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O’Toole’s New Republic – unfinished business or just a dream?
More as a trailer than a review – as it’s out on Thursday– I draw attention to Fintan O’Toole’s latest polemic “Enough is Enough – how to build a new Republic“. Fintan has been promoting the book vigorously on this side of the water, on Radio 4’s Start the Week and here at greater length [...] read our review »
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Sunday Supplement
It being Sunday, we’ve all got time to consider and ponder things at greater length than during the working week, yes? If it’s good enough for the Sunday papers, it’s good enough for this guest blogger. So here’s the review section… Actually, it’s my introduction to a book published last year, Goin’ Down Slow: selected [...] read our review » -
Hearing the Other Voice from the Grave: Why Should we Listen to David Ervine’s Stories?
Ed Moloney’s Voices from the Grave: Two Men’s War in Ireland has received considerable attention in the press and in the public realm since its publication earlier this year. Although the book relates the experiences of the Provisional IRA’s Brendan Hughes and the PUP/UVF’s David Ervine, much of the discussion has focused on Hughes’ stories [...] read our review »
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paddy reilly .
‘Maybe, but the huge subvention received by Israel from the US is not available for everyone’
Its a wonder Dave has’nt thought of suggesting that the Republic should rejoin the UK with it’s sterling currency ‘independence and then like NI we could ask HMG to bail us out to the tune of say 15 billion pounds a year ( prorated for population vis a vis Northern Ireland ). Somehow that might be the straw that would break Mr Brown’s financial back
Both Israel and Northern Ireland benefit from having ‘sugar daddy ‘ sponsors in terms of financial sponsorship and political underpinning from outside to a degree which cannot be replicated for other small european and indeed non european states around the globe . Without this support both States would have long since passed into history or would be far poorer than they presently are . The fact that around the world there are increasing signs of regional integration e.g in South America – Asia and Africa means that the EU will be nmore the model to follow than the 1,500 ‘nation’ state which Dave and the extremist ‘nationalist ‘ sovereignty above all merchants seem to favour .
‘ and Switzerland’s unique financial arrangements as a banking centre cannot easily be imitated’
Easily ? Can’t be . There is only one Switzerland .
‘Ireland, which has carved out a niche trading with other European nations, needs to peg its currency to those nations. The options of becoming a US subsidised holy land or a an offshore banking mall do not exist. ‘
As over 70% of our trade is with the Eurozone that makes sense . Longer term despite Dave’s prognosis I can only see the Eurozone widening to take in more members from Iceland to the Balkans and hopefully the UK .
“Maybe, but the huge subvention received by Israel from the US is not available for everyone…” – Paddy Reilly
Don’t wet your pants over that “huge subvention” to the Israeli economy as it amounted to a mere 240 million USD in 2006 under ESF. On the other hand, Israeli GDP is 164 billion. Do the math on that, kid, and then come back with a percentage.
As for toxic debts that infect the Eurozone, there is no subprime exposure among Israel’s banks as Israeli government, unlike the governments in the Eurozone, wasn’t stupid enough to delegate its monetary policy to third parties.
Dave
“wasn’t stupid enough to delegate its monetary policy to third parties”
Surely you meant to say banking regulation which remains in Irish hands.
The Swiss banks did get themselves exposed to sub-prime. UBS chairman was forced to resign last year as a result.
it amounted to a mere 240 million USD in 2006 under ESF. On the other hand, Israeli GDP is 164 billion.
They must have found clever ways of disguising it, or Israel has benefited from such huge subsidies in the past it no longer needs them. Long experience has taught me the unwisdom of accepting statistics from that quarter.
Mr. Plocker noted that there is already dollar “creep” in Israel, with many real estate and business transactions performed in U.S. currency.
Yes when I was in Israel and Palestine last year I could only curse my stupidity in bringing shekelim. Dollars are the only useful currency. Equally English is the only useful language spoken: Hebrew seems to be a military code for use by the army.
Harry
Ireland new what it was getting when it joined the Euro: a strong, stable currency. Strong and stable currencies do not devalue in the fact of a downturn. Countries that want to run down this route are modelling themselves on Italy, which would continually devalue the lira to try and stay competitive. Is that the future we ought to be aiming for? No, it bloody well isn’t.
The Euro offers Ireland a new of advantages. That stable currency is helpful when looking for inward investment, and it reduces transactions costs with Ireland’s major trading partners. It is also likely that Ireland has got a better credit rating than it otherwise would have by association with it. The downsides are being made clear now.
There is maybe an argument that this case is so extreme that a currency devaluation is the only way out. Perhaps, but I’d like to see things a lot worse before that might fly. I want to see the country adapt, take the pain, raise productivity and move forward. If Ireland can manage that it will be in a much better position than simply devaluing the currency. Dell went to Poland; but there is no future in trying to get them back, and the necessary devaluation to even make is competitive with them would be extreme.
I also wonder – European economies have been a bit out of sync since the Euro began; whereas the US state economies tend be much closer (though there is never perfect alignment). Do we need through these to get properly in sync? Just speculating.
paddy reilly ,
I don’t know where Dave is getting his info on Israel ?
e.g
‘as Israeli government, unlike the governments in the Eurozone, wasn’t stupid enough to delegate its monetary policy to third parties. ‘
Apparently they did’nt have to . Their private sector finaciers did it for them as per this recent Jan 14 th report from Bloomberg News
Billionaires Burn Israeli Savers on N.Y., U.K. Deals (Update1)
By Tal Barak Harif
Jan. 14 (Bloomberg) — Israeli pension funds helped diamond mogul Lev Leviev snap up Manhattan real estate, including the former New York Times building, in 2007. Now they’re sharing in his losses as property prices plunge, dragging down the value of corporate bonds that backed the deals.
Fellow billionaire Yitzhak Tshuva has the same problem after the foray by his Delek Real Estate Ltd. into British property and roadside restaurants helped force its bonds down 73 percent. Pension funds and individual investors lost about 20 billion shekels ($5.1 billion), or a quarter of what they had invested in corporate bonds, as yields fell in the four months to November.
Now, under threat of a strike by Israel’s biggest union over pension losses, the government is proposing a bailout to help close the savings gap for people near retirement age. Concern that some companies could be wiped out helped drag the Tel Aviv Stock Exchange TA-25 Index down 44 percent in the past year.
“These real estate tycoons imported the global financial crisis to Israel,” said Gill Beeri, managing director of Ramat Gan, Israel-based Ayalon Financial Solutions Ltd. Its Smadar fund lost 14.1 percent in the first 11 months of last year. “There’s increased concern that these companies may default.”
Israel is the latest country to suffer from the collapse of the U.S. subprime mortgage market, which led to an economic crisis in Iceland, currency devaluations in Russia and street protests in Greece and Kuwait. There may be even more fallout as the economies of the U.S., Japan and the countries of the European Union contract in 2009.
Kensei is hitting the right notes for now in his post above . We should trust the Bundesbank before either the Federal Reserve and the Bank of England – Historically over the past 35 plus years both the former have indulged in ‘devaluations ‘ to make up for their failure to attack structural defects in their economies . The Germans have been more disciplined in their approach and what the world now needs is a dollop of confidence . Hopefully we’ll begin to see the beginnings of confidence restored when Obama takes over and starts his reforms .
The USA is when all is said and done still the prime driver of the world economy even if in relative decline compared to the rising giant Asian economies .
Gresham’s Law is still inforce -Bad money drives out good and you can replace ‘money ‘ with capital, human , investment or industrial or technological and it’s still true . Who would invest in China today if it’s currency was expected to devalue by say 30% over the next few years . The dollar is a bit exempt given it’s world reserve currency status but even that has it’s limits as the new Obama administration seems to acknowledge .
Glen, the monetary policy of the ECB was designed to promote expansionist demand-side economics by supplying credit cheaply with the intent that people should borrow it and spend it to prop up faltering demand in the consumer society.
When you delegate that power to third parties, you delegate control of your economy along with it. It is a primary tool for controlling the economy. It’s very much cause and effect: loan money cheaply, and consumers will borrow it. The problem is that they will borrow it under an expansionist monetary policy that holds that spending it stimulates the economy. Ergo, the act on simply borrowing and spending it is seen as by the policy moguls in the ECB as creating wealth in the economy instead of simply creating debt.
Keeping interest rate too low for too long meant that people borrowed too much money. It was the policy of the ECB that they should do that. Do you really expect the banks to question the wisdom of the ECB? No, they’ll assume – like everyone else – that those unmitigated jackasses actually knew what they were doing. They transparently did not know what they were doing unless the ECB actually intended to bankrupt the monetary system with its policies.
On the other hand, Israel kept interest rates as high as it needed them to be and moderated them as it needed to moderate them. For example, at a time when the ECB had its rate at 2%, Israel set it at 9%. The result was that Israel had very high growth rates with high interest rates, so folks only borrowed money if they had a solid plan to invest it. In the Eurozone, money was supplied cheap and easy so folks borrowed it for the purposes that the ECB intended them to borrow it for, e.g. new conservatories, new jeeps, sofas, holidays, property speculation, etc… and all the trinkets of the consumer society. Now you have the results of those two contrasting sets of monetary policies in that Israel has a solid growth economy and no toxic assets in its banking system and folks in the Eurozone have massive debts (nice jeeps, sure, but massive debts). The Federal Reserve and the Bank of England all kept interest rates too low for too long. Therefore you see the inevitable shared outcomes of shared policies in those afflicted regions.
Blame the banks for that if you wish, but they were simply following the policies of the political elite. As I said before, the monetary system didn’t fail. The monetary policy worked exactly as it was supposed to work: the agencies who controlled the supply of credit intended people to borrow it and to invest in the trinkets of the consumer society. While it won’t be done with any glee, Israelis will not suffer due to the policies of the ECB. As you suffer bankrupcy, the prudence and independence of Israel will see its wealth far outstrip the EUs as the EU slides into economic ruin.
“They must have found clever ways of disguising it, or Israel has benefited from such huge subsidies in the past it no longer needs them. Long experience has taught me the unwisdom of accepting statistics from that quarter.” – Paddy Reilly
I was wrong about Israel’s GDP. It is 715.8 billion shekels ($185 billion), and not $164 billion. However, the figure for US aid to Israel in 2006 is, as I stated, $240 million.
You are wrong to describe 0.013% of aid as a percentage of GDP as a “huge subvention.” I suggest you stop getting your ‘facts’ from An Phoblacht or similar ill-informed rag.
“FY 2006 Program: Improve Economic Policy and Governance ($240,000,000 ESF). The FY 2006 Appropriation Bill is expected to provide $240 million in economic support funds as a cash transfer to the GOI. It will be used to repay debt owed to the USG, including refinanced Foreign Military Sales debt, and the purchase of U.S. goods and services.”
http://www.usaid.gov/policy/budget/cbj2006/ane/pdf/il271-001.pdf
Glen, the monetary policy of the ECB was designed to promote expansionist demand-side economics by supplying credit cheaply with the intent that people should borrow it and spend it to prop up faltering demand in the consumer society.
That’s been the economic policy of the British, American and Irish governments for the past decade or more. Hell, it’s pretty much been the attitude of the G8.
Looking at the Irish government and its very obvious attitude towards property investment and credit, there is no basis upon which to claim that the lending regime would have been any different if the interest rates had been set in Dame Street.
Well Dave as I said, long experience has taught me to ignore Israeli statistics. I certainly don’t read An Phoblacht: it requires a subscription. The words American subsvention Israel lead inter alia to an article from the New York Times:-
http://query.nytimes.com/gst/fullpage.html?res=9E0CE1D91E38F930A15751C0A964958260&n=Top/Reference/Times Topics/Subjects/F/Finances
“An Israeli policy of refusing to make the territorial compromise necessary for peace has also required enormous American subvention. …”
Another interesting source states:-
“US largesse to Israel may go well beyond what Mearsheimer and Walt estimate. Apart from $3 billion of annual aid usually cited, Israel, according to a study by former Foreign Service Officer Richard Curtis, annually absorbs another half billion in grants from a variety of agencies plus $2 billion in loan guarantees, which handily get forgiven as they come due.[9] From 1949 to 1996 per capita U.S. aid to Israel amounted to 15 thousand dollars. For every dollar the U.S. spent on an African, it gave $250 to an Israeli, and for every dollar it spent on someone from the Western Hemisphere outside the US, it spent $214 on an Israeli. “America’s $84.8 billion in aid to Israel from fiscal years 1949 through 1998, and the interest the U.S. paid to borrow this money, has cost U.S. taxpayers $134.8 billion,” writes Curtis. “Or, put another way, the nearly $14,630 every one of 5.8 million Israelis received from the US in 1997 has cost American taxpayers $23,240 per Israel.”
This is from “Logosjournal”:-
http://www.logosjournal.com/issue_5.2/jacobsen.htm
But this does not take into account the sort of money private individuals are putting into Israel. So the point is, Israel has an income from being a holy land, to which pious individuals will retire taking their money in the performance what they believe to be a mitzva. Ireland does not have that advantage, and so would be foolish to behave as if it did.
@Ken
“Ireland new what it was getting when it joined the Euro: a strong, stable currency.”
The Euro strong and stable? We’ll see how that works out in the coming twelve months, I hope for everybody’s sake your confidence is not misplaced.
kensei ,
‘Strong and stable currencies do not devalue in the fact of a downturn. Countries that want to run down this route are modelling themselves on Italy, which would continually devalue the lira to try and stay competitive. Is that the future we ought to be aiming for? No, it bloody well isn’t.’
Yes it bloody well is at least in the UK and thus NI has to row along
Assuming you are a resident of NI you will not be delighted to know that the forecast for the pound sterling is somewhere between one pound = 1.20 dollars with some commentators predicting pound dollar parity by the time the ‘truth’ fully emerges. The Euro is about as rock solid as you can get with the Yen and US Dollar close behind . The latter simply due to it’s reserve status .
Expect a large dollop of ‘faith ‘ restoration in the US dollar following installation of the new American administration but further out it’s future as world reserve currency looks somewhat fragile. Gold is too expensive and topped out -so hold onto your hard assets even if the equity is diminshing seems to be the best heads down position .
Harry
The Euro strong and stable? We’ll see how that works out in the coming twelve months, I hope for everybody’s sake your confidence is not misplaced.
A caveat: the Euro has been posisbly overvalued for a while. Some decrease would not surprise me.