Saturday, October 31, 2009
1. character (integrity)
2. capacity (sufficient cash flow to service the obligation)
3. capital (net worth)
4. collateral (assets to secure the debt), and
5. conditions (of the borrower and the overall economy).
It's kind of hard to imagine any business applying for a substantial, long-term loan ticking all those boxes right now, don't you think? Which is why I am not surprised by the recent ECB and Irish Central Bank statistics showing a further contraction in lending in Ireland - including commercial lending.
Most small businesses are in survival mode rather than expansion mode. Worse, the interest rates being charged by banks are massive when a) adjusted for deflation and b) set against the likely prospects for revenue growth sufficient to fund loan repayments (including interest) over time. And not just in Ireland, even the United States with its near-zero interest rates is seeing an implosion in its SME sector.
Hence promises by the Minister for Finance to issue guidelines to the banks rescued by NAMA to ensure they expand their lending to Irish businesses are like pushing on string. They won't make a blind bit of difference until businesses (and banks) think it sane and sensible to borrow money to fund expansion. And that' won't happen any time soon if we are to go by the EIU's recent global survey of SMEs: Surviving the Drought - Access to Finance among Small & Medium Sized Enterprises.
The survey asked 'when do you expect the availability of finance to return to 2007 levels in your domestic market?' The majority expect it will be 2011 and later. One in ten don't think finance availability will ever return to 2007 levels. I'm with the one in ten: a proportion I think will grow when, inevitably, eurozone interest rates start going up at precisely the wrong time for growth-minded Irish SMEs.
I wonder could we make it just 2 or 3 C's for borrowers on the basis of, er, the long term economic value of small businesses to the economy? I doubt it somehow.
Friday, October 30, 2009
But it wasn't just that. Sure there were the 'push factors' (seeking employment and a decent income) but there weren't the 'pull factors' there are today (friends and relations who had already moved, cheap and convenient air travel, foreign destinations with better climates and large ex-pat communities, easy communications etc). My parents, like most of their generation in the early 1980s, had rarely been abroad, so the foreign seemed truly 'foreign'.
But for Shane's parents and their contemporaries with graduate-age children (I'm about there myself) the options are very different to when they were young. Very different indeed. Which brings me to the subject-du-jour: NAMA. What if it goes wrong? Horribly, disastrously wrong? Derailed, say, by a double-dip depression (now increasingly likely as we reach the frothy peaks of yet another speculative bubble). Or by a domestic economy that simply buckles under the weight of truly staggering levels of government sponsored debt?
In such a scenario (let's call it a Black Swan event for now), then two things would inevitably follow. The first would be an attempt by the state to ensure its own survival by confiscating large tranches of the remaining wealth (especially savings and other liquid assets) in the hands of its citizens. No doubt cheered on by the usual suspects. The second (though possibly the first if the confiscation strategy is flagged too far in advance) will be the mass migration of those with any wealth left worth protecting. Perhaps to Cyprus, as suggest by Wat Tyler:
Someone has been telling Tyler that Cyprus is now the place for oldies. Tax rates are very favourable for retired ex-pats (just 5% on pension income), their budget deficit is miles smaller than ours, there's sun, Marks and Spencer, frequent direct flights back to the UK (4 hours), and they've long ago forgotten all that unpleasantness during the 50s.It strikes me that that is the biggest difference between my generation and my parents'. The foreign isn't foreign - also we have fewer children to look after (and they'll likely be spending a spell abroad anyway), as well as parents who might actually be better looked after in one of the 26 other EU countries now open to us.
Of course, the consequences for Ireland of a Grey Flight would be disastrous: those left behind would be those least able to make the repayments on the NAMA bill. Their children too would have to leave, turning a vicious circle distinctly brutish. I've already noted the demographic dagger pointing at the heart of NAMA: the Grey Flight would push the blade closer ...
But absent the Black Swan scenario, further, inexorable, relentless increases in taxes on income, savings and assets to fund the biggest financial gamble in our country's history are now inevitable.
I'm predicting a big future for cruises out of Ireland, starting soon.
ht In Mala Fide for the original.
An old man is audited by the Revenue Commissioners. He shows up at the Revenue offices with his accountant.
The Revenue auditor says to the old man, “Well sir, according to our records, you are able to enjoy a very luxurious lifestyle despite not being employed. How do you explain this?”
The old man replies, “Well, I’m a skilled gambler.”
The auditor says he has difficulty believing that the old man could finance his lifestyle just by gambling, so the old man retorts, “Well then, I bet you a thousand euro that I can bite my own eye.”
The auditor thinks there’s no way he can lose this bet, so he accepts. The old man then pulls his glass eye out of its socket and bites on it. The auditor is shocked.
The old man says to the astonished auditor, “Now, I bet you two thousand euro that I can bite my other eye.”
The auditor can tell the old man isn’t blind, so he takes the bet. The old man removes his dentures and uses them to bite his good eye. The auditor is now out three thousand euro, money he doesn’t have, with the accountant as a witness. He starts getting antsy.
The old man sees the auditor and declares, “Well, I’m a good sport, so I’ll give you a chance to get that money back. I bet you six thousand euro that I, a seventy-seven year old man, can stand on one side of your desk and urinate into the garbage can on the other side, without getting a drop in between.”
The cautious Revenue auditor thinks for a moment, decides that there’s no way in hell the old man can manage this stunt, and accepts. The old man walks over to the desk, whips it out, and lets it fly. Although he tries his damndest, he can’t hit the wastebasket, spraying urine all over the auditor’s desk.
The auditor starts jumping up and down, overjoyed at having won his money back and more. Just then, the accountant moans and puts his head in his hands.
The Revenue auditor asks the accountant, “What’s wrong?”
The accountant looks at the old man and sighs, “This morning, he bet me twenty-five thousand euro that he could piss all over your desk, and you’d be happy about it!”
Thursday, October 29, 2009
Although he was talking about the climate change debate, I thought Saffo's points were especially apt for Ireland, including the debate about NAMA. The continuing fiasco of foisting a wildly optimistic, potentially-suicidal 'solution' on an increasingly reluctant, tax-paying electorate reads just like a debate between druids and engineers. Only worse, it's more like a conspiracy: the druids in the Green Party are in cahoots with the too-clever-by-half financial engineers advising Fianna Fail and the Department of Finance. That's going by Peter Matthews description of last night's Leviathan gig.
Conflict is inevitable. Take the looming environmental crisis. “The argument is shaping up to a monumental scrap between two ommunities: the druids and the engineers,” said Saffo.
“The druids say, ‘Look, the solution is we have to turn the clock back, go more lightly on the land’. The druids tend to be pessimists — everything dies.
“The engineers say the way out of this crisis is to engineer our way out. Engineers are by nature optimists. ‘Give me enough resources and I’ll take you to the moon.’ ”Saffo is not one to offer easy solutions. “Druid versus engineer is going to be the debate of the 21st century. I’m a sceptic of both camps. We can’t go back, it’s too late; and yet engineering is what got us into this trouble. There has to be a middle ground,” said Saffo.
Trick or trick everyone?
Monday, October 26, 2009
I thought of this when I read about Norway's policy of releasing individual tax return details to the press. There's a simple web page application you can fill out here if you are a journalist - though you might want to paste the url into Google Translate (making sure to select Norwegian to English before hitting the translate button). The details the Norwegian Government will provide to journalists is quite remarkable: name, zip code, date of birth, income, net worth and taxes paid. It certainly indicates an appetite to take transparency to its logical extreme.
Moreover, it is a disturbing example of how our increasingly digitalised lives are vulnerable to abuse - especially by the state. Take, for example, the behaviour of Irish local authorities who are using new powers to demand customer information from the ESB in order to determine if houses in their area are being used as holiday homes (due to electricity consumption patterns) and therefore liable for the 'second home tax'. Or take the behaviour of police in the UK who are using Tesco Clubcard data to determine if a suspect's spending behaviour is indicative of criminal intent (no, I don't know how this could work either - unless Tesco sells sawn-off shot guns: buy-one-get-one-free?)
Perhaps transparency is the price of progress: we now leave a digital trail of information from our mobile phones, laptops and credit cards behind us everywhere we go. And with more and more information held electronically by government (e.g.: in the form of the very successful ROS initiative) then it will be easier and easier for them to introduce measures such as those of the Norwegian government. But why stop at tax returns? Why not acquire and publish party political preferences (as registered voters do in the United States); religion and race (ditto the latter in the USA), blood type (for emergencies only, of course); criminal record; and make and model of car (as an indicator of carbon footprint)? All of which (and much more) could be rationalised on the grounds of transparency, solidarity, equity, efficiency and so on and on ...
Sadly we are reduced to relying on one arm of government (the Data Protection Commissioner, now threatening legal action as it happens against local authorities in relation to the ESB) to protect us from the other arms. But as arm-wrestling contests go I think I know how that one's going to end.
Sunday, October 25, 2009
Two thousand years ago, a Roman Senator suggested that all slaves wear white armbands to better identify them. “No”, said a wiser Senator, “If they see how many of them there are, they may revolt.” AnonFriday 6th November is Get Up Stand Up day, one that will presumably see a great many public sector workers - and some private sector ones - protest at all the things the Government hasn't done yet. It is their right to do so; a right that I would defend.
But why stop there? Just as public sector employees are perfectly entitled to protest against possible (and increasingly unlikely) cuts in their pay and numbers by the Government, should not taxpayers be equally entitled to protest against probable (and increasingly likely) increases in the burden of taxes they must bear? Tax strike anyone?
Tax resistance has a noble tradition, and given the Government's Chamberlain-like negotiating stance with the unions then it might be wise to have a Plan B in mind. IBEC are beginning to wake up to this possibility, as Danny McCoy from IBEC put it last week:
If consensus cannot be reached, business will take its own decision on how best to proceed in the absence of an agreement.I have a suggestion for IBEC: for every day of (perfectly legitimate) protest by Congress that brings Dublin and our other major cities to a halt (at employers' and businesses' expense), let's have a "Taxpayers Rest Day" - with all IBEC's members deducting 1/20th of their PRSI/PAYE returns for each month in which a protest takes place (assuming 20 working days in the average month). Sending the monies to IBEC instead to support their campaigning.
That should concentrate the minds of everyone at the negotiating table wonderfully: especially the 'Neville Chamberlains' in Government Buildings. Time to hand out the armbands.
Saturday, October 24, 2009
From the wonderful Ads of the World
PS: there's something going on in South African advertising - they are making some of the funniest ads out there. Check out this, this and this.
And don't forget the tissues ...
Brian Cowen told The Irish Times yesterday the Government was anxious “to work with the public service unions to identify measures including the restructuring of the delivery of public services which would enable costs to be reduced without reducing pay rates”.Riiiggghht: the same folks who brought us industrial-scale sick leave on full pay are going to 'identify measures' that sort-of-don't-cost-anything but reduce costs anyway? Hmmm - I think they need to get out of the bunker more often. It's plainly getting to them:
ht Stephen Kinsella
Friday, October 23, 2009
Living with monsters under the bed can be stressful. No wonder 6 out of 10 civil servants go on sick leave every year, for a cumulative average of just over two working weeks (11 days). Here are some of the highlights from the Comptroller & Auditor General's report on Managing Sickness Absences in the Civil Service:
- the average number of days that each employee was out sick ranged from almost five and a half days in the Department of the Taoiseach to nearly 16 days in the Property Registration Authority
- the percentage of staff who took sick leave ranged from 42% of staff in the Department of Arts, Sports and Tourism to 76.5% in the State Laboratory
- 42% of all instances of absence representing 9% of all days lost were uncertified by a doctor or unauthorised
- almost half of all sick days were taken by Clerical Officers and three quarters of all Clerical Officers availed of sick leave. The average number of days taken by each Clerical Officer was 16 days
- female staff absence accounted for 68% of all working days lost, the average number of sick days taken by each female employee was almost 14 days, while the average for each male employee was around eight days
- the average number of days lost for those working a three day week was almost 80% higher than the average for those who worked a standard week.
Or, more accurately, the 'carrot and bunch of carrots approach'. Hence the news today that public sector employees saw their average weekly earnings rise by 3.2% to €973.07 in the year to June (an 'inflation' adjusted increase of 8.6% allowing for deflation of 5.4% in the year to June). That's the carrot. Then there was the other C&AG report yesterday on Central Government Pensions which tells us that a) current public service pension liabilities stand at over €100 billion and that b) taxpayers will have to further contribute a net €157 billion on top of public servants own contributions (and an assumed continuation of the Pension Related Deduction (PRD) introduced in March this year). That's the bunch of carrots.
So where does this leave us? We now not only have a public sector that is extraordinarily privileged relative to their private sector counterparts: they are also increasingly aggrieved at perceived threats to their privileges. Instead of admitting they are part of the problem, public sector unions prefer to indulge in 'whataboutery'. "It was the nasty bankers and developers what caused the recession; we were just doing our jobs and innocently awarding ourselves double-digit pay increases and platinum-plated pensions; so we had nothing to do with it".
Until politicians and public sector union leaders are prepared to admit that you cannot support a 2007-size public sector on top of a 2001-size private sector then no amount of street protests will make any difference. But I don't expect that to happen any time soon. Politicians are already victims of Stockholm Syndrome when it comes to public sector unions. Over-familiarity has blinded them to the unreasonableness of their captors' demands. Hence the tolerance for intolerable levels of sick leave.
Worse, we have an ageing public sector which has turned inwards, viewing the world through increasingly paranoid eyes. Irish civil servants are not unique in this regard mind. Here's the findings from a study of the level of risk aversion and altruism among public sector employees (ht Geary):
Summarizing, we have found clear support for the hypothesis that public sector employees are more risk averse than private sector employees. However, in contrast to our expectations, we have also found that public sector employees are on average less inclined to make charitable contributions than private sector employees. This effect is partly due to the fact that many more people in the public sector feel underpaid. Moreover, we have found that feelings of underpayment have much larger repercussions for the odds of donating to charity in the public sector than in the private sector, suggesting that public sector employees consider the contributions they make on the job as a substitute for charitable donations. Our findings suggest that many public sector employees feel that they already donate a lot to society by exerting effort on the job for relatively little pay and, therefore, are less willing to make any further contributions than their private sector counterparts. Lastly, we have found a clear effect of tenure on pro-social inclinations in the public sector, which arises independently of feelings of dissatisfaction about pay. As public sector employees’ tenure increases, they become less and less inclined to make charitable contributions, while there is no tenure effect for private sector employees.Like Charlie Haughey before them, they have done the State some service - and now they feel the state should service them in turn.
Still, they might be right. There might be a monster under the bed. One with the initials I.M.F. tattooed on its forehead. I hope it goes away.
Tuesday, October 20, 2009
And my southern readers shouldn't forget the North's many cultural attractions. Especially, er, music:
Okay, it's really just a clever marketing ploy, with a super-smart combination of SMS/Skype/Facebook and iPhone App teaching solutions.
I wonder could we sell them Irish lessons?
A polite 有劳/ǒuláo to those nice folks in China.
Monday, October 19, 2009
This conundrum struck me as a I listened to a stunning presentation by the venerable Stewart Brand at the Long Now Seminar series. He has just written a book entitled Whole Earth Discipline: An Ecopragmatist Manifesto. Stewart is a lifelong environmentalist (his biography is enough to induce a fit of I'm not worthy genuflection, and some serious envy to boot ;-) But he has come to have an ecopragmatist view of the challenges we now face as a species, hence his call for:
- Nuclear power
- GMO foods
- Geo-engineering to postpone/solve global warming
Anathema, of course, to our Narnia-dwelling overlords. But Stewart and others like him are taking a long-term view (hence the delightful way in which they use five-digit years, e.g.: 02009, to subtly reframe our perspective of time and the future). They recognise the long term nature of the challenges we face (including rapid urbanisation as illustrated in the chart from The Global Food Equation by DB Research). And they recognise the opportunities that this will create.
Fianna Fail and the Green Party, and through them the government, are now committed to an anti-scientific future. We deserve better and we can do better. If we can just lose the anti-scientific posturing on food and agricultural policy then Ireland could become a very wealthy country indeed through the development and licencing of food production IP and technologies. And we can go further, beyond value-added innovation to the 'thick value' of Awesomeness.
Who would you rather have in mission control as you fly to the moon: the astrologer or the rocket scientist?
Sunday, October 18, 2009
If something can't go on forever, it will stop.
Rationally rethinking the ways in which we govern ourselves (as opposed to the cute hoorey of decentralisation) makes a lot of sense. Never waste a crisis and all that. But we need to go much, much further.
Take the conditions of employment in the public sector. It is the last hold out of the 'jobs for life' mentality. I think everyone in employment - public or private sector - should be on a fixed term contract (sort of the way politicians are). Say 3-5 years, with options for shorter, 1-2 year contracts. This would have several major advantages. Firstly, as the largest employer, the public sector would have the option not to renew contracts if tax revenues meant it could not be afforded. Ideally the renew/don't renew decision would be devolved to management levels best able to make the decisions. The managers would also be on fixed term contracts, of course. This would free up the state to engage in more significant reorganisation of service provisions without the ludicrous situation we have in the likes of the HSE where a host of regional health authorities were 'replaced' by one central authority without a single manager being let go.
I would advocate the same arrangement for the private sector - in fact, ideally it should be made illegal to offer anyone a 'permanent' contract in either the public or private sectors. And I wouldn't stop at employment contracts. I would also like to see commercial rental agreements subject to considerably shorter timeframes (the current practice of 20 years and more leases is frankly Victorian in its assumptions and precedents).
What consequences might we expect? Less borrowing and more savings perhaps? Hardly a bad thing in itself. More people would take out income and mortgage protection policies in order to access longer term loans. But the facilities for this are already in place and widely available. Think of it as a form of 'flexicurity' along the lines advocated by many on the Left (and by NESC). Though they never seem to extend the same labour market flexibility to the public sector for some reason. Flexicurity applied to the public sector as well as the private sector (combining fixed term contracts with income insurance, retraining etc) would improve productivity as well as reduce the rate of increase in public sector costs. Nor would it necessarily mean fewer public sector employees - an expanding economy and population fuelled by a more efficient state might actually require more employees.
Such an approach to employment in the public sector would also help us avoid the situation we are in now: borrowing €400 million a week primarily to meet the contractual obligation of jobs for life in the public sector. It doesn't have to be this way. A more flexible approach to public sector employment across the board would avoid the kind of show down we are about to experience in Ireland in the coming months, with Irish public sector unions playing chicken with the IMF. A more flexible approach could also imply higher wages and salaries for certain, skilled public sector workers to tempt them from (or prevent them defecting to) the private sector. I for one wouldn't have a problem with that if it meant better value for money and higher public sector productivity. Hell, it might even be worth paying higher taxes for it, but don't tell anyone I said that ...
One last thing inspired by Tim Harford. What if the IMF do come knocking? What if schools and hospitals are closed by cut backs and strike action? Could the 6 out of 7 of us not working in the public sector carry on without them? Here's his radical rethink on health services:
There is an obvious alternative. We could pay for our medical treatment the same way that we pay for our cars or our food or a roof over our heads: out of our own pockets. Before rejecting the idea out of hand, at least acknowledge that it would encourage us to ask a very different set of questions, including: “is there a cheaper way that would work?”, “can I get better value treatment elsewhere?”, and even “would I save money if I drank less and exercised more?” The effect on cost and quality would be bracing.
Think about medical technology. Why does its price keep rising while the price of other technology keeps falling? Perhaps it is just bad luck, but I doubt it. As long as patients have no way to demand better value instead of simply better quality, cost inflation seems inescapable.
He's right of course. If - instead of paying taxes to politicians to pay to managers to negotiate with the unions to provide the services - we just went out and bought what we wanted then we'd all begin to wonder where it might stop. Thinking the unthinkable - I wonder does Enda realise what he's started?
Saturday, October 17, 2009
People find it hard to think about the future in the abstract. Sure they can talk about their holiday plans, their ambitions for their children and life after retirement. But once you go beyond biographical narrative it is difficult, and for some impossible, to think in any serious and persistent way about the future. We are, most of the time, present-oriented creatures with (very) limited capacities for abstract reasoning about the future. And when we do (have to) think about the future we often default into simple heuristic devices - the most popular being extrapolation.All the gallows in the world groan with the weight of politicians who boasted of their foresight. All of history is nothing but the lack of foresight.Tadeusz Konwicki
Which is why I welcome books like Ireland in 2050 - How We Will be Living by Stephen Kinsella. There hasn't exactly been a rich tradition of futures thinking in Ireland over the years. The past has too often crowded out the future in popular discourse - even Preventing the Future as described in Tom Garvin's magnificent book (worth the price for the chapter on secularism and cultural shift alone). Stephen's book (and its success) is itself a powerful indication of a new maturity in Ireland: we are no longer a small nation whose future is 'dictated' by events elsewhere. Instead we are wealthy enough and peaceful enough to begin thinking about and shaping our own future. If we want to. And I especially like the way in which Stephen has taken a web 2.0 approach to sharing and debating the ideas and insights from his book: both on twitter and on his blog. I should add I was invited to comment on part of an earlier draft of the book, which I was delighted to do.
Ireland in 2050 falls into a category of writing and thinking about the future that I think of as 'Futures Lite'. In other words, the content and style of the book are designed to engage a general audience about issues and prospects that they might otherwise never think about. A healthy antidote to the cognitive barriers about abstract thinking I referred to above. However, this inevitably imposes some limits on the book. For example, there is no over-arching meta-narrative that frames and explains future outcomes in the style, say, of Paul Kennedy's magnificent The Rise and Fall of the Great Powers which he subsequently applied to thinking about the 21st century (albeit with limited success).
A bigger constraint is the 2050 horizon itself. As Stephen points out, 2050 is as far ahead in the future as 1970 is in the past. 1970, by the way, was the year Alfin Toffler published his seminal book Future Shock - the grand daddy of all Future Lite books. Toffler's core thesis was that change would happen faster (due to the impact of rapid technological evolution) than people could possibly handle (due to cognitive constraints imposed by human evolution). He was right (sort of) about the former (the web, mobile phones, biotech); but wrong about the latter. But what strikes you most reading Toffler is the extent to which he overestimated how quickly some technologies would emerge (see his ideas about the 'electronic cottage') and hopelessly underestimated the speed with which certain institutions would be transformed (the Soviet Union for one).
Reading Ireland in 2050 I feel I am reading a book more about Ireland in ten years time than in forty years time. In other words, it is a well told story that weaves together some of things already happening (the 'internet of things', for example) with other developments that are to a certain extent inevitable (demography and new energy arrangements). If anything the future painted in the book is, surprisingly, unsurprising. There is no reference, for example, to the Singularity: a technology-driven, future event that many serious analysts believe is both possible and probable in the next forty years. A recurring theme in techno-futurist commentaries by the likes of H+ magazine (though they do see the fun side of being ruled by robots as well ;-)
But I don't think that matters much. The important thing is that the book is a welcome start to what will hopefully be a deeper, wiser and engaging dialogue about our country and its future. And it is especially important that that dialogue is not confined to politicians. Not just because of their corrosive parochialism, and the lack of foresight that it engenders (everywhere), but also because a small country needs to engage smart people from all walks of life in creating a compelling narrative about our future. I believe that Stephen Kinsella's book will play a key part in helping bring that about.
Friday, October 16, 2009
I keep thinking about that whenever I hear someone talking about positioning Ireland as a smart economy. Like, you think we're the first to have the idea? I continue to be impressed by Israel's technological achievements - spurred, undoubtedly, by a not-quite-ideal combination of military necessity and political exigency. But it has worked, as explained in a compelling article about Silicon Israel by George Gilder, who notes:
A 2008 survey of the world’s venture capitalists by Deloitte & Touche showed that in six key fields—telecom, microchips, software, biopharmaceuticals, medical devices, and clean energy—Israel ranked second only to the United States in technological innovation. Germany, ten times larger, roughly tied Israel. In 2008, Israel produced 483 venture-backed companies with just over $2 billion invested; Germany produces approximately 100 venture-backed companies annually. The rankings registered absolute performance, but adjusted for its population, Israel comes in far ahead of all other countries, including the United States.Now that's smart - and impressive for a population of just over 7 million people. As Gilder points out, a turning point in Israel's smart economic performance was the emergence of a financial sector - especially venture capital - aligned to new technology start ups etc. Which is why I like Chris Horn's analysis presented at today's ComReg conference on Communications for The Smart Economy. It flies in the face of the usual bromides that pass for enterprise policy in this country. The chart contrasts current policy with what he would consider to be a smart policy:
Horn makes the vital connection between financial policy and enterprise policy - like the Israelis did. Only for Ireland he thinks it is vital to create a regular stream of start ups AND trade sales, with the newly enriched sellers then reinvesting a portion of their wealth in the next wave of start ups etc.
Fine in theory (in my opinion), but a little more challenging in reality. The chart at the top of the post explains why. It's from Goodbody's latest analysis of Irish economic prospects. The bottom line: 20% of the country's wealth will have been wiped out by the time the recession ends next year. And most of the wealth we still have is locked into property and property-related assets. We are faced then with a double tragedy: the long-term consequences of a grotesque over-investment in property to the detriment of every other sector during the boom, and the inability to invest adequately in the sectors that could create drive the wealth creation that might take us out of recession.
But all is not lost. Perhaps one consequence of the Global Irish Economic Forum will be to tap some of the same financial and relational capital that served Israel well during the 1990s and past decade. We'll need all the help we can get. Though if all else fails we could just outsource our national IT strategy to McDonalds. They seem to be having more success with it.
Thursday, October 15, 2009
Very few businesses plan ahead 10-11 years: there's just too much uncertainty. Sure if you're building a major production facility you might think that far ahead - though even then you are more likely to be planning for its subsequent 'redundancy' rather than its continued contribution to growth by the end of the forecast period.
But I have worked on a few plans that did look that far ahead - as far ahead as the Draft NAMA Business Plan realeased recently. There have been lots of comments already about its projections (take your pick). For me the key section of the report - and the most alarming - is that relating to Key Risks Facing NAMA on pages 31 to 33. The authors list 8 key risks to their forecasts ranging from the obvious - a prolonged property recession, different valuation outcomes etc - to the less obvious, e.g.: reputation risks and staffing difficulties.
But amazingly for a business plan looking ahead eleven years there is no reference to demography and population trends. To my mind this is the killer risk at the heart of NAMA. This was brought home to me by a fascinating paper by Diane Macunovich entitled The Role of Demographics in Precipitating Crises in Financial Institutions. Here's her thesis in a nutshell:
The hypothesis presented in this paper, which appears to be supported by the data, is that increases in the share of the 15-24 age group lead producers to ratchet up their production expectations and take out loans to expand production capacity; but then reductions in that share – or even declining rates of increase – confound these expectations and precipitate a downward spiral of missed loan payments and even defaults and bankruptcies, putting pressure on central banks and causing foreign investors to withdraw funds and speculators to unload the local currency.She shows how shifts in the share of younger adult age groups in the total population played a key role in precipitating the Latin American financial crises in the 1980s, the Asian crises in the late 1990s, the Japanese slump over the past decade and, of course, America's great crash of 2008. Intuitively it makes a lot of sense: it's the 20-somethings who form families, buy homes, start jobs (and even companies), and who borrow. Borrow lots in fact.
Is this relevant to Ireland and to NAMA? Hell yes. Following Macunovich I ran a simple correlation between real GDP growth in Ireland (1980-2009) and the year-on-year change in the shares of five year age groups in Ireland's total population. The first column in the table shows the correlation between total growth and each age group's changing share. I've shaded the key 20-24 and 25-29 age groups: sure enough, as in other countries they have among the highest correlations with growth of any age groups. The clincher is in the second column which shows the projected increase/decrease in the numbers in each age group between 2009-2020 (using the CSO's M0F2 scenario as before). The share of 20-somethings in Ireland population peaked just a few years ago (as did growth) and is set to collapse of the next decade (and that's excluding the potential impact of a return to net emigration).
So if we use Macunovich's model to project economic growth over the period of the NAMA plan then the outlook isn't exactly reassuring. Of course, older age groups (also with high correlations in Ireland's case) will see some growth - but they won't be in the market for the over-supply of starter houses that will make up an awful lot of the NAMA portfolio. This, by the way, is also a major challenge for businesses dependent on the Irish consumer market - as I pointed out in a presentation earlier today to the Sales Institute of Ireland.
It took me ten minutes with CSO and IMF data to work this out using Excel. I hope some of the NAMA advisors who will be paid €2.64 billion over the next ten years will check it out for themselves before they prepare another 'draft' of their plan.
Wednesday, October 14, 2009
One Japanese researcher attached electrodes to the upper and lower eyelids of volunteers and got them to watch a movie together. Before too long, 70% of them were blinking at exactly the same time ...
And if you add up all the time our eyes are shut when blinking then an 80 year old will experience two years of their lives with their eyes closed just because of blinking. Weird or what?
Listen here - and do subscribe to the podcast if you're into that kind of thing.
View Full Audio on WNYC
Monday, October 12, 2009
As William Easterly keeps reminding us at his excellent Aid Watch blog, there's an awful lot of 'aid' that isn't very helpful (or wise for that matter). His tongue-in-cheek post on If Hotels Were Aid Agencies gives you a sense of why initiatives like Kiva are much, much smarter.
The Green/FF Renewed Programme doesn't have much to say on overseas aid other than that:
We will set out clear targets showing how Ireland will meet its ODA commitments.Targets are cheap, of course. Maybe a smarter approach is needed: why not let the citizens choose the recipients of aid? And if we adopt a Kiva model we'll get the money back again and we can support other recipients anew.
'Renewable Aid' - sounds like the sort of things Greens should support ...
Sunday, October 11, 2009
But like all such programmes for government - and every political manifesto since the dawn of time - the document is high on idealism and low on realism. Sure there's something for everyone (I rather like their idea for electoral reform, so long as it means fewer politicians). But I feel like we've been promised an organic chicken in every pot - as Herbert Hoover might have said - though sadly The Great Depression meant that he never did get to deliver on his promises.
And I suspect that much the same fate awaits this particular programme.
Friday, October 9, 2009
But maybe the prize awarding committee have swallowed the Self-Esteem pill? Maybe they think that if they give President Obama the Nobel Prize for Peace before he does anything to deliver peace anywhere then he might just deliver? Kind of like a 'gold star for effort' from the teacher. The only problem is all the self-esteem psychobabble is now shown not to work. Indeed it might even have the opposite effect intended:
So we can certainly understand how an injection of self-esteem might be valuable to the individual. But imagine if a heightened sense of self-worth prompted some people to demand preferential treatment or to exploit their fellows. Such tendencies would entail considerable social costs. And we have found little to indicate that indiscriminately promoting self-esteem in today's children or adults, just for being themselves, offers society any compensatory benefits beyond the seductive pleasure it brings to those engaged in the exercise.Oops! And where will it stop: the Nobel Prize in Economics for a first-year grad student?!
Another day another report on how public sector workers are paid much more than their private sector counterparts. Up to 26% more in 2006, according to the ESRI. A pattern confirmed in a similar analysis by the CSO using 2007 data.
Of course public sector unions and their supporters have been vociferous in pointing out 'flaws' in such comparisons: the need to make like-for-like comparisons adjusting for size of organisations, educational attainment of employees etc etc. Unfortunately for them the ESRI and CSO have done just that: the differences they calculate still boil down to one thing - people working in the public sector are paid an awful lot more than people in the same circumstances in the private sector.
Fintan O'Toole makes an obvious point: it was the public sector unions who started the whole private/public sector pay comparisons thing with the ridiculous benchmarking racket (okay, Fintan doesn't call it a 'racket' - but if it walks like a duck ...) But he then spoils his analysis with this point:
Gender is one of the issues that nobody seems to want to talk about. The most striking area in which there is a “public sector premium” is in pay rates for women. According to the CSO figures, the premium is 15 per cent for men but 23 per cent for women. The reason for this is obvious enough – it is harder to discriminate against women in the public service than in private firms. Partly as a result, the really glaring gap is between women in the two sectors of employment, with those in public jobs earning almost €10 an hour more than their sisters in private companies.So let's talk about it. Firstly, where is the 'obvious' proof that private firms discriminate against women? The very same ESRI recently conducted an exhaustive analysis of gender wage differences and concluded that those 'unexplained' differences that do exist (a gap in average male/female wages of 7.8%) could not be attributed to discrimination as there was no evidence for same and might be due to a host of other things (such as women having life priorties other than paid employment).
But you see the problem? It would be a brave politician (or journalist for that matter) who would suggest that women in the public sector are even more overpaid than men vis-a-vis the private sector. Much safer to make evidence-free, egregious accusations about those well known pariahs - private sector employers - than 'talk about the gender issue'.
Now in an ideal world we'd all pay ourselves public sector salaries and enjoy the same terms and conditions (and pension entitlements). But back here on planet Earth it isn't going to happen. If mark-to-market makes sense to some critics of NAMA (and I have some sympathy), then mark-to-labour-market makes much the same sense if we are to avoid encumbering our children and grandchildren with a triple-digit national debt to GDP burden.
But I'm guessing most folks won't want to talk about it.
Thursday, October 8, 2009
I am not the only one. An excellent new study - The Global Oil Depletion Report - by the UK's Energy Research Centre paints a sobering picture of that country's future vulnerability to Peak Oil, whilst avoiding any ideological pitfalls. And as their next door neighbour you can assume their findings apply directly to us. Here's the key part of their assessment:
The short term future of oil production capacity, to about 2016, is relatively inflexible, because the projects which will raise supply are already committed. Reasonable short-term forecasts for any region can be constructed using widely available public data. The primary issue for the short term is the cancellation and delay of these projects as a result of the economic recession and thePeak Oil is an economy killer. You can 'solve' a financial crisis by printing money ('quantitative easing'), so long as you are willing to pay the subsequent price (potential hyperinflation). But a sudden-onset oil supply problem that can only get worse is much more difficult to circumvent. The recent NCC Statement on Energy makes a similar point in relation to Ireland:
consequent risk of supply shortages when demand recovers.
For medium to long-term forecasting, the number and scale of uncertainties multiply, making precise forecasts of the date of peak production unwarranted. Nevertheless, we consider that forecasts that delay the peak until after 2030 rest upon several assumptions that are at best optimistic and at worst implausible. Such forecasts need to demonstrate either how these assumptions can be met or why the conditions identified here do not apply. On current evidence, we suggest that a peak of conventional oil production before 2030 must be considered likely.
It is more difficult to form a judgment on the timing of peak production in the interim, given the multiple ‘above’ and ‘below’ ground factors involved. On balance, we suggest that there is a significant risk of a peak in conventional oil production before 2020. Given the potentially serious consequences of supply constraints and the lead times to develop alternatives, this risk should be given urgent consideration.
Globally, the immediate risk to energy supply is not a lack of resources, but rather a lack of investment to extract resources. Massive investment in energy infrastructure is required to maintain the current level of supply capacity, as much of the world’s current infrastructure for supplying oil, gas, coal and electricity will need to be replaced by 2030. Given that oil production has already peaked in most non-OPEC countries, OPEC countries are expected to account for most of this increase in production. The IEA has emphasised the risk that under-investment could cause a supply crunch in coming years as large proven reserves may not be fully exploited and the supply of oil and gas constrained. Ireland is a peripheral nation particularly dependent on oil and increasingly gas for energy consumption; in this scenario of global under-investment Ireland would be vulnerable to security of supply threats.It's a national security issue. Ireland can't invade oil producing countries to grab some for itself (just as well really), so we have to be smart, flexible and fleet of foot to look after ourselves. This is the strategy advised by Deutsche Bank in a recent report on The Peak Oil Market: Price dynamics at the end of the oil age. They assume that rising oil prices (peaking in 2016) will fast forward plans to increase hybrid cars (including gas-powered) to rapidly reduce demand just as supply starts to shrink. A kind of race to the post-oil age that can hopefully be achieved without too many bumps along the road. A verybrave assumption I reckon.
Wednesday, October 7, 2009
We ask that the government undertake the obligation above all of providing citizens with adequate opportunity for employment and earning a living. The activities of the individual must not be allowed to clash with the interests of the community, but must take place within its confines and be for the good of all. Therefore, we demand: … an end to the power of the financial interests. We demand profit sharing in big business. We demand a broad extension of care for the aged. We demand … the greatest possible consideration of small business in the purchases of national, state, and municipal governments. In order to make possible to every capable and industrious [citizen] the attainment of higher education and thus the achievement of a post of leadership, the government must provide an all-around enlargement of our entire system of public education … We demand the education at government expense of gifted children of poor parents … The government must undertake the improvement of public health – by protecting mother and child, by prohibiting child labor … by the greatest possible support for all clubs concerned with the physical education of youth. We combat the … materialistic spirit within and without us, and are convinced that a permanent recovery of our people can only proceed from within on the foundation of the common good before the individual good.Okay, it wouldn't get my vote - a bit too nanny state'ish for my liking - but it would probably get a lot of people's votes right now. In fact, it did get a lot of votes first time round: the text is from the political program of the Nazi Party, adopted in Munich, February 24, 1920 (ht Adam Smith Institute).
In uncertain times people cling to certainty: and the (seemingly) All-Powerful State can appear to offer certainty to those lacking self-confidence, or those lacking faith in higher powers. Like I said, I don't doubt its appeal - it's the brutal truth behind the appeal that I don't like.
Which brings me to NESC's Well-Being Matters: A Social Report for Ireland. It is an extraordinary document: a) it is extraordinarily long (Volume 1: 212 pages/Volume 2: 354 pages); b) it is extraordinarily repetitive; c) it is extraordinarily out-of-date (it feels like it was written in 2006 and has been updated in a hurry with occasional mentions of a thing called the recession); and d) it is extraordinarily repetitive (or did I just say that?)
The report covers the same well (well) worn ground about how GDP isn't the measure of everything, how there's more to life than economics etc etc. Much the same ground has been covered (rather more succinctly) by the Stiglitz report for the French Government. Much of what NESC has to say is uncontroversial, even interesting (the earlier stuff in Volume 1 on Socrates and eudaimonia is a useful primer for those unfamiliar with his work). It even makes a reasonable fist of defining well-being thus:
Well-being is a positive physical, social and mental state. It requires that basic needs are met, that individuals have a sense of purpose, that they feel able to achieve important goals, to participate in society and to live the lives they value and have reason to value. It is enhanced by conditions that include supportive personal relationships, strong and inclusive communities, good health, financial and personal security, meaningful and rewarding work, a healthy and attractive environment and values of democracy and social justice. Public policy’s role is to place the individual at the centre of policy development and delivery, by assessing the risks facing him/her, and ensuring the supports are available to him/her to address those risks at key stages in his/her life.It all seems terribly reasonable - until you get into the substance of what NESC proposes to do. Firstly they want to get rid of our 'obsession' with GDP and economic growth, especially now the demise of the Celtic Tiger has shown us the error of our ways (from page 151):
... we should be able to learn from the past in planning for the future. The Celtic Tiger years brought unprecedented growth to Ireland and, as documented, general improvements in well-being across the well-being domains. Despite substantial economic and social progress, many social deficits remained, and new risks to well-being emerged, some from environmental resource constraints. Consequently, in building the foundations for future prosperity it would be wise to reflect on how a more comprehensive and sustainable approach could be taken to support human flourishing and well-being. For example, we may think differently about the desirability of fast economic growth, rather than deep or enduring prosperity. We may focus more on intensive rather than extensive growth and place a higher priority on sharing of gains and losses (see NESC, 2005b). We may take the view that infinite growth on a finite planet is not possible and that future prosperity is best secured by moving away from a growth economy towards a more economically, socially and environmentally sustainable model of development. We may seek a more equal society based on the evidence that more equal societies tend to have lower levels of poverty and higher levels of social cohesion (OECD, 2008b). This argument is supported by Wilkinson and Pickett (2009) who claim that more equal societies ‘almost always do better’ in terms of educational attainment, social mobility, life expectancy and higher levels of trust.A mandate to put government at the centre of everything: indeed, the prospect of the goverment as everything. Or, as they put it more bluntly:
The well-being analysis undertaken in this report suggests that some of these goals could be modified further:Kind of reads like a political manifesto, don't you think? But here's the thing, how on earth do they think we're going to pay for all of this without economic growth? Or do they imagine we can just start afresh - Year Zero - convinced that 'a permanent recovery of our people can only proceed from within on the foundation of the common good before the individual good'?
- From growth of total GNP to GNP per head to sustainable growth;
- From income growth to a more equal distribution of income;
- From absolute job creation to overall employment rate to participation rate;
- From discrete and targeted programmes for disadvantaged groups to responsive, flexible, person-centred, and tailored publicly funded services;
- From an exclusive focus on income to a balance between income and better provision of accessible, affordable quality services;
- From developer-led developments to planned and sustainable communities;
- From housing completions to occupancy rates;
- From ‘survival of the fittest’ to a more egalitarian society.
Now don't get me wrong: I'm not saying that the well-meaning, talented folk in NESC are a nest of eco-Nazis intent on global domination (or the 26 counties for that matter). I think they're way too misguided and myopic to harbour such sinister plans (and I've met one or two of them over the years and they seemed like nice people come to think of it!) Their myopia lies in the way in which their thinking is entrapped in the horrors of PC-think.
For illustration, take their analysis of the well-being of children (the first section of Volume 2: I couldn't bring myself to read the rest). Like the dreadful OECD study that addressed the same topic recently, they open the lid on the rarified world of social policy as phrenology. Take lone parenthood. On the one hand they tell us that:
Research by McKeown et al. (2003: 12) on family well-being found that the type of family a child or young person lives in – one parent, two parent, married parents, co-habiting parents, separated or single parents – has limited impact on family well-being. The key factors shaping the physical and psychological well-being of parents and children was found to be family processes, particularly the ability to resolve conflicts and arguments, and the personality traits of the parents.Then just a few pages later we're told that:
The second component of the relationships and care domain is family structure. The indicator is lone parent families. It is acknowledged that many children who grow up in lone parent families are secure and happy, and that there are some two-parent families where relationships may not be conducive to supporting their children’s well-being. However, statistical analyses across a range of countries show that, in general, children in lone parent families have a greater risk of poorer health, early school leaving, low skills, low pay, and poverty.Note the hilarious way in which they couch the subject: 'it is acknowledged' ... what, are they afraid they won't be invited to any more dinner parties or something if they say anything blunter? And what's even more hilarious: their analysis of the impact on children's well-being of owning pets is longer than their analysis of the impact on children's well-being from growing up in lone parent families. I kid you not (164 words on the former, 162 on the latter!)
And as an aside, there is no analysis of religion as a source of wellbeing in either volume (other than as a potential source of discrimination). Yet there are countless studies showing its importance (rather more than pets); something I know to be the case despite my post-Christian, secular leanings. Yet more PC myopia.
Which is why I don't worry about NESC and any proto-fascist proclivities (of which I'm sure there are none). It's just that when their view of the world is so wrapped up in such reality-denying platitudes and plain old fashion leftist ideologies (with a now mandatory dose of greenism) then I know that they will never get traction with the ordinary, real-world-dwelling voters of Ireland. The ones who just want to get on with their lives, look after their families, enjoy rewarding work and be proud of living in our free and peaceful country (despite its present difficulties).
Look: GDP and all that is a bit like the Profit & Loss Account in a company. It's a way of keeping the score - but it isn't the purpose of human society nor of business. Everyone else knows that: but NESC - after 566 pages plus an executive summary - clearly hasn't twigged it yet. Colm McCarthy suggested keeping NESC: I'm honestly not sure why after this.
Tuesday, October 6, 2009
The Comhar report unfortunately reads like a desk research summary of 'green ideas' folks have tried all around the world. Coupled with a breathless 'we should try this in Ireland too' level of enthusiasm. But ... there are one or two ideas (well, one actually) in the report that I like. It's the 'Pay-As-You-Save' scheme for improving the energy efficiency of homes (explained on page 56, whence I borrowed the chart). As Comhar explains it:
The scheme is predicated on the concept of third party financing the upfront capital costs repaid via a charge on the property rather than the individual. This enables the costs to be spread over a sufficient period so that repayments are less than energy cost savings. The third party financing could come from a financial institution such as a government owned bank or instead from a semi-state energy utility such as ESB or Bord Gais. The savings on energy bills, a ‘standing charge’ is then used to repay the loan each month until the original lump sum (plus some interest) has been paid off.Though it is heralded as a form of financial innovation (and when the banks aren't lending then I guess any new lending/borrowing scheme rates as 'innovative') it's really just a form of good-old-fashioned hire purchase. Only instead of separate repayments to the utility company, they are simply added to the utility bill instead. With the added benefit of continued savings on energy bills once the repayments are complete.
The good news for Comhar (and any utility company/financial institution willing to try it) is that there is a potentially huge, pent up demand for such a scheme in Ireland. My own company did a survey in August with Construct Ireland and we found that 80% of those responsible for paying household gas and/or electricity bills would actually be interested in such a scheme.
Which is why I am surprised at the National Competitiveness Council's claim in its Statement on Energy released today (see section on energy efficiency, page 26) that:
Energy suppliers are well placed to assist consumers to improve their energy performance and awareness. The CER should incentivise energy producers to improve energy awareness and efficiency among their clients. However, supports and technical advice that improves performance (rather than awareness) of industry (and potentially households) should continue to be State-funded.This I don't understand. If 'improving performance' translates as 'saving money' then there is no need for the State to fund an initiative such as the Pay-As-You-Save scheme outlined in the Comhar report. Unless of course the banks are still waiting for NAMA; in which case ESB, Bord Gais, Airtricity et al should put the financing of a PAYS/HP scheme out to tender. There's bound to still be a few financial institutions out there (even/especially outside of Ireland) prepared to lend. Or there's always the Credit Unions.
Monday, October 5, 2009
As always such projections are subject to considerable uncertainty - especially in terms of the assumptions behind them. Negative equity only matters when you want or need to sell, and it may well be, as I've noted before, that the current generation of first time buyers might just sit tight and wait until prices come back to nominally the same levels as before rather than sell.
Though that could be a long wait. Expect the next wave of 'financial innovations' to be targeted on helping those with negative equity move and buy again anyway. 100 year mortgages anyone?
Sunday, October 4, 2009
"Everything must change so that everything can stay the same."
But I do agree with The Free Marketeer on one thing:
We will forgive the European Union this time for pushing a bunch of reforms through national parliaments without persuading most citizens of the benefits. But never again. Ireland’s referenda have been pretty reflective of the European meme: We’re not saying ‘Yes’ until somebody really tells us what we’re saying ‘Yes’ to, and why.Where the EU once had a plan with widespread democratic consent (a Single Market and, to a lesser degree, a Single Currency); it now seems mostly to be about bureaucratic change. And the problem with a focus on administrative plumbing is that we end up like Prince Fabrizio in Giuseppe di Lampedusa's magnificent novel The Leopard (and an equally magnificent movie directed by Luchino Visconti). We end up with a Union trying to hold back the tide of the future by modest accomodations with change.
A strategy that did not end well for the aristocracy of Sicily.
Friday, October 2, 2009
But soufflés are tricky things as everyone knows. Especially a Public Sector Soufflé. If you open the 'oven door' at the wrong time - say, by letting in the cold winds of economic recession - then the whole thing collapses. Which is what we are experiencing right now.
- Upward-only benchmarking agreements
- Massive revenues from cyclical taxes
- A give-and-give Social Partnership arrangement with employers
- A decentralisation plan that needs to buy consent
- Labour shortages, immigration and high minimum wages
Pre-heat the economy to unsustainable levels of indebtedness. Continuously mix benchmarking agreements with Social Partnership appeasement, all the time adding in rising tax revenues from vat, capital gains tax, excises and stamp duty. Introduce the decentralisation plan and immediately add the remaining benchmarking agreements to ensure the decentralisation plan blends in smoothly. Baste the mixture in labour shortages, immigration and rising private sector wages propped up by a high minimum wage floor, then sit back and watch it expand.
The private sector has no choice but to deal with the realities on the ground. And that means for most businesses serving the Irish market that the overall level of demand in 2010 will be on par with what it was in 2001 - give or take a year. We now look set to end the decade with a standard of living not much higher than when we started it. But there's one big difference - our 2001-sized private sector will be supporting something like a 2007-sized public sector (allowing for modest reductions in public sector spending last year and this year). And that's assuming the Government doesn't concede any more reality-denying pay claims from public sector unions.
Of course, if we were in the midst of a straightforward inventory-driven recession then a bit of public sector expansion to offset private sector contraction might well help smooth the transition to the other side of the economic cycle. But we are not experiencing a common-or-garden recession in Ireland. Instead we are experiencing what has been called a Balance Sheet Depression, examined in a brilliant analysis by Edward Harrison over at Naked Capitalism:
Recessions are typically characterized by inventory cycles – 80% of the decline in GDP is typically due to the de-stocking in the manufacturing sector. Traditional policy stimulus almost always works to absorb the excess by stimulating domestic demand. Depressions often are marked by balance sheet compression and deleveraging: debt elimination, asset liquidation and rising savings rates. When the credit expansion reaches bubble proportions, the distance to the mean is longer and deeper.But there's one other special ingredient that we have to add to the Public Sector Soufflé here in Ireland. And that of course is NAMA. NAMA just might serve the purpose of - ultimately - increasing asset prices (which Harrison points out is the only tool available to governments to prevent further balance sheet destruction due to further, massive writedowns by banks). But the problem with NAMA is that it will add massively to our national debt which will rise from 25% of GNP two years ago to 140% of GNP over the next four years according to Constantin Gurdgiev. In that scenario 33% of tax revenues will go to simply servicing the national debt.
And if this seems extreme, then have a look at this chart from the National Competitiveness Council's recent report:
The chart does not factor in the costs of NAMA as the details weren't available at the time the report was published.
So we have a government in Ireland effectively unable to fight a recession/depression because it has spent all its ammunition on a high risk asset price protection plan.Therefore calls from the Left for the government to spend its way out of the recession in true Keynesian fashion are simply unrealistic: unless they think pushing the debt/GNP ratio to 200% is a worthwhile goal ...
Unfortunately once the soufflé collapses then no amount of 'heat' will make it reflate. Best start again ...