Failing financial system is flirting with disaster again
A recent conversation with a Wall Streeter who is worried about bad things happening in financial markets got me thinking about bubbles and, more particularly, how to measure them. By...
A recent conversation with a Wall Streeter who is worried about bad things happening in financial markets got me thinking about bubbles and, more particularly, how to measure them. By...
Half-a-billion euro is a lot of money. That is how much the Department of Finance estimates a six-year-old tax break for the hospitality sector costs annually. The de-facto subsidy is likely to have...
By the summer of 2007 it was increasingly clear that the Irish property frenzy was not going to end with a soft landing. The big question was how hard the landing would be. Then, exactly a decade...
How does society balance the rights of old women to sleep safely in their beds and the rights of hardcore career criminals? Is it fair that an innocent person's life is ended violently because...
Every year thousands of companies are born and thousands die. The process of creative destruction in all economies makes this inevitable, and in many ways healthy.
The rich get richer and the poor get poorer. So goes the old saying. It is actually well wide of the mark, according to the taxman. A recent study by the Revenue Commissioners showed that almost four out of five people who were the lowest earners in 2005 had moved off the bottom rung of the ladder a decade later. Movement among the top tenth of earners was not as great, but still considerable - almost three out of five of those on the top rung in 2005 had slipped down by 2014.
The slowing down of the news cycle around this time of year is often called the silly season. The media in high summer can sometimes be silly. But the break can also be an opportunity for mid-year stocktaking, and a chance to peer through the haze of events to see what is really important. As the summer wind-down kicks in and we enter the second half of the year, here are my five big takeaways from 2017 so far, and what they mean for the rest of the year and beyond.
'What is going on?" the editor of this newspaper asked with more than a hint of irritation. "You bloody economists are all saying that the economy is powering ahead, but people aren't feeling it," he harrumphed.
Ireland is Europe's new Rotterdam. For centuries the Dutch port has been a commercial hub with a vast hinterland spreading deep into Continental Europe.
Ireland's entrepreneurial roots are short and shallow. Contrary to the story that we usually tell ourselves, and one that officialdom loves to spout, the history of Irish business successes is a slim volume. Things are certainly improving, but there are still too few home-grown, internationally competitive companies. An acknowledgement that too many young people aspire to the professions, rather than business, and that too many choose immigration over entrepreneurialism, would be a useful starting point in focusing more on the problem.
The suggestion that Ireland should follow Britain out of the EU - "Irexit" - got quite some attention last week. Ray Bassett, a former diplomat, argued in a 42-page document published in London that Ireland should actively explore leaving the EU. His central contention is that the UK is more important to Ireland than the EU. In his judgement, choosing Britain over Europe is the best option for Ireland and its people.
On moving home after having spent almost all of my adult life abroad, two things surprised me about Ireland. The first was how careful Irish people are to avoid confrontation and causing offence to...
Over recent days, the Taoiseach and other European leaders have signalled to Britain that the door is still open to staying in the EU if Brexit is abandoned.
When a new leader takes office, there is always a sense of optimism that he or she can bring about change and betterment. That is all the more so in the case of a young leader.
Over the past couple of weeks I have been in Asia and Australia and have had lots of interesting meetings and conversations. Here are some issues raised which may be of relevance to an Irish business readership.
Political outcomes that almost nobody predicted have become more common in western countries. And Britain has been particularly unpredictable.
Garda reform and Brexit have been two of the biggest challenges facing the current Government. The contrasting ways in which they have been handled speak volumes about the political system - both its strengths and its weaknesses. They also illustrate how constrained the next Taoiseach will be in his freedom of manoeuvre.
International trade is the lifeblood of small economies. Recently, this column looked at new research on Ireland's foreign trade in goods - tangible things, such as meat and medicines, that are put into containers and shipped to other countries. Today, the much less discussed subject of services trade is put under the spotlight.
The average person in Ireland is worth the princely sum of €137,000. What's more, people are getting wealthier at quite a clip, according to the Central Bank's latest figures released last week.
Most people would agree in principle that taxpayers' money should not be used to subsidise private gain. Yet, to a very great extent, that is what we do in Ireland when it comes to third level education.
Size matters. Big countries with big home markets can get rich without doing much international trade. Small countries can't.
Today's Sunday Independent/Kantar Millward Brown poll shows a surge in optimism over the past six months. Never, in the three decades the pollster has been posing the question, has a larger share of respondents been more upbeat about their future personal financial situation. More than one in three people believes that they will be better off in a year's time than now. It was just one in five last October.
One in four people employed in the private sector in this state owes their job to a foreign company which sells stuff to foreigners. The taxes those workers and companies pay fund a great deal of the public sector and the cost of providing public services.
In the lead up to the commemorations of the 1916 Rising, which culminated last Easter Sunday and Monday, there were many voices expressing concern.
Last week saw the publication of the most important economic and budgetary document of the year so far. The Department of Finance's Stability Program Update contains an assessment of the state of the economy, along with - much more importantly - a full set of forecast figures on the public finances for the next five years.
The first large-scale use of chemical weapons took place in this month 102 years ago. Poison gas then came to be used frequently by all sides throughout the First World War. By the time that conflict ended in 1918, more than a million people had been killed or maimed by weaponised chemicals.
Last week's census results showed that Ireland's population was one of the fastest growing in the EU in the five years to 2016.
There are simple answers to society's big problems. Everything that annoys and frustrates you about your life can be put right easily. The reason things aren't put right is because bad people are conspiring to screw you over. This, in essence, is the worldview of the populist.
More than half a century ago, British Prime Minister Harold Wilson spoke with great enthusiasm about the "white heat of technology" and how the embrace of the scientific revolution would forge a "new Britain". The 1963 speech to his party's annual conference became famous for its articulation of the transformative power of science and technology. Few modern politicians anywhere would take a...
Understanding Brexit and its myriad implications is beyond any one individual. With so many factors at play, accurately predicting how things will turn out two years from today, when Britain is very likely to be in its first week outside the EU, is impossible.
There are only two kinds of divorces: bad and awful. One big reason break-ups cause strife is money. When people divorce they are usually not in the mood to be generous to each other.
Don't fight the last battle. This is a lesson that soldiers the world over are taught. So traumatising is combat, it is said, that it leaves an indelible mark on those who engage in it.
In 1845, Ireland had the fifth-biggest population in western Europe. More people lived here than in all the Nordic countries - Denmark, Finland, Iceland, Norway and Sweden - put together. Today, the all-island population is less than one-third of those countries' combined populations.
Banks have been back in the news of late. AIB is being prepared for partial privatisation, Bank of Ireland reported bumper profits, and PTSB’s boss, Jeremy Masding, has been whingeing about excessive regulations on banks.
Last Sunday Enda Kenny made a surprise announcement during a speech in Philadelphia, the city where the American constitution was drafted 230 years ago.
'It is glorious to get rich." So said, of all people, a former leader of communist China. It is hard to imagine any Irish politician saying such a thing. Despite the self-proclaimed pro-business inclinations of most of our elected representatives, the lionising of wealth creation is not something one hears frequently from those in Leinster house.
The Minister for Finance Michael Noonan spoke recently about what is sometimes called "the lucky country". He noted in a speech a couple of weeks ago that Australia has enjoyed 25 years of uninterrupted economic growth. But he didn't merely muse that this resource-rich country on the other side of the world has not experienced a recession in more than a quarter of a century. Its success, he suggested, means that other economies need not be condemned to suffer inevitable cycles of growth followed by recession.
In less than three years' time, supermarkets north of the Border could be selling juicy steaks from the furthest corners of the world at less than half the price of equivalent cuts of Irish meat for sale in the Republic. The same thing could happen to the relative prices of many other food products.
Academic economist Frank Barry has revisited the debate around joining the euro in a new paper*. After 18 years of euro participation he ponders, among other things, what might have happened if Ireland had retained its own currency.
On the Sunday before last June's referendum on the EU in Britain, this column imagined the history of Europe from the vantage point of June 2021. It envisioned that Brexit had happened and that it triggered the break-up of the EU. That, in turn, led to an exodus of jobs from Ireland as companies that used this country as a base to service the single market had left.
Last week in the Irish Independent, issues around politicians' partners were discussed and with that the sexuality of aspiring Fine Gael leader Leo Varadkar arose.
It is rare that a week passes without stories on housing, property issues and homelessness making the news. Last week was no exception.
Political instability and upheaval have been to the fore over the past year: on this island, south and north, on our neighbouring island, on the continent, and across the Atlantic. Yet despite all the uncertainty, which might have caused consumers and businesses - from eastern Europe to America's west coast - to pull in their horns, economic momentum in the Western world has gathered pace...
One month into Donald Trump's presidency, much remains unclear about the precise direction and form of future US economic policy. But the tilt towards protectionism promised during the campaign has materialised in multiple ways - from the people appointed to important positions to the actions and statements made by the new administration.
After his first month in office, nobody would claim that the new US president has suddenly become what might have traditionally been described as "presidential". Supporters and opponents alike agree that he is governing in the unconventional style in which he campaigned.
A state's first duty is to protect its people. In order to do this, citizens in democratic countries, and most others besides, grant to their states a monopoly on the use of legitimate force and many other powers besides. Such extensive powers, along with the often (and necessarily) secretive way policing is done, means that no country is entirely free of malpractice and corruption among law enforcers.
Something is stirring in Europe. Almost 10 years on from the beginnings of the worst slump since the Great Depression, the continental economy appears to be picking up its plodding pace of growth. Last year, the eurozone economy outpaced that of the US for the first time in almost a decade. This year is shaping up in much the same way. Economic forecasts for the eurozone - for what they are worth - are being revised up almost by the week.
In many quarters at home and abroad, Éamon de Valera's signing of the book of condolences at the German embassy after the suicide of Adolf Hitler in 1945 was not well received. As the months and years passed, and the full horrors of Nazism became apparent, it became an ever larger blot on his record as a politician and a statesman.
The outstanding indigenous entrepreneurial achievement of this country is not to be found in the food or the hospitality or the still nascent tech sectors.
Is democracy going the same way communism went a quarter of a century ago? Are people in the free world losing faith in the elected representatives who have governed them for decades? Are the institutions and structures of democracy decaying before our eyes?
Housing was centre-stage in 2016. Don't expect matters to change much in 2017. Owing to the time it takes to build new homes, a likely (modest) increase in the supply of housing this year won't transform trends in rents and house prices.
Michael Noonan said last Wednesday: "The amount of tax collected in 2016 is at an historic high."
The number of people working in foreign-owned, export-focused companies now stands just shy of 200,000, according to IDA Ireland figures published last week. This extraordinary figure - equivalent to around one in eight private sector jobs - shows how globalised the Irish economy is. That the number employed in such companies has grown by well over one third since 2009, multiples of the overall rate of employment growth in the economy, shows that Ireland is becoming ever more globalised.
As the year begins, it is a good time to try to gauge the national mood, both here and with our neighbours. As it happens, opinion polls taken in the closing months of last year across many countries allow us to do just that. Among other things, they show that we Irish are currently the most optimistic people in the Western world.
The New Year has all the potential to be just as turbulent as 2016 was. It could very well be more turbulent. Let's hope it's not. Here's my economic wish list for 2017.
Over the past two centuries, four individual years have stood out as being turning points in Europe. The year 1815 saw the defeat of Napoleon and the ushering in of a European order that led to a century of rarely interrupted peace on the continent. It was against this political backdrop that the transformative impact of the industrial revolution took hold.
'Are the United States and China destined for war?" This was the title of an essay in the highbrow US magazine The National Interest last week.
If you have been keeping up with the stories that have made the headlines over the past 12 months, you'll probably agree that 2016 has been a year to forget. At home and abroad, many bad things have happened. An ominous sense about the state of the world has heightened over the course of 2016. There is more reason now to believe that the centre isn't holding than there was at the beginning of the year.
Yesterday's report by the ESRI paints a quite rosy economic picture for 2017. Next year the Irish economy will grow strongly, the institute's economists reckon, and at a much faster pace than almost every other developed economy.
'To make people's lives better in every part of Ireland." That is the "one simple objective" the Government has, according the minority administration's 20-page progress report on its record over the past half year.
This has been an historic year. Of that there can be little doubt. The international political context in which the Irish economy operates has changed more over the past year than in any single year since the end of World War II.
It is now almost six months since our neighbours voted to leave the EU. What exactly that will mean - for Ireland, Britain and the rest of Europe - remains unclear. It is unclear largely because the British government has not decided what kind of relationship it wants with the EU, or what relationship it believes is achievable.
Three years ago to the day, I began writing columns for this newspaper. On many occasions since then, there has been opportunity to discuss and dissect the plentiful good news about Ireland's recovery from economic crisis. Unfortunately, the news is no longer so good.
'I will duly and faithfully and to the best of my knowledge and power execute the office of Chief Justice (or as the case may be) without fear or favour, affection or ill-will towards any man, and that I will uphold the Constitution and the laws." This is the oath set out in Article 34 of Bunreacht na hEireann which all newly appointed judges must take.
When a recovery begins, and as consumers loosen their personal purse strings, companies tend to have existing employees work extra hours and overtime rather than taking on new people. That is because the cost invested in the hiring and training of new staff could be lost if the upturn peters out and the newly employed person has to be let go.
Tuesday's jobs figures were the most important indicator of what has been happening in the Irish economy since our neighbour's Brexit referendum. Even before the vote in late June, there had been signs that the pace of recovery in the Irish economy was slowing. In the months following the decision, there were further signs of an economy losing steam.
In 2014, when Ireland's public pay and pensions bill fell to its post-crash low point, it stood at 25.7pc of total public spending, according to EU-level data.
In these grim and incredibly uncertain times, let's remind ourselves of some good news which is becoming more relevant by the day. That news is that the cost of living has come down and it looks as if it will come down further in the months ahead.
Donald Trump got fewer votes not only than Hillary Clinton in last week's election, but fewer votes than Republican candidate Mitt Romney in 2012.
Over the past 50 years, Ireland has moved from being an isolated, peripheral place to become one of the most internationally connected countries on the planet. Opening up and embracing the world has brought prosperity and opportunity.
For a half decade after 2007, writing or speaking about the Irish economy was a grim task; it was always to be the bearer of bad news.
Industrial disputes are always fraught affairs. They are almost always very complicated. The factors, issues and dynamics between a group of workers and their employers are difficult to understand fully for anyone who is not involved. Because of all this, commenting on workplace conflicts carries a high risk of being unfair to one side or the other. As such, and as a general principle, I avoid...
Possibly the best-know quote in recent political history is: "It's the economy, stupid." It was coined almost a quarter of century ago by an adviser to Bill Clinton during his first presidential campaign in 1992. The advice to Clinton was to hammer relentlessly on economic issues (the US unemployment rate had been rising since the summer of 1990), and by doing so he would unseat incumbent...
Life is becoming more precarious for most of us. The job-for-life is increasingly a thing of the past. More people are on short-term contracts. Fewer people have steady jobs in manufacturing and more people are flipping burgers. The least fortunate have been "left behind" entirely.
It has been an eventful year. A general election at home was followed by extended political uncertainty and then the forming of a minority Government involving the first ever tie-up between the civil war parties.
Medicines and alcohol cost more in Ireland than most other European countries. The latter is expensive because taxes on drink are the highest in Europe. The former are overpriced because drugs-makers use their huge presence in Ireland to squeeze taxpayers' money from the State and because the State won't do more to take on anti-competitive practices in the retail pharmacy business.
Last week this column discussed Budget 2017. Among other issues, it looked at public sector pay, a matter that has become more topical by the day since. Industrial unrest on a scale last seen in the 1970s and 1980s could be looming, something that would be economically damaging, politically destabilising and socially divisive.
'Five of Ireland's 60 mushroom farms have so far gone out of business since the [Brexit] referendum, including two this week". So reported Reuters last Friday.
How do you feel about paying social insurance? About the same as you do about paying income tax I would guess. There is every reason to feel that way. PRSI comes out of your income. If you are on a salary it is taken by your employer before you ever see it.
This week's Budget was the third in a row in which the public purse strings were loosened. Budget 2017 also joins its immediate predecessors in having a last minute ramping up of the amounts splashed in new spending and tax cuts.
Over the past week I've been in Ohio, Kentucky, Tennessee and North Carolina. Every place tells a story.
Gross domestic product has been described as the most powerful metric in history.
Settling on a stool at 8.45 on Monday evening in a bar in Delaware, a small town slap in the middle of swing state Ohio, your columnist asked a group of 50-somethings close by if the presidential debate was going to be aired. A friendly bunch, who, it quickly became clear, ran the place, were not on the edges of their seats about the most eagerly anticipated debate in US election presidential history.
Brexit has for many decades been the stuff of strategic nightmares for Ireland. Being pulled between our closest neighbour, drifting out into the north Atlantic, and the continent which is vital for our prosperity is never a place we wanted to find ourselves. But the nightmare is now upon us.
In the incredibly complex world in which we live today, the observations of any one person are of limited value in explaining how things are changing and evolving. That, however, does not stop people from coming to conclusions about things based on little more than their own experiences.
When times are good, it makes sense to salt something away. Times aren't always good. After the past eight years, nobody disputes that.
The country's political parties have wrapped up their annual think-ins before the start of the new Oireachtas term. Seven months on from the General Election and with the Government in office for more than four months, now is a good time to consider how the 'new politics' has worked. Much more importantly, what does the functioning of the new politics say about the longer-term...
The publication last week of second quarter GDP numbers passed without much comment. Compared to the publication of the first quarter figures in June, when huge revisions led to the revelation that growth had hit 26pc last year, not an eye was batted.
Leprechaun economics was a term coined by an American economist two months ago. He did so after it emerged that the Irish State's statisticians revised their 2015 figures on the size of the economy. According to the number crunchers, the Irish economy grew by 26pc in a single year. Last week, the Kremlin's international TV station discussed Ireland. The set was bedecked with leprechaun stuffed toys.
Twenty years ago this month I moved to Malta to work in the European Commission's diplomatic mission on the island. With the Mediterranean state seeking to become a member of the EU, my job, as the mission's economic and political affairs officer, was to be a cog in the complicated process of the country joining the bloc.
Last Thursday at 11am the latest inflation figures were published. At first glance they showed that inflation remains dead as a dodo. Prices fell slightly in August compared to July. They were the tiniest tad below the level in the same month last year.
Should Ireland leave the EU? Some readers of this newspaper who have written to the editor over the past week have urged the charting of such a course. They have done so in response to the European Commission's finding last week that Ireland broke EU law in its tax dealings with Apple.
All discussion of last Tuesday's finding by the European Commission on the Apple tax case needs to be prefaced with the statement of an important fact - only Apple, the Irish Government and the European Commission are in possession of Brussels' detailed reasoning on how it believes laws were broken. That is because the ruling can only be published in full once all three participants have agreed that there is nothing in it that breaches the confidentiality of any party.
Corporation tax is making the news like never before. That is mostly down to the Apple case - but another topical profit tax issue is why there was such a massive increase in revenues from this tax to the Exchequer last year.
'Simplify, then exaggerate". This is the advice that is often given to newspaper columnists. Few events show better than the Apple tax case how bad that advice can be, not because the matter cannot be exaggerated, but because it cannot be simplified in any honest way, at least not yet.
How would the Independent All-iance and Fianna Fail react if Michael Noonan were to reject a windfall cash payment to the Exchequer of €1bn? If such a scenario sounds pie in the sky, it isn't.
The surge in job creation in the second quarter of this year, which saw net employment grow by 20,000 in just three months, points to an economy that is growing rapidly.
The numbers at work in the economy have surpassed two million and more people are immigrating to Ireland than emigrating from it.
As the nation was transfixed by the bizarre events in faraway Rio de Janeiro last week, a good deal of things were happening almost unnoticed closer to home that will have a much bigger impact on people's lives. With Budget 2017 now less than eight weeks away, most of the news on the economy and its prospects last week was good, unlike the scandal-riddled news from Brazil.
With less than two months before Budget 2017 we have once again arrived at the time of year when tax and spend issues come to the fore.
Tens of thousands of (mostly) young people received their Leaving Cert results yesterday. Some will immediately enter the world of work, but most will move into a new phase of further education and training before they start to earn a crust.
The extraordinary miscalculation of so many normally savvy people - from bookies to financiers - of the risk that British people would vote for Brexit led to a great deal of shock. Among the consequences was a reappraisal of Donald Trump's chances of becoming president of the US. That the British referendum was followed within weeks by Trump's best-ever poll ratings (which have slipped considerably since) gave many commentators cause to claim that he is in with a real chance.
'Artificial intelligence could spell the end of the human race." That is how no less a figure than physicist Stephen Hawking has described the risks posed by intelligent machines capable of thought and action.
Neutrality has been the subject of debate recently, both at home and abroad. It was claimed earlier this week that an agreement is in place which allows Britain's Royal Air Force to shoot down a passenger plane in Irish airspace in the event of a 9/11-type hijacking.
The dust is settling. Europe is coming to terms with the first major reversal in a process of integration that has defined the post-Second World War era. In Dublin and in capitals across the continent, officials are opening new files by the day on the great many aspects of the long and incredibly complex task ahead.
With the summer in full swing, many of us are spending some time away from the strains of the workplace or planning on doing so. It is timely then, that a recent OECD blog post*, accompanied by a trove of bang-up-to-date data, looked at the issue of workplace strain across Europe.
Hillary Clinton and Donald Trump have been confirmed as their parties' respective candidates for November's presidential election. The campaign is now moving into its final and most intensive phase. As plenty of other articles and analyses have been looking at the candidates, this column will - with some difficulty - try to ignore the personalities.
These are unsettling and uncertain times. Almost every week brings a shock, a change, a major event. Some weeks recently have brought more than one. Last week's instalment included mass murder in Munich and the confirmation that the ranting narcissist Donald Trump, the most different candidate the two major US parties have put up since World War II, will represent the Republicans in November's presidential election.
The economic crisis that hit Ireland from 2008 will remain in the national consciousness for a long time to come. The causes and consequences will no doubt be studied for many years.
Despite going through one of the worst recessions in Europe over the past decade, Ireland's population has continued to grow more rapidly than that of most other countries across the continent.
Last week produced a blizzard of economic and economy-relevant data. Before looking at the eye-poppingly inflated, and internationally discussed, GDP figures, consider the other interesting figures that got somewhat less attention.
There are five geopolitically important powers in Europe - Britain, France, Germany, Russia and Turkey.
'Output and employment'. 'Employment and output'. 'Output and employment'. This is the mantra of economists when talking about how an economy is performing. Employment is measured by counting the numbers at work. If that seems easy, it's not. In modern, fast-paced economies with constantly churning labour markets, even getting those simple-sounding sums right is a challenge for number-crunchers.