Saturday, April 30, 2011

The Happiness of The Irish

Today's Irish Times has a thought provoking article on the happiness of the Irish by Arminta Wallace. Accompanied by an article by yours truly on the resilience of the Irish (reflecting on the implications of the monthly recovery indicator my company publishes).

We've had an emotional recession: will we have an emotional recovery?

Friday, April 29, 2011

Human Flight

This paints a somewhat more serene experience of sky diving than I remember it. But would it make me want to get in a plane and do it all again? You bet:

Thursday, April 28, 2011

The Day The Music Died

Not every industry gets to know the date it 'died'. But the music industry does: April 28th 2003, to be precise. That's right, on this day eight years ago Apple launched the iTunes store. iTunes itself was launched two years earlier, but it was the iTunes store that put a blue ocean of competitive advantage between iTunes and other mp3 players (and retailers, and record labels and...). Today, the latest Apple results reports total sales through the iTunes store of $1.4 billion in the last quarter alone. Not bad for an eight year old service.

Of course there have been lots of criticism of the Apple approach to innovation - including accusations that Steve Jobs is killing jobs. Not surprisingly these tend to come from those sectors on the wrong end of the Apple innovation curve. Sometimes capitalism's creative destruction can look a lot like destructive creation. As for myself, I now buy more music (and listen to more) than at any time since I was a teenager. Thanks to iTunes (and to Radio Paradise where I usually hear most new music first - whilst listening to it on, yes, iTunes).

Now don't get me wrong - I'm not a total Mac fan (in the PC vs Mac sense). I'll keep using my iMac but - much as I like my iPhone - I'll be getting an Android phone next time. Sure it's very pretty in the walled garden that is the iPhone, but I increasingly want to peek over the wall at what's going on outside. Mind you, it could just be a defensive reaction on my part. After all, I can date the 'death' of my own industry - market research - to the date of another Apple product launch: the iPhone, on June 29th 2007. That was when the smart phone took off - and the smart phone will be the future of the market research industry in time.

Of course, the iPhone was only launched less than four years ago. So plenty of time yet...

Tuesday, April 26, 2011

Quote of The Day

"Ireland is being made to pay for deciding to socialise its private debt at the end of September 2008. That was the original sin. ...And now policymakers are talking about privatising state assets in order to pay for part of the costs of the socialisation. Whatever the other merits of privatisation, this does not make sense – the right solution is to (re)privatise the debt." Richard Portes

ht Stephen Kinsella

Change You Can't Believe In

This is what I love about America - they just do anger so much better than we do in Ireland. Regardless of your politics you just have to admire this guy's polemical stamina:

ht Zero Hedge

Monday, April 25, 2011

Transcending Religion

Easter is my favourite holiday of the year: it doesn't have the manic build up that precedes Christmas, whilst it still retains that sense of a time apart from the busy-ness of everyday life. For a few days anyway.

But Easter is more than an extra long bank holiday weekend. The Easter message - that those of us raised as Christians will have been imbued with - is one of hope.  It is a hope based on the deepest human need for transcendence, as recently observed by self-described atheistic humanist Brendan O'Neill:
In his book Transcendence and History: The Search for Ultimacy from Ancient Societies to Postmodernism, Glenn Hughes describes human communities’ longing for some ‘shared human experience [that] transcends biological, psychological and cultural circumstance’; for ‘human participation in a dimension of meaning that is non-particular, non-finite’. That is, the search for something bigger than ourselves and our routine lives, for a sense of purpose that goes beyond our mere biological existences or daily toil.
That is one reason why religious faith remains strong in Ireland, despite the appalling behaviour of the Catholic hierarchy in the past (and, in some instances, in the present). A survey this month by my company asked a representative sample of 1,000 adults to what extent they consider themselves to be religious. As the chart shows, only 30% of Irish people say they are 'not religious at all', with a slightly higher proportion describing themselves as 'very or moderately religious'. The chart also confirms two well established findings about religiosity in general: men are more likely to be non-religious than women; and older people are generally more religious than younger people. Though note that is Ireland's 35-44s that are the greatest doubters when it comes to religious matters. Furthermore note that almost two thirds of Ireland's 15-24s view themselves as being religious, albeit it 'slightly or moderately'. So not quite a generation of atheistic materialists it would appear...

Nevertheless, the Irish people's need for transcendence, like that of most people past and present, means that religion has a good future ahead of it in Ireland. But we will experience transcendence in different ways - and via different religions and philosophies. For some, transcendence will be found in the comfort found through ritual, for others it will be found in the familiarity of their childhood faith, seen through older, wiser eyes (as beautifully described by Anne Carson, ht an Easter-mellowed Epicurean Dealmaker).

While still others will find transcendence in the emerging insights of neuroscience - in the power of the outward gaze - and the realisation that the right hemisphere of the human brain has evolved to believe. As Iain McGilchrist puts it in The Master and His Emissary (the most powerful and original book I have read in ten years - do buy and read the whole thing):
Believing is not to be reduced to thinking that such-and-such might be the case. It is not a weaker form of thinking, laced with doubt. Sometimes we speak like this: 'I believe that the train leaves at 6.13', where 'I believe that' simply means 'I think (but am not certain) that'. Since the left hemisphere is concerned with what is certain, with knowledge of the facts, its version of belief is that it is just absence of certainty. If the facts were certain, according to its view, I should be able to say 'I know that' instead. This view of the world comes from the left hemisphere's disposition towards the world: interest in what is useful, therefore fixed and certain (the train timetable is no good if one can't rely on it). So belief is just a feeble form of knowing, as far as it is concerned.

But belief in terms of the right hemisphere is different, because its disposition towards the world is different. The right hemisphere does not 'know' anything, in the sense of certain knowledge. For it, belief is a matter of care: it describes a relationship, where there is a calling and an answering, the root concept of 'responsibility'. Thus if I say that 'I believe in you', it does not mean that I think that such-and-such things are the case about you, but can't be certain that I am right. It means that I can stand in a certain sort of relation of care towards you, that entails me in certain kinds of ways of behaving (acting and being) towards you, and entails on you the responsibility of certain ways of acting and being as well. It is an acting 'as if' certain things were true about you that in the nature of things cannot be certain. It has the characteristic right-hemisphere qualities of a betweenness: a reverberative, 're-sonant', 'respons-ible' relationship, in which each party is altered by the other and by the relationship between the two...
Man's search for transcendence would appear to be hard-wired into our brain (the right-hemisphere to be precise). The word religion is derived from the Latin 're ligare' - which some interpret as 'to bind together'. And as long as we feel the need to transcend our individual existence then religion will provide the path for many to achieve just that. As it already does in Ireland.

Happy Easter.

Sunday, April 24, 2011


95 years ago today - 24th April, 1916 - the generation of the vision set about realising their dream for us, the generation of freedom:
We Saw A Vision

In the darkness of despair we saw a vision,
We lit the light of hope,
And it was not extinguished,
In the desert of discouragement we saw a vision,
We planted the tree of valour, And it blossomed.

In the winter of bondage we saw a vision,
We melted the snow of lethargy,
And the river of resurrection flowed from it.
We sent our vision aswim like a swan on the river,
The vision became a reality,
Winter became summer,
Bondage became freedom,
And this we left to you as your inheritance.

O generation of freedom remember us,
The generation of the vision.

Liam Mac Uistin

Saturday, April 23, 2011

Barber-ians at the Gate

The Greeks gave us the word 'barbarian' (they thought foreigners all made the same, loutish 'bar-bar' sound). Citi has used a pun on the word - 'barber-ians' - as the title of its analysis of which banks will lose the most in the event of a Greek 'haircut'.

In absolute terms, French and British banks will lose the most, but in relative terms it will be Belgian and German banks (specifically the Postbank in the latter). The Belgian government had better be prepared. Oh wait, they don't have a government in Belgium...

Citi report is here.

Can't wait for their Irish report: 'Hibernians at the Gate' :)

ht Zero Hedge

Quote of The Day

On the moral challenge facing social scientists:

"The aspiration of social science to replicate the predictability and formality of certain natural sciences is, in the end, a hopeless endeavor. Human societies, as Friedrich Hayek, Karl Popper and others understood, are far too complex to model at an aggregate level. Contemporary macroeconomics, despite dealing with social phenomena that are inherently quantified, is today in crisis due to its utter failure to anticipate the recent financial crisis. 

The part of social change that is the hardest to understand in a positivistic way is the moral dimension—that is, the ideas that people carry around in their heads regarding legitimacy, justice, dignity and community."

Francis Fukuyama

Friday, April 22, 2011

Black Swan

Something for the weekend. An amazing performance, featuring the incomparable Yo-Yo Ma and the extraordinary Lil Buck:

Quote of The Day

It will soon be the 80th anniversary of the failure of Austria's Credit-Anstalt bank (which triggered the Great Depression and ultimately WW2). Here's Peter Coy quoting Harold James:
"The scariest thing about the Credit-Anstalt default is that it occurred in a small, peripheral country, just as today's worst problems are concentrated so far in Greece, Ireland, and Portugal, which combined make up just 5 percent of the 27-nation European Union's gross domestic product. 'Austria is a tiny, tiny little place, and you wouldn't imagine it could set off a chain of domino reactions. But it did. I do see exactly that potential now,' says James."
Peter Coy
 Who will be the next Zoltan Hajdu?

Thursday, April 21, 2011

The Emotional Recovery

We've had an emotional recession alongside the economic one: will an emotional recovery lead or lag the long awaited economic recovery? For two years my company has been tracking the emotional state of the nation in relation to the economic cycle, consumer behaviour and our general well-being. The remarkable thing is just how resilient the Irish people have been these past two years. For example, see slides 10 and 11 in the presentation below for one measure of emotional resilience. Long may we remain resilient...

Tuesday, April 19, 2011

Quote of The Day

"The most localised and least cosmopolitan political class in western Europe has run the region’s most globalised economy into the ground."

Monday, April 18, 2011

Ritual is an Antidote to Uncertainty

65 is the new 25. Probably not - but today's Daily Telegraph makes a good attempt at justifying the claim in a report on research showing that 65 year olds are as happy as 25 year olds.

Of course, happiness is subjective not objective. And a happy 65 year old is happy for very different reasons to a happy 25 year old. I suspect the happiness of the former is more likely the result of a comfortable - and comforting - routine than it would be for the latter. For instance, Simoleon Sense reports that "routine enhances feelings of safety, confidence, and well-being in many aspects of everyday life".

Which is probably why ritual - a special form of routine - has such a powerful influence in our lives. It makes us happy. Or 'familiarity breeds contentment' as an old Guinness ad once said.

Saturday, April 16, 2011

A Tax on Young Men

And so it has come to pass: in the face of rising unemployment, record levels of emigration and a widening gender education gap the Government has decided to make it even more expensive to employ young men. Make no mistake about it: the minimum wage is a tax on young men, especially those with low/no skills. It is young men who are more likely to be unemployed (we have the highest gender unemployment gap in Europe - see latest Eurostat pdf), while young men are more likely to leave school and not progress to third level. They are also more likely to emigrate. In other words, it is young men who are on the margins of the labour market, and whose employability is more determined by the cost of hiring them than just about any other group of potential employees.

Unfortunately the Left has more or less abandoned young men as a group. Hence their ludicrous defence of a high and rising minimum wage. Apparently a high minimum wage is good because it boosts aggregate demand in the economy. But the odd thing is they never take their argument to its logical conclusion: why not raise the minimum wage to €50 an hour if its macro-economic benefits are so obvious? The reality is that employers don't hire unskilled, inexperienced staff on the basis of aggregate demand assumptions. They hire them on the basis of micro-economic assumptions about affordability and productivity. Increasing the minimum wage increases the risk an employer takes in incurring the cost of additional staff. And right now employers are a risk-averse lot. I was going to add 'obviously' only it doesn't seem that obvious to the powers-that-be.

The real challenge facing the Government right now is how to a) stop the haemorrhage of young people caused by emigration and b) prevent a generation of young men losing out on vital work experience at a crucial stage in their lives. For as the Fraser Institute observes:
Lost job opportunities for young people are especially unfortunate given that entry-level jobs, which generally pay the minimum wage, are a stepping stone to better paid employment. These jobs enable workers to develop skills and gain experience that ultimately lead to higher productivity and wages. In fact, research shows that after one year, more than 60 per cent of minimum wage workers earn more, with a typical wage gain of about 20 per cent. After two years, the percentage of workers earning more than the minimum wage increases to more than 80 per cent. 
But that happy outcome isn't going to happen in Ireland if our young men and women have emigrated because they have become unaffordable and therefore unemployable thanks to the minimum wage...

I suggest an alternative solution. Simply remove all regulations in relation to wage rates (and other taxes on labour such as employers' PRSI) in the economy for a period of, say, three years. If at any time in that period the unemployment rate falls below 10% then restore the regulations if that's what the electorate wants. But in the meantime stop the tax on young men.

Friday, April 15, 2011

Quote of The Day

The Economist suggests that we 'follow the money':
German banks are owed twice as much by banks in the three bailed-out countries as they are by governments. Once corporate loans and other exposures are included, Germany’s vulnerability is clear: its banks are owed some €230 billion. These numbers would ratchet up further were Spain to default. German banks have an exposure to Spain that is about three-quarters as great as it is to Portugal, Greece and Ireland combined.

Not all of these debts would be affected by a sovereign default, let alone be wiped out. Derivatives exposures are already marked to market, for example. But compared with the potential costs of full-blown default, the amounts that Germany and other countries are likely to put into the three bail-out packages look like excellent value. The rescuers need not be quite so sanctimonious. 
The Economist

Thursday, April 14, 2011

Peak Beer

Is alcohol the new religion in Ireland? The thought is prompted by Andrew Brown's response to the recent findings linking alcohol to cancer. Alcohol is now the main source of transcendental experience for both Britons and Irish, now that we've stopped going to church on a regular basis that is. We seemingly tolerate the risks associated with alcohol consumption because of the benign experiences it provides. I haven't heard of any links between religion and cancer interestingly enough.

But as always with these earnest warnings (typically reported without any of the relevant context: like what share of all cancer deaths are caused by alcohol?), there is a suspicion that those issuing the warning want to nanny us into better behaving ourselves. Whether we want to or not. But before they start wielding their 'nudgeons' it's worth stepping back and asking what's really happening to alcohol consumption. According to a recent paper (pdf) on global beer consumption, beer drinking is distributed as an inverted-U in terms of per capita income. In other words, as countries become more affluent then initially their beer consumption goes up (China is a current example of this), but then as income per capita keeps rising it levels off and beyond a certain level it starts to fall. This is what has happened in Ireland - the chart shows bar sales volumes in Ireland from 1995 to 2011. The peak was in 2001 and has fallen steeply since (by over a third). That's mostly beer consumption.

So it looks like people's behaviour is self-correcting to a certain extent, mitigating the need for policy interventions to curb our consumption. Unless one is left-handed of course (thank you Kevin Denny for ruining my weekend!)

Wednesday, April 13, 2011

seven BIG numbers

My company has recently launched a research briefing on seven opportunities for growth in post-recessionary Ireland. All recessions end in recovery and all that. Should be of interest to those of you in business:

Tuesday, April 12, 2011

Northern Comfort

It looks like it will take more than six months for us to catch up with Iceland. Yesterday's IMF forecasts project an unemployment rate of 6.5% next year for Iceland - less than half that for Ireland. Still, at least our bondholders are happy...

Monday, April 11, 2011

Quote of The Day

Little Iceland has done us a big favour:
"The referendum is likely to have some economic and political consequences. The British and the Dutch governments will undoubtedly grumble, but their options are limited. They can hardly send in the gunboats, as the British did when Iceland extended its fisheries zone in the 1970s. They are not likely to take Iceland to court, either, because the matter is sensitive whichever way an eventual judgment would go, while it is not clear which court would have jurisdiction. In the long run, the No-vote will probably improve Iceland's credit ratings because it means that the country does not have this additional debt to deal with."

Saturday, April 9, 2011

The Eventual Future

Bobby Sands was elected MP for Fermanagh & South Tyrone on this day 30 years ago. I was a student in Belfast at the time. I recall that it really seemed as if Northern Ireland was on the precipice of outright civil war. Just one memory I have of the time was queuing in a supermarket on the Lisburn Road, along with many others, and stocking up on basic supplies, just in case...

Slow forward thirty years and all eyes are on Tyrone again: this time on the funeral of Ronan Kerr, a young man murdered for being a Catholic in the PSNI. Sometimes such tragedies represent real turning points, and no hindsight is required to see it. Most people realised at the time the huge strategic mistake Thatcher made in not compromising with the hunger strikers, and most now realise - as Noel Whelan puts it - the strategic error made by the dissidents as a result of last week's murder.

Sometimes, however, such events blind us with their short term intensity to the long term trajectory of the future. Just as 30 years ago no-one could foresee a future in which GAA, Sinn Fein, DUP and PSNI officials would together attend the funeral of a murdered Northern Irish policeman, so I wonder what eventual future awaits us on this island in 30 years time?

Remarkable things are possible - mostly for the better - over such stretches of time. I have witnessed it for myself in the decades that followed the election of Bobby Sands MP.

Friday, April 8, 2011

Quote of The Day

"Crisis can actually take people from thinking about what's next
to thinking about what is first."
Po Bronson
ht KK

Thursday, April 7, 2011

Shop Or You'll Drop

Episode 5 of Niall Ferguson's series on Civilization makes an interesting case for the virtues of consumerism. Apparently it was blue jeans that brought down the Berlin Wall and won over Maoist China to the ways of capitalism. It's an interesting hypothesis, along with the others set out in Ferguson's series. Though I must admit I prefer the original Civilisation (note the 's') by Kenneth Clark. More Eurocentric perhaps, but a lot more satisfying somehow.

Still, there's something to the consumerism = civilisation thesis. Yes, it is somewhat galling to suggest that 'retail therapy' is the ultimate purpose of Western Civilisation (as Ferguson wryly observes towards the end of the episode), but maybe it's at least part of the purpose? After all, a recent study showed that people over 65 who shopped every day are 27% less likely to die over a ten year period of observation than those who shopped less likely. Shopping and consumerism may well add to the longevity of Western citizens and not just to that of Western civilisation.

Though I think I'll personally keep testing the null hypothesis in relation to shopping and longevity for a while longer...

Quote of The Day

Pity Portugal:
“Ultimately, every penny of every debt must be paid
— if not by the borrower, then by the lender.” 
C. V. Myers
ht Zero Hedge

Wednesday, April 6, 2011

Does Ireland Have A Future?

That was the title of a talk given by Maurice Walsh at the RSA in London last week. For some reason the title of the talk bugged me: it connotes a patronising concern for an errant child rather than a genuine concern for a friend. But, that said, the tone and content of the talk and subsequent discussion expressed more the affection of friends than the condescension of 'superiors'.

The talk didn't contain a lot that was new (which isn't really a criticism, as it seemed mostly aimed at bringing a British audience up to date on what has happened), but there was something that I didn't understand. In his talk Maurice observed that what was missing from the Celtic Tiger boom was 'some idea of what Ireland would do once it got wealthy' (at the 13:45 mark in the podcast). I have to say I have no idea what this means. Has any country in history ever had an idea of what it would do 'once it got wealthy'? There are certainly plenty of economic and other analyses of what happens when countries experience a sudden surge of growth - and the problems that can arise (the 'resource curse' etc) - but the absence of a shared idea seems a bit obscure to me. Maurice will be elaborating on his thesis in The New Statesman later this month, so I'll watch out for it.

That said, there was one new thing that I learned from his talk. I hadn't realised that Newfoundland had made such a hames of governing themselves as a quasi-independent Dominion (economic implosion etc) that the British Government had to rescue them in order to avoid 'financial contagion' spreading to other Dominions. Sounds familiar. Of course, everyone at the RSA was too polite to point out that the largest population group in Newfoundland are of Irish descent.

That would have been patronising...

Tuesday, April 5, 2011

Quote of The Day

... and, possibly, the rest of the century:
"...the economy is a function of surplus energy, and money is the medium with which this energy surplus is quantified. From its origins as a claim on human energy (in the form of labour), money has become a claim on energy, past, present or future. At the same time, debt is by definition a claim on future money. So the ultimate nature of debt is that it is a claim on future energy.

A debt-driven system is thus viable if – and only if – the energy of the future is sufficient to meet the claims that exist on it. And the payment of interest in turn requires that the money (that is, the energy-claim) of the future has to be greater than it is today."
From: End Game - The Denouement of Exponentials, Tullett Prebon

Monday, April 4, 2011

Banking on Recovery

I'm confused. According to the Department of Finance presentation accompanying the bank stress test results last week (ht The Irish Economy blog) new lending to SMEs by Irish banks amounted to €4 billion in 2010. There was a recession last year, in case you've forgotten.

But here's the confusing bit: according to slide 14 in the presentation (see chart) the Central Bank of Ireland estimates that Ireland's SMEs "may require credit in the region of €6-€7 billion over the next three years". That's €2-€2.3 billion per annum. So let me see: in the depth of recession, Ireland's rapidly depleting ranks of SMEs needed €4 billion in new lending in one year just to keep going; but over the course of the forthcoming 'recovery' they're going to need... less? Perhaps we will use barter instead.

If this is what you get for rescuing the banks ('in order to get credit flowing to the economy') then it doesn't seem like much of a deal, does it? Unless of course the Central Bank has assumed a further sharp fall in the number of SMEs. According to today's Irish Examiner they may well be right. Throw in this week's anticipated start to a series of increases in ECB interest rates (shouldn't we just rename it the Bundesbank to avoid any further confusion?) and quite possibly the CBI estimates may even turn out to be optimistic. Not for the first time.

After last week's denouement I'm not banking on recovery any time soon.

Sunday, April 3, 2011

Paper Thin

Here's another interesting finding from the Eurobarometer research on European identity that I mentioned in my last post: it seems that the Euro currency is the main source of our sense of being European. Especially in Ireland - I've charted the average EU 27 and Irish answers below:

Mind you, the survey was conducted a year ago - in March-April 2010 - even though the results were published just last week. My guess is that we become a lot less enamoured with Europe in the intervening period. And not just in Ireland.

Fifty four years after the foundation of the European Union (or European Economic Community as it was originally known) it turns out that the main source of common identity is a currency that has only been in circulation for less than twelve years. Which suggests then the our sense of being European is very shallow indeed. And therefore very, very fragile.

Our fellow Europeans in Brussels and Frankfurt should pay more attention to their own surveys...

Saturday, April 2, 2011

Boston or Birmingham?

A fascinating new Eurobarometer report answers the key Irish political question: 'Boston or Berlin'? Or perhaps I should say it rephrases it: 'Boston or Birmingham'? The table below is from a report on European identity - called 'New Europeans' - which asks among other things which other countries people in Europe identify with, other than their own. Only 4% of Irish people 'feel most attached' to Germany (and only 6% feel attached to Germany in the EU as a whole), but one in four Irish people feel most attached to the UK (47% in the case of the Maltese - it must be an ex-colony thing I guess).

But the big stand out number is the percentage feeling most attached to the United States: that's 17% of all Irish people versus 10% in the UK and only 5% in the EU as a whole. Of course emotional attachment and financial attachment are two different things...

Friday, April 1, 2011

Quote of The Day

Seemed apt somehow:
“There are two ways to enslave a nation:
one is by the sword and the other is by debt.”
John Adams
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