Saturday, June 30, 2012

Maggie vs Marcuse

Quote of the day from Will Davies:
The divorce of ethics from normativity ('68) combined with the divorce of money from material reality ('71) creates the conditions for a frictionless financial culture, in which critics conspired by coining the term 'postmodernism', and in which lying about the price of money is an entirely reasonable and legitimate thing to do. Taking a longer sociological view of the Barclays scandal, the question is not 'why did they do it?', but really, 'why wouldn't they do it?' On what basis, really, did any of us expect pleasure-seeking individuals, far from the disciplining reach of any market, trading paper whose value had nothing to do with utility or human need, to do anything other than manipulate perceptions of that paper's value? How else does paper attain any value, without perceptions being manipulated to some extent? And why, honestly, did anyone believe that individuals, high on the legacy of '68, would manipulate that value for the benefit of the public or mortgage-holders, and not for themselves?
Ah yes, the Sixties: the gift that keeps on giving.

The Unbearable Tightness of Lending

Last week the Government announced a scheme to provide €90 million worth of extra lending to small businesses. Over the next ten years. Fantastic.

Yesterday the Central Bank released its statistics for May 2012, which showed that lending to businesses (non-financial corporates or NFCs) fell by €338 million in the past month. That's on top of a €326 million decline in April. Not so fantastic.

The bottom line is that a) Irish banks have their own 'issues' and are in survival mode only so they won't entertain new borrowers; and b) because of the same issues, the banks are effectively locked out off international markets and are only able to provide short term finance to any business willing and able to borrow. Hence the continuing increase in NFC loans maturing in less than one year (including overdrafts), and the continuing declines in loans with maturities great than one year. The banks can't access long-term funds at sane interest rates, and therefore nor can their customers.

Ireland's banking system is broken. It won't be fixed any time soon (and arguably we shouldn't fix it: I agree with Steve Keen - the global banking and financial sector needs to shrink to about a third the size to ensure its gambling proclivities don't inflict such spectacular damage ever again). But businesses need access to finance to invest, hire and grow so new arrangements are necessary. One option is crowd-funding - there have been a number of attempts at this in Ireland. Beyond crowd-funding there's the yet more interesting idea of creating your own money. Even the political Left are beginning to look beyond state-controlled money to find new ways of resolving the crisis and helping entrepreneurs. Some are going so far as to turn 'the 99%' into their own central bankers through initiatives such as Freicoin. That's certainly one way to shrink the financial sector.

Still, the Government has its €90 million loan fund to distribute. It will only be available to firms employing fewer than 10 people. Luckily, thanks in large part to the banks, a lot of companies currently employing more than 10 people will soon be able to qualify for the scheme. That's if they haven't gone and found their own funding solutions in the meantime.

Thursday, June 28, 2012

Headline of the Day

A classic from today's Irish Daily Star:

ht Slugger O'Toole

Nobody's Default

Quote of the day, with an historical perspective, from Jonathan Compton:
It is also worth noting that for many countries default is their normal condition. Spain is the winner, officially defaulting 18 times since 1550. Greece has done so five times since its re-creation in the 1820s, and has been barred international borrowing for 110 years out of the last 190.
But this time is different, of course...

Wednesday, June 27, 2012

Happy Hopeless

Eric Barker suggests that happiness begins with giving up hope:
Giving up hope makes sense when things seem very unlikely to get better and you decide you want to be happy. Hope impedes adaptation and adapting is one of the keys to happiness.
The monthly survey of consumer sentiment published by my company suggests we Irish have reached the 'happy hopeless' threshold. Our optimism about economic recovery has regressed to low levels indeed, as has our belief that we can weather the financial storm ahead. And yet... happiness and enjoyment remain the most common emotions on a daily basis. Abandon all hope... it will make you happy? 

Looks like we'll be testing that hypothesis for some time to come yet.

Amarach Economic Recovery Index June 2012

View more presentations from Amárach Research

Tuesday, June 26, 2012

The Cruelest Month

Via The Economist:

Enjoy the summer holidays...

Nasty Divorce

The economic impact of the breakup of the euro - via Der Spiegel:

That would shrink Ireland's economy back to its size in 2003 (were back to about 2006 at the moment).

The chart excludes the UK - our largest trading partner - so there may be 'second order' effects that would make the euro divorce a lot nastier even than that portrayed above.

Friday, June 22, 2012

Myth Making

Quote of the day from John Waters in The Irish Times:
Led by incompetents, technocrats and middle managers, browbeaten by technical mumbo jumbo, tied to a pointless utilitarianism and “going forward” to an unfocused-upon destination that we sense is closer to nowhere than somewhere, we insist all the more loudly on the success of our “progress” project.
We need a new myth (or myths). Or to resurrect the old ones...

Monday, June 18, 2012

The Queen's Shilling

They've been voting over at about David McWilliams' proposal that we consider departing the euro for sterling. So far there's a slight majority in favour.

I suggested something similar last year, and it's still an idea worth considering. Certainly the more atavistic hostility to all things 'Brit' has ebbed in Ireland, not least since the Queen's visit. And the recent celebrations of her sixtieth year on the throne certainly helped her good standing with the British people, let alone the Irish.

But... Britain has its own problems. As this handy primer by Tullet Prebon reminds us: the UK's economic situation - especially in relation to debt - isn't a whole lot better than Ireland's. We're just that bit closer to the precipice thanks to the euro...

Indeed, Steve Keen reckons the UK is heading for its own credit crunch later this year. Frying pan, meet fire.

The economic uncertainty for the UK is reason enough to hesitate before jumping to sterling, but there's more. You don't just get an economy with a currency - you get a society. And as the estimable Theodore Dalrymple regularly reminds us, Britain is a society on the precipice of a social and moral collapse that very few are trying to reverse. Here he is on the theme of The Queen's Decaying Throne:

At the start of the reign whose 60th anniversary we "celebrate", Britain was one of the best-ordered societies in western Europe. Now, 60 years later, it is easily the most crime-ridden. 
Unpleasant social disorder is everywhere; in many places, a virtual dusk-to-dawn curfew has been imposed on old people by the drunken disorder that appals and disgusts foreigners. 
Our police, once a model to the world, increasingly resemble an alien occupying army, or fascist militia, festooned with all the apparatus of repression, who inspire fear mainly in the innocent, and who are bullying yet ineffectual. 
The state of the country is parlous in more ways than one. Large areas, once industrial, resemble the Soviet Union with takeaway pizza. The only "private" enterprise consists of retail chains that recycle government subventions to the unemployed. The middle class in such areas is composed almost entirely of public employees and professionals who cater to the social problems created by mass unemployment. 
Even at the height of the so-called boom, in 2006, there were 2.9 million people claiming to be so ill that they could not work at all. And thus the British benefit system performed the miracle of causing more invalids than World War I. 
Dalrymple's lament is that of a patriot, not a republican - he just wishes there was more to celebrate after 60 years. 

We may end up with no other choice but to take the Queen's shilling - but it might be an idea to make it a temporary arrangement on the way to something better. I believe it was once called 'independence'...

Tuesday, June 12, 2012

The Imagesphere

The picture is over 100 years old - but looks like it was taken yesterday. From a fascinating article over at concerning a series of pictures taken throughout the Russian empire between 1909 and 1912.  The colours were created using a clever red, green and blue filter system - and the images look remarkably fresh. There is something extraordinary about viewing people 'in the flesh' as it were, over a century ago when Russia had an empire and Lenin was exiled in Paris.

One hundred years later we are still fascinated by images - only now we live in the Imagesphere...

Monday, June 11, 2012

The Intention Economy

Business wasn't the same after the Great Depression, and it won't be the same after the Great Recession. Doc Searls' book The Intention Economy tells us why. And what. We are slowly evolving from the Attention Economy (the world of advertising and marketing) to that of the Intention Economy - a world in which consumers individually and collectively empower agents to get the best deals on their behalf, whilst protecting their anonymity until the deal is done.

I've blogged before about the 'advertising dividend', described by James Ogilvy back in 1995 when the Internet was something happening on the margins of most economies and most people's lives. But the new age of ubiquitous mobile communications - that has boomed right through the Great Recession - is now finally bringing about what Searls calls the end of the 'advertising bubble'. The age of 'vendor relationship management' is upon us.

It's heady stuff - but I don't doubt the next Google or Facebook will be what he calls a 'fourth party' - going beyond traditional first, second and third party business constructs. Here are some useful links to follow the emergence of The Intention Economy:

Doc's blog (and here's a handy article by him on The Intention Economy)

The excellent UK based Ctrl-Shift

Harvard's Project VRM

A key driver in all this will be European data protection legislation - an area Ireland has some expertise in. So if we want to position ourselves for The Intention Economy then that might be a good place to start...

Thursday, June 7, 2012

That Nineties Feeling

Another measure of how far we have 'fallen': today's Quarterly National Household Survey from the CSO shows that we're right back to 1998 levels when it comes to the working share of the population. I've used the latest results to calculate the number of people in jobs as a percentage of the total population over the age of 15 - see chart below.

Back in Q1 1998, just under half of all adults were in jobs (49.6%). Ten years later the percentage with jobs peaked at 58.7% in Q3 2007. As of Q1 2012, the percentage with jobs stands at... 49.6%.

That's not good for consumer spending, income taxes or most anything really.

It's going to be a slow recovery...


Monday, June 4, 2012

In The Long Run

I haven't had internet access for the second bank holiday in a row ('thank you' eircom) so I've had a bit more time to read a book or two. One I especially enjoyed - Doc Searl's The Intention Economy - will be the subject of a post in the next day or two (it's really good).

I came across this quote in his book - seemed apt for the times we Europeans are living in:
Find out just what any people will quietly submit to and you have the exact measure of the injustice and wrong which will be imposed upon them. Frederick Douglass
Mark Steyn fears we are living through the Twilight of the West - due to a vicious combination of debt and demography. Vaclav Klaus is more optimistic: if we (especially governments) can live within our means then we can break the debt deflation cycle. 

The outcome will depend  on our capacity for 'quiet submission' I guess. Though as the past 1,000 years suggests, European's don't submit for long...

By the way: by using 'Personal Hotspot' on my iPhone I was able to get online and write this post. Thank you Apple and O2...
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