these opportunities.
The problem with small companies offering double-digit returns to real investors is that they can’t do this indefinitely. With inflation running at a few per cent, the company that offers double-digit returns on capital goes bust quickly or becomes dependent on expensive capital, and it can’t grow because so much of the turnover is going to pay the investor.

The company that is offering such returns is only doing it because it is desperate and, unless it gets working capital, it will shut down.

Thus double-digit returns are an opportunity, but also a sign that things may actually slump further from here because it is not a sustainable business model.

The other mechanism whereby the recovery becomes a self-reinforcing mechanism is through wages. In normal recessions, wages will fall as the number of people looking for a job increases. But this is not happening because, naturally, trade unions will move to protect their members.

Instead of wages falling, as classical economics suggests, we see in Europe that companies don’t cut wages; instead they let people go. As this process tends to follow the ‘last in, first out’ pattern, it disproportionately affects younger workers.

Obviously, the people in work want to keep their jobs and conditions, even if the people out of work would be prepared to do the same job for less. This tends to lead to the insider/outsider dilemma, where the workforce is pitted against each other.

Those on the inside – with jobs – have different interests to those on the outside without jobs. The upshot is that people who lose their jobs can’t get back into the workforce and the rate of long-term unemployment rises, as we have seen to an alarming extent in Ireland. All this causes demand to fall.

The implication of both these big forces in the credit markets and in the labour market is that the economy gets stuck. Businesses not only don’t have enough credit, they don’t have enough customers.

If the government cuts spending in this context, the money the government is not spending has to be spent by someone else, otherwise the economy will have to contract.

In the case of Ireland, our government still hopes that foreigners will take up the slack, offsetting the reduction in government spending by buying Irish goods in huge volumes. The plan was that this foreign demand would be seen in surging exports.

Unfortunately, this is not happening. Export figures are actually falling, most probably reflecting austerity policies abroad.
Therefore, national income is falling, unemployment remains far too high and thousands are leaving the country. It is difficult to see how this is all going to turn around and the more the economy contracts, the more the initial debt burden becomes unsustainable.

The economy needs a lower debt burden, a more competitive exchange rate and policies that either liberate the potential capital in the deposit base, or a slow down in government cuts and tax increases.

None of these appears on the cards, implying that last week’s atrocious figures may become a trend.

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  1. Economic Proposals can never solve a National Catastrophe when National Laws are tainted in favour of a few .

    We need a NEW Law Reform Strategy with a balanced representation and independent of political maneuvering .

    The Real Change can only come from a Solid Base . Lets look at Daniel O’ Connell , a Barrister who changed the Law of the Act of Union and sought Catholic Emancipation .

    What followed from that was ….Economic Progress .

  2. A lot of the so called capital in banks may in fact be Debt borrowed from central banks to bolster reserves.
    Perhaps David has stats on this.
    However it looks like the world as a whole is in a debt trap and debt suffocation. Not easily resolved.

  3. 5Fingers

    +1. The system has lost integrity. There are 2 ways this will move.

    1. We magically get leadership and people get on the same page and clean up our act OR
    2. Leadership will be imposed “for our own good”.

    We see how Anglo easily manipulated our Government. Same is happening globally. Short of trying to vanish off the grid, I cannot see how No. 2 can be avoided.

  4. anothereejit

    David, If “the capital is trapped in the banking system and it is not being released into the economy” what is happening to the enormous amounts of additional printed money? Some would say that it is also being trapped by banking and government debt. When this money is released is there not a big chance of a money tidal wave causing hyperinflation and a repeat of Hungary in 1946 and Germany in 1922 then caused by world wars?

    • michaelcoughlan

      Hi,

      “what is happening to the enormous amounts of additional printed money”

      The hegde funds are using it up to recently to drive bond and equity markets to new highs even though truth tellers like McWilliams post articles like this one showing the reality that the economy is going down. In other words hyperinflation is being confined to the stock markets for now. On top of wages falling you have a situation where asset prices are rising especially for assets that will hold their value when the financial weapon of mass destruction
      detonates.

      Benanke is not a conspirator he is an ideologue who dosent get that his own actions have totally disproved his own dissertation. When it all blows up and blow up it will Bernanke will be like Seanie and Drumm; everyone else will be to blame, China, India, dollar shortsellers, gold buyers everyone except HIMSELF.

      • Pauldiv

        Two tier, two speed economy.
        Sea breeze down here, jet stream miles high.
        We are the land that the glacier is hollowing out.
        Frozen

  5. Morning another eejit

    This is a huge risk and is at the heart of the massive policy dilemma not just in the USA but in Europe as well
    Best regards David

  6. David,

    Another simple way to stimulate startup businesses is for the government to offer voluntary redundancies to those who want to become self-employed.

    The entrepreneur covers wages during the early days when customers are few and cash is scarce. The government reduces headcount and gives the local economy a boost.

    John

  7. michaelcoughlan

    Hi David,

    If you never read another post if mine can you please read this one. Please listen to Kim Sinclair at the following link and his description ad to how the gold futures markets are decoupling from the physical.

    http://www.jsmineset.com/2013/06/28/ask-the-expert-jim-sinclair-50000-gold/

    Would it be possible for you, Kelly, and gurdedive to devise a plan where the savings of ordinary irish people in Irish banks can be converted to gold deposits, kept on the banks balance sheets but ring fenced in the event of bail in?

    That way all agendas are served: the banks don’t lose the deposits in a run and get enormous upside and the people don’t lose their savings in bail in!

    Only 5% of the public have the confidence to listen to truth tellers like you and make their own judgement against the prevailing herd.

    Ate we looking at dantes inferno in bail in inIreland otherwise?

    • michaelcoughlan

      If should be of, Kim should be Jim, ate should be are.

    • whatamess

      well worth the watch Michael ! cheers …the few bob i have is in physical gold too as it happens…

      while precious metals possibly help to better protect the little or any savings you do have, an economy doesn’t sprout from currency ,so gold/silver etc are a light year away from what must be our focus…the economy back on it’s feet!

      So you strongly urge David to read that and rightly so Michael , but can i say,with the exuberance of a child on christmas morning…it’s not my intent to offend..

      Imagine a movie set where the cameras fade out and up from a living room on christmas morning,smiling faces exchanging and opening gifts..then to an aerial view of that house’s garden to the roof top , BUT WAIT ! most of your neighbours lights are not on ‘coz they cant pay the ESB bill and no fuckin toys in your neighbours’ houses…In fairness i happily unwrapped my toys ,but i looked out the window one christmas morning and the glitter of my new toys lost their sheen.It’s a mindset,mostly conditioned behaviour ….. Not the TRUTH of this situation …

      Bon Bon ,i can fully appreciate your disdain for talk of gold and such and to date your suggestions are at least BIG PLANS..that’s whats needed…

      i care less the source of the BIG PLAN (LLaRouch,whoever …who cares) We take 5 of the best blueprints,and DEAL with this reality,in REAL tems

      JOB#1 fix the economy!No ,i don’t know how ffs,but that’s the focus!And the economy is in such bad shape that it’s unrecognisable…a head on car crash at 150 mph!little left !

      If it’s not a HUGE overhaul ,u may has well not f**king bother!

      All these suggestions by DMW,while creative in fairness,are again,missing the BIG PICTURE
      …and so what, that we , The subservient Irish ( look at the Egyptians out in force showing some balls !)may raise some tiny percentage of 90billion ( crumbs from the table ) ,but with for example fractional reserve banking still in full swing,it’s sooner or later,we can easily anticipate the outcome … easily anticipated as it’s predictable with human sociopathic nature.. Bankers will find new pozi scheme,dress em up with a bow on top and away we go on the merry-go-round.
      An ounce of prevention is equal to a pond of cure..split the banks ! Job#1 ! Glass Steagall or by whatever mechanism !

      And lets not be blinded by these experts either ,even this lad Jim Sinclair ….before he made his opinion known,MIGHT he possibly have had a quick chat with a Gordan Gecco type ( and there are MANY )and briefed him with what he was about to announce re his predictions …and did perhaps gold SHOOT north,if only for 20mins or 60 seconds? This is how it works ! Pay Day baby !

      ….”greed is good,greed is right,greed works !”
      G.Gecco

  8. NK

    I disagree that the problem is in the lack of capital (or high interest rates) for SMB.
    I (a foreigner) would gladly lend my savings to worthy SMB borrowers in Ireland if:
    1. I knew that criminal is prosecuted (now I know it is rewarded)
    2. If I knew the fascists from the European Commission did not have say in Irish economy
    3. If Ireland was not in the EU

    Instead 95% of my savings are in gold and silver (mostly physical) and will stay that way (at least) until eurozone falls apart when I would reconsider. Even if I had idle cash on my hands I would not invest it in the EU as long as the place is run like a banana republic.
    So there you have it. It’s really very simple.

  9. EugeneN

    David seems to go from Marx to far right wing economics here.

    “The other mechanism whereby the recovery becomes a self-reinforcing mechanism is through wages. In normal recessions, wages will fall as the number of people looking for a job increases. But this is not happening because, naturally, trade unions will move to protect their members.”

    I am not sure what “normal recessions” he is talking about here, but unions are hardly that powerful in Ireland, and recessions always increase unemployment, not reduce wages. And that was true in the 19th century too. In modern economies what probably stops young people replacing older people is simply experience, not some kind of closed shop. Well that and labour laws.

    Classical economic theory on what should happen is dubious anyway. The claim is the market should clear to a wage level where everybody is employed. There is no proof. Imagine a company which employs X number of people to fulfill nX number of orders. Each worker doing n units of work – simplifying here. Then the orders dry up, are halved in fact, so the company leaves some people go, and then employs X/2 workers to fulfill nX/2 orders.

    I can’t see how the workers reducing their wage would mean anything other than the company making more profit, orders are still as nX/2 so only X/2 workers are needed.

    • Hi EugeneN

      I am absolutely with you on the point that classical economics is looking more and more redundant by the day. Paul Samuelson’s Neo-Classical Synthesis (not the neo-classical short hand used by anti globalzation movement) is probably the best place to start, but increasingly I am persuaded by Minsky and Kindleberger more than any other economists.

      The main point and the more crucial is that an insider/outsider dynamic is building up which is shutting out millions of people from making a traditional living from a traditional day’s work. This is a terrifing prospect for everyone.

      Best

      D

    • 5Fingers

      Very nicely put. And with increased capitalization (automation), “n” in nX/2 can becomes arbitrarily large until no one is needed. The dynamic has changed for sure. Bottom line: people have lost control of an industrial tradition of career. The signals this gives to the market in terms of return on capital cannot be interpreted in the usual way anymore. There is an inherent innumeracy or bad logic that needs to be addressed – in the meantime, the market signals are up-ticking stock to oblivion until they suddenly realize Marx’s view of self destruction.

    • Pauldiv

      No Men Needed Today

    • Joe R

      “….but unions are hardly that powerful in Ireland,….´´

      You could hardly have called that more incorrectly.

      They are so powerful that they cannot be touched. Bertie didn´t dare. He cosy-ed up to them looking for their vote and their own party (The Labour Party) won´t dare touch wages or conditions in a serious way for them. Cutting jobs is completely out of the question. Union dues directly fund Labour TDs.

      Look at the list of SIPTU funded TDs here – it includes four serving ministers. Comrade Gilmore is absent though.

      https://en.wikipedia.org/wiki/Services,_Industrial,_Professional_and_Technical_Union

      • EugeneN

        Joe R, clearly given the context of the classical economics I was criticizing – which only can employ to market context, where people can be fired or are at liberty to reduce their own wages to compete – unions meant private sector unions.

        • Joe R

          You clearly said what I quoted above. You qualified nothing.

          SIPTU has 200,000 members across all areas of the economy – public, semi-public, and private and they directly bankroll and vote in government TDs and ministers. That is power.

          There have been no forced redundancies across state or semi-state agencies including loss making inefficient jokes like Dublin Bus and Aer Rianta. That is power in action.

          However, in some places like the Central Bank new contracts for work pay less so you have a generational ageist gap emerging in conditions.

          • EugeneN

            Joe R. Lets be clear, your non-understanding that when we talk about “classical economics” and how wages would respond to unemployment in a classical economic system, *has* to be about private sector workers is your problem, of both comprehension and understanding. Not mine. So when I responded to David about Unions, he, I and anybody else who knows what they are talking about knows it means private sector unions, as clearly it only ever could. Public sector employees are not employed by the Market.

          • Joe R

            I prefer dealing with the reality facing me, including questioning absurd statements which support theoretical constructs with no application because the world. Reality much more complex than those simple dumb models.

            Your comments for me here are more fiction than non-fiction like a discussion of who has the better society – the Yahoos, the Houyhnhnms, the Liliputians or the Laputians.

            SIPTU has 200,000 workers in the three ( not two ) areas that exist in the MODERN IRISH STATE; public, semi-public and private. They directly fund Ministers and those Ministers are in the same party who get to bargain the program for government, and direct spending and control decisions relative to all areas of the economy. That is power.

            And the ICTU claims an affiliation too with Labour. That means everybody in a trade union is affiliated to Labour. There are no divides.
            The trade union is paying for the minister sitting opposite at the bargaining table.

            You can throw your quaint discussion and whatever models out the window, because it doesn´t take the fact those particular IRISH national cross-overs into account. Adam Smith existed a long time ago, and not in Ireland.

  10. Hello David I think you should refer to the economic state of the country as a “depression” rather than a recession it became a depression a long time ago. Kenny and that nut Shatter have given the banks the power to repossess houses andwe all know how dysfunctional they are! What will this country be like in 2 years from now ? An even bigger mess.

    • And the “Nut” can’t see that a swathe of repo houses hitting the market will depress the whole show even more. (As David must be sick telling them.)

    • 5Fingers

      Well, you could argue that it will force the antiquated bankruptcy laws we have out into the open. My hope is that it forces people to declare bankruptcy (and force into law a 3 year bankruptcy term) more readily and in order to get it, you submit yourself to forensic accounting to ensure all assets are taken into account. This gets the strategic defaulters (who I believe represent a sizable percentage of the mess particularly on BTL) and is fairer at the end of the day even to those who break their balls making their payments. When you go bankrupt you loose everything (only right)and you can start again a bit wiser.

      But….a big BUT…we need to fix the law.

      • EugeneN

        We can’t keep maintaining a market so that BTLers can have 10 houses they are not paying for and renters are both paying the owners and the tax to maintain the state owned banks. Of course property has to be re-possessed.

  11. Adelaide

    The Irish Sunday Times/B&A survey polled 898 Irish voters on their general knowledge/numeracy & literacy.
    These are the Highlights.

    Q: Name one of the three members of the Troika?
    A: Don’t know. 60%
    A: Anglo Irish Bank. 4%
    A: Bank of Ireland. 7%.
    A: Nama. 8%
    A: AIB. 8%

    Q: Name the three members of the Troika?
    A: Don’t know. 95%.

    Q: What is 10% of 15 euro.
    A: Don’t know. 50%.

    Q: Spell the word ‘Their’ as in ‘Their children are on summer holidays”
    A: Don’t know. 25%

    You get the idea.
    Here is their conclusion. “… poll punctures the grandiose notion of Ireland as a haven of higher learning… little evidence of a smart economy, adults can barely grasp basic maths… geography should remain a core subject. It would give our young people some insight into where best to emigrate”

    It goes on to say that 25% of the population are illiterate to semi-illiterate and numerically challenged.

    My own take on the illiteracy/numeracy is that this county has a huge underclass which is never on the radar of Official Ireland and its Media.

    On a more trivial note but perhaps equally damning depending on one one’s interpretation, 75% of pollsters could NOT correctly name ONE member of the Troika. I’d interpret this as 75% of pollsters have NO clue about the Troika beyond its cursory mention in the news and if they’re clueless about the Troika it’s likely they’re clueless about the bigger economic picture (the causes&effects) that the Troika is a component of. Anecdotally, this is what I find and it is SOOO infuriating.

    I don’t care about the shortfalls of Irish Media, Education, people too busy struggling & working, oh it’s a boring subject, crisis fatigue etc and every other excuse under the sun, to me this is flagrant ‘COULDN’T BE ARSED’ mentality. In this age of the internet there is no excuse to not acquaint oneself (even on the most basic level) with why your country is going to the dogs, your livelihood going down the tubes and your children’s prospects disappearing. If that doesn’t spur you to do a google search and inform oneself, then, really, what is the point? Remaining wilfully ignorant while becoming increasingly impoverished is a sign of retardation. I’m sorry, but you choose to be a moron out of choice and under the capitalist credo you deserve everything that smarter people can screw you for, your house, your car, your livelihood, your dignity. Perhaps the unpalatable truth is that despite their crassness the bankers are just smarter than the average Mo Moron. They’ve devised a system that guarantees them a win-win. They’re smart because you choose to remain dumb. Either snap out of your self-induced coma or forever be the sucker at the poker table. Your ‘COULDN’T BE ARSED’ mentality deserves nothing but contempt, and even inaction has its consequences, the type that bites your apathetic arse off ……. ‘Crisis’ fatigue? How about ‘Apathetic Irish’ Fatigue? Rant Over.

    The American sci-fi writer Ray Bradbury wrote a short story “The Terrible Conflagration Up at the Place” to describe his experience in 50′s Ireland or rather his view of the Irish psyche. He portrayed us as Deferential child-like Gombeens preoccupied with Alcohol and Superficialities with no self-determination or self-respect, and easily outwitted by the foreigner with the smarts. The bloody racist, thankfully that caricature no longer applies as we move forward into the ICT Knowledge Economy. Doh!

    • EugeneN

      Their and There is a common mistake on the internet – and unlike typos etc. I see it as a good indication of education and intellect. You are right. 50% of people are supposedly educated to third level, not knowing 10% of 15 euro is appalling.

      • Mr Happy Dole Dude

        1.50 – But it’s not worth what it once was and it’s harder to get.

        their is no correlation beteen bad spieling and low interllect people such as enstine prove otherwise… “He told me that his teachers reported that . . . he was mentally slow, unsociable, and adrift forever in his foolish dreams.” – Hans Albert Einstein, on his father, Albert Einstein. —- “I sometimes ask myself how it came about that I was the one to develop the theory of relativity. The reason, I think, is that a normal adult never stops to think about problems of space and time. These are things which he has thought about as a child. But my intellectual development was retarded, as a result of which I began to wonder about space and time only when I had already grown up.” – Albert Einstein

        The Greeks had a name for the people with no interest in the ‘affairs of the city’-(politics) the word is ‘idiot’

        • Deco

          In modern Ireland, we have beer and TV (bread and circuses) to keep the idiots from becomming anything greater than idiots.

          • Pedro Nunez

            In ROI because of a politically ‘managed’ rather than performance managed governance system the ‘failed leaving cert’ politico is running the ‘asylum’.

            We submit to Darwinian tradition in this country through the flight of the fittest whether it be the ‘Flight of the Earls, the wild geese, the ‘Ryanair generation’ of the 1980s, and the so called ‘epidemiological artefact’ that the prevalence of schizophrenia in Roscommon was supposed to be one of the highest in the world because the selective flight of the fittest leaving the greasy hands in the greasy till of Irish politics to the cutest hoors’ of the ‘genetic dross’ left behind.

            The Irish culture and system has to reform to tap the talents of the ‘idiots with no interest in the affairs of their city’ [sic]

    • Tony

      The most worrying part of this is that the survey was of 898 VOTERS.

      • NK

        Correct. And so it goes up all the way to the European Commission.
        Anarcho-libertarians are right about democracy.

    • Mr Happy Dole Dude

      and some argue for direct democracy – Ah bliss.

    • paul

      By Jesus, at last someone who sees the real problem. If there’s one thing worse than being a sheep it’s being a stupid sheep!

      • Colin

        The insiders (protected professions & public sector workers) are the sheep in the centre of the travelling herd, protected from the packs of wolves preying on them by the stupid sheep on the fringes, who get attacked and killed by the wolves. The insiders trick is to always remain in the centre, far away from the danger. The clever sheep who may find themselves close to the fringes but unable to move closer to the centre see the wolves, and knowing they are in a predicament, use skill to avoid being preyed on (emigration).

        • Joe R

          God,

          I would have got the impression you emigrated ´cause nobody likes you.

          How is the 60 hour week going there? you commenting on your coffee break or does the boss pay for blog reading and commenting time?

          • Colin

            God, you’re getting irritated very easily, and no, you’re not funny, don’t give up the day job whatever it is you do.

            60 hour week is going fine thanks, but how that’s a matter of interest to you I’ve no idea, you nosey little twerp. You sound like an insider .

            And no, I’m not on my coffee break. There are 168 hours in the week, 108 hours a week I don’t work.

            And no, my boss doesn’t pay me to read the blog.

            And no, I didn’t leave cause nobody likes me, I left for better work opportunities.

            Now go back to under that rock you crawled out of.

          • Joe R

            FE, FI, FO, FUM, ….I smell the blood of an INSID-ER!

            Hilarious! Projecting there, Colin?

            There is nothing nosey about my comment what so ever.

            You have pontificated here, on a public forum , about your 60 hour week and work ethic in general, while clearly spending a lot of time reading comments, writing your own and responding extensively to others. You spend a fair chunk of your working week involved with this forum.

          • Colin

            Good man yourself Joe R, I’ll happily work less hours if you will kindly top up my wages, but I don’t come cheap so be careful about your decision.

            I never said I had a great work ethic. Maybe you just assumed it? Please find the quote if you are sure I did. That’s sounds too proud for me to say, so maybe you got me mixed up with someone else. But yes, glad you’ve taken an interest in my lifestyle anyway.

            Oh, by the way, what’s wrong with airing my views? Do you fancy yourself as a censor? I even defend bonbon when others here ask for him to be censored.

            Tip; Brush up on your own grammar, maybe take a few night courses, your message gets lots in riddles
            ‘ Dun Laoghaire should be the hub which around which South Dublin revolves instead you have large developments at Carrickmines, The Park, Dundrum, Cherrywood and Sandyford which are linked now finally by the Luas to the center of Dublin.’

            By the way, I’m sure my boss wouldn’t mind if I posted here while on my work breaks, but I always use my time very efficiently, so I do not need to log on here while at work, thank you very much.

          • Joe R

            The below is copied from an an earlier article hereabouts posted (I think) on the 3rd of June;

            Note the irony of the time theat 10.11am GMT – posted from work?

            “Colin
            June 3, 2013 at 10:11 am

            Great Article David.

            I am an outsider, working in London. It means I must perform well at work everyday, no room for slacking off. This is fine, and I’m happy with it right now as I am well paid, but it means I never have a single drink on a night before work, I’m in bed by 10pm, I arrive at work early to allow for any delays, and I work through my lunch. I work 60 hours a week.

            David, you just have to go one step further and tell us that the Unions are destroying Ireland. The National Cake is getting smaller, and they are arguing for an even bigger slice of the cake, at the expense of others. This is economic apartheid! It’s outrageous. It’s immoral and definately unchristian.

            So many people still thing Ireland is a great wee country including Indakinny. The reality is so much different. The final sacred cow has just been slayed, creche expose shows Ireland is definately not the best country in the world for raising children.

            All young people should get up and leave Ireland as a protest vote, and let the middle aged people fund their own lifestyle and see how long that lasts, and when reality bites, then its time to wield the axe, and only then can Ireland slay the economic perverts who are in control.

            p.s. I won’t be able to meet you in London this week, I’m flying away on holidays later, but the weather here is fine, and London is welcoming and friendly. Enjoy! See you in Kilkenny later in the year.´´

          • Colin

            You’re obsessed!

            I can’t believe it!

            Note the time? I was on annual leave, not at work. Don’t believe me? Check me other posts around that date, I remember Adam asking where I was going on holiday? Jesus Christ, do I need to tell you when I’m at work, and when I’m on holiday?

            And where does it explicitly say that I work hard? I say I must perform to my boss’ satisfaction, but where does it say ‘I am a great worker who works hard’?

          • Joe R

            My apologies about my punctuation. Could read better but I don´t think there are several alternative understandings possible.

            My writing clearly lacks the gracious eloquence and studious punctuation of yours. Take this comment of yours for example;

            “60 hour week is going fine thanks, but how that’s a matter of interest to you I’ve no idea, you nosey little twerp.´´

            I only use English for about half the day at the moment and sometimes typing on a smartphone does not help! An editing facility would be good here – some blogs have this.

            But the point about development in DLRCOCO stands, about questionable policies and their end result.

        • Joe R

          You have posts at all hours here.

          Don´t tell me black is white.

          As for obsessed – you are on holiday and you are spending your downtime from your pressurized on economics blogs?

          Where do even start with that?

          • Colin

            ‘you are on holiday and you are spending your downtime from your pressurized on economics blogs?’

            downtime from my pressurized?????

            what the fcuk do you mean?

            Look you twerp, I was on holiday in early June, I returned to work nearly 2 weeks ago. Today I have a day off. I’ll spend my day doing different things, including visiting this blog.

            What do you want? Do you want to know my work roster? Do you want to know my annual leave dates too? Do you want to know what time I go to sleep and what time I eat?

          • Joe R

            *pressurized job – sorry smartphone deleted too much here.

            Colin, you posted information on yourself VOLUNTARILY. You were not even cajoled. Nor was there an attempt to censor at any point

            But I will ask you now, because you attacking in such an aggressive way and lying in the process, so I am going to pin you down now.

            Where were you, sir, at 11.16 am yesterday? On holiday, too? (from above).

            “Colin
            July 2, 2013 at 11:16 am

            The insiders (protected professions & public sector workers) are the sheep in the centre of the travelling herd….´´

            Furthermore, I would like to say it was Rev.Green with the candlestick in the drawing room!

          • Colin

            Joe R,

            I have 2 days off a week (Tuesdays and Wednesdays), the 5 days a week I do work, I average 12 hours a day.

            Why do you want to know that?

          • Joe R

            You work 12 hours a day in UK, in civil engineering, on a Sunday? When pretty much in construction has downed tools

            Right, right. And you have your weekend when everybody else is working? Right I am sure.

            So on Monday 27th of May you were busting your b***s in your workplace when this appeared here on a prior article;

            “Colin
            May 27, 2013 at 4:02 pm

            Paddy,

            Apparently renting is not a choice for any self respecting upwardly mobile Irishman. I mean, what would the work colleagues think?´´

          • Pauldiv

            Lol. This is hilarious

    • Pauldiv

      It’s not surprising really. Shocking maybe but not surprising.

    • Adam Byrne

      COULDN’T BE ARSED – exactly Adelaide, I’ve been saying it for years. If you can’t be arsed then you get what you deserve.

      One thing that is free in this country (one of the only things) is the library; even if you are poor enough that you can’t afford an Internet connection at home, you can get online at your local library and get informed, read newspapers, books etc. – but no, most of them COULDN’T BE ARSED.

    • bentley

      Eh !! Google “Search” … are you kidding ? What do you think that is going to throw light on…. as a search engine Google is utterly dea unless you are looking for bland, banal and generic search return bullshit …. this is where we are now after 20 years of the net … controlled rubbish search results …. please !

      • Pauldiv

        80% of the www is under the tip of the iceberg.
        Most people spend their time above the waterline on sites like Google, FB et all.

    • Irish PI

      Adelaide
      You need to read ” the marching morons” By Kurt Saxon.
      It is based on a Twilight Zone episode where a guy falls asleep in the 1950s and wakes up in 2050 to discover a world totally inhabited by idiots where the average IQ is 75.Apprently we passed that IQ milestone in the US around a decade ago in their universities.By the sound of what you wrote the average Irish person isn’t too far behind it either.
      so my suggestion is possibly the following.

      How many of you have ever read Anne Rand’s “Atlas Shrugged”??
      Premises is the world is slowly brought to a halt by the stupid masses,and the innovators,enterpenuers and movers and shakers decide to revolt and start slowly disappering out of the rotten society that is feeding on them and their brilliance,the revolt is led by a mysterious man by the name of John Galt.
      While there is a whole philosophy called objectivism created by Anne Rand,and the chacters are larger than life,it does have many lessons for us today in our current predicament.
      One I certainly belive is that in a way we should start to slowly decouple on a personal level from this society and govt.
      This happend in many East bloc societies before the Soviet empire fell apart.People got tired working the collective farm and feeding the cities and where still hungry themselves,so they went home and started to tend to their own garden to feed themselves.Gradually they barterd for items and services and resources were shared.No matter how much the Sovs tried to shut it down it flourished until in the end the collectives were weed infested derelict sites and underground capitalism started to flourish.
      Maybe we should start doing the same here in Ireland..Can we barter our skill set for something our neighbours or busisness need??
      Do my tax returns,I’ll fix your kids teeth.Fix my car.I’ll babysit for a week?Amything on a personal or busisness level that starts getting barter trade going that develops contacts is whats needed.Mankind was bartering long before we figured out money.Maybe we can change things ,by slowly opting out of the current way of doing things.
      BTW if anyone needs somone who can teach self and home defence ,urban and rural survival,or executive protection.Im open to offers,or payment in gold soverigns,Canadian maple leavs, krugerrands or US double eagles and pre 1964 US silver change.

      • Colin

        I remember the film Witness and how the Amish community built a house.

        http://www.youtube.com/watch?v=5Wo_VSc9iyc

        Ok, there’s no health and safety law here, but everyone looks happy and feels like they belong.

        • Pauldiv

          I remember that scene too and it stayed with me.

          • Adam Byrne

            You and Col should build a house together like that Paul – in Somalia. The Odd Couple.

          • Colin

            Adam,

            The Somalians would watch me build it by myself, offering no help, watch me finish it, then point an AK47 at my head and demand I leave it to allow them house their camels there.

            Or else they would just behead me like that priest in Syria who was murdered last weekend by Syrian rebels who Obama, Cameron et al want to see win the civil war. You can’t make this sh1t up!

            So, no thanks, I’ll let the do-gooders handle that one.

          • Pauldiv

            You are not too hot in the the humour dept today Adam lad but you shine when you are giving out about the ignorant masses

            In the film Witness we see The Amish living off the land and using local materials to construct houses. They pitch in an work together as a community. Everyone works and there is no unemployment, homelessness, drug abuse or despair

            And you have the nerve to call me odd for wishing I lived in such a community. Now that is odd indeed

            One man’s odd is another man’s even.

          • Adam Byrne

            I’m never too hot in the humour department Pauldiv. I don’t have a sense of humour, that’s a well known fact among those who know me. My comment was purely malicious in it’s intent.

          • Pauldiv

            Fair enough Adam. Be that way. It’s your loss.

      • EMMETTOR

        Ayn Rand…you don’t know who she was or, at least, how to spell her name? Her books are simplistic, elitist, fairy stories beloved of US billionaires. Barter got replaced for a reason, better to bring back dinosaurs and turn the country into Jurassic Park…eh, what else, the idea that Dub Bus should make a profit or break even is crazy, no? “Classical Economics”, note No.1 All Things Being Equal”, so it’s a theoretical construct as all things are never equal. Surely a measure of the disinterest the population in general has to “Current Events” is that they have no input into it. They get to vote a couple of times a decade, for one of the two factions of the same party and now, those they elect are told what to do by the EU bureaucracy, who they don’t even get to vote for, ever. In the cold light of day, my own interest in these subjects is a sort of mental illness. Oh well, here we go through the Submit Comment nonsense…

        • Irish PI

          Ah the usual claptrap by Emmetor.
          Actually Numb Nuts it is spelt like that… Rand!! So go away and read something by her before you try commenting on it perhaps??Simplistic fairy tales…As simple no doubt as “all produce to their needs and ability.”Worked really well didnt it with 56 million dead in the last centruy…Hoe many did Objectivism kill???
          Now go away and play with your X box..Grownups are talking!!

  12. 5Fingers

    What galls me is that if i set up my own friendly load shark operation, offering fair return and taking some deposits (based on I know where u live precepts of reputation ) I would be shut down over night and treated like a criminal more readily than a proper criminal operation.

    Why is it so difficult to side step the current nonsense in the manner above? The pat response will be our ability to import what we do not make will be shattered overnight. If I try and buy oil, I need to trade in petrodollars – any attempt to circumvent this will be slammed down forcing me back into a system that is now becoming unstable. And the same applies if we had our own debt free independent currency.

    The fundamental problem is not that we have a credit lockup. It is a system lockup. I cannot or am not allowed to use another means of trading (aside from inflexible bartering) – and because of this lack of “competition” imposed by artificial regulatory edict, we are forced to fall apart in step with the emerging chaos in the existing system.

    I would hazard a guess that if Ireland allowed competition in alternative trading mechanisms, it would be lobbied to have it instantly quenched for lots of “health and safety” reasons relating to stability and the need for end to end regulation.

  13. Mr Happy Dole Dude

    Two new Xbox games are due out, one called ‘end poverty’ in which the player has to find a way to give everyone on the planet a right to food water an education and safe place to sleep The other is called ‘black ops drone wars’. Microsoft has pre-order in the hundreds of thousands for ‘black ops drone wars’ and none for ‘end poverty’…

    So who among you is not ordering ‘end poverty’ but instead is ordering ‘black ops drone wars’?

    • Pauldiv

      I think it’s pretty sick. And sad

    • michaelcoughlan

      If true it’s some observation. Can’t imagine “end poverty” will be on the shelves long.

    • NK

      1. Why would anyone want to end poverty in the virtual world?
      2. The government is taxing the crap out of me to end poverty on my behalf. Why would I want to help them when I’ve already paid for that?

      • EMMETTOR

        The Government is taxing the crap out of you to pay it’s pensions, overpay it’s Servants, finance it’s Quango Sector, etc, etc…and ending poverty must be way down the list.

  14. Mr Happy Dole Dude

    We are poor we need to accept this!

    Would employing the unemployed people into enforced job share productivity wise using a spoon instead of a shovel – this would reduce the welfare budget (borrowing) but in doing so the borrowed money would not be in circulation and private/ public sector company would close.

    If a person has a take home pay of €500 and bills of €600 what would they do – what should our government do, throw back the keys to the ECB.
    We are heading for massive debts the money system depends on exponential growth a mathematical impossibility – to much college has led to group-think – fact we spend more than we earn – we produce little that deserved the so called boom spending , we are poor we need to admit this and reclaim our reason, we need to take control.

    You wont find the answer in a book or at a college lecture; you could quote someone – it may make sound smart but if you are depending on the intellect of others then you cannot be that intellectual, can you.

  15. Pauldiv

    Last night on Film 4 I watched The Spirit of 45, a film by Ken Loach. Maybe some of you watched it and found it as interesting as I did. It was made in 2013 and it is in Black and White but ends with a surprise colour scene of Trafalgar Square on VE Day

    In 45 people still remembered the first war and the social horrors of George Orwell’s England where employers treated workers like asses and could cast them off when they were no longer fit and healthy.
    This was an embarrassment and the incoming Government were for giving people back their dignity through a climate of full employment, social security and world class public services. They still had their manufacturing industries which exported all over the world

    Churchill campaigned the 45 election by proposing Von Hayek economics and lost big time. The Labour gov’t of the next four years transformed the nation and went for large capital projects like the NHS and nationalisation of major industries. It transformed the country for ever and no-one can deny that Atlee and Bevan were men of considerable vision

    When they were designing the social housing Bevan made sure that houses with upstairs and downstairs had two toilets so that when kids came in dirty they could use the one downstairs. The very thought of that sentiment is enough to make nasty people fly into a rage

    The film went on to show the Thatcher years and beyond but the narrators all agreed on one thing and that it that we have to return to an economy that is based on social need first and consumption second

    Restraint is a virtue

    • Mr Happy Dole Dude

      Where will the money for the 30,000.0 homes that Noonan say we need at an average of €238.000.00 = €7,140,000,000 should the Irish peoples banks be lending more debt to those that can afford to get a loan what about those that cant but will have pay for the debt money.

      “the Thatcher years and beyond” – where did it all go wrong

      • Pauldiv

        That would be private housing yes?

      • Pauldiv

        Get men off the dole and paying taxes.

        They could start with clearing the blot on the landscape that are the ghost estates. This would send a serious message that we want to distance ourselves from the self centered madness that was the Celtic Tiger

        Once those estates are cleared the men could be put to work building social housing which will provide the state with a permanent source of income in the form of rents

        What’s so hard about that?

        • Irish PI

          Ah the usual claptrap by Emmetor.
          Actually Numb Nuts it is spelt like that… Rand!! So go away and read something by her before you try commenting on it perhaps??Simplistic fairy tales…As simple no doubt as “all produce to their needs and ability.”Worked really well didnt it with 56 million dead in the last centruy…Hoe many did Objectivism kill???
          Now go away and play with your X box..Grownups are talking!!

  16. Mr Happy Dole Dude

    Where will the money for the 30,000.0 homes that Noonan say we need at an average of €238.000.00 = €7,140,000,000 should the Irish peoples banks be lending more debt

  17. 5Fingers

    Year and a half goes by….This is worth a re-look. Vincent Browne and Steve Keen. Formidable guy who says it like it is.

    http://www.youtube.com/watch?v=aqY_DYtp60s

    • cooldude

      Watched it again. Also watched this interview he did with Capital Account where he discusses the black hole of debt we are in globally and why it IS important despite what we are told. He rightly says that the banking industry is now a parasite destroying the economy instead of being a service industry which should SERVE the needs of our economy. In my view he doesn’t go far enough which is to eliminate debt based money and the central banking system which encourages all the reckless lending and whose only real role is to protect the banks who are the main shareholders of the CB’s. The reason we will never have the QE for ordinary people that he calls for is because the CB’s don’t give a shit about people they only care about keeping the insolvent banks afloat evan if that is going to mean the ‘BAIL IN” scenario becoming mainstream which is now either likely or inevitable.

      Here is his debt black hole interview
      http://www.youtube.com/watch?v=dsCzqqvIOms

      • 5Fingers

        I am afraid you may not like all of Steve Keen’s data. It’s not the CBs, nor is it QE and neither is it Government spending. It is excessive money creation by private banks (aided and abetted by near freebie Euros) for private individuals which in turn stimulated ponzi schemes in assets – like property – (including Gold I am sorry to say).

        There is massive private debt today. People are massively indebted and so no economic activity.

        The only way a CB’s creating of money into a bank makes bother is by banks using that funny money to speculate on assets – Stocks & Shares (another bubble in the making – about to go bang as Bernanke rolls back QE).

        Money is a social contract of trust. Banks have been allowed to be very unsocial with it and they need to be bankrupted and replaced with clean debt free money from ….yes the CBs direct to indivuduals – washing away debt and guaranteeing deposits to allow a restart with a tight local democratic national control imposed thereafter.

        Anyway…might as well be whistling dixie.

        • cooldude

          I agree we may as well be whistling dixie but at least understanding the problems and how they are created puts you light years ahead of the lamestream media and the puppet politicians.

          Don’t see any useful role for privately run CB’s in a properly functioning economy. CB’s by their very nature issue only debt based money/bonds for which the treasury has to pay interest. This is their modus operandi everywhere across the globe and it is a franchise they protect very carefully. All of these CB’s are private institutions with shareholders who are the commercial banks and the people behind them. These facts are gone into in some detail by Carrol Quigley in his book Tragedy and Hope. Quigley was an insider who had complete access to the CB’s and what their real agenda is. They want a feudal system where the central banks and the BIS are in complete control and they issue their orders to their puppet politicians. A bit like when Trichet from the ECB contacted Brian Lenihan and told him to protect the banks “AT ALL COSTS”.
          This is just an example of a central banker protecting his shareholders and not giving two shits about the people who would have to cough up and pay for the bail out for their entire lifetime. These wankers have to go or else there will be no real change.

    • Joe R

      Keen is a shouty spoofter. He has predicted nothing specific with any accuracy.

      And you couldn´t have picked a better clip to show that.

      The clip has prediction of military coups in Spain or Italy or Portugal / Greece haven´t done that because they don´t trust the military / replaying the 1930s in general / Hitler & return of fascism / an off the cuff scheme introduce a new punt to run alongside the euro that will have a fixed exchange rate…and a year and a half later what has happened of this? Nothing!

      Here is a really good debunking of the de-bunker;

      http://noahpinionblog.blogspot.com.br/2013/05/what-does-it-mean-to-have-predicted.html

      • cooldude

        Interesting comments on Keen. I don’t think he is as big a spoofer as the likes of Krugman but he doesn’t dig very deep to look for the real causes of the problem. Perhaps his biggest weakness is his failure to understand that a money supply which increases much faster than the growth of an economy INEVITABLY causes misallocations of capital to asset bubbles such as real estate and equities

        • Joe R

          What does Keen’s credibility have to do with Krugman? Is Keen not a Doctor of something? His models are absolute tosh. They demonstrated and predicted nothing of the events of 2007-now.He has no singular understanding of it all or how to solve anything.

          All he has done is read some old textbooks by Minsky and started shouting out loud about what has already happened. He owes his sucess to people’s need for an alternative ‘messiah’.

      • cooldude

        Interesting comments on Keen. I don’t think he is as big a spoofer as the likes of Krugman but he doesn’t dig very deep to look for the real causes of the problem. Perhaps his biggest weakness is his failure to understand that a money supply which increases much faster than the growth of an economy INEVITABLY causes misallocations of capital to asset bubbles such as real estate and equities. This is the root cause of the boom/bust credit cycle that is inevitable with a money supply which can be increased too easily. He is correct about the black hole of debt that we are in but he fails to see that this is inevitable under a debt based expanding money supply. He also never even addresses whether these booms and busts are deliberately engineered to rob the 99% and enrich the 1%. He never even contemplates giving people a choice in what they would like to use as money. This to me is a basic human right that a human being doesn’t have to be at the mercy of the parasitic banking industry when they try to save the fruits of their hard earned labour. People need to have choices in what they can use as money and in how they store that money without constant fear that the gambling institution it is stored in is going to confiscate a major portion of it. Perhaps all this doesn’t fit in to his dodgy mathematical models?

        • 5Fingers

          The issue of the malign engineering by an elite to the betterment of the 1% needs treatment. But I think economists are not suitable to comment. It is possible to centralise information and coordinate lobbying like never before. There is one little snag. Rarely is there one elite which is aligned. Given the highly varied cultural groupings I would hazard we are dealing with a war between 4 or 5 elites. Anyway, we need to get some kind of solid view on this. Certainly our host alluding to insider/ outsider references is but an aspect. But the question for me is whether this is emergent behaviour of our socio economic setup that needs a few laws, or is it something else? I do not know.

        • Pauldiv

          Not too keen on him myself :-)

      • 5Fingers

        Well you could say that about the lot of them. Economics is at best a guess. If you find some math to frame a bit of it, great. And I think his views on private debt are spot on. Most if not all his detractors seem to dislike his association with Keynes. Yes, he does advocate increasing money supply as a tool and yes he does not see Gold as currency – although he understands its use to quench ponzi schemes but says it cannot cater for productive expansion because of its limited supply.

        On the point of exact timing – none of his models are going to work. The most he can do is give you a trend. Mathematically speaking integrating from 2nd order time derivatives to derive a calendar time is open to sensitivity to initial conditions.

        I think his predictions on social upheaval are spot on and are coming to pass. Ditto for coming bursts in real estate and stocks and shares. He may be years out but the magnitude will be spot on.

        On the matter of CBs creating money…that never was the original issue. Only private banks create money. Right now, no one is borrowing and the same banks are buying stocks and shares and property with CB money (NAMA being an example) and keeping asset prices sky high. it’ll burst when Bernanke rolls back the QE.

        • cooldude

          The Fed are digitally creating $85 billion new US dollars every month. They use $45 billion of this to buy treasury bonds because no one else will buy them. This buying now accounts for over 70% of new bond purchases in the US and is direct monetization of debt which is usually a sign that a currency is heading towards a crisis and has often resulted in hyperinflation. They create another $40 billion per month to buy mortgage backed toxic securities off the commercial banks at 100 cents on the dollar when it is clear that these securities are worth only a fraction of this. This is done purely to keep the banks afloat as if they had to sell this crap on the open market they would be insolvent in no time.

          The purpose of these purchases is to keep the ponzi scheme ticking over and to protect the interests of the commercial banks who are the shareholders of the FED. It has nothing whatsoever to do with unemployment rates or any of the other stuff they prattle on about. None of this money ever gets to he real economy and is just used by the commercial banks for speculation. This is one of the problems you get with an easily expanded money supply. It always ends in a mess.

          • 5Fingers

            Bond purchases are not equal to circulated money. Rising asset prices caused by banks using cb money is not equal to circulated money. You are making a classic bookkeeping error. Inflation only occurs if people can spend money…which they can’t cos they are in hock.

        • Joe R

          100% unemployment is a lot of social upheaval. That what one of his models suggests, and occurring within 40 years.

          But how on earth is that possible? We all somehow down tools and stop working. Is this a Terminator type reign of the robots scenario? The model trend for will happen is complete tosh.

          Keen has predicted nothing correctly with regard to time also. Timing is everything in a prediction. A stopped clock tells the right time twice a day but you would not rely on one to make a decision on your day or to make a plan. That is the very best that Keen is, a stopped clock. I don´t even think he is that.

          He even called a crash for the Australian housing bubble a few years ago which still hasn´t happened. And that is limited subject and in his backyard, too.

          He made a call there would be an imminent financial crash in 1995. Therefore I think 95-98 is an acceptable time-frame to give credit to him if one had occurred and he had called the sequence and consequences correctly. 12 years isn´t. And called no sequence or consequence correctly.

          But he does shout a lot!

          • cooldude

            We seem to have some confusion on what is or is not money. Firstly bond purchases by the Fed is simply monetization of the debt. Nobody wants to take the risk on a country with over $16 trillion in debt with little growth so they simply create MONEY out of nothing to buy their own debt. The fact that the ten year treasury rate has gone up 5% recently shows that the smart money understands this and they are trying to unload their bonds while the going is good. Now you make the distinction that this is not “circulating” money. I haven’t a clue if it is or not but these are newly created units of currency which are used to buy their own country’s debt ie. money, monetary units, currency call it what you want.

            As regards the MONEY that is created to buy the dodgy mortgage backed securities off the banks the main reason it isn’t circulating in the real economy is because most of these banks are close to insolvency due to their reckless gambling and they need this new money to improve their ratios and to appear solvent. The 5% move in US treasuries has caused someone to loose $10 trillion in the $200 trillion interest rate derivative market. The total derivative market is now over a Quadrillion and this is just one ginormous unregulated casino between the large commercial banks. The trouble is that these banks also have huge deposit bases and these deposits will be annexed in a “bail in” scenario when this derivative gambling casino comes crashing down and it will. I don’t hear Keen even acknowledging the existence of this casino/market because when this blows it will take everything down.

            There is no hope for this present system because the creation of money is in the hands of some extremely dodgy people who want to use money as a medium of control on us rather than a voluntary medium of exchange between willing parties. Until this franchise is taken back off these people things will only get worse and maybe much worse.

            Finally I disagree with your definition of inflation. Inflation is always a monetary event and is caused by too rapid an expansion of the money supply. Price inflation occurs much later. Any expansion of the money supply beyond the growth of goods and services will automatically cause inflation.

  18. Joe R

    But it is all kicking off again – yer man Noonan says we need 30,000 new houses, pronto like!

    http://www.irishtimes.com/news/noonan-says-up-to-30-000-new-houses-will-be-needed-annually-1.1449225

    Apparently, according to whatever birdie has been whistling in his ear, the 150,000 or so apartments built in the boom are not suitable for families and those families are now going to have to shell out (or commit to a big loan in an uncertain market) and buy a nice house with a garden for their growing darlings!

    We will all be grand! Off it all goes again…!!!

    I wonder which birdies have been whistling into Noonan´s ear?

  19. Wills

    In my opinion the basis of the article is highly questionable -

    The economy we all work and do business in is corrupt.

    How much evidence do we need to see that free market enterprise according to the doctrine of Adam Smith is over, until the oligopoly banks and power elites who now control and run the markets and economy are overthrown.

  20. Deco

    {
    Our economy is going backwards. Latest figures from the CSO reveal that the economy has shrunk since last summer.
    }

    Never mind that…the latest “news” is that real estate in the leafy suburbs of South County Dublin are going upwards again.

    Honestly, I cannot make any sense of this at all. It is completely nuts. How can real estate in the one location which continues to be overvalued relative to rents, continue to be overvalued in a capital crisis ?

    Because the banks are concentrating their capital in that market ? The state mandated Irish banks are trying to trigger the “feel good factor” by indicating that some people in this economy are having another housing boom, and therefore the rest of us should start to presume that it will come to a neighbourhood near you soon.

    • Wills

      Hi Deco, longtime no see!

      I think the answer to your question is NAMA.

      NAMA – an extension of the blanket guarantee – an extension of the engineered ponzi property bubble – an extension of the power elites weaponization of the banking utility which according to A45 is a public utility.

    • Colin

      Forget about sense, pull on the green jersey, buy property and search for envy in the eyes of the people you are hoping to impress.

      • Deco

        That is the funniest comment that I have heard from anybody in ages.

        The whole thing is just absurd. And it is like as if the establishment in this country thinks that the people can be pumped into another frenzy, with property supplements, and househunters revisited specials. And the ESRI ( a complete waste of public money) cheering it all along.

        • Colin

          And now we have radio adverts on the radio for Bartholomew Mc Elhatton Estate Agents, targetting the South Co Dublin property owners. They have dropped the actor with the strong slightly threatening Monaghan accent, and have replaced it with a sunny positive Californian one, gushing in global praise of the very fine work Bartholomew Mc Elhatton Estate Agents do.

          • Pauldiv

            I like the Californian accent best Col. Which one do you prefer?

          • Colin

            I prefer the Monaghan accent, but it doesn’t matter a damn, I’ve no business with Bartholomew Mc Elhatton Estate Agents.

          • Pauldiv

            I’d rather waken to the voice of a Californian blonde than the bean on ti

    • Joe R

      It went up by 2.8 per cent for one quarter. They are down 2 percent on this time last year.

      But if there is a stabilization / recovery it will be seen first where location is best. So probably you will see it first there.

      That area has a concentration of jobs with income, existent wealth, schools and universities good transport connections. Also it is extensively developed with a lack of new building land available.

    • michaelcoughlan

      Hi,

      “How can real estate in the one location which continues to be overvalued relative to rents, continue to be overvalued in a capital crisis ?”

      Because the people who are buying these houses have the substantial cash reserves to add to the mortgage and are prepared yonpay a premium to live in those areas.

      In farming land makes 10k per acre. It’s commercial value is €800 to €1000 per acre. The average farmers income is less than €15k. You can’t buy land or rent it to farm unless you have a farm already
      as it wont wash its face commercially.

      Nuts isnt it?

    • EMMETTOR

      Two houses sold recently on my road, in a nice part of North Dublin. They were snapped up, next door to me went in 2 and a half weeks and both purchasers ended up in bidding wars. Personally, I think it’s various Insiders who’s wages have decreased less than the price of property. There’s a limited supply of these and this will not last. It’s a good time to acquire assets if you’re rich enough. Of course, we won’t mention the fact that measuring how an economy is doing by reference to the price of property is like driving while keeping your eyes fixed on the view out of the side window.

  21. Deco

    Outside of the food sector, and the small scale domestic owned engineer sector, Exports are a bit of a joke.

    They should massive, but a small proportion of the top line statistic actually remains in the pockets of people in this eceonomy at the end of the day. The state gets it’s 12 and a half percent cut. The employees get their wages (with the state getting a 52% plus marginal cut at the average industrial wage). The fuel and the inputs are taxed. And that is about it. It is a private sector economy, where the money is either sucked into the public sector or sent abroad. And when the money gets sucked into the private sector in Ireland that means it is used to prop up failed banks, failed property empires, the real estate market, hundreds of state quangos run for the benefit of political party supporters, etc…

    So government statistics in this country are zero percent relevant to most people.

    They are of use to the state propaganda quango in Montrose, and the rest of the quangos.

    Wake up and smell the reality folks. The only measure of wealth is what you have in your pocket, and what it will provide for your families. The rest is nonsense.

    • Wills

      Agreed on all points.

      Plus, the stats we are been fed how can we believe these stats in an envoirnment where the case is now proven that the markets are rigged, the stock exchange is rigged, the banks are now rigged and competition is been shut-down for oligopolies to remain in place long-term.

      • Deco

        You are correct. It is all just one racket. Get the fools to slave endlessly, and then make sure that they have SFA after it all, so that they do it again.

        Human beings are being reduced to hamsters in a wheel. Ponzinomics.

        • Colin

          Deco,

          The Irish ‘hamsters’ in ‘deckland’ are still trundling the wheel because of the Pride construct. If you haven’t a penny in your pocket to enjoy after a week of getting up at 6am, getting home at 8pm, then you press your own pride button, secretly installed by a National school teacher while you were looking the other way. Then you can tell your neighbours and friends what a great guy/girl you are, and search for admiration in their eyes.

          Tip: De-activate the Pride button, don’t pay any attention into what strangers may think of you as it really doesn’t matter a damn. Work on your own self esteem which brings you balance and real rewards.

          • whatamess

            +1
            “Tip: De-activate the Pride button, don’t pay any attention into what strangers may think of you as it really doesn’t matter a damn. Work on your own self esteem which brings you balance and real rewards.”

          • whatamess

            +1
            “Tip: De-activate the Pride button, don’t pay any attention into what strangers may think of you as it really doesn’t matter a damn. Work on your own self esteem which brings you balance and real rewards.”

            “pride only hurts..it never helps” (Pulp Fiction )

            3mins short
            http://www.youtube.com/watch?v=DicYF4RQBnU

    • EMMETTOR

      I feel that Ireland, in an EMU which includes Germany, France, etc can only really be, and will revert to being, primarily an Agricultural and Tourist economy. Even at the low wages of these industries, emigration will be needed to keep employment up to socially acceptable levels. The Cork County Manager will probably still be paid more than the Spanish PM.

  22. Deco

    The current govenment (and indeed the last) are decidedly already proposed to David’s small business suggestion. And the previous one, and it’s constituent parties were no better.

    A walk down the main street in Dun Laoghaire, close to David’s Dalkey base will tell us that. Shops boarded up. For Sale/For rent signs all over the place.

    Small business is now a host for suppoting a plethora of political parasites from the local authorities to various state bodies stuffed with political appointees who did the party favours.

    • Wills

      Again here we see NAMA in operation – this time – rigging commercial real estate rents the cause of many businesses to close.

      More evidence that the power elites are engaged in shutting free market enterprise down.

    • Deco

      Your observation about Dun Loaghaire is so true. The town is dying on its feet as a commercial entity. It is very diffficult to know where to start rebuilding. Any ideas?

      Best

      D

      • Adam Byrne

        I was down in Greystones with Tony a couple of weeks ago and that place seems to be booming. What are they doing right there?

        Going to Wicklow Town today (despite the rain) and will take note and chat to my friend who has a small family clothes store in the town.

        Eminent poster Jimmy Gavin (he of the Potemkin village tales) will tell you stories of the huge number of closed down shops on his travels around the West of Ireland, although I haven’t had the pleasure lately, apart from Galway which always seems to be buzzing.

        • Colin

          Galway is the playground of the South Co Dublin set. It is bourgeois and boutique. Its where the Private School kids move in for 3 weeks with ‘bean an ti’ to improve their Gaeilge. It is where lots of safe jobs are located. Galway is to Dublin, what Ireland is to the EU, trying to be the best boy in the class, keeping up appearances, don’t mention the downturn. Scratch the surface there and you’ll find Galway does not have strong economic fundamentals as the politicians say.

          • Adam Byrne

            What does ‘bean on ti’ mean Colin?

          • Colin

            Woman of the house, or housewife, in this case, the responsible adult looking after the lads while they stay in her house, cooking and cleaning for them, watching out for them and making sure they don’t speak any English.

          • Adam Byrne

            Ok cheers.

          • Joe R

            Bean an tí?

          • Colin

            What’s your fcuking problem now Joe R?

          • Joe R

            Funny, I thought the South Dublin set would have gone somewhere warmer and a lot less wet that they could get to in 4 hours as well, like Spain or Portugal, for example. I am pretty sure that I never that accent there.

            According to IDA Ireland;

            “Galway is emerging as an international centre of excellence for manufacturing and research in the medical and biomedical sectors. Overseas companies in Galway include Boston Scientific, Medtronic, Covidien, Merit Medical, Hewlett Packard, Avaya, Nortel, Cisco, SAP, EA, and Fidelity.´´

            So there are quite a few well paid industrial jobs in Galway supporting the regular Joe, so to speak, there.

            It has a university and and an IT, a few hospitals, and pretty vibrant tourist industry catering for the Burren, Aran Islands and Connemara areas.

            All in all, that is an okay spread of industries and sources of income there.

            This seems to run contrary to the crafty `bean an tí´ making money for six weeks and supporting the whole place image that Colin is purveying.

            In fact the Irish speaking bit is just a small part of the county. Take the GAA teams as a representative sample; no hurler grew up speaking Irish and I would be surprised if much more than a handful of the footballers learned it as a genuine first language.

          • Colin

            http://www.eoteilifis.ie/productions/documentary/beananti/

            I guess they want their kids to do better in their exams so they can get the points for college courses to follow them into the professions.

      • 5Fingers

        It is simple. Dunlaoighre: Highly mobile working professional population upping sticks and moving away. G.Stones…old fogies like me and Tony not bothers about commuting to work anymore. Footfall is where people live work and play most.

      • Joe R

        David McW,

        I have worked with various types development projects in and around Dun Laoghaire over the period 2003-2011. If I can my two cents on this;

        I hold that Dun Laoghaire Rathdown Co Council´s erratic planning policies are largely to blame for its condition.

        Dun Laoghaire should be the hub which around which South Dublin revolves instead you have large developments at Carrickmines, The Park, Dundrum, Cherrywood and Sandyford which are linked now finally by the Luas to the center of Dublin. Or they are stranded on a motorway not in a town center. Or both. Connections from these to central Dun Laoghaire are poor. This have detracted heavily from the development of central Dun Laoghaire. Money / new development has moved away to there from Dun Laoghaire.

        Furthermore DL is surrounded by places which are self referential for minor commerical purposes Dalkey / Killiney, Blackrock and Stillorgan / Foxrock. It is close to Dublin but not far enough away to be seen as independent. None of this helps.

        In the centre of Dun Laoghaire there is a historic core which is heavily protected by planning law and DLRCOCO are a pain in the backside about it too. This pushes modern development out. Also the traffic circulation / level of pedestrianization does no help generate a modern environment for shopping that you would find in Kilkenny, the centre of Galway, i.e. similar sized town center areas.

        Finally, how to deal with this? It is hard to counter such planning and development that has already occurred, particularly in a construction standstill.

        Dun Laoghaire needs to hoover up what ever development makes the high street area more animated. Whatever pound shops art centers and try to attract offices with lots of office workers. Definitely needs better transport connections with these newer developments in the DLRCOCO area.

    • Pauldiv

      A moratorium on rents and rates is needed. Say one year until a shop starts making money?

      Give a free shop to anyone who wants one and they would be occupied in no time with people willing to have a go. I’d take one tomorrow and do IT Consultancy and computer repairs. I’d also set up some form of community based learning and it would all be done free software and recycled computers. It would be an Adobe and M$ free zone and all my computers would run on Linux Mint for desktops and Ubuntu for a server. I’d hold workshops and hire others to take classes in whatever is their open source forte

      I’d persuade people to think about computers and software in a different way. I’d make them realise that everything they think they know about computers and the computing industry is pure bs and I’d show them why

      For the people occupying the other shops in my area I would talk to them about where IT can help them run their businesses.

      Overall it’s a really simple idea that would work and generate local commerce and industry. How could it not?

      I know a girl who makes leather goods and sells them from a website. Buyers are out there but they are not local buyers!

      • Joe R

        Lots of low-fi non-leveraged innovative ideas like this are needed to reanimate streets. I agree whole-heartedly with the thrust here.

        Many new development plans including the Dublin city center one only promote flagship stores and expensive 9 and leveraged ) solutions. The planners don´t get it.

        • Pauldiv

          Thanks. I was expecting to be laughed out of the room.

        • Pauldiv

          It’s a simple low-fi idea Joe and it could work. For one thing it would give people a huge lift if they saw shops opening up selling local goods and services

          There is a street here in Sligo that has the potential to be Carnaby St. I can see it but no-one else can

          People could make and produce things locally for the local market – art, crafts, clothes, food, furniture, shoes, beer etc

          If people were not at the mercy of rent seekers our high streets could be transformed overnight.

          And yes … I see what you mean.

  23. 5Fingers

    Egypt a volcano for change http://www.abc.net.au/news/2013-07-02/egypt-army-gives-morsi-48-hour-ultimatum/4792836
    …Lambay Island was a volcano once…

  24. Adelaide

    Did you hear about the two neighbours, in their late 50s, an accountant and a landscape gardener, can’t get work in their respective fields. They separately go to FAS to see what retraining courses they’d offer. You guessed it, the gardener is offered accountancy and the accountant is offer landscape gardening.
    Seemingly this is a true story on Scambridge.ie. It made me chuckle.

  25. c_west

    Good article. I have the impression that in the last few months the reality does correspond to the statistics (cited in the first part of the article here).

    In layman’s terms if there is such persistently high unemployment and cuts, and we are at the bottom of the interest rate cycle and we have a wave of defaults, then it seems inevitable that things will come to a head in the next few years.

    Especially when rates go up to more normal levels and tracker holders start to pay real interest. I don’t see how the banks will survive that in addition to the current problems (which will still be there) without a further injection of money.
    And what appetite is there now for a further injection of money into the two banks?

    The whole political system seems to me to be completely dysfunctional. As an individual I can’t change a whit about it, I can protest but as Fintan O’Toole put it a weak protest only makes things worse and legitimises the status quo because I’ve exercised my democratic right then…

    The way the advice from Merrill was ignored by the government is highly suspicious in my opinion. Even if we went with David Drumm’s plan we would have burned more bondholders. He is a scoundrel but he was doing what bankers do. The failure was ultimately the government’s.

    All of this and there is no alternative politically… reports in German media today about how we squandered oil rights etc in the 80s. It all adds up to consistently terrible government over years and years and no hope in sight… Sorry for the negativity but the missed opportunity is just staggering.

  26. DB4545

    Checked out the reference to Mr. Sinclair in the previous article. The goldprice.org stats bear that out to some degree. On a more local note a contact in the Credit union is concerned that moves underway to centralise the Credit Unions in Ireland may result in local “talking heads” with a centralised back office operation which creates two imminent dangers for members. 1.Funds are centralised and the large numbers involved attract sharks who raid the funds of shareholders a la Anglo. 2. Funds are centralised and the large numbers involved attract the interest of Government who raid the funds of shareholders a la Cyprus. Your thoughts please?

    • EMMETTOR

      Makes sense to me. The EU doesn’t like Credit Unions, so the Grovelment could tell Yorp that it’s reining them in, while telling the Paddies that it’s the EU making them do it. The Property Tax can only go so far (how far?) and there are only so many new taxation whizzes they can come up with to keep them in the style they’ve become accustomed to, so Credit Unions are a logical target, accompanied or not by a general Bail-In.

  27. Stiofan

    Dear David, what Ireland is experiencing is not, has never been, and cannot be described accurately as ‘a recession’. In the United Kingdom, ad Ireland, recessions are defined as two successive quarters of negative growth. That’s mad of course, as though there is something called ‘negative’ growth (death therefore being ‘negative life’, hunger being ‘negative sufficiency’, a stationary car is in ‘negative motion’ and your liabilities are apparently ‘negative assets’). Perhaps ‘economic performance below trend’ might be a suitable shorthand. A return to trend is generally anticipated, and soon. That’s not the situation in Ireland.

    To illustrate, an aircraft cruising at 10,000 feet loses 1000 feet, remains there for a time and climbs again to 10,000 feet. That’s some sort of aerial recession. The same aircraft losing altitude, hitting the ground and flying to bits won’t be back up at 10,000 feet any time ever. That’s what’s happened here. This is no recession. This is something else. So, what might that be?

    This is an economic re-set. This is the big red button. This is a step-change, downward. Just as the dead Tiger was a step-change upward, one that we so easily accommodated, this step-change downward resets the trend. It replaces the conditions that preceded it. After this everything will be different. The old trend line is terminated. What follows begins a new statistical norm. We have witnessed a discontinuity. Until we cop onto the idea that the past is over we will be talking about a resumption of the historic trend. But Irish Airlines won’t take to the air again.

    Can I ask that you stop referring to a recession? It makes more sense to me to wonder what will the future will hold. What will the new trend line, the new normal be? That’s the interesting bit.

    Thanks for that. Can I ask one other favour? Can you agree that capitalism creates capital. It doesn’t consume capital. Capital is not the fuel of capitalism. It is the result. Will you please stop saying that “small businesses are starved of capital” and asking “why are they not getting the capital” while claiming “capital is trapped in the banking system“. The mythic “capital” of Ireland never existed. It was a “negative liability”. It was never an asset. We never had capital.

    So the question hangs in the air: how will Ireland create some capital? What will we do that creates value, stores value and distributes value? Will we try again to borrow our way to success? That’s not capitalism, here or elsewhere. We can’t drink our way to sobriety.

    • paddythepig

      Excellent comment.

    • Stoifan

      Very interesting comment and thanks for your time and throughts. Sometimes it is difficult to deploy the right language in artilces because old language is insufficient to describe something which is truly new.

      My own sense is that we are being hit by massively distruptive technology that only very few will be able to take advantage of, in a variety of areas, driven large but not exclusively, by the fact that traditional ways of doing business are being destroyed and the little niches therein where people used get paid for their labours are going too.

      This together with the hyper-competition that certain elements of globalisation bring, particularly in manufacturing are driving down job opportunities for the average guy. But related this process is also driving up speculation in areas like finance and real estate plus other speculation which leads to recurring assets bubbles at a time of general lack of opportunity exacerbating inequality.

      These three factors are 24/7 and without single handed commitment to one or a number of specific projects, individuals and by extension their families and by extension the community get hammered.

      Best
      D

      • Pauldiv

        Sounds very Patronising indeed

        “Old language is insufficient to describe something which is truly new”

        If language was good enough for our literary heroes then it should be good enough for us. The written word is a medium of communication that has lasted for millenia and it is the most superior medium of communication available in these days of 24 hour media noise: ticker tapes … ‘breaking news’ ; ‘talking heads’ and radio show ‘socialists’ on 500k a year.

        What right have you to dismiss thousands of years of visual and written communication as ‘insufficient’?

        Just because you sense it without thinking it through enough to articulate your thoughts into words does not mean that language is the problem. Maybe it is you who is part of the problem!

        You sound like an elitist whose is waffling and deliberately leading people up the garden path.

        You guys have no faith or your arrogance and ego have uprooted and dispatched your souls to the four winds. I put it to you that when life gets bad most people like nothing more that sitting in a quiet room reading works by their favourite authors. If those works are of a certain vintage then so much then better because to me it seems that writers used to be far more honest and plain talking than today’s empty headed celebrity shower of gargoyles and assorted odd balls who think language is not quite up to explaining their legendary insight and perspectives.

        The arrogance is breathtaking and if it is not arrogance then is it is propbably just stupidity and wishful thinking like the guy in The Committments who imagines he is being followed aroud by Pat Kenny 24/4. That is what guys like you sound like to me. Really.

        The mass confusion and hypnosis inflicted on children today will ensure that today’s children will be so mind fucked by the computer games mentioned above that by the time they are 21 the word empathy will be missing from their vocalbulary. Personally I’d slap their parents and put them in the slammer for a month until they woke up and took responsibility. Stupidity is our biggest problem pure and simple

        The ‘little niches’ are being pulverised by people smarter and more switched on. Anyone can identify a niche and go for it. It is not beyond possiblility that a guy called ‘Kim’ in Bangkok could be running an ‘Irish’ site and making a killing while getting his buddy’s to turn out all the tourist tat and flog it under a non de plume such as Paddy Murphy. Good luck to them and good luck to the guy who is reaping rewards for all his years invested in learning Digital Commerce. Welcome to reality Brother

        Sure I might even go and live in Thailand and start it. I have the skills but right now lack the motivation. It’s entirely possible with all that cheap labour.

        I live in the real world and know what’s a goer. No bank loan, no credit, no damn all. Just good old fashioned Scottish Brains and enterprise. Fuck Enda and fuck them all. Losers.

    • 5Fingers

      Nice one. I would suggest Ireland has become the Economic Canary in the Mine showing how humanity are now victims of the emergent behaviour which resulted from new tech which drove globalism to a new level to change the rules of competition and has allowed what was the once tolerable actions of the financial community to become lethal.

      I am not having a bash at finance. Rather I think they need serious reigning in until we fully understand what is happening globally. Speed of adjustment and resulting lost opportunities because of our lack of understanding is needed. We need better police. But can we police them?

      • EMMETTOR

        Well banking itself is a necessary evil but we should have as little of this evil around as possible. Just enough to service the Real Economy. Of course most of that’s been moved to China. Incidentally, who’s seen the Apple advert that ends in the “Designed by Apple in California” tagline? Every time I see it I just think “Made by Foxconn in China”, hilarious!

    • Wills

      The mix-up between capital and negative liability is a good basis from which to start from.

      A major problem – IMO – is – that – free enterprise and what it means in reality has been wiped out and replaced with propaganda by the power elites to services their rigging and transfer of wealth away from the less well off.

      • 5Fingers

        I have to say, this had been the most interesting and progressive discussion to date.

        Assets=equity+liabilities. Negative liability could suggest negative assets in standard double entry accounting – meaning negative equity which in turn means you cannot borrow and can only pay interest.

    • bonbon

      Now 1933 is “old language”, yet DMcW likes the Biblical Jubilee mantra?

      Come on! Language is only part of it. Metaphor is the key, and language today avoids metaphor. Here is one :
      The Triple Curve or Typical Collapse Function. I think people can grasp the metaphor, to their dawning horror. BUT a true metaphor shows the way to deal with the otherwise horror-show guaranteed destiny.

      Priority number 1, that plunging collapse much worse than a “reset” – massive genocide. With the monetary overhang impossible, so break the overhang, but never loose sight of the urgent need for Reconstruction. That means Hamiltonian Credit, but freed of the monetary tyranny. That’s Glass-Steagall! 1930′s language with 21st century Metaphor. Come on DMcW you can handle it!

      • whatamess

        intriguing how DMW ,after all your contributions here,has not even once whispered about GS ,to my memory anyway..

        deafening silence

        • bonbon

          It is a litmus test. Both Friedman and Austrian Schooler’s have massive psychological problems with FDR, New Deal, RFC, Hamilton, Bretton Woods, but especially Glass-Steagall. For Irish economists this leads to bretraying Matthew and Henry Carey, and especially Arthur Griffith who exposed the entire British swindle by publishing German Economist Friedrich List’s American System of Political Economy.

          This cripples the Uni’s, and destroys the country!

        • bonbon

          Here in 2010 DMcW did mention Separate bank from state debt or else face econocide but never once explained Glass-Steagall, the historic 1933 action that decisively changed the course for the USA. Today this is THE major issue. It is uniquely American, but even the Financial Times of London has championed it a few months ageo. Deference to London then is not the issue, but deference to Empire is.

    • EMMETTOR

      Austerity is the New Normal.

    • pauloriain

      Good man Stiofan. Now we’re starting to explore the new reality and also understanding how lacking conventional & historical economics theory is.

      It makes me laugh to think of all the experts in all the think tanks, in all the universities and all the expert advisers in government departments in the developed world………… and yet economically we are up the creek without a paddle. Talk about asleep at the wheel. Conclusion, they are all clueless and need to do something else e.g. Jim Power still appearing as an expert in the media, yet he was the chief economist in a bank and didn’t see the crash coming, when he was in the thick of it.

      What is obvious is the disconnect between the study of nature & sociology and economics. We need to reconnect with the idea, that nature likes balance, so if you get a boom your going to get a bust, that kind of idea.

  28. TrackerMan

    David, so in effect we have this societal shift, old jobs for jobs in new industries that few people currently have the skill set for, at a time when the country has very high debt levels. What exactly is the total private sector and public debt as a % of GDP / GNP and what % of national income is used to pay interest on this debt every year. I heard a figure of 25% being mentioned, but this surely sounds too high and what % of income will interest alone consume if global interest rates rise – and how will this then effect consumption and jobs in Ireland? I think we have the highest level of private and public debt as a % of GNP/GDP in the world – maybe marginally exceeding Japan, but I think the composition of their “total debt package” is skewed to the public side – which they can largley finance internally.

  29. Christ almighty, when is this insanity going to end? According to the CSO, something of the order of 7.5% of the population has fled in the last four years. We export more people in absolute numbers than Italy.

    So I’ll throw this out there as a what-if: In some far off land called rationality, Noonan would take that extra €1B and use it to kickstart investment in LFTR reactor technology (a quick summary below, worth 5 minutes of your time)

    https://www.youtube.com/watch?v=uK367T7h6ZY

    Invest while everyone is cutting back, The post-Fukushima wave of anti-nuclear hysteria is an opportunity that would give a decent head-start (when presented with the facts, I believe most people would realise that there is nothing ‘green’ about being totally anti-nuclear power and in Ireland its largely a proxy for being anti-’Brit’).

    Yeah, another mad idea right (and sure, I’ll accept that is a bit of a personal hobby-horse, and feel free to substitute your own)? “Is it less mad than what we are doing now?”, is the only question to be answered. Doing what everybody else is doing has thus far not gone well

    Ireland is in a place where insanity is accepted as normal, rational behaviour, and where value is extracted, not created (with FDI its basically national policy). That is so fundamental to the way of thinking in Ireland that its easy to forget what a profound impact it has, in my view.

    • EugeneN

      The attacks on Noonan are misguided. There are, in fact, very few houses for sale in Dublin, about 2,000. I say as someone sort of looking – although I will wait and see what happens to the arrears. It’s about 30K State wide, which is about 10K in Dublin per year. Thats about right long term.
      Most people reacting here seem to think he is trying to stoke the market upwards, in fact if 10K houses were on the market this year, extra, house prices would fall significantly.

      • Joe R

        Ha ha ha…you don´t have a clue about this do you?

        Construction economics property economics vacancy rates real actual demand and supply in Ireland…not a clue?

        Stick to 4th year economic theory, please.

    • whatamess

      ea worth the watch Liam ,but you spoke of kick starting investment maybe with this emerging technology …. and DMW similarly when he said “Foreigners may well decide that Irish businesses are worth backing”
      but for an investor,return on investment is the focus,right? and Ireland Inc is no competition on a European/Global scale ( re manufacturing certainly )so the investor chooses the country that will deliver the greatest profit…
      Ireland Inc needs to reinvent itself as it currently has nothing to offer… I.T. & Pharma are all leaving or have already left and WHEN the corporation tax is a level playing field,their sudo allegiance for the green jersey,will vanish like a fart in the wind…That’s a further hammer blow to the already impoverished exports of Ire Inc
      So,Debt Forgiveness in some guise must happen,fractional reserve banking to be banned forever,and some projects on a scale as LARGE as the hole we are currently in .. get people back to work…that’s an economy !
      “Is it less mad than what we are doing now?”, is the only question to be answered. Doing what everybody else is doing has thus far not gone well” …
      +1

      • Hi whatamess,

        A move that runs counter to orthodox thinking (which is essentially arbitrary) is the type of thing that if pitched correctly and costed reasonably, will attract investment. Scalping a few shekels off the backs of multi-nationals, won’t anymore.

        Debt forgiveness in my view is a last resort, better to have a burden sharing agreement, its a win-win. Better yet, provide an opportunity for people to climb out of their debt holes and give them hope for the future.

        I’m an engineer, not an economist and I have no idea what this Triple Point stuff Bonbon is going on about means (always thought that was related to hydrogen bonds in water molecules, but I digress..) I’m sure it makes perfect sense to those in the know. I’d posit that there is a direct relationship between productive output and the sustained availability of inexpensive energy, regardless of economics.

        • bonbon

          As an engineer one must realize the key component of an economy or a motor, is not the amount of energy, but the flux-density. Sun and Wind are pre-use of fire densities, a regression to a pre-human past. Ony humans master fire. There is a direct relationship between relative potential population densities and energy flux-density of an economy. In other words a regression means genocide. The Triple Curve has all that and more.

          Pity “economists” have no engineering training!

    • bonbon

      In solar panels dispute there is only one winner: the European Commission

      Look at the Triple Curve, to understand what the physical economy is all about. Nuclear power, energy flux density is critical for survival. Its enforced removal will cause massive depopulation, in other words genocide. We need 6000 GW now just to break even.

      India is a leader in Thorium technology. U.K. will its new reactor running by 2020, and has big plans. This in spite of the exported greenie mania. Could it be yet again, the Euro for the rest, and Wind to boot! A deadly strategy?

      • Hi Bonbon,

        Thanks for the link. I’m not sure I understood it, I’m not an economist and I find the financial stuff a bit confusing to be honest as I’m not familiar with the jargon. As I mention above, I’d posit that there is a direct relationship between productive output and the sustained availability of inexpensive energy, regardless of economics. It seems empirically obvious and historically consistent.

        ‘Green’ is fine as far as I am concerned, so long as its a plan that adds up. Wind is actually a good one, Ireland is one of the few countries that it makes some sense in. Lots of wind, not many people. All comes down to kWh per unit area of land. Build a few lakes near the shore to store excess potential and you’re golden.

    • michaelcoughlan

      Hi Liam,

      “Ireland is in a place where insanity is accepted as normal, rational behaviour, and where value is extracted, not created (with FDI its basically national policy). That is so fundamental to the way of thinking in Ireland that its easy to forget what a profound impact it has, in my view”

      Excellent observation. David (never sat his leaving) Drumm lending billions of euros to manny people, who likewise, never sat theirs. And despite his record breaking loses a company in the US still finds a need to employ him.

      The lunatics have taken over the asylum (banking system)

  30. This recession is behaving differently to others and we discussed some of the reasons why I think this is.

    Mortgages have approached their natural limit of taking two incomes around 30 years to repay.

    The money supply has doubled about every decade going back 4 decades but it’s not feasible for that to happen for the foreseeable.

    In response to “So why is this not happening now anywhere in Europe, let alone Ireland? The most obvious answer is debt.”:

    I’m surprised that you don’t question how we could b e in so much debt in the first place. You do understand that money comes from bank loans and so every euro has a matching debt?

    And that as debt to banks is reduced money is deleted in the process?

    • 5Fingers

      This is private debt. It is huge everywhere.

      And because of the disastrous bailout we have augmented public debt as well.

      Exactly who runs this country?

    • Wills

      IMO the QE / printing of cash is based on confidence of the user in it as a medium of exchange. As long as the confidence remains in check on the street the printers if hijacked can keep going.

    • Wills

      …the debt always ends up transferred into the future through bonds – turning over – so it never gets paid off – so the cash generated by the debt is stolen through gaming bond issuance.

      This is why the debt-money system reigns supreme over law, legislation and social order.

      • 5Fingers

        I am aligned with Mr Ferguson on this one. CB issuance of money to banks does zero to increase circulated money.

        However if all people are doing is now paying interest and little or zero off the principle…then the lot comes to a crunch. Even the banks pumping and dumping assets on zero interest rates will not save them.

        It’s over. Question is when.

    • bonbon

      I expect the “IT from Bit” mantra soon – the physical economy from digital money swindle. Don’t you understand that is incredibly irrational?

      Accountancy is NOT economics!

  31. dvfischer

    This Capital Trap is also known as a Zero Interest Liquidity Trap.

    Ultra-low interest rates cause the banks to hold onto cash waiting for the interest rates to rise, but now they have huge piles of cash. Governments can’t let interest rates rise because of the massive amount of cash that will come rushing out of the banks all at once with only a small rise in interest rates, causing hyper-inflation. The choice now is recession or hyper-inflation, thus the trap.

    This is the result of government interference in free markets. This has been going on so long that the crash, when it comes, will be massive.

    • 5Fingers

      Low interest means banks can speculate at low risk. This causes rocketing high asset and stock prices. If interest rates climb, there will be a massive crash. Demand pull inflation will not happen as people are too indebted. There is no engine to inflate generally.

      When interest climbs the pressure to pull in cash and prevent loss crystallisation will be huge.

      Am convinced banks need to be closed / bankrupted and new people hired for new banks for a new paradigm. Politicians will not budge as they have too much skin in the game.

  32. EugeneN

    The attacks on Noonan are misguided. There are, in fact, very few houses for sale in Dublin, about 2,000. I say as someone sort of looking – although I will wait and see what happens to the arrears. It’s about 30K State wide, which is about 10K in Dublin per year. Thats about right long term.

    Most people reacting here seem to think he is trying to stoke the market upwards, in fact if 10K houses were on the market this year, extra, house prices would fall significantly.

    • 5Fingers

      I personally think the number of houses available is artificially low as market is ultra soft. NAMA is the prop for all this nonsense. Sooner interest rates climb the sooner the gloved come off.

    • Joe R

      Lack of repossessions means the market is artificially small an the price higher than it should be. Massed distressed sales will murder asking prices and new mortgage lending so bank´s aren´t doing that.

      But I think what you are getting at is that Dublin is a separate market to the rest of the country and yes I agree it should be seen as such.

      There is a CSO document called `a roof over our heads´ with vacancy rates and types mapped put across the country I suggest you go look it up as part of your search. It could provide valuable information as to the true state of what is out where.

      Good luck with your eventual decision.

  33. whatamess

    yea worth the watch Liam ,but you spoke of kick starting investment maybe with this emerging technology …. and DMW similarly when he said “Foreigners may well decide that Irish businesses are worth backing”

    but for an investor,return on investment is the focus,right? and Ireland Inc is no competition on a European/Global scale ( re manufacturing certainly )so the investor chooses the country that will deliver the greatest profit…
    Ireland Inc needs to reinvent itself as it currently has nothing to offer… I.T. & Pharma are all leaving or have already left and WHEN the corporation tax is a level playing field,their sudo allegiance for the green jersey,will vanish like a fart in the wind…That’s a further hammer blow to the already impoverished exports of Ire Inc

    So,Debt Forgiveness in some guise must happen,fractional reserve banking to be banned forever,and some projects on a scale as LARGE as the hole we are currently in .. get people back to work…that’s an economy !

    “Is it less mad than what we are doing now?”, is the only question to be answered. Doing what everybody else is doing has thus far not gone well” …
    +1

    • bonbon

      A good effort, but I might remark you fail to see the trap set by the Austrian’s of the London School of Economics.

      What puts this trap firmly on the table, so not even the most stubborn could miss it, is the Triple Curve. Notice that plunging abyss, you are riding it down. The Hayek crowd (and the rest ) have no intention whatsoever of halting that fatal plunge.

      On “forgiveness”, are you expecting Three Hail Mary’s, or some kind of Jubilee (biblical economics)? Come on snap out of it. Look at what these lovables did to Cyprus as a test. The are coming for you now.

      FDR had none of these charming illusions, he let Pecora run Wall Street’s JP Morgan over the public coals before breaking up the banks.
      Right now the Pecora Commission is begun. Breaking banks will open the door to a huge Reconstruction, in ways FDR would be proud of.

      • whatamess

        yea ,maybe “huge debt forgiveness” is naivety to the n th degree on my part and maybe ” the rolling stone about to flatten us ” will not be put off it’s course with such ” “charming illusions” ….

  34. joe hack

    “Capital is money: Capital is commodities. … Because it is value, it has acquired the occult quality of being able to add value to itself. It brings forth living offspring, or, at the least, lays golden eggs.” Marx

    Debt has been given a value in our society

  35. joe hack

    Are we there yet-’Unbridled Capitalism Will Destroy itself’ David are you there yet

    Can you resist elitist in you – machines and media control- every one want to be an elite?
    On ‘the 99 percent

    “You are horrified at our intending to do away with private property. But in your existing society, private property is already done away with for nine-tenths of the population; its existence for the few is solely due to its non-existence in the hands of those nine-tenths.” (From “The Communist Manifesto,” 1848

    Marx was right about capitalism and about communism, communism has never been tried but the west media will tell you otherwise

    The Big Reset- The Awaking

    • bonbon

      Marx was wrong but better than Adam Smith. Marx’s incompetence is the total silence on Hamilton, Carey, what was at that time known everywhere as the American System. the reason for this failure is David Urquhart, his runner.

      The real problem with Communism though was let out of the bag by Engels when asked about the difference between man and ape. Answer “the opposable thumb” to grasp a tool. In other words man is an ape with funny fingers. As such total collapse was inevitable, and horrific abuses. Now looking at Adam Smith, what is the difference between man and ape, why Moral Sentiments as he published. Have a look, it is the same recipe. Empire must always convince the majority they are animals, culling is then much easier!

      So we have socialism for the banks! the ultimate British Empire swindle (who begot both Adam Smith and Marx after all).

      So look up Friedrich List, Matthew Carey, Arthur Griffith – all of which knew this!

    • cooldude

      I think you missed out on a couple of experiments in this form of total control of people and the complete absence of any individual rights or freedom. They ended with a death toll of 65 million people who were executed by Stalin and Mao because they had some basic intelligence. You have to be joking or just plain bonkers.

      • bonbon

        Actually starvation and disease killed most. That is the result of bad economics. The very same “economics” today, called by fancy names will kill 6 BILLION, as precisely stated by its promoters, well documented. Basic intelligence must show the flaw in the “economics” touted here such as “It from Bit”, “Wellbeing from Metal”, “Growth from Animal Spirits”. It is a Wax Works!

        • cooldude

          Starvation from being sent to Siberia because you have some basic intelligence is still murder no matter how you dress it up. The economics of collective control have failed time and time again because producers refuse to send their goods to a controlled market at a loss. Towards the end of the Soviet experiment with communism the shops were mainly empty because no one was sending their goods to be sold and what was for sale was complete and utter statist rubbish. Have a look at the cars they produced. Complete shite.

          I am aware of the Club of Rome and their eugenic plans. Bill Gates, Bono’s buddy, is a big fan of all of this. His “Foundation” is a big supporter of vaccines and GMO foods which makes me very wary of both.

          • DB4545

            Travelled around Eastern Europe in the early 80′s prior to the wall coming down. Some nice decent people but a sad life if you couldn’t operate in hard currency(dollars, d-marks and 200packs of Marlboro). Tried to get a meal in Sofia one evening in a street restaurant. I wouldn’t feed the slop they tried to serve me to my dog. I was in East Berlin on the 33rd anniversary of the GDR. The culinary highlight for the vanguard of the working classes was sausage and a slice of bread. I could and did live like a lord with hard currency but it was no workers paradise for the workers. The jury is out at the moment on capitalism but I learned fast that communism certainly does not work for the average joe. Putin said that anyone who did not regret the passing of the USSR has no heart but anyone who wants it back has no brain and I think he’s right. I think the people who gained most from communism were Western Europeans. The ” threat of communism ” maintained a balance of terror between tooth and claw raw capitalism and the “communist hordes”. This fear prevented the crazy elements of extreme right wing capitalism and “people’s front of Judea” nutter communism from being introduced. Common sense prevailed and everyone gained. Since the wall came down this crazy element has manifested itself in a race to the bottom. Henry Ford could never be described as a communist but he realised that reasonably well paid workers in stable employment could buy his Model T’s and
            everyone gained. We have an “economy” now of short term contracts, fixed term contracts, internships, contracting out, hollow corporations etc. How can people plan for 30 year mortgages or even 5 year car loans in such an environment? The danger for capitalism is that people get desperate and desperate people don’t behave rationally and begin to clutch at the craziest economic panaceas offered to them. We need a rethink and fast, the brain can’t work without the heart.

          • joe hack

            DB4545,

            Excellent you went to where I was heading before I did

            I agree with most of what you say -” threat of communism” maintained a balance of terror between tooth and claw raw capitalism and the “communist hordes”… and nothing now protect those in the west from the excesses of capitalism now

            The names are not at fault the human condition is….

            It is a myth that USSR is the definition of communism
            It is a myth that the USA is the definition of democracy

            Names don’t define right and wrong – in this the above context names are meaningless they are used and abused to become right and wrong which stifles us and in turn removes the possibility real and meaningful debate (this may be intended by some)….

            Fear is been sold.

            ’Unbridled Capitalism Will Destroy itself’the year was 1848 Marx is and was right on this…’Unbridled’ the result of the fall of the USSR??????……Marx did not know what followed 1848…. 2008 -2013

        • joe hack

          ’Unbridled Capitalism Will Destroy itself’ marx

          • DB4545

            Joe be careful with the human condition. It’s not a fault, it’s the way we are. We behave like Richard Nixon but we want other other people to think that we’re JFK. In essence we act in our self interest. The best we can hope for is to come to realise that enlightened self interest is in our own best interests. That to me means simply don’t beggar your neighbour because that neighbour if pushed to extremes will rob or kill you to survive. I believe in pragmatism and common sense over ideology(religious, political or economic) every time. Science(applied common sense) can help fly people to the moon, religion has flown people into buildings.

      • joe hack

        That as I mentioned is the myth indoctrinated by west and the west media the country’s you mentioned where not Communist country’s nor was John Wayne at the Alamo but he did direct and act in a movie to promote Nixon ascension to the throne- nether the movie or Nixon worked out very well.

        To use your analogy that communism does not work because of Stalin – Hitler had a capitalist country – 27 million (Stalin) Russians died wining the second world war – that the USA (John Wayne while taking a break from the Alamo) apparently won single handily-what type of system did the USA have when for the past 75 + years they have been at war – 2.5 million Vietnamese murdered ect – but who’s counting……..

        To have Communism you need everybody involved one country cannot by definition be Communist – as is said Communism has not yet been tried.

        • EugeneN

          If communism hasn’t been tried whatever has been tried fooled all the members of the communist parties who tried it, and the communists and Marxists in the West who supported the then communist regimes until they collapsed. And far from one country it was tried in many, about 1/3 of the population of the Earth. Probably more people lived under it than were alive when Marx lived. Everywhere it was tried, it failed.

          However communism doesn’t just fail in practice, it fails in theory. Of course Marx was good at sloganeering, so you get the slogans here. What he wasn’t very good at was maths. The only economics in Capital is chapter 9 – thats one equation based on the utterly absurd labour theory of value.

          Nor was he good at solutions: The solution is to takeover the State “on behalf” of the proletariat, and if we applied that to Ireland the State sector would take over Apple, Google, Microsoft et al, and I doubt the efficiency of that.

          • joe hack

            So you’re happy with the system as is and exit all discussion on the merit or otherwise – because “Communism” is a ‘bad word’ – end of debate.

            Morales has been treated to unbridled capitalism over France Portugal…..MORALs

            The proletariat work at apple and Google Marx did not write a bible of rules to be followed to the letter nor where Google, apple,or oranges and calculators around in the 1850s or for that matter the Xfactor.

            Google!

    • Pauldiv

      “It’s true that you’re under arrest, but that shouldn’t stop you from carrying out your job. And there shouldn’t be anything to stop you carrying on with your usual life.” “In that case it’s not too bad, being under arrest,” said K.,

      excerpt from The Trial by Franz Kafka

      http://www.gutenberg.org/cache/epub/7849/pg7849.html

  36. The Green Zorro

    Humanity as a species is inherently insane. (at least in the current prevailing autonomous, self serving, grotesque mindset) In the 20th century alone, humankind wiped out 100million of their fellow brethren…
    When this is viewed as a backdrop to the current unfolding events they take on an even more chilling resonance.

    • Colin

      270 million (and rising) killed by islamic jihadis since mohammed first started having notions he was a prophet. 120 million African Pagans, 60 million Christians, 80 million Hindus, 10 million Buddhists.

      • bonbon

        That’s why Obama is funding them. It gets his Queen’s request done – down to 1 billion, off with their heads. If Obama succeeds in starting a Sunni/Shiite “civil war” it will go on for 100 years, exactly like the European 100 years war after Luther, set up by Venice then. Britain, the New Venice, is at it again, Squire.

  37. joe hack

    The richest man in the history of the world the was the last emperor of Russia (Nicholas II, Emperor and Autocrat of All the Russians)He’s also the richest ‘human’ saint in history…he was by default the creator of the USSR

  38. Morning

    Thanks for all the comments and the quality of the discussion.

    I spoke last night to a Serbian friend who has lived most of his adult life in Russia as hanging around Serbia was probably not a great option in the 1990s. Anyway we were chatting about the usual, kids, family etc and quickly the chat got onto world affairs and the way the place was going, the lack of “a new deal” and the fact that everywhere the broad middle classes are being squeezed. I tell you this simply because we were joined by a few others from central Europe and the converstaion reflected the conversation here. These are the worries of every thinking citizen.

    Best

    D

    • michaelcoughlan

      Thanks for this observation David. It could be ended with an observation though as to why this is when the worlds banks are awash in cash?

      Answer from a non economist: the worlds financial system itself is decoupling from the worlds economy. In other words all the worlds banks are trying to get their cashflows from bonds or speculative activities on the stock markets. They are too afraid of couldn’t be bothered to do their jobs and lend money to industry.

      They are now in hyper predatory mode having morphed from parasite to self defeating blood sucker killing the host and ultimately themselves.

      Like Drumm they are too shortsighted and ignorant to understand cause and effect ie: that chats going on is z direct result of their own actions abc no one else’s.

    • 5Fingers

      Taking the Irish perspective, I think our way of solving problems and aping other countries in the way we deploy resources and creativity is THE major barrier to overcoming any of this stuff. C Gurdiev has a little piece on this>>>

      http://trueeconomics.blogspot.fr/2013/07/272013-sunday-times-june-30-2013-irish.html

      We have to recognise that CURRENTLY we not a very creative or innovative race. Our once held view of ourselves as being the darlings of wit and friendliness and flexibility is wearing very very thin internationally and is more seen as witless and desperate.

      The real reason there is a credit lockup is becasue of our leadership. Nothing else. Let’s stop blaming anyone else.

      • bonbon

        I wonder what he means by “true economics”, what truth is in the shadows?

      • Pauldiv

        I like that guy. He does straight talking.

        • Pauldiv

          For example

          “High value-added future opportunities will be found in delivering communicable and actionable insights out of data that can enable products and services innovation and individualisation.

          The world of innovative and high value-added economies is moving in the direction of embracing more broadly-based creativity, intelligent design, consumer-focused disruptive innovation.”

          ICT and Pharma can’t take up the slack and we need to innovate and think how we can create top notch new products and services

    • DB4545

      Hi David, I mentioned previously about travelling around Eastern Europe in the early 80′s. I remember having to change D-Marks for Ost-Marks at a 1-1 official rate and then getting a 10 to 1 rate on the black market once I was in East Berlin. The most a fistful of Ost-Marks could buy me was sausage and sliced bread and watery beer. When I was leaving the place I gave a stranger a couple of hundred in 10 Ost-Mark notes as I couldn’t spend the stuff. He gave a polite thank you but I knew by his reaction that I may as well have given him a roll of toilet paper. That was my lesson in the failure of communism. If communism can’t work in methodical orderly Germany it can’t work anywhere. I’m starting to get the same feeling about the Euro. Banknotes are just a symbol of exchange for goods and services. I think we’re on the brink of major upheaval in the West. Quantitive easing and the confiscation of private property by Governments (Cyprus and the Bank Bail-outs) used to be the benchmarks by which Capitalist countries could judge a country to be communist. A physical wall came down in 1989 and I think a financial wall is about to hit the West in a similar way. I hope the people running the show realise that the centre can’t hold under these conditions.

      • bonbon

        And the Irony is who are best prepared for this Fall?

        Why those very DDR people who saw it all happen before in 1989.

        Remember DDR Premier Honecker’s famous last words :

        Honecker 2012: „Den Euro in seinem Lauf hält weder Ochs noch Esel auf!

        Neither ox nor donkey can stop the Euro march…

        Kohl taking on DDR state debts on a 1-1 DM rate (450 billion) was really stupid. Even much more Donkey is to take the banking debts on a 1-1 basis. How about a 1-10,000 rate?

    • bonbon

      In Putin’s Russia, a different approach is possible. There one will hear of FDR’s New Deal more than from Obama’s total silence.

  39. TrackerMan

    We need to bring back jobs / industries that employ thousands in Europe…so where have these industries gone to…look at the auto industry in Europe for instance…growing hugely in Germany due to high productivity, competitive labour costs, relative efficiency compared to rest of Europe. Unit labour costs since 2000 have shot up in France, Italy, Spain, Greece and not come down even through recessions have occured in those countries also. Germany did not allow this to happen, even though unions there are now allowing for higher wage settlements, which is feeding through to domestic demand and outweighing the effects of a stagnant export market. These other countries usually let devaluation make their industries competitive again – but now they can’t, so they are locked into a permanent disadvantage vs Germany and through union pressure will not allow wage decreases for workers, resulting in huge unemployment..this is the insider / outsider dilemma that David keeps referring to. If relative unit labour costs are so much higher in these counties compared to Germany, I can’t see a way out of Europe’s high unemployment mess for some time. At what level of unemployment in these countries will people shout enough and demand change via leaving the euro? It must be remembered that these countries do not export their young to the same extent as we do here – they tend to stay at home and protest. Furthermore with the “bail-in” announced last week, banks in these peripheral countries may come under further pressure as the smart money leaves these countries and there is this great suction towards the core of all capital – where the risk of losing your money is less…this will further depress demand in all countries with perceived banking problems via less availability of credit…I see the euro situation getting a lot worse before year end..it has been artificially suppressed via Dragi over recent months but all of the underlying problems have just gotten worse..

    • paddythepig

      Facing down the unions will solve the problem you describe. Why not do that?

      • bonbon

        Are you implying “unions” caused the problems? That’s a bit daft.

        Interesting the first thing Hitler did with his fresh Enabling Powers, was to disband unions.

        Do I detect a regressive lurch?

        • paddythepig

          That’s the second time you’ve compared me to hitler, nobnob.

        • joe hack

          Ah Yes, the elites will love that low wages help to create depressions the lack of unions in the private sector has unbalanced wages.

          ‘my spending is your income’ those with the commodities hold the power gold iron oil…GM….foods…

          “Do I detect a regressive lurch?” yes it was Thatcher, Raygun and the Sisyphus monetary system with the stone getting bigger and the muscles smamler

    • michaelcoughlan

      Hi,

      “I can’t see a way out of Europe’s high unemployment mess for some time”

      The people unemployed will have to find within themselves the tenacity to make a job for themselves.

      The politician’s agenda is to save the euro.

  40. DB4545

    Bonbon will you please give the Classical Greek and Roman references and economist nomenclature a bleedin rest? I’m told some English bishop once said that there’s no point having a mind as sharp as a razor if it’s also as broad as a razor. Distill those esoteric economist terms into plain English. I want to hear your views but I don’t want to spend half the evening checking references. This isn’t academia, this is a discussion forum for people with an interest in economics and politics but from diverse backgrounds. Edit. Thanks.

    • michaelcoughlan

      Hi,

      A Sisyphus task relates to a fellow called Sisyphus condemned to roll a massive stone up a hill only to watch it tumble to to the bottom just before reaching the top and condemned to repeat for eternity. Very apt observation by bonbon re saving the euro.

  41. The Green Zorro

    Hi,
    Their agenda is undoubtedly to save the Currency at almost any cost seemingly but a Sword of Damocles truly hangs over this failed ‘Euro’, appallingly contrived Monetary Union experiment…
    The other day I noticed on the back of a 2Euro coin (an exceedingly shiny one admittedly!!) the almost childlike impression of a man coupled with The Euro symbol commemorating the 10th anniversary of EMU (1999-2009)
    Can a reasonable man logically now foresee the doubling down of this particular milestone??
    More broadly, unless a divergent path is plotted the entire European project may be imperilled.
    I doubt this is what the Founding Fathers of Europe envisaged at the Genesis of the EEC when the Treaty of Rome established the Common Market.
    On its present heading how can this all not end badly???

    • cooldude

      The interesting thing is that the European project is going exactly according to plan. How do you get a bunch of nations who have been in conflict for thousands of years into a federal union where they all lose any semblance of sovereignty. Well firstly you start gently with economic and trade ties and then you flood the newer members with easy credit. During this liquidity created boom you get them to sign up to even closer ties ( even if sometimes it takes two goes to get things passed). Then you introduce the single currency with the clear knowledge that it is designed to fail and cause sovereign bankruptcies much like we have seen and are now seeing in Portugal. Then you tie the individual countries into unpayable debts and turn them into feudal federal states of the new Europe which is also just a part of large land masses to be eventually put under a global governance. This is the agenda and it is ALL deliberate and carefully planned. According to this plan things are going well for the banker elite globalists and the next step will be the destruction of the middle classes through the now officially approved “bail in” banker heist. This is all happening and it is very real.

      • bonbon

        Sounds like a speech from Draghi. It is not going as “planned”, it is a disaster, and of course they plow ahead with Empire (notice the Surveillance). Panopticon will not make it work.

        British East India Company chief Shelburne tasked Gibbon to write “The Rise and Fall of the Roman Empire”, a blueprint for the British Empire, but to identify why collapse was inevitable and how to avoid it. Today that is in full swing. But collapsing it is.

  42. As for Anglo Tapes…

    Lesser events than the Anglo tapes succeeded to bring millions of people onto the streets in Egypt.

    The political-economical Junta in Ireland is still laughing very hard and the Fitzpatrick trial could already be in jeopardy.

    Well yeah…really? Surprise surprise.

    The legal principle of animius nocendi no longer seems to serve a purpose.

    1. Knowledge about the law which prohibits a specific action,

    2. knowledge of outcome or consequence of the action; and

    3. Intention of breaking or acting against the law.

    Good morning Ireland. It is quiet on the streets of Dublin, no Laser pointers flashing against government buildings the two single words…GAME OVER!… No, it is business as usual in Dublin. Peacocks flashing their feathers, and I smell Bullshit.

  43. Greg Normal

    Chomsky, at his recent Dublin Lecture, was asked why austerity was continuing across Europe, when it is obvious to all that it’s not working. His answer was facinating: He read a quote from Mario Dragi in a little known publication, that said, among other things that “the social contract in Europe is broken”. In other words the contract that existed in between employers and employees in Europe and the labour laws that govern them are being steadily eroded by what David describes as the “insider/outsider dilemma”. This claims Chomsky is the purpose of austerity, to shift power to corporations and away from people. Interested in feedback on this

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