January 19, 2015

Silicon Dock will float many boats

Posted in Sunday Business Post · 45 comments ·
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In the early 1990s, I used to take the Dart from Dalkey to Pearse Station every day. Back then, Lansdowne Road station was the frontline. It marked the border where the leafy back gardens of upmarket south Dublin gave way to the gritty urban reality of the canals, old railway carriages and the abandoned commercial landscape of warehouses, docks and run down scrap metal yards. It was an urban wasteland.

The only beacon was Windmill Lane studios. And what a beacon it was! This was U2’s recording home and U2 was the biggest band in the world, in fact the only Irish endeavour that was actually world class. We may talk about world class this and that, but U2 were and still are, the only world beating artistic project that this 26 county Republic has actually produced. Even now, 40 years after getting together, their upcoming world tour is practically sold out. In the early 1990s, just after the release of Achtung Baby, the fact that they were still recording in Dublin was one of the very few thumbs up for this part of the city. U2 aside, there wasn’t much to sing about.

Having worked over in London during college summers and seen how Londoners were retaking old industrial buildings and converting urban spaces into high-end residential and commercial hubs, it always struck me as odd that Dublin developers wouldn’t reinvigorate this part of the city.

Take the same Dart journey today and the place is transformed.

Architecturally, the transformation is complete, but something much more interesting has happened. An industry is there that didn’t exist before; this is enormously important.

The industrial story of this part of Europe, I mean north western Europe, over the past 100 years is the story of the decline of industries and the redundancy of not only large swathes of the industrial population, but the industrial landscape too. The birth or re-birth of an industry is a significant development.

According to the IDA, the multinational technology sector here is conservatively worth over 40,000 direct jobs and about €2 billion in wages, excluding indirect jobs. It also accounts for close to €1 billion in corporate taxation, despite the low tax rate. Regular readers of this column will know that I have problems with the paltry tax that these companies pay. (They should pay more on a corporate level and their employees should pay less on a personal level, but let’s leave that to future articles). The point is that the days when I got the Dart into Pearse, these industries didn’t exist. Today, the Silicon Docks are transformed.

For Dublin, the transformation of the human capital and know-how of the employees is much more significant than the visual physical transformation of this part of the city. New industries bring new knowledge, new ways of doing this, new networks and new initiatives. If you are working with companies that are world leaders then, by definition, you will up your game as a worker. You will learn things that you might never have imagined and you will meet people who you may do business with in the future on different projects.

For example, your chances of setting up a small tech business on your own are made immeasurably more likely by having experience in a big global company because you will be having conversations with like-minded people. You will see opportunities, you might get an insight into finance or marketing or sales that you might never have had.

All these aspects of business are crucial and have a profound impact on the people who work in an industry. These networks are not quantified by immediate tax take or number of jobs or whatever metric the political class wants to apply to their cost/benefit analysis of an industry.

Sometimes, what is important is the things you can’t measure! The soft things, such as experience, know-how, networks or simply knowing who to pick up the phone to as a potential buyer. An overlooked aspect of business is that we do business with people we know, therefore, thousands of people working together in the Silicon Docks in Dublin is an enormously vibrant commercial organism that has nothing but positives for the city and the city’s economy.

Just consider how much experience and knowledge is wrapped up in this roll call of leading companies that are present in the Silicon Docks: Google, Facebook, Twitter, Amazon, Yahoo, eBay, PayPal, EngineYard, Dropbox, LinkedIn, HubSpot, Yelp, Tripadvisor, airbnb, ZenDesk and Zynga.

All these are enormous companies. All have become world beaters and changed the way we live. Sure they are American and they are here for lots of reasons – tax being clearly one of the most significant – but every city deploys what it can to attract industry that it couldn’t otherwise conceive of starting up. They were not here before and they are here now and we are only beginning to understand what their legacy might be in terms of new industries and start-ups that will come from the people who work there now and go on to other things.

If you doubt the impact that an initial core of knowledge and expertise can have, consider airline leasing. This is not an industry you would automatically think of when you mention Ireland. After all, we don’t manufacture any planes. We don’t have any aeronautical industrial pedigree, yet 55 per cent of all planes that are leased in the world are leased out of Dublin.

How did this come about?

It came about because in the grim 1970s and 1980s, an Irish company called GPA managed to come from out of nowhere to be the biggest airline leasing company in the world. GPA crashed and burned following an unsuccessful flotation in 1992, around the same time I was getting the Dart to Pearse, however, its legacy has been enormous. Not only is Ryanair – founded by Tony Ryan of GPA – the biggest airliner in Europe by a country mile, but Dublin is full of seasoned executives who learned their trade and made their contacts in GPA.

In short, a significant industry was created by people who initially worked together in the 1990s, then branched out on their own and taught others the ropes. Now we have a niche business in the city.

The commercial legacy of the Silicon Docks can be much, much greater than the airline leasing business can ever be.

It may well be another generation until we appreciate that.


  1. David,
    There is indeed a lot happening with these new businesses. They are bringing a lot of know-how and fresh thinking in to the country.
    I run a monthly meetup for early stage and aspiring entrepreneurs and we see a lot of tech employees there. The next meetup is on Jan. 27 in Dublin. Details are here: http://johnmuldoon.ie/entrepreneurs-anonymous/
    John

    • BirdCourter

      So so true David, it’s fantastic to see the developments there.

      John, excellent initiative on the meet-ups. I’m just back from London and would be keen to attend. Am hoping to get an educational initiative off the ground but need engineering help.

      PS just so you know – the website says Tuesday the 26th. Worth a change as it may lead to more atending etc.

    • ps200306

      David, one question that must be asked is why indigenous Irish tech companies do not go on to be world leaders in their own right. The end result, indeed the end goal it seems, is to be cannibalised by larger multinationals.

      I agree with you that the multinational presence here has been of huge benefit. I learned the ropes with an American multinational with a small software division here in the 1980s. The indigenous software industry was effectively non-existent at that time — even by the early nineties its workers only numbered in the hundreds according to our IDA contacts.

      By the time you were taking the Dart to Pearse, I was working for a tiny startup, which grew to be one of the largest indigenous tech companies. After more than two decades, though, it too became a division of large multinational.

      Perhaps this is the inevitable outcome for any outfit which must eventually reach global markets in order to prosper. But maybe what we need to learn are lessons in how to do global marketing. And leave the techie stuff to the nerds (among whom I am happy to count myself).

      • Deco

        Ireland’s politicians don’t give a toss about Irish business. For one thing, they don’t have the patience.

        But lack of knowledge is rarely an impediment in the Irish institutional state. Lack of contacts might be. But lack of knowledge is never a barrier.

        The “Patrick Neary” principle is alive and well.

        Put him in the job, because he is useful at not doing certain tasks.

  2. michaelcoughlan

    Hi David.

    When GPA crashed Ryan got 34m in debt written down for 4m ponied up. Maybe the bankers and politicians could take a lesson that writing down debt allows for recovery as in the Tony Ryan case.

    Michael.

  3. aidanxc

    Having these multinationals is definitely a positive for Dublin but there is a down-side…

    We are at 100% employment in IT in Ireland and a shortage of staff is one of the biggest issues facing the industry. These multi-nationals are being enticed in by the IDA and then they poach staff from indigenous Irish companies. This is killing innovation in Ireland, the large American companies are not focused on innovation; they are focused on supporting their European sales operations. To boot, there is evidence that the multi-nationals get preferential treatment from the government and Revenue thus adding to the uneven playing field young Irish start-ups have to play on.

    • sdempsey

      A very good point Aidan. The problem that I see is that we have great incentives for FDI but not enough money available to grow indigenous firms. The reason that US firms can grow so quickly is the availability of large amounts of venture capital to ramp up hiring, marketing etc. Irish companies have to compete with smaller budgets and that’s a major impediment towards Irish firms becoming tech world-beaters. You also get the feeling that we don’t respect local talent as much as US entrepreneurs. This kind of thinking infects state agencies. The days of Riverdeep, Iona and Baltimore are gone but there are many companies of the 40-60 person range that could make the push to global player if they could get the necessary finance. The ones that do, invariably end up financed by US VC’s and multinationals which means that Ireland Inc. loses equity. The challenge for the Irish government his how to leverage the vast funds stored in IFSC-based companies, funds & banks by enabling them to invest in Irish companies, creating indigenous success. If we crack this, we’ll transform the nature of business in Ireland and produce tech equivalents of Kerry Group & CRH.

      • With a weaker euro, we can expect a big amount of US FDI for 2015. Also, 11 years ago when the euro got stronger against the dollar at $1.2/€1, it put off a few Americans from traveling to Ireland – I’m sure we’ll see more Americans come to Ireland this year as well as their employers’ money.

  4. Deco

    U2 are not world class. They have used Ireland for what it is worth. And in return Ireland got SFA – just ask the revenue commissioners. Completely overrated in the media in this town. And well connected with Irish America, and the worst elements that patronize both America, and Ireland to abject boredom.

    Does Irish America know of U2′s tax affairs ?

    Is this a good role model, to be following ?

    U2 are the original low-tax Thatcherite toy boy band.

    Some of us have more self-respect that to be grovelling like gobsh!tes in front to Screw U2.

    Not in my name U2, I want nothing to do with the tax hypocrites. U2 are an insult to the decent hardworking people of Ireland who are trying to pay taxes, maintain social services, and put up with Irish gombeenism.

    • EugeneN

      Only one arm of U2′s industry is in the Netherlands. The rest earns significant amounts for Ireland. I assume that most of U2 pay personal tax here.

  5. Deco

    [
    Just consider how much experience and knowledge is wrapped up in this roll call of leading companies that are present in the Silicon Docks: Google, Facebook, Twitter, Amazon, Yahoo, eBay, PayPal, EngineYard, Dropbox, LinkedIn, HubSpot, Yelp, Tripadvisor, airbnb, ZenDesk and Zynga.
    ]

    Question : how many of those corporate making a profit ? Or a profit that is beyond 2% return on market capitalization.

    Dom Com Bomb 2.0 here we come ?

  6. Deco

    [
    Just consider how much experience and knowledge is wrapped up in this roll call of leading companies that are present in the Silicon Docks: Google, Facebook, Twitter, Amazon, Yahoo, eBay, PayPal, EngineYard, Dropbox, LinkedIn, HubSpot, Yelp, Tripadvisor, airbnb, ZenDesk and Zynga.
    ]

    Question : how many of those corporate making a profit ? Or a profit that is beyond 2% return on market capitalization.

    Dom Com Bomb 2.0 here we come ?

    • aidanxc

      While I’m not going to go through the annual accounts of each of them I can say off hand that the following are definitely profitable:

      Google, Facebook, Amazon, eBay, Paypal and LinkedIn… I would say Tripadvisor and Airbnb are profitable also.

      There may well be a crash of tech companies in the pipeline but the ones listed by DMcW are quite well established ones.

  7. Irish PI

    Actually David.The majority of aircraft leasing in Ireland is GE capital aircraft leasing in Shannon.They have a show office in Dublin ,but the work and brains are nowhere near Dublin.Also,the same attitude of privilidge and “only me” ism that infected GPA is alive and well in GE.Not surprising as a quarter of the top ranks were inducted into GE,so the contamination of failure is inbuilt.

  8. David,

    Did you get invited to that shindig today?

    Or are dissenting voices excluded?

    Groupthink again?

    Cheers,

    Adam.

  9. New Oxfam report says half of global wealth held by the 1%

    http://www.theguardian.com/business/2015/jan/19/global-wealth-oxfam-inequality-davos-economic-summit-switzerland

    I love this comment in the comments section under that article:

    Oxfam said it was calling on governments to adopt a seven point plan:

    • Clamp down on tax dodging by corporations and rich individuals.

    • Invest in universal, free public services such as health and education.

    • Share the tax burden fairly, shifting taxation from labour and consumption towards capital and wealth.

    • Introduce minimum wages and move towards a living wage for all workers.

    • Introduce equal pay legislation and promote economic policies to give women a fair deal.

    • Ensure adequate safety-nets for the poorest, including a minimum-income guarantee.

    • Agree a global goal to tackle inequality.

    I cant imagine Bono taking these points seriously when he’s at Davos. He’s too busy lecturing taxpayers about how their money should be spent while his accountants figure out even more tax avoidance schemes for U2 Inc.

    • Pat Flannery

      Thank you for sharing that link Adam. The Oxfam Seven Point Plan is a point of light in an otherwise dark world right now. What are the chances of Bono promoting it at Davos? Probably nil. He could not get passed: “Clamp down on tax dodging by corporations and rich individuals”.

      Ireland needs to rebrand. We need to do better than “the best little tax whorehouse in Europe” with Bono as our model.

      • Deco

        The problem is…we are intellectually so far into a cul-de-sac of “punching about our weight” and other fables that do NOT add up, that we cannot think of much else.

        The debts continue to mount.
        The despair grinds on.
        The gombeenism continues, and morphs into grander pretence, and more sinister promises.

        If people thought about it, there would be a rebellion in the morning.

        Ireland’s gombeen establishment are the biggest part of the problem with this country. And they have no enthusiasm for any form of competition or criticism.

        Small wonder, then that we see them grovelling with even larger gombeenism activists in other societies.

        The one area where this country definitely has punched above it’s weight is in the production of Diarmuid McMurrough style gombeens who enriched themselves, and sold out on the broader society.

        • Pat Flannery

          Looking on the bright side Deco the problem of inequality seems to finally be getting at least some attention. The mere fact that Oxfam is represented at Davos is a small miracle and I understand tomorrow’s State of the Union address by the POTUS will address the issue.

          Maybe its because the 1% are finally waking up to the fact that the dreaded deflation is a direct result of inequality. Maybe they are beginning to realize that when they use their political power to allow less and less income to the 99% the economy shrivels up and dies.

        • EugeneN

          The problems of inequality are hardly confined to Ireland. In fact after transfers we aren’t that unequal amongst the bottom 90%.

    • I hate to sound like a broken record.

      The inequality is the direct result of the banking system.
      Particularly since the time of no restrictions on the amount of currency that can be produced. Circa 1971 and the final release of the vestiges of the gold system. Our standard of living reached it’s zenith then and is already reduced by 55%. That is our STANDARD OF LIVING IS ALREADY 45% OF WHAT IT WAS IN 1970

      All this extra cash (QE to infinity)does not filter down but is held and used by banking and financial interests. For the rest it creates inflation and a devaluation of savings. It is in that regard a stealth tax. Negative interest rates are the result of too much money in the system. Pension funds will go broke.

      The destruction will cause and is in process orchestrating the greatest depression ever. This will be a generational event.

      Oxfam does not understand this and neither do the 99% left in economic distress. It is not going to be a pretty sight.

      Until this cancer is rooted out we are doomed to economic destruction despite the best intentions and pleadings of such as Oxfam.

      • EugeneN

        But surely pension funds are also “rich” in a sense. Real issue of declining wages in the West is the amount of money going to the managerial class and capital.

        • Pension funds generally invest in bonds for income production but the interest rates are too low for the funds to meet the commitments made on distributions promised when assumptions were higher for interest. So riskier investments must be made. Those risks are likely to materialize. Higher interest rates will shrink the bond value and break the back of the economy.
          Essentially the pension funds are waiting to go broke.

          This includes government funds and so as the governments look for money they will bail in all bank deposits and nationalize the private pension funds.

  10. 3D

    My earliest memories in the 50′s travelling to Dublin four times a year was by train to Kingsbridge ( now Heuston) and taking the bus to Westland Row ( now Pearse) .We never went to Amiens Street ( now Connolly ) .The reason was it looked too dangerous then.Too many poor people dressed in rags and filty and hungry .

    I use to have to visit Westland Row to make a train connection for Wexford . I remember in those early days my train arrived in Westland Row for boarding at around 6 pm and this station had the first of mad rush human traffic in Ireland where no other station could compare .It held a unique ambiance from Victorian Dublin .

    For me this station had the first 3D Image . When the train was arriving and when the loud noise of crossing the bridge was heard I would stare at the immediate arrival into the building from the bridge .For me it was like my comics when a train drove through a wall as if it fell off a picture poster out of nowhere .I use to think that comics must be real .I would have a bundle of comics on me to read and all the imagery was real science . .Lots and lots of Dubs would be waiting to travel locally and many were taking the boat train to England for the night crossing .

  11. Strumpet City

    I agree with David Dublin was grim in the 70s and 80s . That was not true for the Mid-West Region of Thomond . This part was thriving and wealthy and expanding . It was here that GPA was conceived and founded and grew to be the mighty company it now is .Shannon was the magnet for the whole region and national politics supported the local efforts and promoters . Shannon had then a comparable significance and leadership now enjoyed by Dublin today.

    Sadly all that changed after Charlie took political decisions to focus on Dublin and copied all fiscal plans enjoyed in Shannon to replicate them in Dublin. Forex in Kilorglin had similar banking success and ensured that this would not happen there.Lets make no mistake the spirit of renewal begins in the West .

    Dublin was only saved by a Limerick man a new city manager John Fitzgerald who transformed the city to be what it is today .

  12. Enterprise Ireland

    What has never been discussed is the risk factors in Enterprise Ireland . It is like the Central Bank on steroids .No regulators are appointed to access the financial risks it takes on behalf of the taxpayers and the viability and security it may or may not hold.They hold the biggest private investment funds in Europe . This means billions of euro borrowings .

    Has no one seen this Elephant ?

  13. Silicon valley may float your docks but central banks will sink your economy and reduce you to economic serfdom.

    Did the Swiss people, possessors of the last bastion of democracy authorize any of the actions of the Swiss central bank? No! Ironically the BIS that bastion of a totalitarian banking system is based in Switzerland.

    http://www.gata.org/node/14989

    “Is any nominally democratic country aware of the full range of market intervention being practiced by its own central bank? Do mainstream financial news organizations even inquire about it, much less report about it?

    This is essentially a totalitarian system, except that central banks are not yet shooting people for complaining, though no one in authority is complaining. Someone in authority should test them.” –Chris Powell

    Well David are you up to the challenge?

  14. Adelaide

    According to ICTIrleand 5% of the employed Irish workforce are engaged in the IT sector, with multinationals accounting for 75% of that IT workforce.

    In the context of the real world this ‘sexy’ industry has been, is and will always be a niche employer.

    Constantin Gurdgiev had a great piece a while back deriding the fantasists harping on about the great white hope of IT as the solution to the mass unemployment in Ireland.

    In my own experience of having had 20 years in the industry I would estimate, apart from a few outliers, that no IT company whose product is non-hardware will ever reach beyond a thousand employees. If you’re not shipping hardware with your software you will always remain a SME. I personally had great hopes for Intune based out in ParkWest Dublin to become a global player with its innovative hardware plus software, alas, they went bust last year. As I said in a previous post, if the Irish authorities are serious about its IT sector it should look to Israel as the template.

    • Deco

      That last sentence captures it. Irish Authority is very wary of anything that might be used as a template, in case it includes an honest critique of Irish authority.

      The whole model of centralized control, with loads of gombeens and political appointees overseeing the whole effort, is simply not up for negotiation.

      The spontaneous, Israeli model is not as good as supporting gombeens as Ireland’s oversized, expansive, chancers in charge of a program, and the program in charge of everything approach.

      Excellent post Adelaide.

      Dublin is at the tail end of a US Fed driven monetarist bubble. The actual entrepreneurs that are produced are as likely to get out and go to Central California as they are to stay in Dublin.

      Israel has a lot to teach us, but the clowns in charge have nothing to learn (apparently). Least of all that things would be better if they were in charge of nothing.

      • DB4545

        You’ve nailed it Deco. IT is a nice niche and it’s the top of the food chain for the moment. Light engineering and Tourism target a demographic who need employment. A focus on defence technologies and Conference/Trade show tourism can soak up a lot of unemployment for people with traditional engineering trade skill sets. We’ve avoided the defence sector like the plague (excluding software) because of our “neutrality”. Timoney manufactures under licence overseas because of the hostility to the defence sector. Most Countries fight to get defence technologies because of the value,diversity and well paid employment opportunities they add to an economy. It hasn’t done neutral Switzerland any harm. Our “liberal” elite would be appalled of course but f**k them it’s not their kids that have to emigrate. One day soon the IT paradigm will go the way of Kodak who refused to accept that the world doesn’t stand still for one technology and Ireland will be up s**t creek again. Israel provides an effective model. We don’t even have to re-invent the wheel just change the f**king tyres.

  15. Adelaide

    According to ICTIrleand 5% of the employed Irish workforce are engaged in the IT sector, with multinationals accounting for 75% of that IT workforce.

    In the context of the real world this ‘sexy’ industry has been, is and will always be a niche employer.

    Constantin Gurdgiev had a great piece a while back deriding the fantasists harping on about the great white hope of IT as the solution to the mass unemployment in Ireland.

    In my own experience of having had 20 years in the industry I would estimate, apart from a few outliers, that no IT company whose product is non-hardware will ever reach beyond a thousand employees. If you’re not shipping hardware with your software you will always remain a SME. I personally had great hopes for Intune based out in ParkWest Dublin to become a global player with its innovative hardware plus software, alas, they went bust last year.

    As I said in a previous post, if the Irish authorities are serious about its IT sector it should look to Israel as the template.

  16. Daithi7

    Jeez, a nice positive, reflective article, which then projects forward future potentially positive spin offs from current industries and the comment section gets progressively hijacked by the bitter moan, doom and gloom merchants….. woeful responses to a wonderful piece. Ye are pathetic!

  17. SMOKEY

    Cut and paste: This little article says it all,

    FRANKFURT, Germany (AP) — Europe’s struggle with economic stagnation is raising questions about whether its prized project — the shared euro currency — can bounce back or even just survive.

    Fundamental gaps left at the euro’s creation in 1999 are haunting its policymakers. The euro’s missing pieces have come into sharper focus as the European Central Bank prepares to decide Thursday whether more monetary stimulus is needed to ward off crippling deflation and as Greece faces a Sunday election that could conceivably lead to its leaving the 19-nation eurozone.

    ADVERTISEMENT

    Richer countries’ reluctance to share taxpayer money with poorer ones is still blocking change. Fixing the euro will be a matter of years — and that’s only if the political will can be mustered. The alternative to change, according to economists and some officials, is that voters may turn their backs on an idea that promised prosperity but didn’t deliver.

    No less a figure than Mario Draghi, head of the ECB, said in a recent article it’s clear “that our monetary union is still incomplete.” And at a Brussels conference Monday, Pierre Moscovici, the EU’s commissioner for economic and financial affairs, said the current state — no growth, high unemployment — was “unsustainable.”

    “If nothing changes in five years, the European project will be rejected,” Moscovici said. Or, as Draghi argued, countries “have to be better off inside than they would be outside.” Economists often note the euro’s lack of a central budget. One central bank — the Frankfurt-based ECB — must devise one monetary policy for 19 countries, each of which has its own budget and a different way of running its economy. When one member is hit with a disaster, there’s no central automatic spending to soften the blow.

    A shared budget “is the most important missing component and also explains why the eurozone is so fragile,” said Paul De Grauwe, a professor at the London School of Economics and author of “The Economics of Monetary Union.” ”And a fiscal union you can only have within a political union, because you need some supranational institution that is capable of directly taxing and spending.”

    In contrast, the U.S. has a large federal budget that means rich states constantly send money to poorer ones without most people giving it one thought. When Florida’s real estate boom collapsed, the state government didn’t have to take over the busted banks. The Federal Deposit Insurance Corporation did. Meanwhile, federal money kept coming to Florida residents to pay their Social Security pensions, their unemployment insurance and their Medicare old-age health insurance.

    Not so in Greece, Portugal and Ireland. When those governments faced bills running into the billions — for jobless workers, collapsed banks, pensions and health costs — they were bailed out by other European Union nations. But they had to agree to painful budget cuts and tax increases that sank their economies even deeper into recession.

    That pressure to cut back is one factor keeping European growth slow and unemployment high — 11.5 percent overall and 26 percent in shell-shocked Greece. There, the left-wing Syriza party, which is leading ahead of Sunday’s vote, has said it plans to reject the bailout conditions, a step that could lead to Greece running out of money and leaving the eurozone.

    The troubled countries lack the safety cushion that comes from having their own currency, which would fall in value and make them cheaper places to do business. Instead, they have to cut labor costs. “So the burden of adjustment … falls squarely on labor, basically on cutting labor costs,” said Simon Tilford, deputy director of the Centre For European Reform in London. “That, politically, is a precarious basis for a currency.”

    The eurozone has added safeguards since the crisis started in 2009, particularly a bailout fund to lend to troubled countries and common banking oversight to keep failing banks from busting government finances. Rules limiting deficits were toughened and countries’ budgets, labor costs and trade balances subject to common review.

    Yet eurozone growth was only 0.2 percent in the third quarter last year and inflation was minus 0.2 percent. Inflation that low is a sign not just of lower oil prices but of weak demand that some fear could persist for years — or even decades, like it has in Japan.

    Still, calls for sharing some spending or financial risk — such as by ramping up common spending on infrastructure, or borrowing collectively through so-called Eurobonds — is still facing a firm “no” from Germany and several other countries such as Finland and the Netherlands.

    So what can be done? Draghi argued since U.S.-style budget transfers between richer and poorer “are not foreseen,” it’s time for countries to make up for that by deciding their economic policies together, to the point of sharing sovereignty. Members need to push each other harder for basic reforms such as clearing away the excessive bureaucracy that holds back economies such as Italy and France.

    Draghi left the details blank. One possible way to make common decisions, economists say, would be an EU body which sets an overall eurozone fiscal stance. There are other ideas out there. New European Commission head Jean-Claude Juncker has launched a fund to attract private investment in new infrastructure such as roads and bridges. Think-tank economists churn out proposals for things like shared unemployment insurance, shared bonds, and EU-wide deposit insurance. Many experts think integrating capital markets — so people can hold shares in companies in other countries — would help spread the pain when trouble comes.

    Deepening monetary union is on the agenda for an informal exchange of views when EU leaders in February. Yet big changes — involving changing the basic EU treaty — appear off the table for the short term.

    “Economists realize today there is no political momentum to move in any significant way, and as a result, many economists have tried to develop technical solutions,” said De Grauwe. “That’s fine, but it’s not a technical problem. It’s a political problem.”

  18. SLICKMICK

    Silicon docks is of little employment use to Irish people. Companies want staff who speak Turkish, Swedish etc. I can’t imagine the Finnish govt giving grants to companies who want to recruit Irish speakers in Helsinki !
    Thanks to MNC’s rent levels in Dublin are only 10 % below 2007 levels. Lower paid employment is squeezed as a result.

    • EugeneN

      That’s somewhat to do with employment from MNCS, but pretty much any demand over supply will cause that issue. The problem is not enough housing. From ghost estates to under supply, to a reaction against under supply, to over supply, to ghost estates.

    • Deco

      Correct. There is a large transient population in Dublin, in the IT sector. After 5 years learning (max) they pull out.

      At age 30, they have a highly productive decade in front of them. And the real “fourth level qualification” (work experience in a high profile name) is attained.

      Irish taxation law, being heavily loaded on the labour force, and the cost of living (with low corporate taxes) is producing this result. People who come, save as hard as they can (which is not easy) and then move to somewhere else, and make the real money.

      Irish healthcare, and babycare, which are both offer a terrible reward/cost equation, make sure that this is a certainty.

      The incompetent institutional state gets it’s cut. And the talented people in those sectors know that it is an unreal zone. In fact the incompetent institutional state drives talented people away.

      To the point that Dublin has developed a reputation as a downmarket version of London – for those with some ambition and less brains.

      The talent develops itself to an employable ability, and then it moves on. To somewhere that is more family friendly. The best that Ireland can manage is if the talent moves to Galway ( a lower cost, cleaner, more cultured version of Dublin).

      Ireland’s strategy is to pull in “investment”. It is “investment centric”. It is not employee or talent centric.

      That is a highly absurd “strategy” for a knowledge based economy. It is an unsustainable strategy.

      Ireland’s economic strategy is not about wealth creation, is about economic statistical relocation. It is a charade of sorts. It continues to flatter to deceive.

      In other words….

      IT IS ALL A LOAD OF UTTER BULLSHIT.

      Constantin Gurdgiev’s critique of official statistics captures the essence of the situation. Modern Ireland has cast traditional economic statistics into the sewer, and simply can no longer be trusted, when the politicians produce a “good news story”.

      It is great for real estate renting in Dublin. But that is about the height of it.

      And don’t expect the Irish education system to come to the rescue. That is being dumbed down to a degree that is utterly shocking. The pressure on third level bodies to make everybody look smarter is persistent. The current minister is trying hard to be an even bigger idiot than either of the last two.

      Against the backdrop of such utter nonsense, we have a relentless message of how more confidence is needed.

      This society is going to hell in a handbasket. Nothing surer.

      • Dilly

        There is a massive transient population in Dublin. It has made the place far more interesting though. I know of Bolivians and Brazilians who have their own party and club scene. They live on the fringes of Irish Society, many will be gone, once they have saved enough money, except of course those living off the welfare state. Meanwhile the Irish are still obsessed with property. I find that they constantly scan for feel good stories to justify their massive mortgages. I sold up in 2006 and did not buy again. It doesnt help that land and space in Dublin has been wasted over the years.

  19. Posted at http://www.lemetropolecafe.com
    Following the Swiss reset of currency

    “The IMF’s SDR may soon become the intra-central bank reserve currency, denominating even new bond issuances. With such a system we would still use our regional fiat currencies (dollars, euros, yen, pounds, yuan, etc.) for day to day transactions.

    The Chinese Renminbi aka Yuan will be added to this IMF SDR currency basket in 2015 followed with China updating its official gold reserves. Many experts believe the IMF in concert with central banks around the world, will revalue the gold price to give the next monetary system an appearance of legitimacy.

    Of course precluding an IMF takeover of the world monetary system, we’ll likely have to live through a G20 bank melt down via bad derivatives with the BIS’ Financial Stability Board having already laid the infrastructure for bank bail-ins which place derivative creditors ahead of regular bank deposit holders.

    The value of the original 1969 SDR was defined as equivalent to 0.888671 grams of fine gold which, at the time, was also equivalent to one U.S. dollar. Later after the final collapse of the Bretton Woods system with Nixon closing the gold window 1971… in 1973, the SDR was redefined as a basket of fiat currencies. Today the SDR basket consists of the 4 fiat currencies: the euro – yen – pound sterling – and U.S. dollar.

    Since 1973, the IMF ‘s SDR has lost over 95% of its value to Gold bullion. No matter how technocrats or the mass media dress up SDRs in convoluted financial speak, it is simply just another debt issuance out of thin air layered upon regional fiat currencies. ”
    -James

  20. Deco

    Eventually it gets to the point that there is so much positivity spin from the government, from the media, and from business in Dublin, that even DMcW is drifting with the commentariat flow.

    The Irish public discussion is bullshit.

    It was bullshit in the Ahern era. It was the same in the Cowen era. And it remains the case in the Kenny era.

    I learn more about Ireland from newspapers from London, than I do from newspapers from Dublin.

    Is there a better description of the sheer wall of nonsense in the Irish public discussion than that ?

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