The Finance Dublin Debt Clock of Ireland ticks on still
See the Republic of Ireland's national debt mount up, a measure of the legacy the Irish Government is in the process of bequeathing to the children of Ireland:
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The FINANCE DUBLIN Irish Government Debt Clock was set at midnight on June 30th 2009, when it was €65.278 billion. It updates the latest figures for the National Debt of the Republic of Ireland. The clock is re-set periodically, to reflect changes in debt and deficit estimates from the Dept of Finance, the National Treasury Management Agency (NTMA), and independent economists. For further background on what the debt figures mean click here. One of the periodic adjustments to the Debt Clock parameters (in November 2011) followed the announcement of a €3.6 billion reduction in the official Government debt, on November 3rd 2011. The adjustment resulted in an upward revision of the Finance Dublin Debt Clock value for end October 2011 of €38.65 million. This is because the total on the Debt Clock has always been based on published NTMA debt data, rather than figures contained in the original Department of Finance documentation. (The national debt stood at €119.1 billion on December 31st 2011).
(30th January 2012): ‘Ireland's 12.5 p.c. - older even than Sarkozy himself’'
The concept of a low and stable rate of corporation tax has been a pillar of the Irish economy since the 50s, longer even than the EU has been in existence; ‘indeed it is older even than President Sarkozy himself’, said former Irish Taoiseach, and former Ambassador of the European Union to the United States, John Bruton in an interview marking the 25th anniversary edition of the IFSC, one of a number of contributions to be published in forthcoming Finance Dublin Yearbook 2012. It therefore is something with a very long pedigree, and is not something that was introduced opportunistically overnight.
He was listing the key pillars of the IFSC's global attractions in an interview with the editor of the Yearbook, Ken O'Brien. John Bruton is president of IFSC Ireland, an umbrella representative body for Ireland's international financial services industry, representing the main pillar bodies in the sector. France's President Sarkozy has been to the fore amongst EU leaders in attacking Ireland's 12.5% corporation tax rate.
The low corporation tax rate was first introduced in Ireland in 1956 by Gerard Sweetman, and since then it has been integral part of what Ireland is - ‘an island country that is one of the most open economies in the world, and which is also one of the least insular’.
The key modern pillar of that Irish corporate tax regime was introduced by John Bruton's own Government in 1997, by the then Minister for Finance in his coalition Government, Labour Party member Ruairi Quinn (the modern Irish Education Minister).
Commenting on this Bruton said: ‘The 12.5% was introduced and agreed by a Government that included the largest left wing element in Government in the history of the state. Being able to get the agreement of the left to this was central to its subsequent success’, he said. ‘It was therefore not seen as an ideological matter, but was seen as a development policy’.
It is also of long provenance, points which sometimes are not appreciated in international dialogue on the issue of Ireland's low tax regime.
Amongst the other key assets of the IFSC he listed:
- its predictable administrative regime, which goes with its tax regime;- its English speaking staff, with the majority of the approximately 30,000 employed in the sector having it as their first or second language;
- improved wage competitiveness, matched by lower staff turnover rates than previously seen;
- accessibility to key policy makers;
- a robust and responsive regulatory regime, nothwithstanding a degree of discontent with what, some in the industry claim , is an occasionally overly officious application of the current financial and regulatory regime, in times when, due to the economic climate, people are being careful and cautious of their own accord anyway;
- its history as a common law jurisdiction, which makes for easy transferability of business structures and staff with other common law jurisdictions such as Bermuda, the USA and the UK.
Commenting on the credit crisis and the ongoing European bond and economic crisis, the former Taoiseach said that inappropriate regulatory responses and tax fixes such as the Financial Transactions Tax (‘a really bad idea’) were mistaken because they were aimed at addressing problems that had nothing to do with the causes of the worldwide crisis, and the ongoing crisis with the euro.
“In the first instance the global crisis has to do largely with problems arising because of our ageing societies, in Japan, Europe the US, and indeed here, reflected in our policies in the health and pensions areas”.
These problems have been there for a long time, and the availability of cheap money in the late 1990s and the first decade of this century postponed or disguised them. The euro crisis has aggravated the problem, underscored by a “gold standard approach” that did not permit monetary easing, and, at a banking regulation level, by Basel II's insistence on the holding of excessive levels of securities held in Government bonds by banks.
To read the Finance Dublin January 2012 editorial President Sarkozy's unsound FTT proposal rightly opposed click HERE
(23rd December 2011): 'Ireland second most generous nation in world'
'Despite its woes, Ireland was ranked second most generous nation in the world in the 'World Giving Index', the largest study into charitable behaviour across the globe involving 153 countries in total, published on December 19th. Using data from Gallup's Worldview World Poll, the report is based on three measures of giving behaviour - giving money, volunteering time and helping a stranger.
The results show that the USA is officially the most charitable nation in the world, moving from fifth place last year to first place this year. Ireland is the second most charitable country and Australia the third.
Overall the World Giving Index, demonstrated that the world became a more charitable place over the last 12 months - with a 2% increase in the global population 'helping a stranger' and a 1% increase in people volunteering.
Within Western and Southern Europe, Ireland was the most 'generous' nation, followed by the UK, Netherlands, Iceland and Denmark. At the other end of the European spectrum were, in order: France, Spain, Italy, Portugal, and, in last position, Greece.
The full report can be found: HERE.
(6th October 2011): 'Ireland has already restructured its debt'
'Ireland has already restructured its debt' is the title of an important analysis of the Irish debt situation, published today by NCB Stockbrokers. "Assuming Ireland can maintain the average interest rate at 5.2%, the primary surplus at 3.1p.c. and assuming the economy can grow at a real GDP growth rate of 2.5 p.c. Ireland would actually be reducing its debt to GDP ratio going forward by approximately 1.9 p.c. per annum", it says. The full report can be found: HERE(3rd October 2011): Is it time for a Government statement on Ireland's exchange rate policy?
Click here to read more (Editorial in the September issue of Finance Dublin)(5th August 2011):Nineteen months and nineteen days...the length of time it took Ireland to go from AAA rating to IMF bailout
Food for thought on the United States' loss of its triple A rate is underlined by the speed of Ireland's subsequent downgrades, folllowing its first downgrade from Triple A status in March 2009.Click here(30th May 2011):'Debt sustainability is not only achievable for Ireland, but is also affordable' : key findings from Davy Report
On May 27th leading Irish stockbroking firm, Davy, published an important report on the Irish economy, entitled a Medium Term Path to Debt Sustainability. It is essential reading for all those who wish to understand the dynamics of the Irish economy, the restoration of a working banking system and how these events are interacting with the financial markets.
It comes at a time of renewed doubt about Ireland's ability to resist the pressures for default, emanating from within Ireland and without (including those, who, with the best will in the world, are influenced by the sheer weight of negative, and ill informed economic commentary) (e.g. Irwin Stelzer, in today's Wall Street Journal). Interestingly, for Mr Stelzer, the Davy report projects that Ireland will have a lower primary budget deficit than the United States itself in 2012, and that the UK's fiscal profile is broadly similar to Ireland's - the difference between both countries and Ireland being that Ireland is trapped in a politicised and largely disinterested (in Ireland and other 'peripherals') eurozone, while both the US and UK have vastly superior bond and monetary financing markets.
The report identifies two critical issues at the core for the Irish economy - the attitude of the EU to enable the Eurosystem to perform as a normal currency zone, and the ability of the Irish economy to grow at over 4% (nominal).
Among the key findings are the below:
“If investors can peer through the fog of the EU authorities' policy response, then the highly attractive valuations of Irish sovereign and bank debt will become all the more apparent.”
“Given a 5.6% interest rate, the Irish economy should be able to achieve a primary balance and nominal growth of 4.0% to stabilise the debt/GDP ratio. The planned adjustment in the primary balance is of similar magnitude to that achieved in the 1980s. So, at least within the Irish political sphere, such fiscal adjustments appear achievable', the 38 page report concludes. See the full report.
(15th May 2011): Arrest of IMF Chief, Dominique Straus Kahn, comes as France puts pressure on Ireland's position in the eurozone
Mr Strauss Kahn was due to brief Angela Merkel on the Eurozone bailout on Sunday, and he was headed to Europe to discuss the European debt crisis. (Ironically he was staying at the New York Sofitel, which was funded by Allied Irish Banks, one of the banks bailed out by his Irish rescue package last Autumn). He was scheduled to meet German Chancellor Angela Merkel on Sunday and financial ministers in the Euro Group on Monday and Tuesday. Besides putting the finishing touches on the €78 billion Portugal bailout package, the main focus of the meetings was how to resolve Greece's deteriorating sovereign debt crisis this week.
Mr Strauss Kahn's tenure as chief of the IMF was due to end this year in any case, clearing the way for him to stand in the forthcoming French Presidential elections as the Socialist party candidate against the incumbent, Nicholas Sarkozy. Opinion polls up to now suggested that Mr Strauss-Kahn would have won against Sarkozy on the first week's ballot, gaining over 50%.
His place will be taken by the IMF's No2 John Lipsky, a former JP Morgan executive, and himself also planning to step down. Traditionally, the IMF is headed by a European, and the No 2 position by an American.
Already, speculation about the replacements are in train.
In the past week, on BBC 2 TV's 'Newsnight', French Finance Minister Christine Lagarde in a double header interview with the British Chancellor of the Exchequer George Osborne did not demur when asked would she be interested in the IMF top job.
In the interview, the two finance ministers spoke of the differing architectures of the EU bailout, with Chancellor Osborne emphasising the UK's special support of Ireland, as distinct from Greece, a Eurozone member which it is not obliged to support, in view, he said, of the special connections between Ireland and the UK.
A ramping up of French rhetoric about the Irish corporation tax 'rate' (while ignoring the real issue - the CCCTB) coincides with renewed discussion about the, previously unthinkable, issue of Ireland leaving the eurozone, perhaps re-establishing a currency link with either the UK, or perhaps a north-west European currency basket (including Denmark, for example, who also have a special role in the IMF bailout of Ireland).
Such a move could have major beneficial effects on the Irish economy (achieving price flexibility in a way that increasingly seems impossible - as a result of the difficulties Irish Governments have in confronting entrenched public sector union opposition to pay adjustments), but would require a stable long term resolution of the funding of the Irish banking system first.
An agreed exit by Ireland from the eurozone in return for a deal on the banking resolution - help in funding the banking system - (in return for bank equity, using co-co bonds, for example?), matched with a withdrawal of French pressure to get Ireland to accept the CCCTB by Ms Lagarde and her colleagues could yet be part of the resolution.
(11th May 2011): Durkan on the deficit
ESRI chief forecaster Joe Durkan, making a welcome return from academia, has given a pithy and (mostly) accurate prognosis on what needs to be done to slow down and stop the debt clock. It proves that Ireland, or the Dept of Finance, or the Central Bank never needed the external help of analysts from credit rating agencies or the IMF to tell it how to run its affairs. Durkan's home grown analysis was always available, but unfortunately wilfully ignored.
Durkan says the deficit should be got rid of completely within a shorter period than the IMF proposes, and that the Croke Park agreement should be scrapped, with wage cuts implemented. Croke Park involves only paltry 'savings' in any case - an irrelevancy, as the big figures involved in the above debt clock show - and represent, therefore, no more than a device to deflect the fundamental economic critique of the deal. This latter approach, as this page has argued before, would be more job friendly to those (last in first out) public servants whose jobs are threatened by the need to preserve the Celtic Tiger- style salaries and pensions packages of more established colleagues.
Durkan however also says, after all that, though, 'I would raise taxes'. Maybe confidence would be helped if he chose different words - perhaps a 'Debt reduction whiparound' would be better - i.e. something that citizen-taxpayers knew would be temporary, until the deficit was eliminated. The problem with the words 'taxes' and 'levy' is that they have never been temporary, although both in history were brought in by Governments with the assurance that they were temporary measures, and eventually turned into long term entitlements by 'public servants' and politicians.
And, as for the idea that pension funds should absorb another levy to fund yesterday's jobs activist initiative (see below posting) - it is to be hoped that it will be seen in time as a counterproductive idea. Joe Durkan's point is that the single best thing a 'Jobs Initiative' could do was cut the deficit faster than earlier proposed. That would, on the one hand, boost confidence, and thereby bring surplus funds into the economy, providing an autonomous 'stimulus' to the economy from those who are the only creators of jobs - individuals and companies.
(10th May 2011):Confidence, the key to jobs creation
Job creation is all about confidence - confidence amongst those who are the only creators of jobs - individuals and companies.
Governments, and political activists in Government, do not create jobs, - it is not their metier - and those who go to work every day and try to make ends meet know it.
That is why the Government's 'Jobs Initiative' to be announced today should be judged in terms of its effect on confidence. But the signs are worrying, as, strapped of its usual source of funds - borrowing, (deferred future impositions on taxpayers - the real job creators) - defenceless private citizens are potentially going to be asked to fund the 'initiative' up front - by a pensions levy. Aside from anything else, such a move would represent another capricious assault on the attempts of the citizens of Ireland to restore their financial balances at a time of unprecedented stress for them - see this: Government’s proposal to fund its jobs initiative by imposing a levy on private pension savings 'short-sighted, and unfair'.
As the end of Enda Kenny's first 100 days hoves into view, there is much to be encouraged about in the Government's performance. Labour Ministers have shown that, to quote the Tanaiste's often repeated urgings during the election for the spirit of 'meitheal' to prevail in Ireland's economic crisis, true social solidarity can spring from the responsible actions of Labour Ministers in Government, as evidenced by the public statements of a number of ministers, including Pat Rabbitte, Ruairi Quinn, and Brendan Howlin.
But the record can be blotted by a lazy return to the bad old ways of Government activism on spending, whether it is funded, directly by the bond markets, now closed to Ireland, or worst of all, by the defenceless citizenry who have taken the responsibility of providing for their own pensions, out of their own savings, to be raided, yet again, as they would see it, by a capricious, croney-capitalist government.
A clear signal from the Government in its jobs initiative that this type of activism is part of the past, of the days of 'Bertie bowls', unregulated and unchecked credit expansion, and a payola approach to the State's expenditure for the 'golden circle' surrounding Government would be the best thing that would come from this 'Jobs Initiative'. It's not about money - it's about good Government - such a signal could truly be costed as a 'stimulus' worth tens of billions, not just billions.
(5th May 2011):Good Exchequer returns - for tax - but why is spending still rising?
The better than expected Exchequer returns for the first four months of the year show that in the income tax, corporation tax, and excise duty areas returns are running ahead of Budget projections - a sign that the Irish economy might just not be the moribund creature that 'burn the boldholder' pessimists believe.
There is even something positive to be taken from the sluggishnes of VAT returns - because, while it signals understandable continued consumer pessimism, the counterpart will be stronger household balances, not, yet, reflected in deposits of domestic Irish banks.
The bad news is the evidence that taxpayers (or 'citizens' as some would have it) were truly conned in the second half of the year with talk of surgical cuts in public expenditure by the last Government. It is clear that with net spending still rising in the first four months of the year, compared with a year earlier (even after account is taken of adjustments because of the accounting for the new USC) that forewarnings the talk of cuts of 'billions' in the latter half of last year was accompanied by a large dose of spin. It is clear with the evidence of time that nothing was done by the previous Government during its time in office about its day to day spending, which ended up bankrupting the nation, following three years of inaction in the face of repeated warnings.
As the figures on this page show, the national debt now is above €100 billion. The figure today (May 5th) comes to 81.9 per cent of the GNP for Ireland for 2011 - €125, 078 million (Central Bank, April 2011), (65.8 per cent of the 2011 GDP of €155, 706 million). At the rate the debt is currently rising, the debt/GDP ratio will have surpassed 90 per cent of GNP by the closing months of this year (and over 70 per cent of GDP).
(13th April 2011): Wall St Journal Europe Op-ed by Prof Richard Portes: 'The Case for an Irish Default'
Prof Richard Portes, a professor of economics at the London Business School, has been one of the most vocal of the 'burn the bondholder' advocates and he has now taken to the columns of the WSJ Europe, where his arguments under the above heading are set out. As such they are a useful summary of a position which has been taken up in turn by other advocates of default, including Irish backbenchers recently elected to the Dail, to significant local popular acclaim.
It fails to convince on all counts, and furthermore serves to underline the deep danger, and negative consequences for Ireland and the wider Eurozone of even regarding such suggestions with any degree of seriousness.
The Irish 'burn the bondholder' debate has exact analogies with the first days of the American Republic, when the new Government was faced with s staggering debt burden from the revolutionary war, and similar calls were made on the new Government to default, notably from founding father James Madison. Madison's recommendations were rejected by Washington and his treasury Secretary Alexander Hamilton, whose response, contained in a document entitled 'Report on Public Credit', set down the blueprint for the greatest Treasury on earth.
Prof Portes actually himself refers to these spectres in his own article of default opponents: 'trade sanctions, long-term loss of market access, a significant increase in borrowing costs', yet he chooses to dismiss these deadly serious predictions by nothing more than blithe assertion, while arguing, on the other hand for a unilateral haircut by an Irish Government of something like 40% or 50% of a debt of €100 billion.
He also assumes that bondholders will meekly accept the haircuts that a defaulting Irish Government might impose on them. The story of Elliott Associates, an American hedge fund that in the 1990s spent $11.8m on distressed Peruvian debt and, after four years in the courts, forced the government to settle in 2000 for almost $56m may prove a salutory lesson.
So, even if the Irish Government defaulted, it would face potential lawsuits, and possible class actions perhaps for years to come from aggrieved bondholders. (Manmohan Singh, India's Prime Minister, economist, and father of India's modern economic progress, famously estimated a 300% annual return on invested capital in lawsuits from such bondholders). Do Irish taxpayers, and businesses wishing to operate, invest, and trade from this jurisdiction wish to live with this type of threat and bad business odour hanging over their heads for the next decade - as recommended by Prof Portes?
Argentina is the only example in recent history of the scale of sovereign default Prof Portes and the 'burn the bondholder' brigade are advocating for Ireland. Let's look at what has happened to Argentina in the fully ten years since its fateful decision to default.
Today, Argentina remains locked out from international bond markets. Its rating at low junk status (B by S&P) effectively continuing to lock it out of the international credit markets. This is despite the fact that since the mid 2000s, Argentina's GDP growth rate has run at between 6-10 per cent per annum. A full decade later, Argentina's name remains mud in the bond markets, despite the phenomenal growth rates it has recorded (itself partly due to the recovery of under capacity growth recorded during its early default years - and something that a non defaulting Irish economy could plausibly hope for also).
Prof Portes seems not that familiar with the Irish economy and its history since the 1980s, the factors that lay behind the 'Celtic Tiger', and the fact that it during that period (the late 1980s-1990s) achieved a similar turnaround in its primary budget budget surplus, (11 percentage points of GDP) that his article considers dubious now. He himself refers to the low current acount deficit (about to go into surplus) now applying, (down from 6% just 2 years ago), and the 'internal devaluation' of 10% already achieved. He doubts that this can go further, without giving any suggestions as to why. Perhaps this is because he has failed to identify the root causes of the Irish economic calamity, as revealed in his assertion: 'The country did not get into its present situation because of fiscal profligacy'.
He just can't see how Ireland's economy can bear the brunt of recovering its solvency. History shows that it was possible during the 'Celtic tiger' years, and that, if competitiveness, crucially, can be further improved, the economy can do so. Up to now, the Irish fiscal deficit has been tackled primarily through taxation measures, which are now at or over their limit of sustainability, while there has been little action up to now to reduce public current and capital spending.
The 'Celtic Tiger' was ignited in the 1980s by a decisive attack on public spending - led by a simple across the board dictat to all Government spending departments in 1987 to cut all programmes by a given percentage, without regard to special cases for any kind of public expenditure. It was an 'internal devaluation' achieved at a time when Ireland had its own currency (albeit fixed within the EMS). The new Irish Government, with its specially appointed 'Finance Minister for Spending' (a member of the Labour Party, and best equpped therefore to resist the special pleadings of Irish public sector unions) has in its early days expressed its intent to attack the levels of spending that offer such rich pickings to deficit hawks.
This is supported in the judgements of economic forecasters - the IMF this week predicted that Ireland, by 2015 will have the fastest growing economy in the advanced world, (with the exception of a handful of Asian Tiger and smaller E. European economies). Irish stockbroker Davy said this week they are more optimistic (for this year and next) than the IMF - predicting growth of 1.6%. followed by 2.4%), yet Prof Portes is suggesting nothing less than default at the prospect of a debt/GDP ratio of 120% by 2015. (Belgium's is higher than this now, and Japan's Debt-GDP ratio currently is 200%).
He says it would be 'moral' for the Irish taxpayer/Government to default without also suggesting that they should hand over the ownership and the keys to the domestic banking sector that they now effectively own.
The issue of moral hazard appears to lie at the heart of Prof Portes' dialogue. Moral hazard is something that economists, among them Prof Portes, rightly have identified as being central to the fixing of the broken global credit system. There is no doubt that, going forward, banking investors should face the risk of losing their capital if businesses they lend to fail. After the proposed default, the Irish banking system would continue in business, under the ownership of the defaulting party, and would continue to make profits for years to come. How might international legal triibunals respond to the cases of aggrieved bondholders in the face of such obvious phoenix trading?
Prof Portes is mixing up his timing - his proposed Irish default is after the event, after the bank guarantee (a guarantee limited by time, by the way, and not necessarily subject to the complications he suggests in his article), and therefore a repudiation of the word and fidiciary obligations of a eurozone member country. Such an action would without doubt lead to contagion in the eurozone, and, most likely in the wider financial markets. It would not work, for Ireland, for the world. It's not practical, necessary, desirable, and, indeed moral on any normal legal understanding of the term.
For more on Argentina's debt woes see this article in the March 2011 issue of Finance Dublin by our contributor Keith Boyfield
(11th April 2011):As USA turns back from the brink, here's what Ireland must do now
As Irish debate continues to focus on the issue of burning senior bondholders, the main problem - which this page has highlighted since the Debt Clock was launched in July 2009 - is the underlying Government Budget deficit. If this was not a problem there would be no banking problem, severe and all as it is.
The United States has looked across the Atlantic, seen what has happened in Ireland and in other European states, and has seen too, that it is on a similar trajectory. This past week has truly been historic in US history, and thanks to the compromise reached between Republicans, Democrats and the White House in the early hours of Saturday morning, US Federal spending will fall year on year next year for the first time in over 15 years. Now, Democrats, Republicans and President Obama are all claiming credit for it. Whomever history shows to have got the issue right, the main winner is the American people, the US economy, and its future. A similar accord involving all parties in Ireland on what is being described in the US as 'grown up economics' must be addressed without delay.
The deal, and the Budget for next year is being masterminded by Paul Ryan, the chairman of the House Budget Committee in the US Congress. The following link explains a process that Ireland can copy.
Here's the US plan that will rescue Ameriica if its politicians can agree A Budget to save America from Ireland's fate
For an alternative view: see this (from Paul Krugman), which, as usual, ignores the 'Croke Park Deal' side of the story, and the European-record cost levels of the still-voracious Irish Public Expenditure Machine, built up during the Ahern-Cowen years.
(8th April 2011):CEO of JPMorgan Chase, expresses confidence that Europe and Ireland will resolve its sovereign-debt crisis
Jamie Dimon, CEO of JPMorgan Chase, is confident that Europe will resolve its sovereign-debt crisis. He thinks the rewards of investing in Greece, Ireland and other European countries outweigh the risk of default. "In the unlikely occurrence of extremely bad outcomes in all these countries, JPMorgan Chase ultimately could lose approximately $3 billion," Dimon said. "But we are in the business of taking risks in support of our clients and believe that this is a risk worth bearing since we hope to be growing our business in these countries for decades.
Dimon's JP Morgan Chase is one of the IFSC's bigest employers, with close to 600 currently employed there (Source: Finance Dublin IFSC Employment Survey, 2011 (forthcoming in the next issue of Finance Dublin). The general confidence he expresses in the below article, published on Bloomberg, is indicative of the importance for Ireland that the Government keeps its nerve and ignores the 'fairy dust'* solutions of those who advocate default, including the band of misguided 'celebrity economists' who mistakenly believe you can apply the principles of avoiding moral hazard after the event, when they should apply before the event.
See: Dimon Says Risk of $3 Billion in European Losses Worth Taking for JPMorgan
*'Fairy dust solutions' a phrase Junior Minister for European Affairs Lucinda Creighton used to describe some of the utterances about defaulting as an economic 'solution' put forward in the Dail this week.
(4th April 2011):The FINANCE DUBLIN Guide to:
'Burning the Bondholders' for Beginners
Question: Is 'burning the bondholders' morally justifiable?
No. Because moral precedent in international law on the question clearly holds that businesses (or persons) who issue bonds are obliged to pay them back as long as they are solvent and continue to operate as going concerns.
Question: Can the Irish Government be justified in defaulting on its bonds or on Bank of Ireland or an AIB bonds (the two new 'pillars' of Irish banking) so as to cut the cost of its recapitalisation of the Irish banking system?
No, because to do so would be a form of 'phoenix trading' which, rightly, has always been regarded as repugnant in Irish business.
Question: Can pundits and other commentators be in a position to issue blanket calls for simple system-wide 'burning of bondholders' as a general policy?
No. To do so would require a case-by-case knowledge and assessment of the bond documentation in the Irish banking system at a granular level, which is not possible. For example, it theoretically might have been (be) possible to 'burn the bondholders' of Anglo Irish Bank had it not been nationalised, and had the bond documentation (and international case precedent) been consistent with this possibility.
Question: Is it right to say that the Bank Guarantee of October 2008 was the single biggest error in the history of the state?
Such single issue superlatives do not help an understanding of the crisis because they focus attention on a single event in a complex and evolving economic 'conjuncture'. This process has been described as 'a failure of economic governance' in a previous posing on this site, and supported in the recent analysis of the process by the Governor of the Central Bank (see below positing of March 2nd).
The short answer to this is No. The October 2008 scheme consisted of a 24 month guarantee which expired on 29th September 2010, (and which earned the Irish taxpayer a considerable sum in insurance premia from the covered banks). Had the Government properly used the window of opportunity bought by the guarantee in the 24 months period to sort out the banking system (the American and British Governments managed to do so in a similar time frame) while it still was solvent (most importantly, by addressing the urgent issue of its own underlying deficit - by slashing spending and not embarking on disastrous and confidence-sapping scams such as the infamous Croke Park deal) it could have managed the recapitalisation of the banking system. (The country's credit rating was still AAA at the time).
Question: Is it right to describe this as a 'bailout' of banks at taxpayer expense?
No. The term 'bailout' implies that the sovereign will not be the owner, which, by and large it will be, given that the Irish domestic banks will be mainly state-owned - the Bank of Ireland being the principal future vehicle for private equity investment in Irish banking. Therefore a more accurate term would be 'a recapitalisation' of the banks.
The taxpayer is being asked to put new capital into the banks, which are going concerns, and which will be the vehicle for the necessary revival of the Irish economy to everyone's benefit, and most importantly to those who have been most hurt by the banking crisis. This is a very good deal (see below posting also), because it means (a) a direct return to the taxpayer, starting almost immediately - Davy's estimate a profit attributable of approx €1.5 billion per annum in the next 3 years - see below), (b) a capital gain that may be realised at a future date, and, (c) kickstarting a recovery in the economy.
Question: Is this a better form of 'stimulus' than other forms of 'stimulus' that have been mooted (e.g. Metro North, or a deferred delay in the deficit reduction schedule, or 'Croke Park' - none of which have passed an investment appraisal)?
It is because the rate of return on the racapitalisation is extremely high - even higher than the return being demanded on secondary Irish bonds in the international bond markets at present. The opportunity cost for the Irish state on this is the 1% currently being offered to the Central Bank on the ECB's short term facility, currently running at some €150 billion.
Question: Should we be upset that Europe has not yet come up with the 'promised' medium term facility for Ireland and other eurozone member states in liquidity difficulties?
No. Long may the short term funding continue, at its concessionary interest rates. This is support from Europe that it would be gracious of us to acknowledge.
Question: Should the ECB help out?
Yes, and here the term 'burden share' is appropriate. The ECB has an obligation as the lender of last resort in a monetary union, which the eurozone is, to ensure the liquidity of its constiuent parts, of which the Irish system is part. Furthermore, the Irish Central Bank is, and was, part of the Eurosystem, and its acknowledged failure to regulate credit in the Irish banks (being 'asleep at the wheel') was as much a failure of the ECB, as it was a failure in Dame Street (and in other member states of the eurozone, and not just in the pejoratively termed 'PIIG' member states - and indeed in the wider world, starting in the US).
(1 April 2011): IMF backing for Irish Government's banking plan is echoed in positive response from bond markets analysts
There is a clear pulling back from the brink on the pre election chatter about 'burning bondholders' and reneging on debt, hence the unequivocal welcome from the IMF, EU, ECB above.Credit rating agency S&P changed its outlook for Ireland from 'negative' to 'stable' following the stress tests - although downgrading the official rating to BBB - in line with the other two (DBRS continues to accord reland an A rating). The credit rating agencies, who tend to lag the most forward looking bond market analysts (see our below coverage), and who, of course, did not cover themselves in glory in predicting the global credit derivatives crisis, have tended to follow the market downwards in downgrading Ireland's rating, but this move by S&P may well be a sign that the tide has turned at last.
This was the view of KBC analyst Eoin Fahy who wrote today: "Credit ratings agency S&P has just downgraded Ireland by one notch, to BBB+, and (very importantly) changed the outlook to ‘stable’ from ‘negative’. All three agencies now rate Ireland at BBB+ or equivalent, that is three notches above non-investment grade. "The downgrade was expected, but many people expected the downgrade to be of more than just one notch, and the change to a 'stable' outlook was also a surprise, in my view. "The commentary was actually quite positive about the stress tests, describing them as “robust”, and said that the cost of the recapitalisation of the banks is within the range of S&P’s expectations."
11.00 a.m. Update: Bank of Ireland, the one remaining bank that has a chance of remaining in majority private ownership saw its shares rise by 0.09 c to €0.31c (+38%) in the first three hours of trading on Friday, another indication of the positive assessment of the effect of the announcements. (AIB, the other 'pillar' bank saw its shares rise 2c to 21c on the small companies market (+11%)).
(See also this clear sighted economic analysis by a newly elected FG TD and former senator: this month's Op Ed column in Finance Dublin.
(5th January 2011): The 2010 Exchequer returns
The 2010 Exchequer returns published today raise an interesting paradox for those enthusiastic proponents of 'tax and spend' as the solution to the country's economic woes over the past three years.
Commenting on the December exchequer returns, released today by the Department of Finance, IBEC Chief Economist Fergal O'Brien said: "Tax receipts finished the year some €700 mn ahead of expectations - almost entirely due to the strong performance of corporate tax revenues. Tax revenues from the sector in 2010 were 24 p.c. ahead of forecast and were actually marginally ahead of the 2009 outturn. The only other tax head meaningfully ahead of target in 2010 was excise but this was partly due to the excise increases in Budget 2011. A fall in cross border shopping during the year also contributed to the somewhat better than expected outcome.
"Income tax remains the main area of weakness - it was €250 mn below target and almost 5% down on the 2009 outturn. Its performance improved somewhat in the latter months of the year, however, and in December it was actually €100 mn ahead of forecast for the month. Coupled with fairly positive Live Register numbers in recent months this provides a source for optimism for 2011," concluded Mr O'Brien.
The following question should be asked of those economists who pushed the ideology of hikes in income tax and other taxes on productive activity: why is that taxes have collapsed in those areas where rates of tax were dramatically increased (i.e. income taxes), while taxes performed well, and ahead of expectations, in an area where tax was low and kept low (i.e the 12.5 % corporation tax rate)?.
(8th December 2010): a cautious Budget, with two big "ifs"
* The net deflationary impact is just 2.2 per cent of GDP. This is measured by the reduction in the 'General Government Balance' (what used to be called the 'Public Sector Borrowing Requirement', before the EU came on the scene with new budget accounting procedures), from 11.6% in 2010, to 9.4% in 2011.
* It achieves more through tax increases than it does through cuts in current expenditure. Total tax revenue (including PRSI), post Budget, is projected at €34.9 billion. This will be 27.3% of projected GNP in 2011, against tax revenue in 2010 of €33.53 billion (which is 26.7% of GNP this year). The increase in money terms is €1.37 billion, with all of it, virtually, a tax on labour, in the form of PRSI and income tax increases. Thus, it is a Budget that heavily relies on tax increases, and in particular taxes on income/earnings, and effort, of course.
* This raises the question of the first big 'If'. Will the taxpaying public accept another imposition of this scale, what will it do to their confidence, and will they just not bother, emigrate, or close down? After all, Ireland has now pushed its marginal tax rate to over 50% of a top earning (hence a high skilled, 'smart economy' type of person, also likely to be senior), and will they accept it? Certainly, it diminishes further the attractions of the jurisdiction for international high earners. The big risk factor therefore in the Budget is that the optimistic assumptions for income tax projections, will, again, not be met. If this happens there will be big trouble ahead, especially with the IMF/EU taking an increased interest in the accounts going forward.
* Perhaps the framers of the Budget accept this, the principal uncertainty in their projections. If so, it is not suprising that they would have built a big contingency into the projections, to cover the eventuality of the income tax revenues collapsing or falling behind in the coming year again. Which brings us to the second "if" - the remarkably high provision in the figures for 'Non Voted Capital Expenditure', i.e. capital expenditure still at the discretion of the Government. The Budget figures allow for a very big number here of €8.28 bilion ('Net Capital Expenditure')(an increase projected of €855 million over last year). This is the good news in the figures, for if tax revenues do not perform, the Government can slash and burn its plans for capital expenditure (of dubious economic efficacy, and budgeted at €3.96 billion for next year and subsequent years). This spending of course, at the behest of the IMF/EU, can be stopped - especially given that few of these 'investments' can be expected to produce an internal rate of return higher than the bargain basement blended interest rate of 5.8 per cent contained in the IMF memorandum (at the time of writing, more than 200 basis points below what the market is prepared to offer the Irish Government in the sovereign bond market).
* What happened to the €6 billion? It was never going to be the fiscal adjustment, just a cut off a projected budgeted figure that never existed anywhere, except in the imaginations of Departmental Secretaries, in their wish lists of expenditures for 2011. The real cut is the cut in the level of Government borrowing that will take place in 2011. This is encapsulated in the bottom line figure for the 'General Government Balance', down from €18.175 billion in 2011 to €15.18 billion in 2011. This is a reduction of just 16.5 per cent in the projected increase in the national debt of Ireland for 2011. Hardly a front loading. The good news, though, is that there is lots of fat left still in the Irish public finances. Large lumps of the "Non Voted Capital Expenditure" could be mothballed, or even abandoned (Metro North, for example). And, the politicians could vote for an appropriate cut in their salaries and pensions (benchmarking them, as they should, to those of our nearest neighbour, and trade partner, Britain). A good start, though, has been made with a cut in the Taoiseach's salary - further progress in 2011 would see it dropped again to match that of the British Prime Minister, and perhaps, in year three, to the appropriate relative level to Mr Cameron (taking into account the fact that the Taoiseach legislates for a population about the size of greater Manchester).
(7th December 2010): Irish Economics 101: A Budget for Ireland's two classes
The party of the Minister for Finance who delivers the Irish Budget today gathers at a graveside annually which bears a flagstone with the following inscription: 'Our independence must be had at all hazards. If the men of no property will not support us they must fall, we can support ourselves by the aid of that numerous and respectable class of the community, the men of no property'.
There are two classes in society, as Wolfe Tone, (the author of the above) perceived it – 'the men of property' and 'the men of no property'.
A successful and civilised government is that which can mitigate between both classes, providing both with the space to co-exist, and trade in a civilised fashion, so that the aspirations of both can be simultaneously achieved.
The aspirations of 'the men of no property' is that they become men of property, and the aspirations of the 'men of property' (usually formerly 'men of no property'), is that they do not lose their property, or have it confiscated. A successful government is that which can keep both sides happy.
Modern civilised governments govern so that the economy is not a zero-sum game, but a game in which citizens trade and participate to mutual advantage, as is trade. This Budget will be judged in posterity as to whether it succeeded in mitigating between the two classes, in its various manifestations, the self employed, the public sector, the large corporations, SMEs, private sector employees, the young, middle aged, old, and disabled.
(3rd December 2010): The debt clock slows down for the first time
New NTMA figures for Irish national debt at end November show a decline in debt in November, keeping the total below €90 billion. This is the third month that a decline in the rate has been recorded, and, consistent with better-than-expected Exchequer returns for the first eleven months, there has been a reduction in the 'speed' of the debt clock.
This is the first decline seen in the 'speed' of the debt clock since it was set up in July 2009. Whether this can be confirmed as a definite trend will depend on the Budget.
The end November total for Ireland's national debt was €88.568 billion, down by €876 million on the end October total. Nevertheless, the debt continues to rise, although the rate of increase will depend on the final Exchequer figures for 2010, to be released in early January. Meanwhile, figures for the first eleven months of the year show a deficit of €13 billion for the year to date, indicating that the outcome for the full year may be somewhat less than the original rate assumed in setting the debt clock.
The Exchequer figures for the first eleven months show that see this analysis by Robbie Kelleher of Davy corporation tax revenues were substantially ahead of target, and cutbacks in capital spending (an effective means of curbing your deficit when you have to) have been resorted to. The bad, but not unexpected news is that the Government signally failed to achieve a real reduction in its bloated current expenditure, years after the economic crisis became apparent, and that its income tax strategy ('tax the rich' by raising top tax rates, and capital gains tax etc) has been a dismal failure - with income tax revenues in the first 11 months down below even the projections made by the Minister at the time of the Budget last year, with Ireland's SME and enterprise sector flat on its back as a result, and employment levels in the doldrums.
(29th November 2010): Terms of Ireland's bailout largely as expected, now attention turns to the future of the euro
The terms of the four party bailout agreed for Ireland (involving Ireland itself, as one of the four) were largely as signalled during the week. The total value of €85 billion is as was signalled, involving Ireland, the bilateral EU currency independent countries...
(28th November 2010) Clemenceau: 'money is too serious a matter to be left to Central Bankers'
(24th: November 2010): A Failure of Economic Governance
If the 2 year bank guarantee introduced in September 2008 had been accompanied by the type of action only now being introduced in the Irish Government's four year economic plan, the Irish fiscal crisis would have been averted...
(21st November 2010): Green Party brinkmanship in posture to precipitate Irish general election will probably mean little difference to package being eventually implemented in Ireland
The invitation to the International Monetary Fund to provide its 'lender of last resort' assistance to Ireland will result in agreement amongst all parties to implement the mooted €6 billion in spending cuts and tax reform measures that already has received acceptance on the part of most bodies representing a majority in the Irish Parliament (Dail).
An indication of the measured approach both to banking system "recapitalisation/restructuring/resolution", and a fiscal policy tailored to the circumstances of individual countries", is provided in this video recorded by Ajai Chopra, the Head of the IMF Mission currently in Dublin . The mooted cuts of c€6 billion in the Irish 2011 Budget will lop about 3.8% off relevant GDP expenditure, and this would move the Irish economy into a balance of payments surplus of over 2 per cent of GNP in 2011, with GNP growth (of approx. 2 per cent) returning for the first time since 2007, after a cumulative fall of 15% between 2008 and 2010 (IMF estimates). The actions of introducing a Budget on December 7th 2010 next, preceded by a 'Four Year Economic Plan' published by the Irish Government, (which will be published with the Imprimatur of the IMF and EU) on Wednesday 24th November next will be accompanied by much political posturing by Irish political parties, following the Green Party's call for a election after the December Budget. The key question will be whether they vote for the Budget, or not. This lack of clarification immediately sent Irish bond yields and credit default swap rates upwards again.
(19-21st November 2010): World stocks rise on IMF intervention as failure of economic governance in a second eurozone country is accepted
The invitation to the International Monetary Fund to provide its 'lender of last resort' assistance to Ireland must be seen for what it is. There are many lessons to be learned by what is, after all, a small country, and they are not easy, as the reasons for the failure are complex, and involve not just economics, but politics, and perhaps even moral philosophy...
(18th November 2010): Now CB Governor indicates 'loans' are being negotiated
Patrick Honohan is now quoted on Reuters as saying that 'billions of euros in loans' are being negotiated - which really does seem to indicate that a bailout is under discussion, both for the fiscal shortfall, and the banks' balance sheets. Now, even more ominously, the threat that Irish economists who understand the dynamics of FDI, and Irish growth, feared for weeks, - the circling of the EU wolves to take away Ireland's most potent competitive attribute - the 12.5% corporation tax rate - is underway - Reuters quotes French Finance Minister Christine Lagarde, as follows today:
"In an indication of potentially tough negotiations ahead, France said Ireland may have to raise its ultra-low 12.5 percent corporation tax rate -- a taboo in Irish politics -- in return for the assistance package. "French Finance Minister Christine Lagarde said Irish business taxation was abnormally low by European standards, while income taxes were broadly in line with the EU average. "So we will have to see how these (corporate) rates can be changed without weighing down the Irish economy and driving away investors," she told France-Inter radio."
Christine Lagarde is someone who knows about FDI, having worked in US law firm Baker McKenzie as a corporate lawyer in her time, but, really, are we going to be so naive as to rely on her good intentions, and the intentions of her Government on their assurances that they will ensure that the corporate tax rate will be changed 'without driving away investors'.
For the Irish Government to retain the credibility of its past assurances that there would be no change in the 12.5%, (a fundamental basis of trust by the Irish electorate in passing the Lisbon Treaty referendum) it will have to fight tooth and nail, it is now clear. If this were to involve a choice between Ireland's tax sovereignty and the Croke Park Agreement, then it it clear which has to go: Croke Park (in the national interest, and, indeed, in the long term interest of all direct beneficiaries of the Croke Park agreement, and their children). To sacrifice this would be a wilful destruction of the central plank in the Irish growth model that was pioneered in Ireland since the 1950s, most notably by Lemass, the party forerunner of Bertie Ahern, and his successor Brian Cowen.
It is to be hoped that the abject failure signalled by Lagarde will not happen, and that an Irish Government can still save its face, and the nation's interest, by conducting a clever negotiating strategy that ensures survival of the corporation tax, as hoped for, and suggested in the following article, published today. and in this analysis: '12.5% tax - why Ireland is not for turning' by the Head of Tax and Legal Services of PriceWaterhouseCoopers, Ireland, Colm Kelly, published on 19th October.
(17th November 2010): An 'FDI' solution at the long end of the Irish banking balance sheet
Pat Cox, former President of the European Parliament today called for an absence of spin, and plain speaking on the issue of the bailout, and in response, the Finance Minister Brian Lenihan this morning responded with an assurance of intellectual rigour and plain speaking (interviewed by Ivan Yates on Newstalk Radio). Based on these assurances, it is clear that a conventional fiscal 'bailout' is not an accurate description of what is being discussed, but a due diligence process by central bankers, at central ECB level, of the balance sheets of the Irish banking system the ECB is continuing to be required to support. As for the longer end of the balance sheets of the Irish banking system - it is emerging that the extension of the Irish state bank guarantee as proposed in the previous post here is not being bought, (not enough credibility left, unfortunately, in the Irish credit rating) but that equity and bond type funding at the long end is what is now being looked at. This promises a more stable solution. The involvement of 'Asian investors', 'sovereign wealth funds', and other investors in the recapitalisation of the Irish banking system may be expected as an injection of foreign direct investment in the Irish banking system.
(16th November 2010):Food for thought: Milton Friedman's warning for Ireland in 2001
(12-16th November 2010): The main cause of the current bond market spike, and how to resolve it
Assurances about the intentions of EU Finance Ministers are no more than short term palliatives, but a step that the Minister for Finance could take would an announcement of an extension of the bank guarantee scheme (well) beyond June 2011, associated with a statement that it will be renewed thereafter if necessary, until the necessary rebalancing of the c€400 billion balance sheet of the credit institutions is achieved. This would have...
(11th November 2010): What factors lie behind Ireland's high bond yields?
The following questions might be asked as to why the bond markets continue to be so negative about Ireland, in the light of the following positive factors...
(5th November 2010): Only Eurozone country in the Top 10 of the World Bank's "Doing Business" Report 2011
The rankings are: Singapore (1), Hong Kong (2), New Zealand (3), UK (4), USA (5), Denmark (6), Canada (7), Norway (8), Ireland (9), Australia (10).
The World Bank 'Ease of Doing Business Report' is one of the most authoritative and influential benchmarks of international economic competitiveness. It was published on November 4th 2010. Its metrics measure the underlying effectiveness of an economy's mechanisms and openness to business - in turn, its ability to respond, and bounce back quickly to economic corrective measures, such as proposed in the forthcoming Irish Budget.
The Report ranks 183 countries overall. The 2011 Report also ranked Ireland, alongside the USA and Canada as best in the world for 'protecting investors', after NZ, Singapore and Hong Kong.
(5th November 2010):Lenihan, the NAMA process, and the scope for Self Financing Tax Cuts
Brian Lenihan has decided to take on 'the junior George Soroses', of the European sovereign bond market, overextended and short at the margin in the Irish play, to judge by increasingly anxious analysis about the ability of the Irish economy to grow...
(29th October 2010): What can be done about the bond market's flight from Irish debt?
Now the State is in firefighting mode, if it is to avoid a default. In a firefight, the main source of the problem has to be confronted, and focus and perspective is needed on what will solve the problem...
(26th October 2010):The Economic Case for: Exclusive reliance on big Spending Cuts in the 2011 Budget and for No More Tax Increases
This Seminar in the Economics of the Debt Clock is a warning that temptations should be resisted to increasing the overall burden of tax in the Budget, particularly taxes that further restrict job creation and investment and expansion by private enterprises, of whatever kind. Income tax rates do not need adjustment at the top - the taxable capacity at this level is at (or beyond) its maximum, while there are taxes that could and should be cut, resulting in higher revenues in 2011 than would otherwise be the case with unchanged rates under these Heads.
The real job creating experts are businessmen and women, not economists
In short, all forms of 'stimulus' in circumstances such as now exist in Ireland should take the form of reducing tax rates , particularly in areas which have shown diminishing Exchequer revenue returns in line with tax rate increases previously. The 'stimulus' that is most needed is employment creating stimulus, and therefore the tax stimulus should be concentrated in private sector employment generating areas - e.g. incentives for employers, small and large, to take on additional staff, or just to expand their own businesses. These risk takers are the best fitted, and, by definition, the most knowledgeable group in the economy to how to impart the stimulus that is needed. By increasing their savings, Irish consumers are now embarking on a necessary deleveraging of their family balance sheets - this is a form of investment in their futures, and the process should find all the necessary fiscal and monetary policy support from policymakers at this time in particular.
It is clear that some of the most eminent politicians from all sides of the political divide are in agreement with this perspective. For example, Ray MacSharry (in his interview with Brendan Keenan in the Irish Independent), Former Attorney General Peter Sutherland, who in a speech at the Dublin Chamber of Commerce called for spending cuts in the range of €5-€6 billion, a figure echoed also by Fine Gael frontbench spokesperson Leo Varadkar, in the Sunday Business Post, and who, at the Dublin Economics Workshop in Kenmare said:"We will achieve this adjustment primarily by reducing spending rather than increasing taxes. Our plans are based on €3 in savings for every €1 in new taxes raised because we know from all of the studies carried out that savings in public spending do less damage to the economic growth and employment than tax increases. Increasing taxes is the easy political option but it is not the right one". There is also a remarkable consensus of views from sixteen of the managing partners of Ireland's accountancy firms in an unprecedented collaboration of views on what should be done for the economy at this hour of need
These views have found support in a speech by the former Taoiseach, and chairman of IFSC Ireland, John Bruton, in a speech on October 20th to the Dublin SE Branch of FG when he said: "I think there is a lot of sense in the suggestion by Leo Varadkar that we frontload the austerity and get the job over and done with. Dragging out the agony until 2017 would just mean more hardship over a longer period".
For the full text of former Taoiseach Bruton's speech click here
"Those who say that the chasm cannot now be bridged between spending and revenue should bear in mind that the increase in spending, and the gap between it and revenue which it has created, is quite recent", he said.
Former President of the European Parliament attacks suggested 'duplicity' in EU Commissioner Olli Rehn's remarks on Irish tax rate (Update 5th October 2010)
The former President of the European Parliament, Pat Cox, in a speech last night attacked the suggested 'duplicity' raised in Commissioner Rehn's remarks. The Irish people voted "Yes" to Lisbon on the explicit understanding that Irish Governments would retain sovereignty in the tax area, he said.
Quoting Thomas Jefferson, he said, "Thomas Jefferson when drafting the American Declaration of Independence wrote that: ‘Governments are instituted among men, deriving their just powers from the consent of the governed’. The consent of the governed in Ireland for the Lisbon Treaty was informed by the guarantees, including the tax guarantee. Its nullification without their consent would be an act of duplicity unworthy of any law abiding and self- respecting institution".
For the full text of former President Cox's speech click here
EU Commissioner Olli Rehn undermines Ireland's Corporation Tax Rate (Update 1st October 2010)
EU Commissioner Olli Rehn was not doing anything to help the interests of Ireland, or indeed of the unemployed workers of the European Union...
Accounting for bank losses makes no difference to underlying causes of the rising debt (Update 30th September 2010)
The Government and the Central Bank's announcement today on the resolution proposals for the banking crisis will hopefully put an end to the virtually exclusive focus on banking cost issues to the detriment of focus on the real causes of Ireland's debt crisis...
Why all the fuss about €2.4 billion in Anglo unsubordinated bonds? (Update 29th September 2010)
At the rate the Debt Clock is advancing, a default on these bonds ('unthinkable' or not?) would cover just 45 days of the Debt Clock's advance...
S&P downgrade disputed by NTMA, but, the main problem - non banking bailout costs - remain(Update 25th August 2010)
The most negative aspect of the S&P re-rating on August 24th 2010 is the 'outlook negative' aspect, rather than the actual rating...
Minister for Finance, Brian Lenihan sets out economic philosophy at Beal na mBlath (Update 22nd August 2010)
A measure of the modernisation of the Irish Republic is the fact that the first Fianna Fail minister to be asked to speak at the annual commemoration of the Irish civil war assassination of the country's second Finance Minister, Michael Collins, chose to make an address that dealt centrally with fundamental issues of economic policy and philosophy. The speech at Beal na mBlath, on August 22nd, allows us to discern the underlying economic and political principles of the 25th and current Irish Finance Minister, Brian Lenihan..
The Finance Dublin Debt Clock one year on (Update 23rd July 2010):
The Debt Clock, launched in July 2009, surpassed €85 billion this month...
Debt clock shows no sign of slowing in the first six months of 2010 as €8.83 billion added to Ireland's National Debt (Update 13th July 2010: )
Latest figures from the NTMA show that the national debt shot up from €75.15 billion at the end of 2009 to €83.984 at the end of June 2010...
More fantasy economics from the New York Times on Ireland (Update 21st May 2010)
Now its everyone's problem: the EU's c. €750 bn 'Stabilisation' fund lets Greece and other profligate countries off the hook (Update 10th May 2010):
The EU stabilisation fund set up over the weekend, while it averts the short term threat of contagion in the Eurozone bond markets, still contains the seeds of its own destruction...Why the Debt Clock for Ireland continues its unabated rise, despite some positive news on tax revenues (Update 9th May 2010)
The national debt rose in April by more than expected, by 3.7 per cent, or by €2.92 billion. This was the biggest increase seen since the Finance Dublin debt clock was first set in July 2009. This is despite Exchequer figures showing an improved yield to the Exchequer in tax, and welcome signs of Government underspending on both the current, and capital account. An immediate (and politically painless) gain for the Irish Exchequer would be an internal freeze on this already budgeted spending, (which would involve dismissing suggestions by some financial sector economic commentators that this is a bad thing (on the belief presumably that bureaucratically-directed (Public Capital Programme) 'stimulus' is what the Irish economy needs)). The increased cost of servicing Irish borrowing because of the widened spread between Irish and German bonds is a negative development outside of Irish control, and makes fresh action on the Budgetary front all the more urgent. (This point is also made by economist and chairman of 'An Bord Snip' Colm McCarthy in an article in the Irish Times (May 7th 2010)).
Why Irish taxpayers should not be asked to support any further moves to bail out Greece (Update May 9th 2010)
The Irish Government should not support any further moves...