Sunday, February 26, 2012


Liam Halligan said something in his latest commentary about oil prices that surprised me: oil prices in euro are now above their previous peak, just before the 2008 crash. So I went and checked, and sure enough, he's right (oil price in euro over past ten years from Index Mundi):

As Liam notes, this is way bigger than the Greek fiasco. But never mind, another good recession will sort it out...

Saturday, February 25, 2012


I had an interesting chat yesterday with some folk from the IDA. The conversation inevitably got around to 'where to next' for Ireland and inward investment. One idea I suggested worth exploring is that of making Ireland the global exchange for new types of money. Moneyville, for short.

I've blogged before about the potential for the ePunt, the beauty of the Brixton Pound, and the genius of the Bijlmer Euro. All of these point to a revolutionary transformation in the nature and meaning of money: and it's only starting. Businesses and communities throughout the world are experimenting with new types of digital money, time-based and local currencies, the gamification of money (Farmville/Cityville Cash etc), and the potential for mobile phones (NFC-enabled and others) to replace cards, cash and wallets.

Ireland can be and should be at the centre of all this. We should aim to be the IFSC for new types of money, providing a location for businesses, NGOs and others to launch and/or experiment with different currencies that will help us move beyond the impasse of broken banks and failing government controlled currencies. This is especially important to us in Ireland because the eurozone will likely experience the same fate as the post-Soviet Union ruble zone, as explained in the Futures Company's fascinating new report on The Future of the Eurozone.

Ultimately, the Moneyville strategy will enable us to restore resilience to Ireland's economy and society. It will also restore a degree of 'antifragility' (Nassim Taleb's latest idea) which will leave us less vulnerable to the inevitable failure of a one-size-fits-all monetary and fiscal policy framework for the eurozone.

It will also create a great many new jobs and new businesses - which is where the IDA comes in...

Sunday, February 19, 2012


Four months. That's the shortest, feasible amount of time it would take to replace one currency in a given country with another. Say, replacing the euro with the drachma. More typically, such changeovers take at least 12-18 months. These and other gems of insight into Europe's future are covered in the latest episode of the BBC's excellent Analysis programme, cheerfully entitled: Preparing for Eurogeddon.

Co-incidentally I have been in Paris for a few days. Several things struck me: 1) it's very expensive - even at its 'bubbliest' Dublin did not come close to Parisian price levels (especially city-centre property prices); 2) Paris is very rich - there are generations upon generations of wealth accumulated in Paris (as evident in the architecture), and still more money is pouring in (every other building site - and there were many - seemed to be financed by either a Middle Eastern or Asian bank). Which left me with a third thought: Ireland doesn't matter to France, nor does Greece nor even Portugal. If the euro really was about tying France's economic fortunes to Germany's then it has been a success. Whether it has been a success for everyone else is besides the point.

When Czechoslovakia broke up after 75 years in 1993, the Slovaks started off by using the old Czech currency but with stickers attached to the notes to differentiate them as Slovakian currency until a new, replacement currency came into circulation. The Slovakian currency weakened rapidly against the Czech currency so wily Slovakians took to peeling off the stickers... Eventually they got their own currency of course, and indeed they ended up in the eurozone in 2009. Good timing.

But nothing lasts forever: and these days 75 years is a good innings, politically speaking. The European Union has been going - in one guise or another - for nearly fifty five years. That's longer than Yugoslavia (45 years), though not as long as Czechoslovakia. It seems to be the European way - we don't do unity for long (despite our motto: united in diversity). George Handlery observes that:
To its own peril and to the detriment of international stability, the praxis behind “Europe” is degenerating. Europe has a tradition of resistance to centralism. This applies to Charles the Great, the Sun King, Bonaparte, Hitler, and Stalin. Bureaucratic centralism’s project is unlikely to fare better once its fig leaf covering is welted. Wanting to force Europe, through administrative constraints, into a mold that ignores its organically determined pre-disposition, is not accidental. The attempt reflects the inclinations and political shrewdness of the West’s ’68-ers. Their left-collectivistic program is best realized through “Brussels” where they can act for the “masses” without having to consult them. The growing power of the center is exercised without a real democratic mandate and it is legitimized by an abstract and therefore stage-manageable idea. Accountability does not exist as the system is run without the endorsement of voters empowered to dismiss their “leaders”.  
'Europia' may well go the way of its many empires before it. But France will go on. Perhaps that is why, to my surprise, so many receipts in shops and restaurants still give the equivalent total amount in francs alongside the actual price in euro. Ten years after the currency came into circulation, the French are still keeping their options open. I don't blame them.

Image credit: Mapping Stereotypes

Wednesday, February 15, 2012

Thawing Consumers

Are Irish consumer markets thawing out? After a very long 'freeze' we shouldn't expect anything immediate. But  my company's most recent Economic Recovery Index survey highlights several months of improving sentiment since late last year. It could be (a lot) better, but it has been (a lot) worse:

The Irish domestic market is a bit like Stade de France last Saturday: it's still not safe to play, but we'll get out onto the pitch at some stage.

Sunday, February 12, 2012

The Science of Politics

I'm a big fan of Peter Thiel - he puts his (own) money where his mouth is. But even he is worried about the West's long-run capacity for growth, partly due to the politicization of science. This from a fascinating discussion with Francis Fukuyama, firstly on the slowdown in growth:
There has been a tremendous slowdown everywhere else, however. Look at transportation, for example: Literally, we haven’t been moving any faster. The energy shock has broadened to a commodity crisis. In many other areas the present has not lived up to the lofty expectations we had. I think the advanced economies of the world fundamentally grow through technological progress, and as their rate of progress slows, they will have less growth. This creates incredible pressures on our political systems. I think the political system at its core works when it crafts compromises in which most people benefit most of the time. When there’s no growth, politics becomes a zero-sum game in which there’s a loser for every winner. Most of the losers will come to suspect that the winners are involved in some kind of racket. So I think there’s a close link between technological deceleration and increasing cynicism and pessimism about politics and economics. 
Then on politicians and science:
You can’t just write checks to the thirty smartest scientists in the United States. Instead there are bureaucratic processes, and I think the politicization of science—where a lot of scientists have to write grant applications, be subject to peer review, and have to get all these people to buy in—all this has been toxic, because the skills that make a great scientist and the skills that make a great politician are radically different. There are very few people who are both great scientists and great politicians. So a conservative account of what happened with science in the 20th century is that we had a decentralized, non-governmental approach all the way through the 1930s and early 1940s. At that point, the government could accelerate and push things tremendously, but only at the price of politicizing it over a series of decades. Today we have a hundred times more scientists than we did in 1920, but their productivity per capita is less that it used to be.
Do read the whole interview. Meantime, our own Chris Horn has voiced similar concerns about what is going on in Ireland:

In contrast I believe most long-established Irish organisations — in the civil service, in the political elite, in most media companies, in the legal profession, in the medical sector, in established banking and business, in religious institutions — are strictly hierarchical, not least to protect embarrassment to senior figures from challenges by young upstarts. And yet the technology sector thrives on disruption, creativity and rapid improvisation. 
Part of the reason is our republican view of Irish culture. We embrace literature, art, music and dance, and especially accomplishment in sport, all as the essence of Irish culture. Yet we rarely embrace scientific discovery and technological insight as likewise having cultural value that can enrich society. There is little scientific discussion in our national media, mainstream journalists often seem largely disinterested, and our public service broadcaster RTE almost completely ignores the topic. Review the number of pages in a newspaper, or hours of broadcasting, devoted to literature, arts, music, dance and especially sport, compared with science and technology. Our politicians may occasionally turn up to open a new venture, but rarely seem to consider technology policy and its potential and actual impact on our society at large.
It looks like returning to a long-run growth path is going to be an even bigger challenge for Ireland - as for everywhere else. Though it might be easier if the politicians got out of the way...

Saturday, February 11, 2012

Public Sector Banks

From Martin Taylor, writing in The Financial Times:
 Investment bankers may be in retreat, but ideas – as so often – outlive their progenitors. Financial engineering is still with us, purporting to work its meretricious miracles for governments. Thus there remains considerable faith – even, or perhaps especially, among people who hate bankers – that a financial solution, involving firewalls, bazookas, leverage and improbable amounts of money, can “solve” the euro crisis. It can do no such thing. It can buy time, as the European Central Banks’s deftly enormous interventions are doing by flooding the banking system with cash – but the purchase of time is not costless...  
 Facing up to losses on sovereign exposures may be necessary, but it is deeply subversive; every bank, and every central bank, reposes on the myth of sovereign credit. Since in many societies there will be no alternative but to socialise much of the fallout, we can expect to see state indebtedness in many still solvent countries rising to proportions of gross domestic product much higher even than they are today, and many banks coming under state ownership. Pressure will rise for them to behave unashamedly like state banks. 

 The entire article is well worth reading.

Monday, February 6, 2012

The Treaty After Next

I was debating the proposed new EU fiscal treaty on Charlie Bird's radio show on Saturday. It was a cosy gathering of 11 contributors including me - so there was limited time to develop any of the topics raised in the discussion.

Inevitably most of the discussion was about problems rather than solutions (e.g.: the legal case for a referendum etc). But what struck me was the obvious fact that the proposed treaty fails to address the key problems now facing Europe, and so we need to starting thinking about the 'treaty after next' as inevitably there will have to be another one.

Three key issues are ignored in the treaty as currently drafted. I call them the '3Gs', namely: Greece, Germany and Growth. The first one is obvious: Greece will have to leave the eurozone in the next two years (or two weeks!) - it's just a matter of how and when. The eurozone's politicians have wasted an opportunity to work out a clear mechanism for enabling a country to leave the eurozone, whilst minimizing the impact on the departing country's citizens and those remaining in the euro. It's a horribly complex task: but nevertheless a necessary one given the horrible problems facing Greece. It would be far better for Europe's future to have a transparent, feasible, democratic process for facilitating a country's departure from the eurozone (and eventual return if mutually acceptable) than the reality-denying nonsense that is the draft fiscal treaty as it currently stands.

The second issue is Germany: Europe and the eurozone's future now appears to be tied entirely to the political priorities of Germany. Which raises the obvious question: what will happen when Germany goes into recession - as it inevitably will? Over the past two decades Ireland has experienced inappropriate interest rate policies emanating from Germany as it struggled first with unification in the 1990s (pushing rates too high for everyone else); and then recession in the 2000s (pushing rates too low for everyone else). My guess is that a deepening recession in Germany will create domestic pressures for changes to the fiscal treaty, changes that will once again require intense political negotiations and, maybe, another referendum in Ireland. Given Germany's dire demographic prospects the rest of Europe will once again be dragged in a macroeconomic direction unsuited to the wider needs of countries like Ireland.

The final issue is Growth. The word is mentioned only ten times in nearly five thousands words of the draft treaty. The treaty will do nothing to get Europe (let alone Ireland) back on a sustainable growth path in the coming years. That is tragic for our country, simply because our 'growth potential' is higher than nearly every other member of the eurozone but we will not be able to realise it because of the skewed focus in treaty on balancing budgets and borrowing constraints.

On balance, the draft fiscal treaty is irrelevant to Ireland in the short to medium term - as argued by Colm McCarthy. The Irish government would be better off focusing its attention on lobbying for the treaty after next, one that will be better suited to the wider needs of the eurozone - including Ireland - and one more realistic about the future for Greece and Germany.

One idea: the Government should publish a draft treaty of its own for debate in Ireland, Britain and other EU countries that could ultimately form the basis for one that will have a meaningful impact on our collective futures. If we wait for the Germans to start the debate then I fear it will be too late.

Friday, February 3, 2012

Men Overboard

It is with regret that I must announce the resignation of the CEO of the National Men's Council of Ireland (NMCI), with immediate effect, in protest at the drastic cut in NMCI's funding by the Department of Justice. As the outgoing CEO, Sean McKay, explained:
"It is my personal view that the Government has shown scant regard for men's rights and my resignation is a personal protest against this indifference. I wish the NMCI well in these difficult times for the organisation.”
...okay, it's a joke. Back here on planet Earth there is no NMCI, and why should there be? After all, men are just another minority group like so many others - surely they can't all have government funded bodies advocating on their behalf? There is though a representative group for the majority group in society - women - whose CEO did indeed resign over cuts to their funding.

But maybe we need an NMCI, especially when you read the latest CSO report on Women and Men in Ireland 2011. Among its findings:
  • Over half of women aged between 25 and 35 have a third-level qualification compared with less than four out of ten men.
  • The early school leavers rate among women aged 18-24 in 2010 was 8.4%, which was much lower than the male rate of 12.6%.
  • Women are more likely to have a third-level qualification, with over half (53%) of women aged 25-34 having a third-level qualification compared with nearly four out of ten men (39%) in this age group.
  • Men worked an average of 39.4 hours a week in 2011 compared with 30.6 for women and married men worked longer hours than married women, with nearly half (44.5%) of married men working for 40 hours or more a week compared with only 14.7% of married women.
  • The unemployment rate for men in Ireland has increased over the last two years to stand at 17.5% in 2011, while the unemployment rate for women has risen over the last two years to 10.4% in 2011.
  • For the 20-24 age group, about a third of men and just over a fifth of women were unemployed in 2011.
  • Ireland had 98 men per 100 women in the population in 2011. For the 85+ group, there are 47 men per 100 women in Ireland.
  • Emigration rose steeply between 2006 and 2011 to about 38,700 males and 37,800 females, resulting in a net outflow leaving the country in 2011 of 18,600 males and 15,500 females.
  • Men are more likely to be admitted to psychiatric hospitals for schizophrenia and alcoholic disorders while women are more likely to be admitted for depression.
  • The Education and Health sectors employed the highest proportions of women in 2010 with women accounting for more than 4 out of 5 people at work in the Health sector and nearly three quarters of those in Education. The sectors with the highest proportions of men in 2010 were Construction, Agriculture and Transport. In primary education, 85% of teachers are women. And in second-level education, 63% of teachers are women.
  • Women’s income in 2009 was around 73% of men’s income. After adjusting for the longer hours worked by men, women’s hourly earnings were around 94% of men’s.
  • The proportion of men at risk of poverty in 2010, after pensions and social transfers, was 15%, just above the rate of 14% for women. At risk of poverty rates were considerably lower for those in employment, at 10% for men and 5% for women.
  • There were 12,487 persons committed to prison under sentence in 2010, of whom seven in eight were male. 

Irish men (like men everywhere) are more likely to be failed by the education system, unemployed, in poverty, imprisoned, forced to emigrate, to commit suicide and to die younger. But apparently there's no need for a National Men's Council of Ireland...

Ah but: what about the lack of women in the Dáil? Men make up the majority of politicians after all. What about the lack of women on corporate boards? Men make up the majority of company directors after all. What about... and so on and on. Feminists never use the word 'some'. Some men are politicians, some men are on company boards. It's funny how the lack of women in prisons, on dole queues and in dangerous manual occupations doesn't get the same attention. The many, many men at the bottom of the social, economic and political pyramids are invisible apparently. But of course, feminist ideologues only look upwards at imaginary 'glass ceilings', ignoring the real 'glass cellar' at their feet. The lust for power can do that to you I guess.

But this constant denigration of men in the mass media - and in everyday reality - has its price. And not just in terms of men's health and economic prospects. As the tragedy of the Costa Concordia and the behaviour of passengers and crew reminds us, a civilization that treats men as a disposable, contemptible minority isn't destined to remain a civilization for very much longer.

I hope Sean changes his mind...

Wednesday, February 1, 2012

The Tenth Crusade

History tells us that there were nine Crusades throughout the Middle Ages, all of them ultimately doomed to failure, though some took longer than others. As related in the recent BBC series, the motivations of those involved in the Crusades - and in resisting them - were an unusual mixture of religious devotion and venal plunder. Often both at the same time.

But none were quite as venal and self-serving as the Fourth Crusade. Originally inspired by Pope Innocent III, the Fourth Crusade was meant to free Jerusalem by invading via Egypt. There was only one problem: a lack of cash and ships to facilitate the invasion. Which is where Enrico Dandolo, the Doge of Venice, came in (pictured). He was more than willing to fund the Crusaders if they would only repay him by solving a few 'trading problems' he had along the route to Egypt. And his biggest problem was the Byzantine Empire, with its capital in Constantinople (modern day Istanbul). The Byzantines had refused to give the Venetians a monopoly of trade along the profitable routes dominated by Constantinople, instead playing Genoa against Venice is a game of power balance by offering them competing trading rights.

Enrico Dandolo was having none of it and as the Fourth Crusade sailed into Constantinople - on route to Egypt allegedly - he increased the pressure on the Crusaders to pay the exorbitant fees he had demanded for their transport. Eventually the Crusaders saw only one way to repay their debts: to sack the city of their hosts, which they duly did in an act of extraordinary Christian-on-Christian barbarism. The sack of Constantinople so horrified Pope Innocent he excommunicated all the Crusaders. A gesture in marked contrast to the papal blessing given to previous Crusades, whose participants were assured of absolution for their sins because of their sacrifices.

Back to the 21st century. Are we about to witness a repeat of the Fourth Crusade? Again Greece - the cultural and historical heartland of Byzantium - is on the receiving end of visitors whose intentions, we are told, are entirely 'noble and true'. I'm referring, of course, to the German demand to impose a Proconsul on Greece to ensure their elected politicians don't do anything silly like prioritize Greek citizens over European banks. Wolfgang Schauble playing Enrico Dandolo perhaps? Already most European politicians have reacted in horror to the idea - as did most right-thinking Christians at the sack of Constantinople by the Crusaders. But it didn't stop the attack on Byzantium back in 1204 - and it probably won't in 2012.

So is the 'Tenth Crusade' about to begin - one even more ignoble than the Fourth? Time will tell. It's worth remembering that eventually the Byzantines regrouped and threw out the Crusaders - though it took them nearly 60 years to do so. Eight hundred years later, I suspect that things will move a lot faster...

Related Posts Plugin for WordPress, Blogger...