The Euro

Tomorrow is Euro's 11th birthday, after 5 expansions, members of Euro-Zone have increased from 11 to 17, and it has become the second important currency of the world after dollar. From the time was born, Euro had many emergency times, so does now.

The brightest time has gone, and now euro has to face a cruel reality, some members of Euro-Zone have terrible budget problems. Now Greece and Ireland has been forced to execute their debt restructuring and special rescue plans and Portugal and Spain are in danger. The domino effect of debt crisis makes ECB always in a gloomy mood.

Compare with perfect unify currency, the appearance of euro only unified the currency policy of members, but not the financial policy. This inherent defect breeds the hodiernal crisis. As the feedback of this crisis, the members of euro zone start to perfect the economy regulation of euro zone. They want to solve the inherent defect.

Large-scale financial contraction measures have published one after another, and plan to reduce the budget under the safe line in 3 or 4 years. Although the rebound of euro can be expected, the aging of population, debt unbalance among members and weakness of reformation still enslave the scale of rebound. Also the US economy and Dollar policy can affect the situation of Euro, but to be honest, I don’t think Euro Zone will fall apart as some opinions of skeptics. For all the members of Euro Zone, give up Euro not only can overturn their economies, but also their politics. The only chance for Euro is keep going down, and find opportunities from the incorporative progresses.

What made consumer prices fell

The article name Consumer prices down marginally on the Irishtime.com said that compare withe October, the consumer prices fell o.1 per cent in November.

During November, alcohol and tobacco prices fell 1 per cent, due to supermarkets and off-licences reduced their price. The prices at restaurants and hotels were down 0.4 per cent against October levels. Because of the price of second-hand cars fell, the transport also decline slightly, about 0.3 per cent. The percentage of the total cost of food and transport was decreasing. However, the price of clothing and footwear rise 1.9 per cent as prices recovered.

"The EU Harmonised Index of Consumer Prices, which excludes such items as mortgage interest and car tax, was down 0.2 per cent in the month." as the article said.

The most significant changes in the consumer prices index is the this year were the rise price of housing, water, electricity, gas and so on, increase 9.2 per cent. And also the cost of communications rose 2.9 per cent compared with last year. As Avine McNally said, the rising of the prices were driven by the public utility costs.

In my opinion, the prices of the energy will still increasing in the future until person find new energy instead of oil.

Policies may provide recovery but not future growth

Danny McCoy states in todays Irish Times that there is a danger of rushed legislation serving the current needs of the banking crises but not serving future problems and growth. The government have introduced direct and sensible polices in broadening the tax base and reducing the cost of doing business. These polices have been mixed with policies undermining the main governmental aim of the smart economy with substantial cuts to education. These cuts in education have only reinforced the opinion the government are only serving current needs and not worrying about future growth.

There has been a reduction domestic demand with cuts in public welfare, minimum wage and public sector wages. According to Paul Sweeney also in the Irish Times today these cuts are more damaging because of the lack of job programmes to counter act the loss of money in the Irish economy. Sweeney suggests there may be a faint possibility of an export led recovery due to the positive early indicators but this export led recovery will leave many parts of Ireland underdeveloped and untapped.

At the end of 2010 the government or the soon to be new government need to reflect on their aims and the creation of sustainable and realistic policies to achieve these aims in order for recovery and continued prosperity afterwards.

IMF is too polite to say, but this bailout pushes us further into the red zone

This article from Colm McCarthy was published in the Irish Independent on the 19th of December 2010 and outlines conclusions on Ireland's financial rescue package, which he fears.
McCarthy reveals that The cost of the bank rescue and the onus on taxpayers means we have no chance to service our own debt. He outlines when our debt burden concludes that assuming that everything goes as planned, which never really happens in Ireland unless the IMF have planned for this, will be at the absolute limits of sustainability. He finds that in 2013 according to IMF predictions the ratio of debt to GDP will still raise questions about the sovereignty of Ireland. "There are significant risks to the programme that could affect Ireland's capacity to repay the Fund".
McCarthy continues on to say how the essential problem is that the Irish State has taken the liability for bank losses which has surpassed their initial fears. If the State could get itself off the hook with more of the bank bondholders, its ability to service its own debt, including debt to the IMF, would be enhanced writes McCarthy. The respected Canadian market analysts BCA noted "Ireland's sovereign debt risks would have abated if bondholders had been forced to take a haircut on their positions, because this would have given the government more resources to repay creditors”, which is also currently the case in Spain at the moment.
To conclude in reality the Government is proceeding with the programme of budgetary austerity and has succeeded in getting another Budget through. However McCarthy’s final pint seems to escape the people of Ireland, although this recession is driven by the financial crisis and the collapse of the housing bubble we are still unable to meet the everyday cost occurred by the state and this phrase has been coined as the “twin bubble”
The twin bubbles, in public spending and in bank credit, squeezed the traded sector badly, and the strong euro exchange rate did the rest. The result has been a serious and widespread loss of competitiveness across the traded sector, including agri-business, manufacturing, tourism and export services.

Marie Curie Actions

To improve the human research potential and strengthen the socio - economic knowledge base, the Marie Curie Actions offer numerous opportunities to individual researchers to participate in a research team in other country. Funding is available for researchers to move both within Europe and internationally. There are a variety of schemes that are based on individual applications or from research groups in academia or enterprise. Marie Curie Actions also supports national funding agencies to create new schemes to promote international mobility. The applicant applies to the EU commissions jointly with the host institution. The commission selects the most suitable applicants and signs a contract with the host. The individual researchers then signs a contract with the institution.
Emma Seale is an Earth Sciences graduate from UCC and is now a Marie Curi Fellow in an SME at Daithi O'Murchu Research Station in West Cork. She is working on a collaborative.
Brothers Alan and Steven Davy are computer science PHD graduates from Waterford Institute of Technology. Both will be working at the University of Barcelona on wireless network technologies.
Ireland has the highest number of Marie Curie Fellows per capita of researcher of all Eu Member States. During the period 2002-2006 Ireland secured more the 55 m Euros for researchers in academia and industry. Since 2007 the total to date is 43 m Euros. Mari Curie Actions are a strong enabler for at least three of the major EU policy flagships - the Innovation Union, Youth on the Move and the Agenda for New Skills and Jobs. See originally text from the Irish Times dated 30 December online.
Meilleurs Voeux en 20011

Another Bubble???

Gold, palladium and silver prices are continuing to rise. According to an article by Amanda Cooper in todays Irish Independent gold prices are "closing in on a tenth consecutive yearly gain as doubt re-emerged over the US economic outlook and weakened the dollar." Spot gold is currently priced at $1,409.85 an ounce. Palladium prices have hit a nine year high while silver prices also increased.

Further evidence of increasing gold prices can be seen as the number of companies now buying used gold from the public is also on the increase.

According to the article increasing prices are said to be "fuelled by investors seeking an alternative to increasingly volatile currencies, stocks and bonds, against a backdrop of an uncertain US outlook and Europe's debt crisis."

The article questions "Is gold a bubble?". Denis Gartman of the Gartman Investment newsletter responds "Perhaps", and goes on to discuss the increasing trend.

We are all familiar with Tulip-mania and the more recent Irish property bubble. The consequences of the burst property bubble are evident. Could the same happen with gold? One would imagine that people should be more cautious before engaging in speculation of increasing prices and before investing in gold.

http://www.independent.ie/business/stocks-markets/gold-still-gaining-as-economic-doubts-weaken-dollar-2478405.html

Oil Trafford?? I'll have some of that!!!

If ever there was a time to have money then surely the time is now. As the world is gasping for wealth then it appears the only cure for the thirst is oil. One country which is sitting on an amazingly quenchable amount of oil is Qatar. Qatar is a Middle Eastern country with a population of just over 1.5 million, a population which does not mirror the wealth and power now associated with this small part of the Arabian Peninsula. Qatar’s national income primarily derives from oil and natural gas exports. Qatar has the highest GDP per capita in the Arab World according to the International Monetary Fund (2006) and the second highest GDP per capita in the world according to the CIA World Factbook.

Earlier this month Fifa, the global governing body of football awarded the world cups of 2018 and 2022 to Russia and Qatar respectively. Coincidentially two countries which possess not much football heritage, but two countries which possess massively wealthy individuals whom have acquired wealth from oil. It is as obvious as the wealth in Roman Abramovich's back pocket that a certain degree of foul play appears to have been part of this system. Its one thing holding a global football competition in the vast country of Russia, which is not the most accessible of countries, but it is more than a little inconvenient to hold a football tournament in Qatar. As the World Cup usually occurs during the northern hemisphere's summer, the weather in Qatar is a concern with temperature reaching as high as 50 degrees Celsius. Other issues include the fact that homosexuality and alcohol consumption carry sever penalties in the Arabian State. So what I personally conclude from this decision is that everything has its price, even the right of hosting the World Cup.

Now with Qatari interest in football growing it appears the rich men in Qatar are looking to invest heavily in the football world. Earlier this month, just after the World Cup announcement the Qatar foundation unveiled a £125 million sponsorship deal with Barcelona football club. Barcelona whom have never carried a commercial sponsor on their shirts appear to have a price for their ethical believes and the Qatari's have found it.
http://www.guardian.co.uk/football/2010/dec/10/barcelona-shirt-sponsor-qatar-foundation

http://www.telegraph.co.uk/sport/football/teams/manchester-united/8217591/Manchester-United-sale-a-long-way-off-says-Michael-Edelson.html

So with all this money floating around I was intrigued to hear the rumours that the heavily indebted Manchester United appear to be on the wish list of The Qatari Royal Family, namely The Qatar Foundation. As i blogged last month about the recent moves by the Glazer family to remove the £243 million Payment-in-Kind (PIK) debt from Manchester United now is being seen by some experts as a possible payment funded by Qatari money. After all, the chances of the Glazers having paid down the PIK debt from their own pocket is thought minimal, although the secretive nature of the family’s business dealings means we may not know soon, if ever. However with rumours of a £1.5 billion imminent bid on the cards by the Qatari foundation it does make sense for the money obsolving Glazers to perhaps 'get their house in order'.

For Manchester United fans who have sat by and watched rivals such as Middle Eastern owned Manchester City and Russian owned Chelsea spend millions upon millions on players whillst United have only been servicing debt, it will represent some hope. Whillst the efficency of how Manchester United is run is certainly admirable in comparisson to the excuberent neighbours Manchester City, most fans would crave the end of Glazers reign and perhaps a little taste of that oil that may just see Manchester United dominate on and off the field for some time to come.

Look back 2010

At the end of the year, Occident have to face the worse situation on stagflation and high unemployment rate.

Ireland’s economy is hit by this debt crisis, the great housing bubble left a large sum of debt and excessive real estate industry, as well as these problems are difficult to be eliminated in short term.

Spain as one of the largest European economic entity, its economic situation is close linked to Euro. This November, the cost of debt financing rose 18% in Spain, it made investors daunting.

Euro institution’s flaw leads to one economy crisis after another, lots of European countries have to face big deficits. At the same time, under the global market integration, especially as the close relationship between US and EU, European weak economy situation has a negative impact on US’s economy recovery.

No matter EU or US, the governments’ attitude that to connive at asset bubble to overgrowth makes government cannot deal with currently problems efficiently.

Switching pressure to our sovereign debt!

Happy Christmas!

Interesting piece again from Colm McCarthy in the Independent from earlier in the month. At this stage it may seem like flogging a dead horse in questioning the use of the bailout to the parties involved but coverage seems to continually suggest that it has missed the mark in a big way in terms of assuaging the fears of the markets and has put the Irish taxpayer under and unnecessary burden which we will struggle to be able to pay.

The most interesting suggestion of the article is one that has been raised before of the differences between the IMF team and the EU officials in their approach to the bailout. The suggestion being that the IMF(and evidently the markets) would have preferred the deal to include some "burn" of the bank bondholders whereas the EU preferred the deal which has now been ratified in the Dail. The EU appears to have won out in this as the major partner in the discussions but again it must be asked who is this servicing? The markets? the Irish state? or the banking systems of our European partners?

It seems to me that at this stage we as the Irish taxpayer are at least in part paying for not only our own banks reckless lending and our own states asleep at the wheel banking policy but also the same problems of our European neighbours from whose banks we borrowed. As John Bruton has suggested recently surely the EU and ECB themselves should be taking some responsibility in financial terms for this problem which is no doubt EU wide instead of enforcing overly harsh repayment obligations on the Irish state. The apparent weakness of our governments negotiation skills and the standoffish presence of the IMF in deference to the ECB's primacy on the matter may be something we will be ruing for some time as our sovereign debt holders begin to frighten at the prospect of our state going the way of our banks under this excessive burden.

Tough Times for Retail Sector

All Irish retailers, excluding the motor industry are struggling this christmas. In November just past, retail sales increased by 0.9% in volume compared to last year. The volumes of good sold in November, excluding cars, has also dropped by 0.2% from October. Possible reasons for the drop in sales may be as a result of our current economic situation. People are afraid to spend their money since the Government has posed a mass of uncertainty through the loan negotiations with the European Union, many or saving whatever money they have for a probable bleak future. Having the value of core retail sales fall by 1.9% compared to previous years and 0.4% from October is a definite cause for concern. According to Laura Slattery of the Irish Times, this is an indication that retailers are constantly cutting prices in to convince the consumers to buy.

REI, Retail Excellence Ireland, announced this morning that December sales are on track to being the weakest in trading history. They are predicting volumes to drop by 6.7 compared to last December. This is due to a combination of both the extreme weather conditions and peoples attitudes to spending money. In the past few weeks we've all been aware of the weather change, in the begining the snow was such a novelty but now it has got to a stage where i think many people are sick of being stranded in their homes. Travelling in from anywhere outside the city is very dangerous, the council is providing sand and gravel for main roads but all country roads are skating rinks so many consumers have been unable to travel to the shops.

The bar sales are being hit the most according to the CSO. There figures show Novemeber's value of sales dropping by 13.4%. What i found unusual was that there was a 4.6% drop in sales in November compared to October. Normally one would think coming up to Xmas sales would increase because people tend to go out more with work parties or other events.

A worrying thought according to economist Alan McQuaid, "The bottom line is that it is now likely to be 2012 before we see a positive average annual change in consumer expenditure, which is bad news for the retail sector."

Everyone Needs to Accept Cuts

Over the past few weeks one can't walk through the city without being handed countless flyers and leaflets. Each display the opinions of various groups affected by the new budget - students, OAPs, the general working class and so on. I am writing this blog after receiving the Workers Solidarity Movement November/December 2010 leaflet. The front page article reads: "1% of the population, 34% of the wealth".

I don't completely disagree with the point of view put across in this article. I agree that there needs to be increased taxes for the higher income bracket. However I don't agree that the working class should face no tax increases or decreases in social welfare. Everyone should face increased taxation and social welfare has to be cut in the current climate. I myself am a student and will be affected by the increase in fees and the decrease in grants. My current plan to do a H.Dip has to be postponed for example. However I believe an increase in fees and a decrease in grants needs to be introduced. All areas need to be scrutinized and cuts in each sector will be needed if we are to emerge from this crisis. Everyone was content to spend during the tiger and accept low taxes and high social welfare payments and now we need to accept this harsher climate and try to rectify the results of past behavior.

It is certain that an amount of mistakes have been made but we cannot now be childish as a country and refuse to pay because we believe it was a certain groups fault- bankers, the government or whomever else. Even if that is the case, it is not realistic to put the blame on one group and expect taxing them only for example to produce the results needed. We need to face these challenges and accept that we all have a stake in this country.

Partying and Irish implications of the monetary union

The job of a central banker, according to William McChesney Martin Jr. - the longest serving Federal Reserve chairman - is "to take away the punch bowl just as the party gets going." This is in order to prevent the economy from overheating and to keep inflation and inflation expectations in check.

But what happens when a country no longer has control over its monetary policy, as happened Ireland after it joined the Euro? In this case, fiscal policy has to step in and become the policy lever through which a country can pursue price stability and sustainable economic growth. In short, the Minister for Finance must become part Governor of the Central Bank, part Minister for Finance.

Ireland's fundamental misunderstanding of its role in a monetary union lies at the heart of many of our current financial problems. During the height of the Celtic Tiger, interest rates in the Eurozone were are inappropriately low levels for Ireland, whose economy and inflation level was booming. The Irish government should have been aware of its new role and tried to keep inflation in check through fiscal policy. Instead of doing this, it let these high inflation levels become built into people's expectations, which helped wages increase to unsustainable levels in the public and private sector, as well as feed the massive increases in public sector spending during the Ahern era. Government policy fed the boom, precisely at the time when it should have been aiming to keep it in check.

Instead of taking the advice of McChesney Martin Jr. and taking away the punch bowl as the party got going, the Irish government instead took the advice of Chuck Prince (CEO of Citigroup during the boom years) who said: "When the music stops... things will be complicated. But as long as the music is playing, you've got to get up and dance!"

Live Regster number falls again

The number of people in receipt of unemployment benefit fell for a third straight month in November.

The decline of 4,200 in the Live Register brought the numbers on welfare down to 425,002, according to the Central Statistics Office (CSO).

The standardised unemployment rate, which is calculated separately, fell to 13.5 per cent in November, down marginally from 13.6 per cent the previous month.

This compares with an unemployment rate of 13.2 per cent recorded at the end of the second quarter in the latest Quarterly National Household Survey, which is a more accurate indicator of joblessness.

The 4,200 decrease was composed of 2,600 men and 1,600 women. The average net weekly decrease in the numbers claiming benefits in November was 1,050, compared to 1,320 in October.

Minister for Social Protection Éamon Ó Cuív said the figures provided further evidence that the Live Register was stabilising. “The Live Register has risen in November in each of the last five years but this year sees the first November fall since 2004. The scale of the fall is positive too as it is the biggest November fall since 1999,” he said.

However, he said that unemployment levels remained high and job protection, job creation and productivity growth are the Government’s key concerns.

Labour Party enterprise spokesman Willie Penrose said while the decline in Live Register numbers was welcome the underlying pattern remained unchanged.

“Virtually all of the decline recorded today can be attributed to factors such as the emigration, the likes of which we have not seen since the 1980s,” he said.

A break-down of the figures revealed that roughly one-third, or 150,327, of the Live Register in November were classified as long term - or more than one year - claimants.

So far this year, the number of long term male claimants has increased by 43,105 or 64.1 per cent, with the number of females up 15, 875 or 66 per cent. The total number of long term claimants increased by 2,719 or 1.8 per cent in November. However, the number of short term claimants fell by 7,270 or 2.6 per cent last month.

About two thirds or 274,675 of the total claimants last month were short term, compared to 322,158 or 77.9 per cent in Novermber last year.

The fall of 47,483 over the year consisted of a decrease of 38,970 in the number of male short term claimants and a decrease of 8,513 in female short term claimants.

The Live Register includes part-time workers, seasonal and casual workers who are entitled to claim benefits in order to support their incomes.

Of the total claimants last month, 18.9 per cent, or 80,208, were casual and part-time workers, compared to 77,924 or 18.1 per cent in October.

The number of Irish nationals accounted for 82.4 per cent, or 350,220, of the number of persons on the register last month. There was a monthly decrease of 4,698 (-1.3 per cent) in Irish nationals and an increase of 147 (+0.2 per cent) in non-Irish nationals.

The total number on the Live Register of 425,002 represented an annual increase of 11,496 or 2.8 per cent, the data showed.

Business group Chambers Ireland said the figures offered grounds for optimism.

"The number of people on the Live Register is still too high, however the fact that seasonally adjusted figures have once again declined, combined with Ireland's strong performance on exports provides some optimism amidst a lot of bad news," said chief executive Ian Talbot