December 2, 2013

Ireland's engines start to fire

Posted in Irish Economy · 109 comments ·

When we get a rake of economic numbers, it gives us an opportunity to assess where the economy is in the cycle. This new information should also be fed into our own world-view and we should change our minds, borrowing the logic from the great Keynes who declared ”when the facts change, I change my opinion, what do you do sir?”

I think these numbers are strong enough for people to begin to see that the economy is emerging out of the darkness.

For the first time in years, the economic data published last week was almost unambiguously positive. When Europe is flirting with deflation, the expression, ”almost” unambiguous, is good enough. More than that, the data indicates that we may be witnessing a build up of ”pent-up” demand, which could be released into the economy next year.

By far the most encouraging figure was (and is always) increases in employment. A jobless recovery is no good to anyone, but the idea that the economy is creating employment opportunities is something we should truly rejoice over.

The figures showed that 58,000 more people have jobs this year than had jobs last year. That is 58,000 people who have a job this Christmas who didn’t have one last year. Consider the extra number of families that have someone working this Christmas? Of these new jobs, 53,000 are full-time.

One worry is the on-going generational divide. Young workers are not getting a fair chance and they are still – in the main – caught in a limbo-land of not having enough experience to get a job, but not having the job to get enough experience. This column has written before about this poison – one of the most significant challenges for, not just this society, but all Western societies.

The largest annual increases in employment were in the 35-44 age bracket with 21,000 new jobs, and the 45-54 age group with 18,400 extra jobs. Younger workers continue to struggle, with more than 9,000 jobs lost in the 25-34 age group over the period. The long-term impact of kicking around looking for work and facing daily rejection in one’s twenties is unambiguous. US data indicates that people who experience long periods of unemployment in their twenties never recover in terms of wages or income and always lag behind those who have jobs in this early part of their working life.

However, I will come back to this in other columns, for now let us focus on the positive.

One other encouraging development is that the labour force continues to grow. The number of employees in Q3 2013 was 1,573,600, up 27,300 over the year, and the number of self-employed people was also up 30,100 to 309,900.

In general, therefore, income is up in Ireland.

If we take a back of the envelope calculation and take the data published on Tuesday on average weekly wages and then multiply this by the number of new jobs, we get an idea of the sort of increases in incomes we are seeing in the country.

Taking the full-time jobs figure of 53,000 workers and using the newest average weekly wage of Euro 675.53, we get an increase in income before taxes of just under Euro 36 million per week in the country.

Now here is the strange thing.

If income in Ireland is up, how come retail sales have fallen in the most recent month?

You would expect that if people’s income rises, we go out and spend it. But this isn’t – or at least hasn’t – happened.

In fact, there was no change in the value of retail sales in October when compared with September, and there was an annual decrease of 2.1 per cent when compared with October 2012, and a drop of 0.9 per cent in volume terms, after adjusting for inflation.

So out on the main street the increased incomes aren’t being spent.

Where it is the money going?

Luckily, we have new figures from the central bank, which may give us a clue. Deposits from the Irish resident private sector increased at an annual rate of 7.6 per cent in October 2013, following a rise of 8.5 per cent in September.

So that’s it then, the money is being saved. That makes sense doesn’t it? People are saving their new wages. This would make sense because if you have been out of a job for a long time and you get a new one, you are likely to have been traumatised by the experience of not having cash, so you are likely to hoard your new income.

But unfortunately, it isn’t that simple or straightforward because, household deposits, which account for 51 per cent of private sector deposits, actually declined by 0.5 per cent over the year to October 2013. But deposits from private companies rose by 4.9 per cent.

How do we explain this conundrum?

Let’s dig a bit and think about where else the new income could be going.

Let’s look at most recent credit card statistics. We see that the outstanding amount on plastic is falling (and has been for some time). This indicates that people with credit card debt are paying this off and therefore, not spending and not saving really either (see panel). Therefore, the deleveraging cycle goes on and the average person is trying to clear their decks of debts before they start again.

But at some stage this will stop and people will start to spend a little bit and then a little bit more. This is part of the ”pent-up” demand, referred to in the opening paragraphs. As the cycle continues, more and more income will be spent. This might come as a surprise to retailers when it happens, simply because they have been battered in recent years and don’t expect fortunes to turn.

Equally, the fact that Irish companies are saving significant amounts also implies that we are likely to see a substantial increase in investment and hiring in the years ahead. After all, when interest rates are 1 per cent, what’s the point in saving capital that can be put productively to use?

Increased spending from ordinary Irish companies is the other reason, that we should be more confident about the outlook for the economy.

Ultimately, people who have secured new jobs, or those who have simply held onto their positions, will become more confident and begin to spend some of the cash they are now saving. In addition, they will stop paying down credit cards and become more comfortable with their debt position.

This economic tipping point could come as early as 2014, simply because the gains in employment are significant and, with our largest trading partner, Britain, motoring along, external demand for the stuff that real Irish companies produce is buoyant.

Equally, as the Eurozone flirts with deflation, interest rates will stay low so the housing market’s recovery should remain on track, for a while.

It would be a shame to end such an upbeat article with a warning, but unfortunately there is one and this is the likelihood of another bank recapitalisation next year as our big banks fail the ECB’s stress tests.

In my view, only a miracle can prevent this.

However, there is a solution to this. By digging in our heels and insisting with all our power that the Eurozone pick up the new tab based on financial solidarity, the government could actually quarantine the still toxic banks and allow the long awaited recovery to take hold.


David McWilliams hosts the Winter Tales’ book festival at Dalkey on December 7. Tickets

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  1. dorn

    Are these rising employment figures for Dublin or for the whole country? While I realise that any data I provide is anecdotal at best, everyone I have asked (all of them are outside Dublin) has only seen more businesses closing and more people being let go. I haven’t heard of someone outside Dublin getting a new job (or a payrise) in months, and it appears to be a very rare occurence for the last few years.

    • Adelaide

      I travel the country as part of my job and I concur. When the evidence before your eyes contradicts the official NEWS it’s difficult not being sceptical. My own personal barometer is traffic. Remember the traffic in the boom years. Yikes! On my own anecdotal evidence large swathes of the country are eery wastelands. I shall be keeping an eye out for increased traffic in the New Year.

    • CorkRob

      Exactly DORN!
      I walked around Cork City at the weekend and was shocked at the number and spread of closed-down retail businesses. I tried to work out how many long term and lifetime jobs had been lost and it was huge.
      If Cork city centre is a national barometer, we’re still in deep trouble.
      There are occasional announcements heralded by Government about “hundreds of new jobs” being created, invariably “Over 5 years”, but most seem to be Call-centre positions on minimum wage.
      A trip to CareerZoo in the National Exhibition Centre in Dublin last Spring confirmed my fears about the “Thousands of jobs on offer” – I’d guesstimate that over 90%+ were solely for “NATIVE Speaking Foreign Nationals” in Call-centres serving Eastern European & Asian markets.
      Not much there for a middle-aged English Speaking Irishman with 25 years of Sales/Marketing Management experience. Try raise a family of 3 kids on €8.65/Hr.
      The only option for many like me is to try and set-up your own business (Not as a “Consultant” !!!) and create your own income, but the Social welfare trap and a lack of Joined-up thinking between Government Departments hinders rather than helps.
      David, you should suspend your travels to the USA/Far East/Germany and London and spend some time in “Real Ireland” and familiarise yourself again wit the realities that STILL face Middle-Ireland on a daily basis, joblessness, dropping house prices, lack of bank credit, stupid levels of governmental bureaucracy and a sense of deep frustration that those who led us here are getting away scott-free and the Government are complicit in doing nothing about it all.

      Call centre jobs for Minimum Wage foreign immigrants are not and will not be the solution to our current woes and Dublin is a cocoon.

      • Adelaide

        ” middle-aged English Speaking Irishman with 25 years of Sales/Marketing Management experience”

        You’ve just described a friend of mine who was made redundant last Christmas. His constant complaint is the dearth of viable jobs on job sites. It’s all ‘opportunities’/'interns’/'training’ etc and those few jobs that are fulltime are too poorly paid. Luckily he is in a financial position not to have to demean himself for ‘opportunities’ at his age.

        Is there a breakdown of these recent 53,000 fulltime jobs?

  2. stefanooldrati

    It should be analyse if how much of these jobs are from foreign companies, or Irish companies (seen the stress to promote Love Irish Food, with no vision from my pint of view), and how many are from which size of companies to see if there is a boost in start ups and how long these start ups are in god health and able to set strategies for themselves for the short and long terms and with which depth and perspective.
    I hope also these people won’t fall for new “mortgages” attracted by short terms Banks interests…
    Anyway good that jobs production is back, I hope also Irish will stop bidding on houses to spend their money uselessly, and adopt the french-italian attitude to offer just what is the asking price or less depending on the status and location of the property.

  3. Macbeth

    ‘Is this a dagger I see before mine eyes, the handle towards my hand …I see thee still…etc ‘

    When I finished reading the article I thought it had been written by Alan Ahearn , a conformist to the governance policy by the government . I was shocked that our host has changed his clothing to a soft , gentle poodle fornicating to the Dept of Finance .

    I hope this does not develop into a trend .

    This site has been renown to provoke men to think .

    I found this article a damp squib and not challenging the findings made public by the government .

    As always I will always read what is and will be written by David however my reservations had to be printed this time.

    Were conforming articles to be continued as in this piece complacency would set in like dry rot and we know where that leads us , down a hole.

  4. The qualification of employment includes a broader spectrum of people that work and are part paid by social welfare and a stipend from a temporary employer. So many social welfare recipients are considered ‘in employment ‘.

    This reminds me of what my Ukrainian client told me last week in relation to the current strife : ‘Currently Ukrainians are paid in employment to work and if they join the EU they expect the same money but this time not in employment and on social welfare’ .

    I agree to work is better but is there a better way ?

  5. eamonnmoran

    Hi David.
    I keep an eye the Youth and 25-34 unemployment stats a bit. You are right to point out the decrease in 9000 jobs for those between 25-34 as a concern but there is good news at last for this age group too if we dig a little deeper in the stats.Its true this group and the 15-24 groups have been hit worst by unemployment and emigration but the good news is that the numbers working in the 15-24 have stabilised and the unemployment figures for 15-24 (74k to 64k in the last year) and 25-34 (31.6k to 29.9k) in the last year has been decreasing.
    The main reason for the decrease in employment for the 25-34 is a demographic one. There are a lot more 34 year olds (The Popes children) than 24 year olds in the country. So when one year passes a lot more slip out of the 25-34 year category than enter it.
    One would expect that young people would get a larger proportion of new jobs than older people as the upturn starts and this hasn’t happened so far in this emerging upturn. Looking back the main lesson we can learn from this recession for young people is that there should have been more inter generational solidarity in order to curb forced migration. When faced with the only two remaining options, to cut jobs or cut wages, most employers opted for the for the former option. This led to the majority of the burden of the recession being forced on young people who were first out of jobs and first forced out of the country. We could do things now to encourage employers to opt for the later option in future downturns (contracts of employment allowing salary reductions or hourly reductions in recessions). This would actually reduce the depth and length of those recessions as younger people spend more of the income they earn it would also have reduced the levels of inter generational inequality.

  6. Stiofan

    Yes David, the patient occasionally has a great day on the way to the morgue. The drugs are not working, the therapy is a waste of time, the prognosis deteriorates, and then for apparently no reason the patient gets colour in his face, is sitting up in bed chatting, suddenly animated and ‘almost’ his old self. My dad did all that, and the next week we went to the funeral. The reason was, they say, that the underlying condition remained unchanged (he had a stroke and cancer). In the case of Ireland it appears that the prognosis has not changed. The FG/ILP coalition has not attempted to address the malady, which has entrenched itself since the ‘change of government’ (hahahahaha). The patient has no new behavioral patterns but there is ‘pent up demand’ for the old ways (borrow, spend, move to interest-only, borrow more to pay interest on legacy debts, repeat). There is a view promoted that we are ‘almost’ at the end of a prolonged period of bad weather and things will blow over and get back to ‘normal’. But nothing has changed, has it? My old dad looked a good bit better, but the broken part of his brain and the spread of recalcitrant cells wasn’t stopped. The facts had not changed. It was great to experience those final moments with him but only a miracle could have saved him, and he is greatly missed.

    • Stiofan

      By the way, anyone talking about re-re-capitalising ‘our’ banks (hahahaha) has lost me. Capital is the output of capitalism, not the input.

    • cooldude

      Very amusing Stiofan and I reluctantly concur. The reason I am reluctant is because I would love to see the economic situation improve around here but I”m not too sure that’s the case. Didn’t the central bank come out with figures of around 400 NEW cases of mortgage arrears every month. This shouldn’t be happening if the economy is actually recovering. Unfortunately the government are always messing about with employment statistics so it is difficult to get a clear picture from them. Schemes like Jobbridge are deliberately designed to massage the figures to look good. Until there is some real proof of this phantom recovery I will remain dubious.

      If one of the banks need to be recapitalised I’m afraid we will probably see the “bail in” legislation, which is now law across the EU, brought into action. You don’t initiate legislation unless you intend to use it. It’s there, it’s law and they will use it when it suits them. A depositor in a bank is simply an unsecured creditor and will be last in line in any sort of a crisis. Sorry to break the happy happy mood but as they say facts is facts.

    • george

      I totally agree with you. Personally I think that we are covering the cracks but the structure is as unstable as when the big bubble burst. While we have retired public sector people, who have themselves privileges nobody else gets, like lump sums and pensions linked to their former salaries, things that this Country or probably no other Country can afford, in real terms it seems to me we are going nowhere. Not to mention quangos, spin doctors, and private professionals working within the structure of the public sector, and the Bank situation, etc.
      A friend of mine, who was in the teaching profession, got early retirement and approximately a lump sum of 100.000 euro, plus he is getting a pension almost equal as his former salary, plus approximately accumulated holidays of 6 years in thirty years of service. Compare it with ordinary people whom from two years time from now, are going to have to wait until 68 to get a pension without any lump sum, and get an ordinary state pension no linked to what they used to earn. Is it fair that the highest rate of pension that the State pays, in some cases is more than five times (lets say this is reasonable?) than the rest of the population? So if the former is expected to be perfectly all right for the majority of the population, why others are getting so many privileges funded by the state i.e.: the rest of the tax payers? Why don’t we put things like this to a referendum and laws can be changed, to have a more equal and fair society, and to put a stop to such a waste of energy (money that we have to borrow ) from the State?
      So now soon we’ll be going back to the financial markets, to borrow money to keep the State funding an economic structure that the productive sector by itself cannot sustain, with the hope that we are going to generate such an economic growth that will allow us to pay for the huge amount of debt plus interest we already have accumulated, and is still going up . Isn’t it another kind of bubble that sooner rather than later is going to explode in our faces? Am I totally wrong (I even hope so!), or this so called “recovery” doesn’t make much sense because as you said, te real causes of the problem has not been properly addressed ?

  7. michaelcoughlan


    I don’t want to appear negative but I wouldn’t believe daylight out of the Fail Eireann politburo.

    Ireland is taking in less tax than the cost of running the country. Unemployment levels may have fallen because of the record breaking levels of emigration remember. More people at work? I wonder what are the quality levels of these jobs re salaries and prospects? Ireland has merely parked the promissory note payments. No mention of the monetary runaway madness now brazenly in your face from the Fed in the US and its potential impact on Ireland. No mention of the enormous bad bets about to roll over AIB and BOI.

    Methinks David that Ireland could be in the uptick bull trap phase of the super graph you published two weeks ago.


  8. pauloriain

    Hopefully you are right David.

    However, what about jobbridge and the internship program? Were they not given a boost earlier on in the year and haver they distorted the figures?

    Of course, if the government are massaging the numbers, you could understand what they are trying to do. We have effectively an over correction, which has led to less spending. Creating a feel good factor to induce some economic activity is a worthy gamble on their part, given that nothing the lack of other growth inducing factors.

  9. Dorothy Jones

    You are right David
    There is an increase in work now for our students. Even oul’ wans like me have been hauled back from Teutonic sojourns to the shores again.
    It does seem as if this is Dublin based, but I hope that this will be the case in the rest of the country.
    But Jaynie, don’t be encouraging people to run up credit card bills.
    I haven’t had a credit card for a long time and don’t ever hope to have one again.
    Anyway… lets hope that struggling retailers will have the benefit of any new confidence.

  10. 5Fingers

    M50 traffic barometer suggests things have got busier over the last year. Definite peak times to avoid and this despite the upgrades in the last few years.

    Is there a metric out there of the average salary on these new jobs. Has it remained steady?

    Where has the increase occurred? Exports? To where?

    Rents are climbing too. Pretty fast in Dublin as well.

    Could it be that Ireland is now so open that upward and downward movement is affecting us disproportionately?

  11. Adelaide

    I would suggest that rents are climbing because wages are falling. Fifth year consecutive drop in average wage which now officially stands at 35K pa. On that basis the average house price should be 105k. Either house prices drop to this affordable price or the recent 53,000 low paid workers will join the rest in the rental market. Too poor for an inflated mortgage but not so poor enough to rent. In this scenario Buy to Let landlord cash buyers will continue to buy up properties and prop up house prices but the ‘fundamentals are not sound’ when an increasing and sizable percentage of the workforce are priced out of the housing market. A house price correction is inevitable.

  12. [...] have risen, genuinely. It isn’t all down to emigration and part-time employment, as explained by economist David McWilliams. Manufacturing growth slowed in November but the Purchasing Managers’ Index has been steadily [...]

  13. username1

    Anecdotally, I’m not hearing about many, if any, getting new REAL jobs.

    Might the ‘new’ job figures have anything to do with the many who’re leaving jobs to emigrate, jobs they were over qualified to do, in many cases?

    Somebody leaves a job, but he/she makes no formal announcement of such to the relevant government related bodies. Might he/she still be regarded as an employee in the system? Somebody replaces him/her, ditto a new employee is in the system? In effect, the negative human story of emigration might be unscrupulously getting used to generate false positive spin? In other words are our positive job numbers just a symptom of a deeper malaise that we don’t want to investigate because we so want to believe a good news story?

    Of course, one has to take into account the same system was probably in operation last year, but if emigration is up a notch this year it might be skewing the ‘positive’ numbers proportionally upwards? There surely would have to be some positive upward retail figures?

    Might there have been a change this year, relative to last in terms of tabulating the numbers, i.e. it would mean that the same system would not be in operation, at the D of SP or CSO level?

    Clue: The medical card system doesn’t know how many cards it shouldn’t be paying for because people don’t inform the HSE that they’ve emigrated.

  14. Paul Divers

    Sligo jobs on FAS site:

    Proving this article is delusional.

    • Adelaide

      So the article reads.
      1) Of the annual 58,000 increase in employment, 30,100 work for themselves, and 27,300 work for employers.
      2) Assuming overall, each is earning the official average wage of 35K per annum, that’s a total 39 million in extra income per week.
      3) It’s only a matter of time till this extra e39m income makes its way on to the high street and kick-starts the economy.

      First, states the average wage/salary offered on the Fas job site is 22.5k per annum which is a far cry from David’s assumption of 35K. 22.5k pa is not a far cry from Ireland’s 18k pa minimum wage for an adult.

      Second, what if many of the 30,100 newly self employed are like a friend of mine, given a modest lump sum by the welfare to start up her business back in January on condition she can not reclaim for welfare. Since January she has been officially self-employed (and there is one less signing on). Alas, her business never got off the ground and it’s off to Mexico for her in the new year (ps Mexico is booming, jobs aplenty). For the entire 2013 she had no income. I wonder how many of the 30,100 have equally zero income.
      Honestly, can one credibly assume that newly self-employed will on average be earning 35K pa in this recession?

      I hope I’m wrong and that this ‘new’ employment means viable sustaining incomes for our fellow citizens.

  15. StephenKenny

    Unless I’ve missed something, David’s assertion is fairly easy to check – someone just needs to find the statistics on outstanding consumer debt, do the arithmetic and it’ll show that these full time jobs are real full time jobs, or just some low/zero income faux job.

  16. redriversix

    Hard to know what to write at 07.30 in the morning after you have gone through the daily routine of searching job sites for gainful employment……

    I suppose opinion depends on where you are in society & what circles you move in.

    staring at the screen , I wonder is “there any point in posting any opinion” ?

    Less Companies are closing because less are starting up…..

    1000 souls a week are leaving Ireland for better opportunities abroad [ they hope]

    Government still refusing to deal with national or personal debt crisis which is growing.

    Until Government starts being honest & faces up to the social crisis across Ireland nothing will change………..

    “cursor flashing in the corner startng to annoy me,talk to you later”

    • michaelcoughlan

      Hi Barry,

      Keep sane and keep posting. I find your posts the most insightful and realistic. I find them to be substantially much higher quality and consistent than our host even.


    • 5Fingers

      Totally agree. Something is a bit odd. Cracks are merely being plastered over, but the underlying structure is dodgy. Personally I think our host is stirring the pot.

      I am not interested anymore in headlines that change like the Irish weather.

    • Ryu Hayabusa

      There is no functioning ‘government’ currently. A dead hand guides the tiller!

      Enda broodingly hangs from the prow of a latterday Marie Celeste. . .

      A good ship foregone in fine weather and apparently ably crewed.

      Ranks up there with the Irish Banking ‘Bailout’ as one of history’s great imponderables.

    • Paul Divers

      Hear you loud and clear Barry. Keep writing.


      I’m there…

  17. michaelcoughlan


    The title of the article caused me to think about the fate that befell the Titanic and her sister ship the Brittanic. Both ships sank by the bow with their ENGINES ROARING.

    Hope its not a metaphor for things to come.

    • DB4545

      The Titanic? I did the Titanic experience tour in Belfast a while back. Let’s just say that it needs a bit of disneyfication. While I have a bit of a soft spot for our Northern Brethren showbiz is not their strong point. I hadn’t the heart to tell them that the f**king thing sank.

    • george

      The name of the game is “greed”. Because the more the elites control the basic necessities of the population, larger is the loot to be divided by relative few people.
      The greed of few over the needs of the most, pervasively prevails.
      In my circle of friends there are six persons whom during the boom were so well paid in their jobs, that most of them invested in bank shares, and some in property to let. As if their secure jobs, and their high salaries, and excellent working conditions weren’t enough security, they wanted more and more.
      All of them lost everything they invested in bank shares, but they didn’t loose their homes, neither had to dramatically adjust to a lower standard of living, because they all kept their secure jobs and money keeps coming on, although diarrhoea was a common ailment for long time .
      And they did it, because they were comparing themselves to even bigger fish, that even at present they try to emulate in their appalling behaviour.
      Greed for the sake of accumulating more and more in the hands of few, at the cost of destabilising the social equilibrium any civilised society should aspire to. And that eventually even could bring us to deeper levels of degradation, like in Hong Kong, where poor people pay 150 dollars per month, to live in a cage of 1,5 sq meters.
      It is not happening in the west yet. But look what already is happening in Spain, Italy, and Portugal, where all the millions of people who lost their jobs, only get limited unemployment benefit for few months, and where in many cases three generations of people end up living under one roof, and sometimes sharing between several of them the pensions the elderly in the family are paid.
      Isn’t it a shame that this is happening in western Europe, and that the EU don’t demand from all Governments in the EU a basic standard of social assistance; as the people in Ireland, England, Germany, and other Nordic Countries get!.
      We suppose to save the bogs, and the wet lands, and the habitats for endangered species, and we regulate and impose sanctions to Countries that don’t comply with it. And what about unemployed people in Spain, Italy, Portugal, and even in Poland.
      Don’t the respective Governments and the EU care about them?

      • Ryu Hayabusa

        The price of ‘progress’ …Such brave citizens taking one from the team. And when they sink without trace.. oh well, ho-hum Collateral damage.

        At least to the little alien chappy yanking on the levers inside Herman van Rompuy’s head!

        Spanish Youth unemployment :56%
        Greece Youth unemployment :63%

        Both have unemployment levels north of 25%.

        The raw statistics don’t lie. This crumbling edifice won’t endure.

        • whatamess

          It can’t endure Ryu!

          but our host has a solution:

          “However, there is a solution to this. By DIGGING IN OUR HEELS and insisting with all our power that the Eurozone pick up the new tab based on financial solidarity, the government could actually quarantine the still toxic banks and allow the long awaited recovery to take hold.”

          more stuff from La La land and Twinkie Winkie

          Bit of REALITY,as i see it

          We are HOSTAGES to unparalleled financial fraud by satanic vermin.These “addicted to money” rats are relentlessly spreading their Weil’s disease and a tandem attack of looting our countries.Without intervention with GS ,THUS providing John Q Public with real protection, Bubonic plague will devastate humanity !

          there’s surely a valuable lesson to be learned from the following link

          Let’s change the banksters’ nature and in doing so, change our future!

          • whatamess


            “the economic data published last week was almost unambiguously positive.” That brand of koolaid sure has a kick..but it’s like “the mule’s” kicking of late!

            Economics has its own gravity. It is as powerful and immutable as that of physics.”We’re in freefall and never a mention of a safety net ,by most?/

            And there’s more ‘fire’ from a scout troops’ campfire or from my a** the morning after a vindaloo !

            I do appreciate our host doesn’t wanna be a Joe Duffy full of gloom and doom,but SO many people TRUST his assessment of the status quo and this “farticle” stank to high heaven,i feel

          • whatamess

            As I’m reading about him,let’s have a quick look at one Jon Corzine ,of MF Global and G.Sachs ..sounds like he could star in The Sopranos i know, and while Jon too is a gangster ,he’s not Sicilian,but he’s another leveraging / hedging /securitisation magician and mis-selling’ fund junkie, snorting lines of ‘complex’ derivatives and swaps up his greeeedy nose and certainly ought to have done jail time post MFG’s bankruptcy ! Corzine not going to jail and JP MORGAN’s recent fine and get outta jail free card helps me to better understand the absolute necessity to use a top down approach of splitting these zombie TBTB banks. There’s just no other way or if there is, i just can’t see it

            Tyler Durden told us recently the Volcker Rule intends to scrap “portfolio hedging” by July’14, but that’s not even close on sufficient’s just more window dressing…the public deserve to be protected,in a REAL way !

            2mins and it sums up future pensions and the future horror for’unsecured shareholders’

            and just for nostalgia and the behavioural insights of a vulture


          • whatamess

            28 mins on businesss owners sharing their terrifying experiences and REAL life ramifications of being mis-sold SWAPS

            caveat subscriber !


          • michaelcoughlan

            Hi whatamess,

            I published on this blog after MF Global failed about Corzine and on that occasion McWilliams responded. I had referenced an article where post MF Global there was a rumour circulating that Corzine was contemplating setting up a hedge fund!

            I worked backwards and provided the hypothesis that what in fact had happened was GSucks found itself with a load of worthless securities on its balance sheet when the European debts they had “invested in” turned out to be worthless. They need the problem solved. Corzine is an ex Gsucks man and He was sent into a cash rich MF Global and the first thing he did was buy all the worthless stuff from Gsucks.

            MF Collapses and Corzine takes egg on the face with a nod and a wink from his buddies who he got out of jail in gsucks that he would be sorted down the road. Then the rumour goes around a few months later that he was setting up a hedge fund!

            I made the connection and McWilliams response was that it was surprising re corzine.

            As for splitting the banks you yourself are living proof why it will never happen prior to an enormous crash in the first instance. You are articulate and capable and instead of being proactive all you do is spend all your time talking yourself up your own arse on McWilliams’s website.

            Let them fail and build new banks independent of each other.

          • whatamess

            Ah yeah,

            The ” just let them fail” genocidal crew

          • whatamess

            Yea,i get it now…it must gives you peace of mind ,as would alot of delusional belief systems,that post crash ,everything will magically reset “in a sensible way”….that’s just the stuff dreams are made of Michael and anyone else reading this! you gotta quit that optimism bias and remember without a change NOW,the system of empire that will emerge from the ashes,post CRASH,will be the very same empire as before…

            we can be brave NOW and pull the proverbial pin and if we don’t ,the trailer ,loaded with debt will,unquestionably,take us unceremoniously over the cliff!!

            The future doesn’t have to look that way…we can choose an alternative

            Glass Steagall is the crucial first step!!!

    • michaelcoughlan

      Well done Adam. Humble pie on the menu for me bonbon.


    • 5Fingers

      Yes, Thorium Reactors make a lot of sense once they manage to get the first ones rolling. Initial costs of thorium is much higher than uranium but once you get it rolling, you can breed more reactors from it at lower cost. India is the natural starting location for them as they hold 25% of reserves of the usable stuff. Thorium cars? eh….no. Here is something that discusses the practical issues involved.

    • bonbon

      Not a bad intro. Canada’s CANDU could be converted to Thorium. But the method of energy extraction for the Auto, is quite different to the power reactor setup : Laser Isomer (optical gamma light) pumping, also well known in “other areas”.

      And the argument that Thorium was dropped for U and Pu for bombs is plausible. Britain has hundreds of tons of Pu which is an excellent fuel for the right kind of reactor, by the way.

      Funny that DMcW neglects to mention engines, power, energy, and above all fire. Monetarism has quenched the fire of imagination and progress in many a Tiger.

  18. Paul Divers

    Wow roaring. Ya hear dat lads. Roaring they are.

  19. Ryu Hayabusa

    Guten Abend.

    Fine Gael election manifesto…

    Your money or your life… preferably both! “I’m the dandy highwayman you’re too scared to mention” …the way you look you’ll qualify for next year’s old age pension,, but not if we can help it you won’t!”

    “Stand and deliver… Your money or your life!”

    Ich werde es allen mitteilen.

  20. 5Fingers

    There is perhaps one message I get from this article. Basically the unreliability of news. It flip flops from day to day. Next article will be down, next will be up and so on.

    Look for opportunity. Never mind naysayers even though it may seem to explain current bad luck. Either way, its your ass and you need to get on with it somehow. I am not being an apologist for the nonsense we see around us at all, but I am saying be careful you do not shoot yourself in the foot with a constant diet of bull$hit news and general negativity. Focus on what you can do. Invest a little here and there in terms of some good will or a helping hand. It does come around and by the bucketload if you give it a chance.

    • bonbon

      The message is Brutish liberalism. Play monkey for the “news”, prance after the bubble.

      Rather daft message I would say, what?

  21. redriversix

    European bad bank debt rises to 1 trillion dollars or euro…a increase of 100 billion.

    No company . business household or Country can survive debt…

    We can cut costs,increase turnover but if you do not increase profit margin , you have no additional funds to pay down debt.

    you slash prices which reduces margin but increases turnover which leads to increase in employment but only temporary as you are trying to get people to spend more for this month,which may look good on the balance sheet for Nov & Dec but January & february , turnover collapses.then you hold on to cash,delay vat payments push suppliers out 90 or 120 days hoping that things will get better after Patricks day.

    Which is the better business ? A pub in town which has to turn a 100K per week to break even ….or a pub in kerry doing 3K a week where you can net 1200 euro per week ?

    My first experience of “buying turnover” was Italia all remember the hype,happiness and excitement of our first world cup.Pubs were packed,flat out busy.

    We turned over huge money .thought this was great

    at the end of the summer we compared figures with the same period the previous year,labour costs,stock,glassware,cleaning products & security.

    Believe it or not we would have been better off had we not had the World Cup..!

    Turnover during the week, say tuesday,Wed & Thurs were match days i.e Ireland,England and someone else in our group, were packed…but turnover for Fri,Sat & Sun dropped but you still needed minimum Labour cover. On the match days you were paying overtime to have staff in on their days off,and you had to pay well because they did not want to work if these were their days off !

    In looked great..but when Figures broken down & compared year on year in Oct..not so great

    Apart from maybe a good P.R exercise with free food etc..from a cold business look over the didn’t work out so good.

    I signed on yesterday which I do every month until i get a job..I noticed yesterday I don’t have to sign on again until 25th February.

    Is this another way of keeping live register figures down for January ?

    People always “eat & drink with their eyes” a old saying in the Bar Trade..the outside of your premises,if attractive looking will entice people inside… than you try & get them to spend.

    Ireland is doing the same thing may look fine..but if the engine is fucked..the ship wont sail..very few customers get to see the engine room.

    • Good day to you RR^

      Debt is the killer of any economy as you observe.
      The world economies are debt saturated and suffocated by even a 1% interest rate as the debt is so huge.

      As the world issues 97% of its money as a loan the effective debt is the worlds total money supply less that little bit of commodity money. you know the coins in your pocket and you neighbours gold and silver coins stashed for a rainy day.

      Until the money system moves from debt based fiat currency to free competition in honest money there is no respite from the debt, no solution to the problems. The more currency issued by the central banking system the greater our enslavement.

      Individuals can free themselves from personal debt and the country could adopt an honest form of money to free the people in general.

      Your debt based currency enslaves you.

      • bonbon

        Contrary to Hayek’s road to well nowhere, Glass-Steagall is about giving the private entities their debt to do whatever they want with it, sans any guarantee whatsoever. It is not RR’s nor mine, nor any citizen of any republic’s, debt.

        As for subjects of some Crown, well they can decide on that issue too by putting the subject of Glass-Steagall on the table.

        • Odious debt can be returned to the lender without complicating the discussion introducing GS at every turn. GS is a red herring, a smoke screen.
          Just what the central bankers what to divert our attention to. Are you a fan of central banking bonbon?
          Credit money is debt. We need a return to commodity money of integrity and intrinsic value.

          • bonbon

            Odious debt is poisonous for the crowd that get it back, and deadly for the citizen who are being force-fed it.

            Still the practical man, pragmatic idealist, cannot let go of that monkey trap bait, the gold ingot.

          • whatamess


            Why the knee jerk reaction to the mention of debt or credit money?Debt is a sine qua non of expansion?without credit,growth would be snail speed?

            As this is more your forte,can i ask Tony,is there enough gold to support an expanding economy and population or will it naturally result in deflation??If the answer is there is insufficient gold, we will then be SUPER reliant on gold production,to keep pace with expansion,especially if there was rapid expansion????or the limited amount that does currently exist,will if rapid growth emerges,skyrocket,BUT at the cost of deflation for everyone which just hold us all back and a strategy that will ,’intrisically’ serve only to suppress humanity’s progress?

            Tony,this is a not so famous,but a well known Cork saying:

            “god bless us and save us says michael john davis ,they’re trying to persuade us that herring are fish”


  22. Increases in job numbers do not necessarily lead to a growth in income.

    Canada goes sideways in income even as job numbers are better. Information shows the standard of living in Canada is now at 45% of what it was in 1070.

    strange how that correlates with the total abandonment of controls on currency production in 1971 when Nixon abandoned the vestiges of the gold backed US dollar freeing us to the dubious pleasures of monetary inflation known today as QE to the nth.

    • bonbon

      That change was not linear, straight line stuff, rather it became highly non-linear when in 1999 Glass-Steagall was repealed. Nixon started a snowball, but the avalanche hit after 2000 then the ice-age of credit freeze hit after Lehman.

      Let’s end the iceage of massive “frozen liquidity” and re-instate Glass-Steagall. It will then be hard to believe what a cold pile-up it was.

      Hamiltonian credit systems are what the Holocene is to the paleolithic!


    Informative reading on the way things really are rather than imagined

    • bonbon

      Don’t get stuck in the present, the way things will is the life-and-death issue.

      That is that Glass-Steagall is all about, opening the door to the knowable future.

      Animals have no future (or past). Let them not make animals of us !

      • Typical gobbly gook response of a programmed mind. One that no longer thinks for itself but is told what to think. No future there.

        • Paul Divers

          Actually his first sentence makes perfect sense but you are so sure you don’t need to pay attention. Anyway you will not be around for much longer so it means nothing. Ashes to ashes Irish Brother.

          • Well I am pleased for you that you can understand what he meant to say.

            You are so sure that I do not pay attention?

            Anyway if you want to ignore him be my guest.

            Christmas is coming and the winter solstice. The future looked brighter to some, 2013 years ago, and for others it will be a fact of life for the 6 month after the 23rd.

            Let me be the first to wish you happy Christmas as we take note of the Gospel(good news) message.
            “Peace on Earth and Goodwill to all men”.
            Blessings to All.

          • bonbon

            In his Apostolic Exhortation Evangelii Gaudium, Pope Francis calls upon financial experts and political leaders from around the world to bring about a financial reform which defends the common good, and replaces the tyranny of a “survival of the fittest [economy], where the powerful feed upon the powerless,” where the ancient golden calf is worshipped, and where human beings are “considered consumer goods to be used and then discarded.” He admonishes that “it is the responsibility of the State to safeguard and promote the common good of society.”

  24. bonbon

    While DMcW seemingly dances to a numbers tune, London’s DT
    Liam Halligan Back to Promoting Glass-Steagall.

    Some disconnect, what?

  25. bonbon

    A goldbug above failed(?) to give the link to
    Glass-Steagall: Wall Street’s Permanent Bank Holiday

    “Reenacting Glass-Steagall will mean orchestrating the largest market crash in human history. We present six detailed steps that describe how we will clean up our banking system. Glass-Steagall is not the full recovery, it does not guarantee economic growth, but it is the first step forward–and it will ruin Wall Street.”
    As I repeatedly show, the first step is GS, then Hamiltonian banking. Massive credit for Reconstruction, but not for bubbles of any kind of proprietary stuff.

    This shows the genocidal Hayek (et al) attempt at a “sound money” credit squeeze for an ideal – literally billions would be willfully mirdered, thrown on a srapheap for an ideology that is pure Brutish empire.

    So let’s get on with orchestrating that crash, shutting down Wall Street and London, and starting a massive Recovery, sans Empire.

    Be not subjects!

  26. Here we go bonbon.
    you advocate crashing wall street and the economy and then continuing with a credit based , (read debt based) money system controlled by the central banking system.

    As you say GS is a baby step and does really nothing to solve the problem of debt, interest and derivatives.
    To control that and stabilize the economy we need to return to a commodity based money and ban fractional reserve banking (an issue you steadfastly refuse to comment about).

    Bonbon, do you favour central banking debt based fiat currency and fractional reserve banking? Yes or no Bonbon.

    • bonbon

      Of course Wall Street will be flattened, but who needs that junk.

      Now yes or no , do you propose a genocidal , and I mean willfuly murderous assault on our human species in the name of a “sound” ideal. That is what any kind of Specie Resumption, planned by a faction of the slavering elite, will actually achieve. Tell Tigers that’s what that faction is openly plannin – no golden window dressing.

      • you, as usual, do not answer a direct question with a simple direct answer .You twist , turn, prevaricate, but NEVER answer.

      • And you never deny that Hamiltonian credit and the first US bank was a central bank sponsored by the Rothschild’s.
        Or that it issued debt based currency just like today’s banks.
        You do not deny that you support fractional reserve banking.
        The only thing you deny is that people should have debt free commodity money.
        You do not deny that GS will collapse the financial markets.
        You do take a perverse delight in having the pension funds of millions and the investment of millions thrown on the scrap heap and their sustenance destroyed.
        “Who needs that junk”?
        It is the current policies advocated by such as yourself which are as you put it , genocidal. It is the continual debasement of the economy by the consistent debasement of the money supply by inflation that you support that is genocidal. The damage is already done bonbon by the like of yourself. now you seek to assign the awful blame to others.

    • Paul Divers

      I challended you all to ignore Bonboon till xmas and yet here you go again. No-one gives a toos about your macho ill advised idelogical jousting. It is irrelevent to most of us. You are selfish self indulgent individuals.

  27. bonbon

    The difference between a “golden” standard and Glass-Steagall is around 4 billion souls. Actually this is the stated intent of the greenie “limits to growth” mob. Coincidence?

    Smells like Empire to me. A Brutish one indeed.

  28. Paul Divers

    A Chairde,

    When Dalkey Dave blows off farticles like this the audience suspends belief. The comments tell me they know they are being taken for mugs. They should know better and have more faith in the hero inside.

    Mise le meas

  29. joe hack

    Haynes – on the the dangers of running engines with no oil, a must for every economist.

  30. bonbon

    Goldbugs may have chosen to ignore this : “Bail-in” Strikes Pensions in Detroit and Illinois

    Bail-in is now official EU policy, and there ARE going to raid everything to attempt to save the few.

    So flatten it with Glass-Steagall.

    That’s where Hamiltonian Credit then plays the key role. That is the central issue that the Austrian School just cannot get around with innuendo or recipe’s. With Hamilton Credit in full play there is no Hayek “road to serfdom”, and no Brutish “gold.standard”. But there is reconstruction on a scale that most cannot even conceive of.

    DMcW must redo his numbers game with the the chosen and knowable future and not get stuck in the past with that doomed banking empire. There are not enough people of all labor age-groups available for the reconstruction about to be unleashed.

    The doomed Brutish empire declares “too many youth” for the paltry jobs available, and “too many aged” for the pension system – so to the Camps with them. We had that in 1846, others in 1939.

    Flatten that system with Glass-Stegall and Hamiltonian Credit.

    Glass-Steagall: Wall Street’s Permanent Bank Holiday

  31. Swanie

    Hi David.
    I appreciate the piece you have written here, but you did not mentioned the announcements regarding the Central Bank of Ireland’s balance sheet assessments which were also released on Monday.
    These results are quite alarming and the piece you have written is distracting from the real issues which are still confronting this country.
    I understand that people don’t want to be reading about doom and gloom all the time, but hiding from the realities does nobody any favours in the long run.

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