Economy – Page 75 – Slugger O'Toole

Free trade: Does protectionism protect or destroy jobs?

Mack on July 10, 2010, 11:20 pm

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Neither, according to Paul Krugman. Protectionism causes a misallocation of internal resources, i.e. an economy wastes resources on producing products and services it would be more efficient to import. Any doubts as to where he stands on protectionism v free trade should be readily cleared up by this quote Just to be clear, I don’t think the Smoot-Hawley tariff was a good thing — it was a really bad thing. Nasty protectionism! Bad Smoot-Hawley! Bad! Bad! Bad! Krugman on what …

On the necessity of a land tax

Mack on July 9, 2010, 5:39 pm

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Constantin Gurdgiev gave a good overview of why a land tax is essential if Ireland is to build a smart / knowledge economy a few months back on the Renegade Economist. It’s probably worth reviewing his arguments today, the day Fianna Fail ruled out a (admittedly unfair) flat rate property tax. Gurdgiev blames the disparity in taxation between investments in human capital (e.g. increased education) – typically each additional Euro earned is taxed at 53% – and investments in land, …

Euro Crisis : Soros on the Euro’s deficiencies and what needs to be done

Mack on July 9, 2010, 9:00 am

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Excellent George Soros essay on NyBooks – The Crisis & the Euro. In it he forensically examines the structural issues with the single currency, points out Germany’s critical role within the project and how they have been making bad policy decisions, and how this threatens political and social stability within the union. All is not lost, as he outlines three steps that need to be taken (cleansing the banks, huge monetary stimulus to offset fiscal tightening, European infrastructure investment funded …

Time to scrap the lower marginal rate?

Mack on July 8, 2010, 5:06 pm

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Michael Taft has a blog post promoting a proposal from Social Justice Ireland for refundable tax credits. The idea being that if your tax bill was lower than your personal credit allowance you would recieve a cheque for the difference. While this proposal comes from a left-wing source, it is similar to an idea for a Negative Income Tax proposed by Milton Friedman. Which got me thinking. Given that, at least in the USA, wage increases increasingly go to the …

Euro Crisis: Greece restructuring it’s debts

Mack on July 8, 2010, 11:28 am

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Fancy word for default. Spotted by John Dizard in the FT, and neatly summarised by Yves Smith on Naked Capitalism below. Greece is imposing (at least) a 19% haircut on holders of state hospital bonds. This hasn’t yet gotten the attention it merits because it’s bonds issued by particular government bodies (in this case, the Greek state hospital system) and the investors aren’t big Eurobanks but suppliers. Old outstanding coupon bonds are being replaced with zero coupon bonds. The relevant …

Greek budget deficit halves in 2010

Mack on July 7, 2010, 12:00 pm

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Almost. The Budget Deficit fell for the first six months of this year, and is running at €11,450 million. This is almost half the €19,685 million deficit for the equivalent period last year. Finfacts report that the economy is expected to (only) contract 4% this year (despite massive austerity measures). Finance Minister George Papaconstantinou said the country had “met its goal” for the first six months of 2010 after the 41.8% dip in the budget deficit – – to 4.9% …

On neoliberal Scandinavia

Mack on July 6, 2010, 2:00 pm

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Tim Worstall They are classically liberal economies with lots of redistribution on top. So, if we want to be more like them we’ve got to be a classically liberal economy with lots of redistribution on top. We need the classically liberal economy in order to generate the moolah to be redistributed. Scott Summers The neoliberal revolution combines the free markets of classical liberalism with the income transfers of modern liberalism. Although this somewhat oversimplifies a complex reality, it broadly describes …

Date set for one-day US economic forum on Northern Ireland

Pete Baker on July 2, 2010, 10:36 pm

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The US Economic Envoy to Northern Ireland, Declan Kelly, has announced the date for a one-day economic forum on Northern Ireland to be held in Washington. The US-NI Economic Conference will be held on October 19, with Secretary of State Hillary Clinton overseeing the event at the State Department in Washington DC. Political leaders had already made a commitment to holding the conference, but today’s announcement fixed a date for the one-day event and confirmed that it will bring together leading executives …

Seán Quinn’s cunning plan…

Pete Baker on June 4, 2010, 4:48 pm

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As the BBC notes, Seán Quinn has told RTÉ’s Prime Time that he has a plan to repay the €2.8 billion the Quinn family owes Anglo Irish Bank within seven years. Some turnips may be involved… Not least of which is that, if this earlier BBC report is correct, there are two separate debts involved. A year ago, Quinn Cement announced that bulk production was being temporarily halted. The company told 65 workers not to return to work for a month. The …

Sale of First Trust “underlines permanence of the border”

Aldous Duke on June 1, 2010, 12:12 pm

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Unionist peer, Baron Laird of Artigarvan used the House of Lord’s debate of the Queen’s speech to address AIB’s sale of First Trust bank, its northern subsidiary last Thursday. The life peer told the House of Lords that the sale was a lesson to unionists that not only underlined the permanence of the border, but proved that “when times are tough, how quickly the Irish are willing to abandon anything in Northern Ireland”; “To many, the Dublin-based AIB was regarded …

ECB : There are no alternatives

Mack on May 29, 2010, 11:21 pm

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European Central Bank executive member Lorenzo Bini Smaghi outlined the fiscal and monetary constraints facing EU states at the Group of 30 conference in Rabat. In it he warns of a US of future crisis, and perhaps controversially denounces Keynesianism as inappropriate. European states can’t rely on inflation to reduce their debts, fiscal austerity is the only course available to them, but Americans may be deluding themselves that they will be able to impose an ‘inflation tax’ on investors in …

Euro debts: “Purge the rottenness out of the system” – Hugh Hendry channels Andrew Mellon

Mack on May 28, 2010, 12:18 pm

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An interesting discussion on the problem of, and solutions to, sovereign debt default on Newsnight. Everyone’s favourite, um, “clinker-bag” is back, this time being rude to Columbia University’s Professor Jeffrey Sachs, Gillian Tett a journalist at the Financial Times also in attendance. Kent Brockman, from the Simpsons said it best in Homer the Vigilante. Kent Brockman reports on the situation. Kent: Hordes of panicky people seem to be evacuating the town for some unknown reason. Professor, without knowing precisely what …

Euro breakup : Why Morgan Stanley is wrong

Mack on May 28, 2010, 10:36 am

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A few months back Morgan Stanley analyst Joachim Fels produced a set of warning signs that would indicate the Eurozone was at increased risk of breakup. He’s back today with a new research note – To be clear, we neither advocate a EUR break-up nor is this our main scenario. However, the risk that it happens is far from negligible and the consequences for financial markets would be severe. Given recent developments, a break-up scenario has clearly become more likely, …

Naked Capitalism: The Great Depression and the Revolution of 2017

Mack on May 27, 2010, 2:10 pm

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Entertaining, and sobering futuring at Naked Capitalism. President Kucinich also announced a new “Marshall Plan” for war-ravaged Europe, which has descended into near anarchy since the EU collapsed in late 2010. He called on the Italian Red Brigade army to end its siege of Berlin. He promised to begin an airlift of food for Europe’s starving millions, to be followed by industrial products to help European nations to begin to produce for domestic consumption. He called for an end to …

Was Friedman right? The debate on American post-1980 reforms

Mack on May 27, 2010, 10:56 am

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Interesting debate in the US blogosphere on the pro-market reforms implemented in the US (and other countries including Britain & Ireland) since 1980. Paul Krugman defends the large rise in American living standards pre 1980 liberalisation and contrasts it with more moribund growth there after while Scott Summer highlights the reversal of the American economies (and that of other reformers) relative decline. Krugman – Read almost any conservative commentator on economic history, and you’ll find that the era of postwar …

Euro crisis : Timelines

Mack on May 26, 2010, 10:07 pm

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October 2009 New Greek government elected. 5th November 2009 New Greek government ‘fess up. The budget deficit is 12.7% not 6%, as claimed by their predecessors! 20th November 2009 The European Central Bank tightened the rules for the collateral it accepts against loans, the new rules will come into force on March 1st 2010 December 2009 ECB says plans will not be delayed to help Greeks And Ratings agencies downgrade Greek debt And Greek Government begins undertaking first round of …

“everyone in Ireland is an economist now”

Pete Baker on May 26, 2010, 3:32 pm

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Mack referred in passing to the Guardian’s G2 feature on Ireland at the start of the crisis in the Eurozone, but it deserves a bigger mention. Here’s a key extract “There were very few of us in the boom who suggested what was going on was nonsense. If you’re against consensus in Ireland, the first phase is ridicule, then it’s violent opposition, and the third phase is universal truth – where everyone pretends they agreed with you all along,” [David] …

Ireland : Why Morgan Kelly is wrong

Mack on May 26, 2010, 10:15 am

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On Newstalk Radio this morning Professor John Fitzgerald of the ESRI explains why he thinks Morgan Kelly’s analysis of the banking crisis is overly pessimistic and replies to David McWilliams assertion that his growth estimates are ‘horseshit’. John Fitzgerald on Newstalk Radio – his interview starts about 40-41 minutes in. The reasons why he feels Kelly is overly bearish – 1. Fitzgerald argues that there are insolvency issues at Anglo Irish Bank and Irish Nationwide, but that AIB and Bank …

Euro crisis: Where are they getting the money to do that?

Mack on May 25, 2010, 11:11 pm

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Hat tip to The Big Picture for this entertaining, Australian, look at the Euro crisis. From the transcript – BRYAN DAWE: How much does Greece owe, Roger? JOHN CLARKE: $367 billion. BRYAN DAWE: Correct. And who do they owe it to? JOHN CLARKE: Mostly to the other European economies. BRYAN DAWE: Correct. How much does Ireland owe? JOHN CLARKE: $865 billion. BRYAN DAWE: Correct. Who do they owe it to? JOHN CLARKE: Other European economies mostly. BRYAN DAWE: Correct. How …

Euro crisis: “there is no unity at present in the euro zone about what needs to be done”

Pete Baker on May 22, 2010, 6:01 pm

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A couple of reports in the Irish Times to emphasise a point made recently by Tim Garton Ash. First up a quote from the German Chancellor, Angela Merkel. “We are at the start of this work and there is no unity at present in the euro zone about what needs to be done,” she said. “We have to stabilise things first, exchange views and at a later point say what needs to be done and how, and where we have …