Ok. How do we square this:
- Irish Times / Vines & Watson – Markets are making the wrong call on Ireland’s debt;
- Constantin Gurdiev – 23/08/2011: Trade Figures for June – an awesome performance by the sector;
… and this?
- Michael Taft / Irish Left Review – If an Economic Tree Falls, Does It Make a Sound?: First, Vines/Watson claim we are ‘swiftly restoring our competitiveness’ and, as proof, suggest that our current account surplus will soon be of the order of 3 to 4 percent of GDP. In other words, we will be exporting more than we are importing; selling more abroad than we are buying in from abroad… We can see that the turnaround in all down, not to rising export earnings, but collapsing imports. Export value actually fell but goods imports collapsed by a phenomenal 28 percent.Falling imports is about more than just household consumers too poor, too prudent or too nervous to spend. Most imports are bought in by businesses as inputs into their production or re-selling activities. Falling imports, especially of this magnitude, are a clear signal of an economy being gutted of business and household activity.
Second, Vines/Watson go on to discuss Ireland’s net public debt. They claim that it will top out at 110 percent – a high figure but not one that can’t be overcome. Hopefully. But even topping out, we will still have the highest debt level in the Eurozone, bar Greece. It is hard to base an argument about ‘unexpected comebacks‘ on the projection that we won’t be as bad as the worst…
Imagine that you have been denied a loan from every bank in the land and you’re getting by on your in-laws generosity. Are you really someone that every bank in the land can relearn to love?
- Irish Independent – Gene Kerrigan; Relax, we’re out of the woods — again: It never went away, that old national trait — the inferiority complex that ensures that whenever anyone from outside says anything positive about us we perk up like a mouse sniffing a tasty chunk of cheddar. I read the Vines and Watson article and for a piece written by two genuinely smart guys it seemed a bit light on facts… We could face years of stagnancy, pain and worry, as the smart guys dump their debts on us. And that’s the optimistic view. Or the bottom could fall out of the global economy and we’re into Mad Max territory. In which case, you and I will meet at the docks to fight each other for bags of rice sent by kindly Chinese people to feed our kids.
Politically, we appear to be already into the post-independence era. We had hundreds of years under the proud invader, then the Act of Union drew us into the English embrace for 120 years. We then had about 90 years of independence.
The current rule by the EU/IMF/FG/Labour coalition seems to be heading, under the guidance of Merkel and Sarkozy, towards some hazy notion of an EU-wide fiscal authority. This will set the framework within which our national government will collect taxes and allocate resources.
It will involve a debt ceiling written into our Constitution. Last week, Michael Noonan explained why this will be a good thing. “If the analysis of the crisis,” he said, rewriting history, “is that the last Government recklessly borrowed the country into a major bankruptcy crisis . . .”
No, Michael, that’s not what happened. The last Government, with your approval, transferred private bank debt to the public, making a manageable public debt unsustainable, then squandered our cash reserves on zombie banks and depressed the domestic economy in an effort to balance the books.
- Constantin Gurdiev – 25/08/2011: Irish Exports – long term composition: However, it is worth remembering that various exporting sectors are also importers – both of inputs into exports production and goods for consumption and capital investment. So consider the composition of our trade balance by each broad sector contribution… Ireland’s trade balance is pretty much now made up of pharmaceuticals and medical products… back in the 1970s, on average, we were net importers of Organic chemicals (51) & Medicinal & pharma products (54) with the two sub-sectors contributing 3.74% deficit to our trade balance. By 2010, the two sub-sectors own trade surplus stood at 86.1% of Ireland’s overall trade surplus and in the first 5 months of 2011 the same proportion stood at 97.3%. Let’s, say, our potency is Viagra, folks… our flagship domestic exporting sectors: Total food and live animals (0), Beverages and tobacco (1), Crude materials, inedible, except fuels (2), Mineral fuels, lubricants and related materials (3) and Animal and vegetable oils, fats and waxes (4) continue to contribute negatively to our overall trade balance. These sectors yielded 2.62% negative contribution to trade surplus in 2010 and in the first 5 months of this year they own trade deficits are running at 4.85% of our total trade surplus. By the way, if you think this is a new development, the same was true in the 2000-2009 (-0.23%).2011 so far is also the first year when we are registering negative contribution to the trade balance from Office machines and automatic data processing equipment (75) and Electrical machinery, appliances etc., n.e.s. (77). Back in the 1970s these flagships of manufacturing were contributing 25.86% of our overall trade balance… but in the first 5 months of 2011 their contribution turned to negative 2.1%.
Some interesting stats to keep in mind when we talk about successes of our exporting sectors.
- Airplane II: The Sequel Buffalo Anchorman: Our top story tonight, Four-alarm fire rages through Downtown Buffalo. Also in the news, Lunar Shuttle heads for the Sun, and certain disaster.
Tokyo Anchorman: Our top story tonight, Four-alarm fire rages through Downtown Tokyo. Also in the news, American Lunar Mission locked in death struggle.
Moscow Anchorman: [with a gun pointed to his head] A Four-alarm fire in Downtown Moscow clears way for a glorious new tractor factory. And on the lighter side of the news, Hundreds of Capitalists are soon to perish in Shuttle disaster.