Will monetary policy-makers get it right this time?

The IMF step in, along with central banks across the globe, after billions have been wiped off share values in recent days as problems with the US mortgage market contaminate global stock markets. The BBC’s business editor might have allowed himself a hollow chuckle, but I’m not convinced that’s an appropriate response. There are various attempts at explaining the problem in the media, from David McWilliams’ perhaps over-simplified version, through to the overly-technical one noted by John Naughton.. who also points to something in-between. Update As the markets appear to steady, the BBC’s economic editor asks whether the right lessons will be learned?

, , , ,

  • ND

    It’s fascinating stuff Pete,I enjoyed the links. I’m not an economist, but it turns out economists are just a shower of bluffers so i’ll foist my opinion on ye anyway.

    NI could return to international prominance in the not to distant future as the place were the housing pyramid came unstuck!! Isn’t it exciting for everyone suffering withdrawal from international notoriety that the peace process brought!

    There is nowhere in England, Scotland or Wales with comparable debt levels V wages V house prices. There is nowhere else you can rent a £220k house for £100 per week.

    Less finance, less remortgaging, less moving up the “property ladder”, equals less employment, less demand for finance, mortgages, property etc etc.

    There are few inbuilt values in the NI economy, what is our competitive advantage?

    Our disadvantages are many and the pluses rolled out by Invest NI are the patronising “great education” and………. and……..

    Does the recession in construction already underway and accerbated by the financial jitters in the markets pollute every facet of the NI economy the way it will in the free state?

    Will a 7 – 10 year period of economic instability put back/assist the anti-partitionists grand scheme or does it just copper fasten the UK for NI by increasing our reliance upon the English exchequer?

    I don’t know but the markets may cause NI to get pneumonia.

    Maybe i’m wrong, maybe NI is immune to globalisation.

  • Baudrillard

    I’ve never had much of a head for economic matters and considered the subject excruciatingly dull. But over the years I’ve come to realise what should have been obvious to me: economics are at the core of all politics and if you want to be a knowledgeable citizen (and voter) you have to make some effort to find out what’s going on.

    So thanks Pete. I see the post had little response!

    It’s much easier to blather away about what passes for politics here – (the usual ‘us and them’ rubbish). Meanwhile, in plain view, our entire futures are being determined by hedge fund managers in the City and on Wall Street (and to a certain extent by the puny ineffectual interventions by the US Fed and other central Banks).

    The European Central Bank sluices over £60 BILLION into the economy one day last week while most of us here were arguing over money to the UDA that was the equivalent of a hedge fund manager’s annual bonus. Funny old world.

  • cynic

    “There is nowhere in England, Scotland or Wales with comparable debt levels V wages V house prices. There is nowhere else you can rent a £220k house for £100 per week”

    No but thats not the economics that counts nor are the sums all the picture.

    Suppose you finance the purchase of the £220k house at say 6%. That costs £13200 / year. Rental income (assuming you can let it with a stable tenant) is £5200 / year.

    This is a loss of £8000 / year unless of course the house price rises faster. So it can still be an economic proposition, especially if you bought in at below the £220k price or own it via a company and can offset any losses against other income.

    The reason prices are so high is simple…supply and demand. There has been a wall of (often Irish) money buying things up against a restricted supply and the planning system here is a scandal – we have huge amounts of land and a low population density but we cannot zone land for housing (perhaps because it might hurt a few well connected developers?)

    After this international turmoil the demand side may take a bad hit, although the stock margets dont look that bad – a lot of it is hype. I think that psychology is the main issue. Buy to let investors will be scared and may panic and dump propety to get out. Equally the banks may clamp down on credit. It could be a rerun on England in the late 80’s – a boom followed by a 30% fall and then then (after 3 or 4 years) another surge upwards.

    The truth is, nobody knows!

  • IJP

    You gotta love this… random discussion about “tribes”, 80 posts; discussion about a banner held up at a march few people attended, 200+ posts; world economy on verge of collapse, 3 posts… a hollow chuckle indeed!

  • IJP

    Quality not quantity, mind – the 3 posts were spot on.

    (The only thing I would say is I consulted a Belfast estate agent early this year on how many homes were going to Southern investors. Answer: none)

  • kensei

    “Suppose you finance the purchase of the £220k house at say 6%. That costs £13200 / year. Rental income (assuming you can let it with a stable tenant) is £5200 / year.

    This is a loss of £8000 / year unless of course the house price rises faster. So it can still be an economic proposition, especially if you bought in at below the £220k price or own it via a company and can offset any losses against other income. ”

    No, it cannot be a economic proposition. What that is, is gambling because you are relying on a rise in house prices to offset your loss. An economic proposition is when you do the figures and see a return that can be compared with placing the money in a bank. You then factor in the potential for capital growth (or indeed loss), as part of the risk. On your example 220k is yielding a 2.3% return a year, if you have the mortgage paid off or a 4.5% loss if you haven’t. This is madness!

    “The reason prices are so high is simple…supply and demand. There has been a wall of (often Irish) money buying things up against a restricted supply and the planning system here is a scandal – we have huge amounts of land and a low population density but we cannot zone land for housing (perhaps because it might hurt a few well connected developers?)”

    Except, it’s not quite so simple. What is driving the demand? Is it economic fundamentals or speculation? Those are two very different things.

    Second the current situation is critical to the house price market because we don’t really have a house price boom. We have a credit boom. Even more than the interest rate rises impacting purchasing power, the sub prime mortgage stuff is impacting on banks desire to lend money. If that results in tightening to mortgage:wages ratio, house prices will contract.

    Third, the government could sort this problem fairly rapidly if it wished – either by building more houses, incentivising others to build more houses or restoring credit regulation. except that would impact all the people on the ladder you don’t care about kicking it away as long as they are alright.

    “The truth is, nobody knows!”

    And this, for markets, is the worst of all possible situations.

  • ND

    Sorry if boiling everything into a mini rant about the housing situation didn’t do justice to the larger issues at stake for NI.

    It occurs to me that there is limited discussion on any economics thread because there is a lack of ideas to be considered and pursued.

    The world at large has accepted the centre right and NI, the home of the revolutionary has just fallen into line.

    So is there a vision for NI and I’m just in the dark or is it a case of being opportunist and encouraging the scraps to fall our way from our neighbours.

    I’m not being critical here of anyone really but I just have a feeling that there is no aim for the economy.

    It has occured to me before that we devote so much of our intellectual energies to whataboutery is the econonomy a new way to approach our politics, is it an unploughed field or am I missing something.

    P.S if your reply apportions blame on sectarian grounds please place a warning at top so I can save myself time.

    I’d like an idea of progress and momentum if anyone can help me?

  • ND

    Thats if you ignore the rather substantial Denmark related post of course……..

  • DK

    “There is nowhere in England, Scotland or Wales with comparable debt levels V wages V house prices”

    Does that mean that NI is sub-prime!

    Actually, we are not really comparable to the US, since there are not comparable financial instruments here: banks/building societies do not offer sub prime mortgages. Also the number of repossessions in NI is falling (there was an article about it in Saturday’s Irish News).

    The cynical among us may wonder why the reaction of the markets is now when sub-prime has been news for months. It could be the paring with poor US economic data, but I wonder at the timing of the crisis coming after the large banks have just released their interim profits (all of which were good and downplayed the impact of sub-prime).

    My prediction is that this is just jitters and will have minimal impact on Northern Ireland.

    The real crisis will come when China has some sort of political instability which, being a dictatorship, is certain to happen.

  • Animus

    This is bad news for us in that the UK is replicating the same model – excessively high valuation and spiralling personal debt.

    Kensei – simply building more houses is not a solution. It’s rather like the assertion that building more roads will solve the tranport crisis. Netiher is likely to work. There are many unoccupied buildings in Belfast City Centre, and population density is low, but buyers aren’t clamouring to purchase there.

  • DK

    Northern Ireland’s economy will always be one of a small region of Ireland and the UK.

    The advantages that we have are few:

    Good infrastructure
    Tourism potential

    But we are hardly going to build an economy on mining or ship-building when we have nothing to mine and no-one who will work for 10p a day with zero safety standards.

    Pretty similar problems and advantages to the Republic. The main differences we have with the republic though is the rest of the UK behind us and being in the Sterling zone. Whether this is used as an advatage or not is up to us.

    In short, we have the location advantages of Ireland, and the infrastructural advantages of the UK. Or, we have the disadvantages of both.

    Main areas of growth in Northern Ireland:

    1. Tourism – severely below potential as the Republic has shown
    2. Financial services – we are part of the UK, but offer workers better quality of life than central London (and cheaper too).

    So, our educational systems need to focus on these two arenas – not just for people here, but to attract people from further afield, at least some of whom will stay.

  • ND

    DK,

    Tourism and Financial Services, fair enough.

    Both our neighbours are strong in these areas so we just compete better over a longer time of stability in these areas.

    Is there anything truely innovative we in NI can do though? Can we take our situation and consciously pursue any new paths to economic and social progress.

    We all talk about a normal future, does that mean a journey to regional obscurity?

    I’d hope we could come up with a new way to look at the challenges and from there build something genuinely new, built by a post-peace process commonality.

    Pie in the sky?

  • kensei

    “Kensei – simply building more houses is not a solution. It’s rather like the assertion that building more roads will solve the tranport crisis. Netiher is likely to work. There are many unoccupied buildings in Belfast City Centre, and population density is low, but buyers aren’t clamouring to purchase there.”

    No, the solution to increased demand is increased supply, and it will solve the problem. It was only a brief point on the fact the Government could solve it if it wanted – and add incentivising redevelopment of brownfield sites if you like – but they would take serious action for fear of upsetting those who have it made. At least until we hit crisis point, anyway.

    DK

    Man, you are a barrel of wrongness

    “The advantages that we have are few:

    Good infrastructure”

    What?????? Where do you live?

    “Tourism potential”

    If that’s all we have, we’re more than fucked.

    “Pretty similar problems and advantages to the Republic. The main differences we have with the republic though is the rest of the UK behind us and being in the Sterling zone. Whether this is used as an advatage or not is up to us.”

    Actually, the Republic has a lot of other advantages; not least the ability to set its own policy and taxation.

    Sterling is only an advantage within the UK. Outside of it, it simply makes it harder and more risky to do business with the EU, our main trading partners. It’s not like interest rates are set for our benefit, or anything. But hey, the Queen’s on it.

    “the rest of the UK behind us”.

    Ha ha ha ha ha. No, wait, you’re serious. UK policy is dictated for and by the SE of England.

    “1. Tourism – severely below potential as the Republic has shown”

    Actually, Heathrow flights are important to this – 70% of people who fly into Dublin don’t bother to come up.

    “2. Financial services – we are part of the UK, but offer workers better quality of life than central London (and cheaper too).”

    Just, really, what? We have no financial services sector to speak of, and it will take real effort to build it up, especially with competition from Edinburgh and Dublin. It is also likely to be Belfast centric. And better quality of life? Jesus Christ. And there are plenty of good reasons people would want to be in London or Dublin and not a backwater provincial capital.

  • ND

    OK, so we are mostly on our own then Kensei. Our neighbours will present opportunities but as is right they will serve their own interests first.

    Whats the plan then Kensei?

    Although tourism is an obvious one I don’t much like living in a famine/plantation/big ship that sank/troubles theme park and seeing that as the future. Loads will work at the sharp end though and good luck to them I say as it’ll help us all.

    Financial Services? We’ll win some (with the exchequers help i’d imagine) and we’ll lose a lot of competitions for these jobs. Fair enough.

    Any chance NI could pick a path and do something like Seattle? Come from our low ebb and be world reknowned and respected for our generation achievements.

    At least we could give all the mopes some distraction.

    You happy to go with the flow then.

  • al

    Seems to me the whole system requires a cycle of people entering and leaving the housing market to keep it going.

    I look at my own circumstances, 23 years old educated to degree level and working in my first job and my net wage each month wouldn’t cover a standard mortgage payment on the average property price in NI. To live on a council estate with a variety of paramilitary murals on the gable wall would be out of reach. This is clearly lunacy and unsustainable. Renting a place, thus paying someone elses mortgage, plus bills would easily take over 50% of my earnings. The result? I’m living at home still and waiting until circumstances become more favourable.

    I look around all my friends who are in the 20-30yr old age bracket. There are maybe a dozen of us and not a single one has a mortgage. Only a couple rent. The rest live with parents.

    In the last few years the “cheap credit” has led to some idiotic purchases and I really wonder how people around my age who were “lucky” to get a house a few years ago will fare if the interest rates continue to creep or some other economic circumstance appears that causes problems.

    I just hope “the arse falls out of it” or else a lot of young people are going to be permanently relying on mum and dad.

  • kensei

    “Whats the plan then Kensei?”

    It’s not as simple as “let’s pick a few things and work on those”. We need to create conditions that are friendly to entrepreneurship, we need to take the pain and cut the public sector (and I say that as a Social Democrat with little problem with a robust public sector), we need to invest in the education system and the universities in fact, all our infrastructure. While we have the good will, squeeze every last bit we can get out fit. Oh, and kill Invest NI, while we’re at it.

    We need to build a wide enough base so that it isn’t a mater of the odd idea coming through, but consistent development of businesses and ideas.

  • ND

    Yeah, it doesn’t stack up al. I’ve been sticking money in high value savings accounts since 2005 when I finally finished uni. I’m much more chilled about it recently though, don’t be scared into buying. Keep the faith in that regard because it has to happen.

    But if you can move beyond the crash, where do we go in the future so that we have a fair crack at the whip and people in your shoes coming out of uni in 15 years time are not in the same predicament where social/cultural pressures mean you must have a property yet it is financial craziness to buy a house.

    Its a social, cultural economic question for me anyhow. Can we look for something that is truely new in our relationship with our resources, expectations, businesses that make NI a truely distinctive place or do we accept our position and hang to the shirt tails of others?

    …..right and back to doing a bit of work.

  • I Wonder

    “cut the public sector ”

    Has anyone who advoctaes this trite policy any idea to what extent public spending actually
    generates income for the private sector?

  • kensei

    “Has anyone who advoctaes this trite policy any idea to what extent public spending actually
    generates income for the private sector?”

    Yes. And it’s bad, because it means that our economy is actually more dependent on the public sector. Over 70% of the NI economy is down to the public sector. It’s too high.

  • ND

    Fair enough Kensei. All points that make sense to me, and the pragmatic approach taken in many regions.

    I’m all for reform of the public service.

    But is there a truely unique-ish idea for the progress of our entire economy that can be a strenght to both distinguish ourselves from all our neighbours and enable entrepreneurial juices to flow.

    Can our generation find the room to do something beyond the norm.

    ……obvious answer is i should just get of my ass and do something of course, make it happen, but can we make a conscious choice to take our small economy (as it is without arguing the constitution again and again) and move to new ground.

  • Baudrillard

    ND There is an official economic vision for Northern Ireland (see it here). But I wouldn’t bother downloading it if you’re looking for visionary ideas rather than a bunch of clichés (the usual buzzwords ‘innovation’, ‘knowledge sector’, ‘entrepreneurship’, ‘skills’, etc.) All well and good – but nothing concrete to back it up.

    kensei is right (and sounds fairly exasperated about it. Do you work for DETI by any chance?) Our advantages are few and far between – we don’t have a good infrastructure: there is, erm, at least two bloody great big stretches of sea between us and our markets in Europe.

    The internal road and rail links between Belfast, Derry and Dublin are still rubbish – although the Belfast/Dublin stretch is improving (no thanks to local politicians). Have you ever travelled by public transport in Germany? That is infrastructure.

    Tourism – Belfast claims to have received 6.5 million tourists last year. But look at the small print – anyone visiting Belfast for any non-work related business for the day is considered a tourist (if my mum comes up from Derry to buy new shoes she’s recorded as one of those 6.5 million). There is potential to build on this – but we’re never going to be London or Dublin – we just don’t have enough stuff that tourists want to see or do – and I don’t think there is ever going to be the critical mass to change this fact.

    We are stuck with a UK economic policy designed to stop the SE of England over-heating. It is in no way applicable to the situation in Northern Ireland but one size is made to fit all. In a more sensible scenario local politicians could have some influence over local taxation – as individual states do in the US. At least thing we could adapt to local circumstances.

    Our one, rather minor, advantage is that local manufacturing companies do not pay rates (and even that is to be done away with soon).

    Our other advantage at one point was cheap labour and cheaper housing. The cheap housing has completed disappeared – and – if you’re going to hire staff these days you need to pay them enough to cover £200k+ mortgages. Citibank has to pay its staff the same here and they would in London – so why come here?

    That’s bad – but what makes the situation worse is that we have a region on the same island with all of our advantages (English speaking, well educated workforce, inside the EU, traditional links with the US and UK, etc). The Republic also has an economy geared to high tech investment and a huge critical mass in tech already in place- Google, Intel, SAP, etc AND it’s inside the Euro zone.

    If you were an investor which would you chose?

  • Dewi

    Al – your circumstances are not untypical in these islands. Some of it is structural as more and more people are living alone, the population aging, a distorted buy to let market reliant on capital increase rather than rental income, some restrictive planning laws and a relatively high in-migration level. I lived with Mam till I was 30 !
    We are a bit different to many places in the world, however, where renting is the norm and a more sophisticated market can lead to better value.

  • I Wonder

    I don’t disagree with you Kensei, I just object to the reflex idea (not necessarily yours!) that a panacera for all economic ills is *cutting the public sector.*

    This actually carries BIG repercussions for the private sector, including sometime right wing commentators on here and elsewhere.

  • al

    Dewi I could see myself being stuck at home well past 30 at this rate!

    House prices need to fall significantly. Earnings have rose little in the last 10 years and then you look at house prices effectively trebling in the same period. Bound to fail in my opinion…best of luck to those who’ve bought a house in the past 2 or 3 years…

  • Dewi

    http://www.whatprice.co.uk/financial/housing-market/house-prices.html#house

    There have been crashes in the period but over the last 50 years the “Real” cost of buying a house has risen 400%. This does seem to imply a structural supply / demand issue – which as previous posters have said needs a structural solution.

  • Baudrillard

    al The national household income is somewhere around £30,000 (see Office of National Statistics) Northern Ireland is undoubtedly less again.

    Even with a 100% mortgage, with a loan of five times the average salary, that’s a mortgage of only £150,000.

    Even if they drop substantially houses prices are unlikely to fall by that much. Things are looking very bad for anyone not already sitting pretty.

    So, we are forcing the best and brightest of our young people to leave – just when the economy needs them the most.

  • Pete Baker

    Getting back to the topic..

    There’s an update to the original post

    Update As the markets appear to steady, the BBC’s economic editor asks whether the right lessons will be learned?

  • Dewi

    “kensei is right (and sounds fairly exasperated about it. Do you work for DETI by any chance?) Our advantages are few and far between – we don’t have a good infrastructure: there is, erm, at least two bloody great big stretches of sea between us and our markets in Europe.”

    Funnily enough it’s usually cheaper to transport by sea:

    http://www.econ.ox.ac.uk/members/tony.venables/nltv.pdf

    Pretty geekish I know sorry

  • al

    It’s gone a bit “exponential” recently Baudrillard and I suspect it’ll take a pretty big turd sometime soon. Might be 5 or 10 years down the line but I think it’s coming.

    I agree with your point about people. I’m going for a holiday to see family I have in Canada next week and I’ll be taking a close look at the job market and economy/housing while i’m there. Somehow I doubt they’ll be expecting the guts of £200,000 to live in a Kilcooley-esque estate with a riot outside every summer.

  • IJP

    Aha, I return to find lots of posts and the high quality very much maintained!

    Some excellent points all round.

    ND poses an excellent question (“What are we going to do?”, “What are we going to be?”).

    Kensei poses one essential cog in the wheel – reform of InvestNI. Or did he say abolition? No elected representative could possibly say that of course, only think it…

    Bau also spots the typical raft of clichés and counter-clichés that count as “economic strategy” here.

    A few more controversial points for discussion:
    – stop blethering on about “exporting”, we are the most insular region in Western Europe and that ain’t going to change soon – many of our successful businesses don’t actually export (at least not beyond the British Isles);
    – stop blethering on about “innovation”, small countries don’t innovate on their own and it’s quite possible to be profitable if you just do the basics better than your competitors;
    – start blethering about improved management training, green industries, better public transport (the kind of stuff that will make us stand out from our neighbours).

    In short, invest big in education (and I mean education, not debates about the 11+!) and (mostly green) infrastructure.

    In short, if you’re trying to consolidate in your first season in the Premier League, it’s essential to do the basics right. You can worry about the European places in a couple of years’ time.

  • Dewi

    “stop blethering on about “innovation”, small countries don’t innovate on their own and it’s quite possible to be profitable if you just do the basics better than your competitors;”

    Denmark done allright to dominate European Windfarm manufacture….Finland seemed to have cutting edge in Mobile phones for a while. An innovative culture is a sustainable competitive advantage IM not so HO….

  • al

    NI used to be handy at shipbuilding and aircraft surely?

  • Dewi

    “NI used to be handy at shipbuilding and aircraft surely”

    Barriers to entry probably a bit high these days for complete manufacture – aircraft maintenance and parts production however is a fairly specialised niche. Much of that going on over there ?

  • George

    The problem is Northern Ireland has little or no control over its economy.

    At the moment, it needs Westminster to implement something to give it a specific advantage, which simply isn’t going to happen.

    As for IJP’s talk of investing in education, he might note that for the first 20 years of that policy south of the border, (late 60s to late 80s) people were complaining that we were simply educating our young people to leave while bankrupting the country at the same time.

    Things got so bad we were being taxed when we tried to leave the country.

    There is no great benefit for NI in investing huge amounts in education if the people subsequently have no choice but to leave.

    As for infrastructure, how are you going to fund it when the place is already running an annual budget deficit of at least 5 billion sterling as it is?

    Northern Ireland needs to make a decision about how it is going to control its future. That is one tough decision to make.

  • kensei

    “- stop blethering on about “innovation”, small countries don’t innovate on their own and it’s quite possible to be profitable if you just do the basics better than your competitors; ”

    Profiting on “doing the basics” depends on whether or not you have comparative advantage in what you are trying to do. It is also simply untrue that small countries cannot do innovation – Nokia is from Finland, for example, and it’s always a possibility if you can spin things out of the universities.

    “- start blethering about improved management training, green industries, better public transport (the kind of stuff that will make us stand out from our neighbours).”

    And here’s those thing – those things should be done to encourage innovation in those areas, even if it is merely in process. There is a lot of things government at various levels can do. For example, lots of cities in the us are providing municipal wifi access. Belfast City Council is bringing in private companies, but it’s not quite the same.

  • kensei

    “There is no great benefit for NI in investing huge amounts in education if the people subsequently have no choice but to leave.”

    However, highly educated workforce was a necessary condition for the current boom in the Republic.

  • George

    Kensei,
    one of many necessary conditions.

    The point is that a highly educated workforce on its own is not enough because they’ll all just pop down the M1 to Dublin or fly to London unless they have good opportunities at home.

    Creating an educated workforce nearly bankrupted Ireland for the guts of two decades.

    As late as 1992 the majority of graduates were getting out as soon as they got their degrees.

    Dublin was not the type of city your average European or American executive would like to be stationed.

    In 2007, a highly-educated northern workforce is exactly what the Republic needs.

  • kensei

    “The point is that a highly educated workforce on its own is not enough because they’ll all just pop down the M1 to Dublin or fly to London unless they have good opportunities at home.”

    Of course not. But as one of many necessary conditions, it needs done.

  • ND

    I got a great run at the old education lark to be honest, did just about as well as I could from 11+, grammar school, queen’s route. I don’t have much faith in that as the answer to the question though.

    What are we going to be, what is this education system aiming at?

    There’s a postcard in my local on the wall “aim for nothing and you’ll hit it”.

  • IJP

    Dewi / Kensei

    Fair points. I should define my terms – what I mean is there is no point in government blethering about innovation when:
    a) it’s not innovative itself; and
    b) it doesn’t provide the educational or physical infrastructure to enable those who might innovate to do so here.

    NI people are quite good at innovating elsewhere, of course.

    In short, businesses know they need to innovate, but it doesn’t “just happen” because government tells them to!

    Mind, I can’t think of anything Norway’s done in terms of innovation for decades and it’s doing OK. Maybe we just need some oil…!

    George

    A fair note of caution, yes.

    But I was clear that by “education” I didn’t mean schools. I mean ongoing education, learning on-the-job and during-the-job rather than going through lots of theory with no practice. And I also mean bringing in expertise from outside, which frankly is the way the northeast of the island did it before, and the way most successful economies do it now.

    Your point also ties into an additional requirement, which is the provision of cultural wealth to keep people here. The lesson of the failed “Imagine Belfast” campaign was not that Mr Collins didn’t know what he was doing, it was that Belfast really doesn’t have much to offer in terms of culture. There’ve been some moves in the right direction since, but few and far between.

  • ND

    IJP,

    I agree that invention/innovation has to be a personal process, there are questions of personal responsibilty, not top down government intervention.

    We are (some of) the people though and it is our government (kinda), there is post the buzz of “peace” a question of where now?

    Perhaps the most telling posts here are those of Al? It’s boomtime we are told but we’ve outpriced our own people from their own country, call it what you will and pledge your allegiance to the great unknown it’s still a harsh reality.

    Education in itself is a major part of Belfasts’ economy. Not merely an asset of but very much a major business in the local economy.

    But don’t tell me it is world class because it is a great unknown in both Dublin and London where I’ve spent most of my working life.

    Producing accountants,medics and lawyers is grand but far from world class.

  • ND

    Sorry Pete for drifting of topic.

    I know the markets stabilised –for today. It’s still the most interesting they have been in my grown up lifetime. A chance to learn and all that.

    My instincts tell me this was a warning to people to as we’d say “catch yourself on”. I expect gambling to continue apace though human nature being what it is.

    Heard someone question the purchase of a must have item at topman though,so maybe inflation will fall in line.

  • DK

    Northern Ireland has these advantages:

    1. Speaks English
    2. Good infrastructure (and by that I mean that we have total broadband coverage, a major sea port and good roads – yes really: try travelling in England, the M50 or on the French toll-road disasters – they make the Westlink look like a speedway). We are a developed western country.
    3. Nice place to live – if you like a more rural setting.

    And what industries will the future bring. IJP reackons on green technology, fair enough. But most likely it will be improvements in communications and financial instruments to use them (by that I mean more flexible payment systems). Think an iPhone that is also a cash-card and you get the general idea.

    Probably the most innovative thing we can do here is to enter both the Euro and Sterling clearing mechanisms and leverage this position for some innovative wealth creation – give all those new Bank of Ireland hedge fund managers something to do. This might actually be something that our political leaders could drive, since it fills the DUP need for independence and the SF need to become closer to ROI.

  • IJP

    ND

    I’m cautioning ultimately, I guess, against the usual NI idea that Government can change all these things by magic. Actually power (including the power to change) derives from the people, not some Minister being clamped on one side by his cliché-ridden civil servants and on the other by a ludicrous voting system which makes it impossible to get anything done. We have to get on and do these things, not wait for “Government”.

    Is there also a cultural problem in NI that parents expect their children to be solicitors or doctors, but not businesspeople?

    DK

    Although I’d rather have France’s toll autoroutes to the Westlink, I think you’re definitely on to something there.

    I suggest green technology because our neighbours aren’t particularly renowned for it, it’s a growth industry, and it kinda suits us (the image and all that).

    But your other ideas are all excellent. I know the phone-as-cashcard is actually being trialled in Kenya of all places, but there’s no reason a branch of UTV plc or some such shouldn’t be following up big time.

    How about a Slugger Hedge Fund investing in iPhones…?

  • Baudrillard

    DK I would still argue against the idea that we have an infrastructure advantage. Certainly the ‘broadband’ infrastructure is better than some but it’s mid-table at best.

    In Japan today the basic home internet connection is $30 per month for 100Mb up and down optical fiber-to-your front door. Northern Ireland’s network would have difficulty offering this service to a large company never mind a home user.

    Here in NI we pay the equivlant of $20 to $30 a month for cable or ADSL lines that are advertised as 2Mb but in reality are usually not much more than 128Kb up and less than 64kb down – because the line capacity is shared out amongst many customers.)

    Our so-called hi tech communications infrastructure is already starting to show its age. Depreciation in this stuff is very fast. It’s not like roads or rail – it’s often out-dated in much less than 10 years.

    San Francisco is going to have free universal WiMax in a couple of years- care of Google who are doing it free of charge. Google are not idiots – just imagine the thousands of small business opportunities that environment is going to create. It’ll re-affirm San Francisco as a city of web innovation.

    I guess my point is that government can only do so much. Investment on this scale is the job of business. Government departments are so far behind the curve, it’s a joke.

  • al

    “In Japan today the basic home internet connection is $30 per month for 100Mb up and down optical fiber-to-your front door. Northern Ireland’s network would have difficulty offering this service to a large company never mind a home user.”

    It isn’t quite the basic home internet connection Baudrillard. Generally the fibre optic is available in the cities but once you head out of the main centres you’re soon back into standard ADSL type scenarios where speeds aren’t far beyond anything available in the UK.

    “Here in NI we pay the equivlant of $20 to $30 a month for cable or ADSL lines that are advertised as 2Mb but in reality are usually not much more than 128Kb up and less than 64kb down – because the line capacity is shared out amongst many customers.)”

    This is basically false. Those on fixed line speed services are becoming a minority these days due to the push to get everyone onto the adaptive “max” ADSL services. In this case around half have a push at 8mbit and the speed tails off the further out from exchanges you go. Even in the worst case scenario it is rare to see operating speeds as low as you specify and infact to have a speed of 64kbits would be regarded as a fault – not normal speed for millions of people as you suggest. 24mbit services from “Be” are available to around 3 million homes at the moment and around 7 million have a chance at getting higher than the 8mbit available from the BT standard network. Virgin’s cable network is also fairly extensive and doesn’t tend to run at <128kbps for most people. Within the next few years the BT network will be converted to an IP-only network, the first of it's kind in the world, well ahead of the likes of Japan and Sweden. BT will also be introducing 24mbit ADSL2+ nationwide, a la "Be", next year and are trialling fibre to the home at the moment.

    "Our so-called hi tech communications infrastructure is already starting to show its age. Depreciation in this stuff is very fast. It’s not like roads or rail - it’s often out-dated in much less than 10 years."

    Again this is essentially false. The infrastructure in the UK and NI is, overall, essentially in the "world class" category. Coverage is basically universal. Broadband connections of varying degrees are available to 99%+ of the population which few, if any, other nations can state at the present time. Indeed it is one of the lessening number of areas where NI is still ahead of the ROI. In fact vast elements of the network are over 20 years old and the copper or aluminium in the ground could be a lot older than that still. It does however work.

  • kensei

    I’m sorry, al, the idea that UK broadband services are world class is laughable. The killer with broadband here is that the traffic is subject to “fair use” and also shaped heavily, so effectively you only get your 8 MBit when browsing (sometimes), which is utterly pointless. It’s needed for large file transfer and streaming video. Already ISPs are throwing hissy fits over the iPlayer, despite the fact that Internet TV has been on the cards for some time:

    http://blogs.guardian.co.uk/technology/archives/2007/08/13/isps_warn_bbc_over_iplayer_bandwidth_use.html

    As for price, here is the entry price per megabit table around the world:

    http://www.muniwireless.com/article/articleview/6195/1/2/

    We’re Aston Villa, and the fact that the Republic are Middlesbrough doesn’t make it any better.

    I’d love us to be world class in IT, I really would. I think we should be following the American model of municipal wifi, instead of Belfast Council’s approach of just leaving it up to BT. But it all requires investment, which means we have bugger all chance.

  • Animus

    Speaking English is becoming less and less of an advantage. India has a growing middle class of people who are fluent in English and willing to work for lower wages. Why do you think so many jobs are going in that direction?

    Our roads may be decent, but our public transport infrastructure is appalling. And having a sea port was advantageous at one point, but it’s less so now. Giving the opportunity to send goods overland by rail (or lorry) or to travel by seaport, which is more cost-effective?

    Al – I dispute your assertion that broadband is available to 99% of consumers. Education is still key – having access to broadband is great, but what about the large numbers of people who are not technologically savvy and the 26% who are functionally illiterate? It’s great to have an elite group of entrepreneurs with high skills, but not if a large proportion of the population lack basic literacy and numeracy skills which would allow them to take jobs in the new industries created.

  • Dewi

    Giving the opportunity to send goods overland by rail (or lorry) or to travel by seaport, which is more cost-effective?

    Seaport actually for the same distance.

  • ND

    Market jitters continue,just had an email of mate in a Japanese Bank in the city. Be prepared for more jitters, rumour is a subprimes are going to land on a few banks heavily, so be braced for city lay-offs. The problems in the market so far are mostly america’s and already the issue of risk is spooking the UK market.

    Irish subprimes are likely packaged and out there somewhere in trade trade land where they seem valuable on paper. What if there really is a southern recession?

    Even Irish prime mortgages carry risks for the financial markets if things go as bad as previous bubbles.

    ………….and then there is the UK market, the economy ticking along nicely of course but does anybody else feel there is a lot of looking over your shoulder? Sunday supplements recently are all about city bonuses buying the country pile. Exit strategies?

    Momentum is all important and it is all in property in one way or another. The next 8-10 weeks will be interesting.

    As for the NI economy into which this thread headed apace………

    There is a lot of obvious stuff that I hope is being tackled, hopefully the talking shop will take on these tasks and do so efficiently in the best interests of the economy. Even invest NI can wrap itself around these issues/assets;

    1) We speak English.
    2) Our infrastructure is bad but improving/better than others.
    3)There are physical barriers to exporting that are clearly far from fatal.

    Is there nothing exceptional that can be done though thats what I wonder. Can we reach beyond the norm, strive for a new way to look at things, build prosperity and some form or idea of a social prosperity too? Enlightened, ambitious yet satisfied, not easily comparable to what has gone before……..

    These questions are beyond Petes thread and I apologise. They are beyond me to answer but I hope they are not solely of interest to me.