Greece under pressure from EU

The Greek debt crises may be spiraling out of control according to Arthur Beasly and this crises may effect the Irish debt crises.

EU authorities are struggling to contain the worsening financial crisis as Greece is loosing the "confidence of it EU-IMF bailout sponsors". The EU-IMF backers are looking for deeper cuts in the Greek economy and a faster 50 billion privatization program with little enforcement by the Greek government. The lack of execution of the terms set by the EU-IMF by the Greek government is due to the "lack of an advanced land registry in the country, leading to legal uncertainty over the ownership of many public assets".The troika wants the Greek government and opposition to agree on a fixed timetable for the execution of stringent policy measures in return for this aid, but consensus has proved elusive.

The problems in Greece has the potential to affect the countries who are already under pressure under the IMF-EU. It holds the possibilities that the Irish government may be swept off its current course of action as the EU-IMF may become more severe in trying to deal with the economic crises in Europe. Ireland though seems to be on course in dealing with its crises as new banking stress tests have not "thrown up any fresh capital requirements for Anglo Irish Bank or Irish Nationwide Building Society beyond the €34.7 billion already pumped into the two institutions."

Survey: Eight firms a day go bust

A survey has shown that a total of 8 companies a day went bust throughout the month of May and figures also show that people are now shying away from starting a business.
The survey was conducted by vision.net.ie and it showed that court-ordered liquidation are up to 50% and for the first time more than 1 in 2 companies are now showing signs that are consistent with business failure.

Figures show that 1,181 people chose to become a company director for the first time in May , this is down a huge 42% from the same time last year.

Vision-net.ie director Christine Cullen commented: "The sharp drop in 1st time company directors is letting. It is impossible to say with certainty what may be influencing this, but the lack of finance options for would-be entrepreneurs and people adopting a more cautious approach are among likely factors"

Ms. Cullen added that the rise in court-ordered liquidations signals a hardenning of the position being taken by debtors and by the courts.

Figures show that 84% of the liabilities for companies which closed during May are unsecured creditiors, this meaning that unpaid debts will most likely not be realised.

Of the 93 million euro owed to creditors from meetings, more than 40 million euro was in the retail and wholesale sectors.

Overall, 155 liquidators were appointed in May, compared with 190 in April. There was 44 receiverships, compared with 64 on the previous month.

Vision-net also carried out credit rating stress tests on 13,414 private limited companies who have filed accounts in the past 5 weeks and 14% of these firms suffered a worsening of their credit rating. This means that 55% or 7,431 of those companies sampled are now in the high-risk category.

Encouraging Emigration could help solve Ireland Unemployment Problem

Since the economic crisis Ireland has suffered a massive increase in unemployment.
Forecasters have predicted there will be further 20,000-30,000 job losses in the coming year. With the numbers at work in the economy down by 15 per cent so far in the crisis, Ireland has suffered the worst employment shock of any OECD country, a point made in these pages on a number of occasions.

With the current state of the Irish economy, Ireland can ill afford this increase in social welfare. One of the measures that could be considered is to encourage irish people to emigrate.

the irish charactertistic of emigration has being well established. According to Economist Joe Durkan suggested Ireland could accelerate outward migration, thus containing the rise in unemployment. According to Irish Times economist colunmist it may be worth considering for state agencies is to ensure 'that those who are considering a move are incentivised to do so. This would be good for everyone: it would help those who want to move to do so, and it would cut the massive welfare bill of a bust country'.

This policy would greatly enhance the irish economy. In fact the Spainish governemnt introduced these policies earlier in the recession.

On data and statistics

A few years ago my sister in law came into the study at home while I was doing an undergrad economics assignment, a wall of Excel data in front of me, and came out with the line "'tis far from spreadsheets you were born." And she's right. It is.

That quote was brought back to me last week around the time of the death of former Taoiseach Garret FitzGerald. By all accounts he was a man who loved statistics, who reckons that he is the only private citizen of Ireland to have a complete set of CSO figures. Even at his funeral, his son thanked the staff at the CSO for enthralling him with stats during his life. I wonder what my sister in law would have said if she ever met him!

The recent census brought out excitement in Garret FitzGerald, with him writing a column on its importance given Ireland's ever changing demographics. But I also found myself getting a little excited come the 10th of April - indeed I filled out my section a few weeks before, and filled out my parents parts too on the 10th. I even remember saying to my dad "these things are important!" when he gave a "sure it was 1967 or 1968, put either down!" answer to me while I did the census...

So what has all that got to do with anything? This masters has opened my eyes a bit to the importance of data and accurate statistics. For an undergrad assignment data was either considered an irrelevance or a nuisance. But now! As we start our theses a big question has been "what's your data like?" A person could smile with satisfaction if indeed they had a full dataset that they could work with, with all the variables for all the years!

'Tis a long way from spreadsheets we were born. But the importance of them are only becoming apparent now.

Will Ireland follow Greece?

There are constant comparisons being made between Greece and Ireland of late. Recently, Sky News aired an interview with The Economist Intelligence Unit lead analyst Megan Greene. In this interview, Greene argued that the bailout is insufficient to lead Ireland out of the crisis. According to Greene, it is only a fraction of the amount the Economist Intelligence Unit forecast Ireland would need to prosper. The bailout funds are clearly inadequate to cover Ireland's debt and pull it out of the crisis. It seems to be the case that the bailout will actually lead Ireland into more extreme debt further down the line. It is merely delaying the inevitable.

Reports are continuously being produced indicating that the bailout is the wrong way to go. The governments plan to bailout the banks is further exacerbating the matter. A scathing report on the state of Irish debt and planned expenditure has been produced by Morgan Kelly which appeared in The Irish Times on the 22nd of May 2010. This article has recently been considered by Suzanne Lynch and Laura Slattery of the Irish Times. Greene argued that the bailout is insufficient whereas Kelly is of the opinion that as well as being insufficient this attempt at saving Ireland will actually cause us to fall into greater debt. Kelly believes that Ireland's downfall and national bankruptcy is inevitable and this attempt to bail Ireland out will actually put us in a worse position by delaying the unavoidable fall to bankruptcy.

McCarthy on Eurozone banking crises

The UCD economist and "Brod Snip" author Colm McCarthy again raises some salient points in his column on the eurozone banking crises. Colm McCarthy is someone who's column I enjoy reading as much for his at times caustic wit as his insight on various issues surrounding the banking and fiscal crises. He ends this article on a theme we have seen all too often in the last number of years:

"unless the European banking crisis is acknowledged and dealt with soon, we are witnessing a slow-motion train-wreck that will end badly for Ireland, for several other eurozone members and ultimately for the entire European project"

The problems outlines by Mr Mcarthy in this article are by no means new and are widely acknowledged. However the power-brokers central to the issue( heads of european states and the ECB) remain quite vocally divided on the issue as witnessed in recent elections in Finland

Will any change in attitudes of tack come too late for Ireland? Or indeed, is it already too late?.

Tougher Times but Life Roles On

According to the RTE news yesterday the government downgraded its outlook for its economic recovery with GDP now forecast to decrease by less than 1%. They have now projected growth 0.8% which is down from 1.8% last November. This gives a pessimistic economic forecast for the rest of the year. They also told of how the domestic economy is expected to remain in recession for this year and next, with only the export sector providing growth according to the revised figures. Employment will fall by 30,000 jobs this year and over four years the number at work will increase by 100,000. But with more than 300,000 jobs going since the recession, high unemployment figures currently at around 14%. We also have to pay back our bailout which is based on our economic growth. Can life get any tougher for families trying to pay mortgages?

They talk about the dull times in the 1980’s how people earned to put food on the table. I know this is a terrible time for some people in Ireland however I personally haven’t heard of any one dying from starvation I think we are not that badly off, were are just worse off than we were 5 years ago and signs on it was the bank paying for our good times. I think we should stop worrying about our finances to an extent. I think that we need to revert back to Abraham Maslows 1943 paper on Theory of human Motivation he found that self-actualization was the most motivating factor. If we provide for one self and important others do we really need a fancy life with 4000 square feet houses for families of four or 2 new cars for driving. Most of the generation before us didn’t have them and it didn’t do them any harm. There is life after high wages and I’m afraid it continues whether we like it or not.