#UCCEconoCon Live Blog

Refresh for updates, thanks to @AudreyEWalsh for some of the quotes

Hello and welcome to my live blog of the UCC Economics Society Economic Conference. There is a great line up of speakers organised and I will be updating this post as the day goes on. Feel free to ask questions in the comments on Twitter (@spiller2 or @corkeconomics) or on Facebook. Todays Timetable:

11:30 – 11:35    Welcome by Stephen Barry, Auditor of UCC Economics Society
11:35 – 11:50    Opening Address by Robbie Butler, UCC Department of Economics

11:50 – 12:50    Panel Discussion 1: Is politics the greatest stumbling block to economic stability? Ciaran Lynch TD, Sinead Ryan and Declan Jordan, Peter Mathews TD and John Considine (Chair)

12:50 – 13:20    Q&A

13:20 – 14:20    Lunch

14:20 – 14:40 “Gaming It: Incentives, Cheating and the Grey Area in Sports” – Declan Jordan

14:40 – 15:40    Panel Discussion 2: The Eurozone – wobbling on a tightrope between growth and debt? Megan Greene, Seamus Coffey, Brendan Keenan, Lorcan Roche-Kelly and Tim Harford (Chair)

15:40 – 16.10   Q&A

16:10 – 16:20    Coffee Break

16.20 –     Keynote Speech by Tim Harford

Robbie Butler:

  • We can go from Primary to University without studying Economics.
  • We don’t teach basic Economics, how to save, how to spend, how not to spend more then you earn
  • Interest in Economics has declined since the recession.
  • Need to capture imagination of young people. Less than 10% leave formal education with education in economics

Panel 1: Is politics the greatest stumbling block to economic stability?

Declan Jordan

  • Politics isnt the greatest stumbling block to economic stability
  • Do Governments hinder or help the Economy
  • 13 Countries with good growth had committed, credible and capable Government
  • Bad decisions and Bad Governments can damage Economies
  • Electorate needs to incentives “good politicians” with “Good policies”
  • we tend to see politics as a problem, we get the government we deserve, we elected them
  • we elected the same government 3 times who had short term views, but we contributed to it

Peter Matthews TD

  • We’ve had a volatile economic situation here, as opposed to stagnation (Japan) or depressed (Soviet Union)
  • Unregulated markets has wrecked the real economy.
  • Read the “Price of Inequality” – Joseph Stiglitz
  • Also read “Thinking Fast & Slow” by Daniel Kahneman
  • This country is overburdened by debt which is unsustainable! A debt right down for Ireland would be the right thing to do!
  • The 11 MEPs need to agree on working together to reduce the €53bn debt

Sinead Ryan

  • 1st lesson of economics is of scarcity, 1st lesson of politics is to ignore the 1st lesson of economics.
  • Where there is conflict between Economist and Politicians, the tax payer ends up the loser.
  • Examples are Irish Water, HSE, Bank Crisis and unprofitable routes on public transport
  • No politician wants to be called brave

Ciaran Lynch TD

  • If Government is a stumbling block for economic stability if bad policies are followed, its not if good policies are followed.
  • Everyone now has opinion about economics just as in politics
  • The financial crisis has both internal and external causes!
  • Economics does not come with an ideology, just like Politics
  • Coming out of the current crisis/bailout is an example of how politics can work
  • Life cycle carbon taxes – there is not enough materials in the world to meet future supply.
  • Politics does not cause instability but pursuing economic dogma does

Q&A: Question: How do we get the Politician’s we deserve

  • Economist should provide Electorate with information
  • Economist should fact check on political policies

“ECB Monetary Policy” – Lorcan Roche Kelly

  • German Economy is the most important tool to the the ECB
  • To get where the ECB wants to be, the must do something new. They can’t cut interest rates. Money supply must be managed better!
  • The crisis that Europe is facing, is not a debt crisis…. it is a growth crisis!
  • The best thing that happened to the ECB was Trichet leaving the bank and Draghi coming in
  • The Euro suffers from a publicity problem

“Gaming It: Incentives, Cheating and the Grey Area in Sports” – Declan Jordan

  • Lots of cheating in sport, Luis Suraz, World Cup 1982, Theire Henry, A-Rod, Lance Armstrong, Maradonna.
  • Cheating is not new, its easier, they do work hard
  • Its’ expected
  • Is bending the rules allowed?
  • Cheating needs a new definition
  • Should be defined as Breaking the rules for Advantage

Panel 2: The Eurozone – wobbling on a tightrope between growth and debt?

Brendan Keenan

  • Eurozone is still a collection of National Economies, cant be compared to USA. Huge disparities between Governments
  • The eurozone crisis could easily erupt again!
  • Ireland facing more contraction until 2016, Public spending can grow beyond that if we reach that if international recovery
  • Is Ireland political willing to continue walking the tightrope? It will still be tough
  • A Tightrope… doesn’t matter which side you fall off! You fall off! A second bailout would lead to unknown territory.

Megan Greene

  • Adding an item to the agenda, INFLATION…… it should be growth, solvency and inflation.
  • It is important to look at 2 different solvency levels: 1) Public Solvency levels 2) External Solvency levels
  • 2014 will be a chronic year for the Eurozone, however next year things should get get better!
  • Germany has some room to provide some stimulus, but unlikely as its facing a rapid ageing population
  • German’s population is ageing and while their fiscal policy is good, their future generations will be paying the price.
  • Banking Union will not be about burden sharing, which was the point
  • Debt conference in Europe with all the weaker countries (and perhaps France), to restructure debt, is necessary.
  • The most political likely deal is debt restructuring. It will be politically tough. But rescheduling at least is nessecary

Seamus Coffey

  • If deflation appears in prices, it might not be too bad. However, if it appears in wages, it would not good!
  • Deflation also affects Government income, VAT and Duty.
  • Those most hurt by deflation are those in debt. Most in debt? Governments- where anti deflation comments come
  • We still havent solved the Banking Crisis
  • EU needs to become more federal, whether in policy or fiscally, for social project of 1950s to avoid getting stuck
  • The Burden of the Debt has to go Somewhere

Lorcan Roche Kelly

  • Eurozone is almost a Co-Op
  • The Eurozone is a good tempate for a Federalised Europe
  • We need a really bad crisis for politicians to hand over fiscal power. Seeds are there for that crisis. Sovereign Debt
  • The answer is more Europe
  • Integration or Disintegration
  • We are half way across canyon, if we turn around we will fall off.

Keynote Speech: Tim Harford

  • Focusing on the story of Alban William Phillips (Also known as Bill Phillips)
  • He is the Indiana Jones of Economics
  • Invented the Moniac the first computer model of an economy
  • Developed the Philips Curve, the correlation between inflation and unemployment
  • The 1970’s Oil Crisis discredited the Philips Curve
  • When he developed the curve he never believed in it.

And thats it folks! Thanks for joining me!

 

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House of Commons to Debate Loan to Ireland

House of Commons of the United Kingdom
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This Evening the House of Commons will be debating the Loans to Ireland Bill which will allow the United Kingdom to give a loan of £3,250 million to Ireland.

The plan is that the bill will finish off all stages today. It will pass the Committee stage in the whole House.

Already today the issue has been raised four times in the House of Commons. The first time by Mark Reckless, MP for Rochester and Strood, during Northern Ireland Questions, in relation to assets held by NAMA in Northern Ireland and suggested that maybe some of these assets could be used as collateral in the loan. The second time was in relation to the effect of the economy in the Republic on the North. Northern Ireland Minister, Hugo Swire MP for East Devon, said that it was important that the UK was seen as part of the solution for Ireland and not the problem.

During Prime Ministers Questions, Mark Reckless MP, again, raised the issue of the loan to Ireland and suggested that the UK does not follow the wishes of the German Finance Minister. David Cameron in his response agreed with Mark Reckless and said that he was glad that the UK could come to Ireland’s aid.

I will be watching the debate on the bill and it will be interesting to see some of the remarks that are made.

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No Consenus

German Logo of the ECB.
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Euractive have a very interesting article on the talks between EU Economic Commissioner Olli Rehn and the Irish Government and Opposition.

“He asked us our view and I told him […] we had no confidence in this government, and the thing that would give more stability to the country is an election and a government in place that had a significant working majority,” said Michael Noonan, finance spokesman for the centre-right Fine Gael party

This of course means the markets are jittery about Ireland. Will Fine Gael stick to the 4 year plan to reduce the deficit if they win the election? Will Labour? This worry and the Portuguese Debt Auction  has sent “the risk premium on Irish and Portuguese bonds to record highs and prompting market talk of European Central Bank (ECB) intervention.”

This is worry news indeed.

The Irish yield spread over benchmark German bunds reached a record peak near 574 basis points in late trading. The 10-year Portuguese/Bund spread also hit a euro lifetime high of 466 basis points and traders said the ECB had been buying bonds.

Credit ratings agency Fitch Solutions said the cost of insuring Irish and Portuguese sovereign debt against default had widened by 24 and 22% respectively compared to the sovereign debt market average in the last week.

Commissioner Rehn is still thinking positive though, he told RTÉ

“I believe that the markets have not yet internalised this plan and these decisions because they are still at the planning stage,” he said. “Once they have been decided by the government and passed by the parliament they will have a real effect, and then the market forces [will] believe that Ireland is able to cope.”

I personally hope that he is right. Next months Budget is going to be make or break, not just for the Government, but for the country as a whole. There is no doubt that cuts and taxes are coming, and a few holy grails will have to be given up, but can we accept that as a country? Will we protest on the street like the Greeks? Or will we grin and bear it?

The next four years are going to be tough. Can we make it? I hope so, but we need political will and not political point scoring.

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IMF says we are screwed

International Monetary Fund
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The Telegraph have an excellent article on the latest IMF report – “Will It Hurt? Macroeconomic Effects of Fiscal Consolidation” – and what it means for countries trying to make cuts.

In Ireland we cut to quickly. We forgot to bring in a stimulus like other countries. Cuts in budgets mean growth cuts, which will lead to a longer depression.

According to the report Southern Europe (Spain, Portugal, Italy and Greece) and Ireland could be in for an extended recession. With bug cuts coming in Germany and France, they could be joining them, as well as making it less likely for Southern Europe to recover as no demand for goods.

Has the article states:

We are seeing a pattern – first in Ireland, now in Greece and Portugal – where cuts are failing to close the deficit as fast as hoped. Austerity itself is eroding tax revenues. Countries are chasing their own tail.

So what are Governments doing? Cutting more. It doesn’t bode well for the future. We need something to encourage spending, we need something to get other countries to buy our goods. How will we do that? I am not sure, but by leaving out the stimulus we cut too hard and fast. We could be stuck for awhile. This is not good for our government as,

The lesson of the 1930s is that politics can turn ugly as slumps drag into a third year, and voters lose faith in the promised recovery.

Most of the country has already lost faith in the Government and the other political parties are having varying support levels, (see here).

We have no choice but to cut. The deficit is too high. Its that or leave Anglo fall. Maybe that would mean the cuts would not have to be so deep and therefore we would have a fighting chance of recovery. I some how doubt our government will take that chance.

a tip of the hat to Peebles for the link

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The 17th Member of the Eurozone: Estonia

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Estonia is set to join the Eurozone on the 1st of January 2011 according to the Irish Times. Estonia was given the all clear by the European Commission. Estonia will be the fifth of the 2004 intake to join the common currency following Slovenia in 2007, Malta and Cyprus in 2008 and Slovakia in 2009.

Plans by Poland, Hungary and the Czech Republic are still not on track, so they will not be joining the currency any time soon.

It is interesting considering the current state of the eurozone that it is willing to continue to expand.

The Commission stated that “None of the other eight countries assessed in the report is found to meet all the convergence criteria for adopting the euro” Those countries are: Bulgaria, the Czech Republic, Latvia, Lithuania, Hungary, Poland, Romania and Sweden.

The Council of Ministers will have to approve this.

Hattip: European Movement Ireland

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FG Complain to EU about NAMA – Its a bit late?

Corrected (rotation and minor crop) of :File:B...
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So Fine Gael’s Senator Eugene Regan made a formal complaint to the European Commission about NAMA.

He claims the ‘scale and scope’ of the scheme is disproportionate to the size of the Irish economy, transfers too much risk from the banks onto the Irish taxpayer and does not contain sufficient safeguards that Irish depositors and borrowers will not be forced to pay for the huge mistakes by Irish banks.

Now I think most people would agree with that, but why go crying to the EU now? I thought the Government claimed they cleared this with the EU? Then again they never produced the proof.

The submission can be read here (PDF)

“Fine Gael has grave concerns about the NAMA scheme and the implications it will have for each and every citizen of the Irish State. We opposed the NAMA proposal in the Dáil and Seanad, along with many others, but Fianna Fáil and the Greens forced their ill-advised plans through regardless. Our concerns persist and we have highlighted them is this submission. They include the lack of transparency, flawed valuation methodology, no guarantee of credit flows from banks and inadequate burden-sharing between the banks and the taxpayer.

“The complaint to the Commission calls for the exclusion of Anglo Irish Bank from the scheme and the divestment of non-core assets of Bank of Ireland and AIB to ensure that the focus of each institution is on the provision of credit to the Irish economy.

“The Government has so far presented EU approval of NAMA as a formality and I am asking the Commission to critically examine the bankers/ developers bailout known as NAMA with a view to limiting its scale and scope so that the cost to taxpayers and the State can be minimised.

“While the choice of asset relief scheme is decided by member states, the scale and scope of the NAMA project to be undertaken by the Irish Government, as set out in the draft NAMA business plan, is entirely disproportionate to the size of the Irish economy and budgetary resources and threatens the financial viability of the State itself.

“The scheme also ignores key guidelines issued by the European Commission in relation to transparency in the valuation of assets and the risk-sharing element which sees the taxpayer shouldering most of the burden. Furthermore, the unrealistic assumptions in relation to the ‘long-term economic value’ of assets will unquestionably have a severely negative impact on the Irish State, and its people, for generations to come.

Most of the above we have heard before. But is Brussels willing or able to do anything about it? NAMA is passed. Its law. I know Fine Gael couldnt raise it before it was passed with the Commission, but still is it not a bit late? A bit of crying over spilt milk?

I cant see Brussels telling the Government to undo NAMA, but we see what happens. But we will be waiting I would say!

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An Bord Snip

Scissors
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Okay so an Board Snip has been published and its recommending some serious cuts in various sections of Government. Some are good ideas, others are savage. I agree with most of the mergers but not with some of the cuts.

There is one thing we must remember with the report. It is only recommendations. We now know what the Government have been recommended to do, so if we think soething shouldn’t be done we need to get out there and lobby for what we want protected.

This is the advantage of the democracy we live. A lot of TD’s (especially rural TDs) will be looking at this report and shaking at the thought of the next election if some of these measures are brought to pass.

The Oireactas is on its summer break, so it is the perfect time to get lobbying your TD and giving them the reasons why the cuts shouldnt happen.

I know I will be lobbying my TDs on a few of the issues that I care about, its up do you do lobby for what you want!

Check out the Irish Election posts on the Bord Snip reports to see what is being recommended without going through the report.

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Some scary figures

Things aren’t looking well for the Irish Economy at the moment and a few numbers seem to look fairly ominous for the economy and therefore the rest of us.

FinanceDublin.com supplies one of the figures which is actually a Debt Clock tracking the Irish Governments Debt which currently stands at over 64 billion euro. That is a shocking figure which we and our children will have to pay off.

The second figure comes from a press release by Deirdre Clune of Fine Gael on the issue of Youth Unemployment (found via Youth Politics on facebook)

“Figures released by the CSO show that youth unemployment has jumped by 170.9% in the last two years. In June 2007, just two years ago, 33,872 people under the age of 25 were on the Live Register. This had increased to 91,755 by June 2009.

“This represents some 57,833 young people joining the live register in the last 24 months. The devastating effect this is having on these young people and their families cannot be displayed in figures and graphs. But it does exist, and it is being ignored.

“Youth unemployment growth of 171% in this two year period has been well above the national average of 151.6%. Young people are clearly facing the brunt of the economic downturn.

That isn’t great news for us young people in Ireland.

The thrid figure is from the recent IMF report on Ireland which shows that the Irish Economy is worst placed among the developed countries

GDP is projected to contract by 13½ percent through 2010, the largest among advanced economies

Read full report (PDF)

Things aren’t looking well at the moment, when will they pick up? Who knows. It depends on what the Government does and how well it does it.

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Recession Diary: 27th May 2009

So it happened. Something I didn’t think would happen. Or maybe something I wouldnt let myself think would happen. All the warnings were there, but I didn’t think it would happen.

I got handed my notice.

Thats right. I am now unemployed.

I never thought I would be upset about loosing my job. But everytime I think about it, my eyes well up.

Yes, I know I am not alone in loosing my job, but its a gutting esperience when it happens.

Whats to blame for me loosing my job?  The Government.

Why? Cause they have raised VAT (Something my employer absorbed and didn’t raise prices) and they have raised income tax. This means people are spending less.

The retail sector in this country is in a downward spiral. Shops, especially independents are tight for cash, with bills not being paid etc.

The Government need to see what its doing wrong as at the moment all it is doing is shutting down small business. We need to get Ireland back to work!

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The Morning Sessions

We started this morning we two motion based sessions on Health and the Economy. There was no new substantive addition to the heakth policy as announced by Enda Kenny last night. The only addition was the idea of a National Body Test (NBT), which would be “an age appropriate annual check up to pick up illnesses early.” which is an interesting idea.

Dr. James Reilly TD’s speech was very good and had some hard hitting words aimed at the HSE. It ticked a lot of boxes with those in the room and be ended up getting a standing ovation. (Was that just for the telly though?)

We are currently on the Economy session which is providing quite a few number of quotes for those watching on twitter (#fgaf is trending on twitter!)

Dont forget to watch the liveblog! and is the streaming working on the Fine Gael website?

Enjoy the telly coverage

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