Thursday, 30 April 2009

First 100 over what about the next 100?

President Obama has had an amazing first 100 days in office. The list of accomplishments are wide ranging but probably the most important is seeing through the economic stimulus package although the puppy was nice as well. He also announced a new war not on Pakistan or North Korea but on Cancer. Science appears to be the key weapon in his efforts to defeat this horrible disease and he intends to invest of 3% of GDP in science. This has masasive implications for those of us who have loved ones with the disease.

Other accomplishments on child health, equal pay for women, Cuba, opening dialogue with the muslim world.....all these are campaign commitments that he is delivering on. It is slightly easier since Arlen Specter moved to the Democrats and his future policies could be boosted this summer when Al Franklen is confirmed in the Senate.

Above is a link to Politico film of highlights from first 100 days

But what about the next 100?

The economy is a key concern especially with unemployment, bank lending and the auto industry. Will there be bankruptcies in GM or any or the major car manufacturers? How long will it take the Green economy vision to take root and deliver results?

Foreign policy will be spent watching Iraq, and an increased focus on Pakistan and North Korea.

Domestically as well as the economy will be further health reform promised in the campaign.

When will the Republicans get their act together and how effective will they be?

Then there is the unforeseen - an attack on US soil, major foreign engagements, potential political strife not just from Republicans but also from Democrats.

Northern Ireland? As the new team starts to assemble I hear someone say the words "maybe not today, maybe not tomorrow but someday...."

Anyway as the President himself said "we have a lot of work to do."

Wednesday, 22 April 2009

Reply to Erin Go Broke - US-Ireland Council

How Krugman got it wrong on Irish economy
US-Ireland Council responds to New York Times column
Executive Director, The Ireland-U.S. Council, New York, NY

David O’Sullivan, Executive Director, The Ireland-U.S. Council, New York, NY

Economics, they say, is the dismal science. And, it becomes dismally gloomy in the hands of someone like Paul Krugman whose opinion piece on Ireland’s economic challenges (Erin Go Broke - April 20, 2009) contained egregious errors which clearly compromise the conclusions he allows himself to reach.

He reports that “Ireland moved to shore up confidence in its banks by offering a government guarantee on their liabilities”. This is not true. And, it is incorrect by a magnitude that cannot simply be glossed over. The Dublin Government only guaranteed bank deposits - something the Federal Government here did back in 1933 with the establishment of the FDIC ..

Thus, his assessment that Ireland’ taxpayers have been put on the hook for potential losses of more than twice the country’s G.D.P. is plainly and simply wrong. Ireland has the most open economy on earth. When international trade tanks, you can be sure that Ireland feels the pain. And, it has. But, this is not news. A long time ago, Ireland chose the strategic option to be a free-trading nation with low corporate taxes to encourage enterprise and faster economic growth.

The Irish economy has weathered all the recessions ever since the policy was adopted over 60 years ago. But, it has also been the fastest-growing economy in the world for most of the past 25 years.
Professor Krugman also paints a big picture that is disappointingly negative and inaccurate.

He says that Ireland has raised taxes and cut spending. Well, a closer look at what Ireland’s response has been is more instructive. The very low corporate tax rate, obviously, was not touched. Personal income tax rates were not increased. Sales taxes (or Value Added Taxes) did not get hiked. So, there were some (but I would have to say minor) tax increases.

But, the real story is that the Government in Ireland has taken a scalpel to Government spending – but in areas that make sense – especially the cost of Government. For example, if private companies have to cut labor costs to survive, the Irish Government thinking is that public employees, who cannot be fired, must also shoulder some burden. Thus, every Government employee will see their wages cut by 20%. Not very nice if you are a Government worker – but I suppose it’s better than losing your job

Finally, Mr. Krugman does not take the great opportunity he had to contrast the Irish Government’s interesting and imaginative policy response to the banking crisis with the U.S. policies that have been announced. The problem real estate loans of Ireland’s banks will be ring-fenced in a sort of asset lockbox and will be managed back to health in time. Thus, these problem legacy assets will no longer taint the balance sheets of the banks. More importantly, Ireland’s taxpayers will reap the rewards of the upside when asset values recover – something never mentioned in his piece.

The recapitalization of Ireland’s banks has been undertaken in a timely and prudent manner. The Government’s liquidity injection to the banking system came in the form of preference share capital in the two largest banks. Importantly, ownership of the vast majority of Ireland’s banking system remains in the hands of private shareholders.

Even after these capital injections have been made with Government funds, Ireland's total national debt (even allowing for the increase in debt levels recently) is today less than the total corporate debt of AT&T, Inc. - the slimmed-down regional Bell!

The great thing about a democracy is that opinion journalists are free to be depres singly negative if they choose to be. The current international financial and economic crisis provides a grand platform for the pessimists to strut their stuff. A little look on the bright side now and again might do a power of good for Dr. Krugman’s dismal outlook.

Dodds Responds to Darling Budget

The past few days have seen various politicians bandy about figures suggesting how much the budget to NI would be cut they ranged from £160m to £450m to £600m. In the end the Department of Finance and Personnel have worked it out as £123m for 2010/2011. Whilst this is better news than expected it will still mean that there will be cuts in services and budgets for departments. These cuts will become clear in the June Monitoring Round. Expect a lot more political reaction and economic analysis in the media over the days to come. Below is the reaction of our Finance Minister to the Budget.


While welcoming some aspects of the budget Finance Minister, Nigel Dodds has expressed his disappointment with the Chancellor’s announcement today that existing funding available to the Northern Ireland Executive would be reduced by £123million in 2010-11. However the Chancellor has highlighted some offsetting allocations.

Responding to Alistair Darling’s Budget Report to Parliament, Mr Dodds said this afternoon: “While it is disappointing that Northern Ireland has not been allowed to retain the savings from additional efficiencies, I note that the net impact is less than had been feared as a result of the £50.3million of additional funding for the Executive in the current financial year and £66.1million in 2010-11.

Turning to the UK wide measures announced today the Minister said: “I welcome the decision to extend the stamp duty holiday which will hopefully be of greater benefit going forward as the property market recovers. In addition, the increase to this year’s Winter Fuel Payment of £100 for those aged over 80 and £50 for those aged over 60, as well as the enhancements to the Child Tax Credit will be of real benefit to the most vulnerable in our society.

"Although I remain concerned that the Chancellor’s economic growth projections are overoptimistic, the doubling in capital allowances will provide additional support for local business to prepare for the inevitable economic recovery. I would also urge local business to take advantage of the UK wide Strategic Investment Fund.”

"Although the impact of the additional efficiency savings for Northern Ireland for 2011-12 and beyond will only become clear at the next UK Spending Review, the reality is that we are entering a period of lower growth public spending of 0.7% per annum at the UK level, which will require careful consideration of administrative structures and the public service delivery chain in Northern Ireland.”

“However, for the short-term we must continue to prioritise frontline services and focus attention on maximising savings from back-office functions and potentially inefficient institutional structures. ”

Summing up the Budget Report, the Minister recognised that the financial position faced by the Chancellor constrained his ability to provide further support to the economy.

He said: "As we move into 2009-10 the Executive will need to have an even greater focus on ensuring that every pound spent on public services delivers maximum value for money so that we can continue to provide a better quality of life for all the people of Northern Ireland.

"The outworking of today’s announcements in respect of the 2009-10 financial year will be incorporated into the Executive’s decisions as regards the forthcoming June Monitoring Round in line with local needs and priorities”.

Darling Budget and Northern Ireland: Treasury View

Higher taxes spending cuts and the first Carbon budget with a target of 34% carbon reductions by 2020, £435M for energy efficiency, £525m for offshore wind and £405m for small scale projects. Below the HM Treasury Summary for NI

Budget 2009 for Northern Ireland
Today the Chancellor has announced a package of measures to help
business, families, and pensioners in these unprecedented economic times.
These include:
• A package of measures for business, including the introduction of an
enhanced first-year capital allowance of 40% for one year, introduced with
effect from April 2009.
• support for individuals, including through an increase in the annual
investment limit for Individual Savings Accounts (ISAs) to £10,200, up to
£5,100 of which can be saved in cash;
• support for homeowners and homebuyers, including an extension of the
stamp duty holiday for all houses costing up to £175,000 until the end of
the year;
• £5 billion recoverable value for money savings in 2011-11 raising the 2007
Comprehensive Spending Review target from £30 billion to £35 billion, and
in the next Spending Review period, additional efficiencies to help support
the economy and front-line services, rising to £9 billion by 2013-14. The
Budget sets assumptions for spending growth from 2011-12 onwards, with
current spending growing by an average 0.7 per cent in real terms and
public sector net investment moving to 1¼ per cent of GDP by 2013-14;
• support for the environment, including setting the world’s first carbon
budgets and measures to encourage energy efficiency and low-carbon
• additional provision of £143 million for the Northern Ireland Executive as a
consequence of additional provision for UK Government departments.
This April a number of important changes for families and individuals came
into effect:
o 600,000 basic rate tax payers in Northern Ireland will be £145 better
o increases to the child element of Child Tax Credit of £75 above
indexation will benefit around 130,000 families in Northern Ireland;
o The introduction of the new £190 health in pregnancy grant will
benefit the estimated 25,000 mothers to be in Northern Ireland this

The Pre Budget report also announced changes to help the economy. And
these are now delivering. For Northern Ireland, over 3,140 businesses have
benefited from being able to spread payments of tax, and the enterprise
finance guarantee scheme has ensured that viable SME’s continue to access
finance they require in Northern Ireland.

Tuesday, 21 April 2009

"Erin Go Broke"

Nobel Prize winner Paul Krugman gives a hard hitting examination of the Irish Economy in the New York Times. His critique basically states that Ireland is the worst case scenario in these economic times.

Erin Go Broke
“What,” asked my interlocutor, “is the worst-case outlook for the world economy?” It wasn’t until the next day that I came up with the right answer: America could turn Irish.

What’s so bad about that? Well, the Irish government now predicts that this year G.D.P. will fall more than 10 percent from its peak, crossing the line that is sometimes used to distinguish between a recession and a depression.

But there’s more to it than that: to satisfy nervous lenders, Ireland is being forced to raise taxes and slash government spending in the face of an economic slump — policies that will further deepen the slump.

And it’s that closing off of policy options that I’m afraid might happen to the rest of us. The slogan “Erin go bragh,” usually translated as “Ireland forever,” is traditionally used as a declaration of Irish identity. But it could also, I fear, be read as a prediction for the world economy.

How did Ireland get into its current bind? By being just like us, only more so. Like its near-namesake Iceland, Ireland jumped with both feet into the brave new world of unsupervised global markets. Last year the Heritage Foundation declared Ireland the third freest economy in the world, behind only Hong Kong and Singapore.

One part of the Irish economy that became especially free was the banking sector, which used its freedom to finance a monstrous housing bubble. Ireland became in effect a cool, snake-free version of coastal Florida.

Then the bubble burst. The collapse of construction sent the economy into a tailspin, while plunging home prices left many people owing more than their houses were worth. The result, as in the United States, has been a rising tide of defaults and heavy losses for the banks.

And the troubles of the banks are largely responsible for putting the Irish government in a policy straitjacket.

On the eve of the crisis Ireland seemed to be in good shape, fiscally speaking, with a balanced budget and a low level of public debt. But the government’s revenue — which had become strongly dependent on the housing boom — collapsed along with the bubble.

Even more important, the Irish government found itself having to take responsibility for the mistakes of private bankers. Last September Ireland moved to shore up confidence in its banks by offering a government guarantee on their liabilities — thereby putting taxpayers on the hook for potential losses of more than twice the country’s G.D.P., equivalent to $30 trillion for the United States.

The combination of deficits and exposure to bank losses raised doubts about Ireland’s long-run solvency, reflected in a rising risk premium on Irish debt and warnings about possible downgrades from ratings agencies.

Hence the harsh new policies. Earlier this month the Irish government simultaneously announced a plan to purchase many of the banks’ bad assets — putting taxpayers even further on the hook — while raising taxes and cutting spending, to reassure lenders.

Is Ireland’s government doing the right thing? As I read the debate among Irish experts, there’s widespread criticism of the bank plan, with many of the country’s leading economists calling for temporary nationalization instead. (Ireland has already nationalized one major bank.) The arguments of these Irish economists are very similar to those of a number of American economists, myself included, about how to deal with our own banking mess.

But there isn’t much disagreement about the need for fiscal austerity. As far as responding to the recession goes, Ireland appears to be really, truly without options, other than to hope for an export-led recovery if and when the rest of the world bounces back.

So what does all this say about those of us who aren’t Irish?

For now, the United States isn’t confined by an Irish-type fiscal straitjacket: the financial markets still consider U.S. government debt safer than anything else.

But we can’t assume that this will always be true. Unfortunately, we didn’t save for a rainy day: thanks to tax cuts and the war in Iraq, America came out of the “Bush boom” with a higher ratio of government debt to G.D.P. than it had going in. And if we push that ratio another 30 or 40 points higher — not out of the question if economic policy is mishandled over the next few years — we might start facing our own problems with the bond market.

Not to put too fine a point on it, that’s one reason I’m so concerned about the Obama administration’s bank plan. If, as some of us fear, taxpayer funds end up providing windfalls to financial operators instead of fixing what needs to be fixed, we might not have the money to go back and do it right.

And the lesson of Ireland is that you really, really don’t want to put yourself in a position where you have to punish your economy in order to save your banks.

Monday, 20 April 2009

Cardinal Brady to meet the UPRG

Oh to be a fly on the wall of that meeting. This is another step to bring peace to Northern Ireland through the creation of trust. This is achieved through education and opening peoples minds.

Chief amongst the issues will of course be decommissioning of weapons and spokesman Frankie Gallagher gave some hints of movement when he said this would be a good year for Northern Ireland.

I hope in their meeting, and possible subsequent meetings, they find time to deal with other issues including how to deal with poverty and how to raise educational standards amongst the loyalist population.

What better way would there be to face the economic crisis that affects all of us regardless of religious or political belief than to work together to tackle poverty, social exclusion, unemployment and education.

Surely such images would convince even the most hard pressed investor to look in our direction. Good Luck!

Wednesday, 15 April 2009

Happy Birthday Seamus Heaney

Belated Happy 70th to Seamus Heaney. one of my favourites is his poem 'Digging' brings back some memories. Anyone any other favourites


Between my finger and my thumb
The squat pen rests; as snug as a gun.

Under my window a clean rasping sound
When the spade sinks into gravelly ground:
My father, digging. I look down

Till his straining rump among the flowerbeds
Bends low, comes up twenty years away
Stooping in rhythm through potato drills
Where he was digging.

The coarse boot nestled on the lug, the shaft
Against the inside knee was levered firmly.
He rooted out tall tops, buried the bright edge deep
To scatter new potatoes that we picked
Loving their cool hardness in our hands.

By God, the old man could handle a spade,
Just like his old man.

My grandfather could cut more turf in a day
Than any other man on Toner's bog.
Once I carried him milk in a bottle
Corked sloppily with paper. He straightened up
To drink it, then fell to right away
Nicking and slicing neatly, heaving sods
Over his shoulder, digging down and down
For the good turf. Digging.

The cold smell of potato mold, the squelch and slap
Of soggy peat, the curt cuts of an edge
Through living roots awaken in my head.
But I've no spade to follow men like them.

Between my finger and my thumb
The squat pen rests.
I'll dig with it.

Seamus Heaney

Monday, 13 April 2009

Easter Messages

This Easter the message has come from the Real IRA that they will murder soldiers and police personnel "whenever and wherever" they see fit. I have a few questions on this message

1. Who do you represent? Irish people both North and South decided in a vote for the Good Friday Agreement that their future would be determined by peaceful means and consensus.

2. What would a United Ireland look like under the leadership of the Real IRA? What economic and social solutions would they present to affect the lives of all Irish people North or South?

3. If you kill a British soldier or a police officer how many will that deter? How many will leave Ireland? Past experience has shown that murdering soldiers/police only leads to an increase in security personnel. Therefore, who is reinforcing the "occupation of Ireland"?

Undoubtedly these individuals will consider themselves patriots. This patriotism offers nothing but death, increased poverty and guarantees even higher unemployment across Ireland as investors flee the country.

Patriotism has to be defined by living and delivering for your country. It has never been more important to have true patriots across the island of Ireland who will live for their country, creating jobs and prosperity, investing in education and hospitals and helping the world do likewise.

It is much more courageous and patriotic to live for your country not to bring it shame through violence and murder.

Thursday, 9 April 2009

Future of Housing

Today saw the launch of the Commission on the Future of Housing in Northern Ireland. It will examine housing issues such as social housing and perhaps fuel poverty more info below:

"One of the UK housing sector’s most senior figures is to lead a new Commission on the Future for Housing in Northern Ireland. Lord Richard Best OBE will chair the Commission, which will hope to play a leading role in contributing to housing solutions in Northern Ireland over the next decade and beyond.

The Commission is being organised by leading housing bodies in Northern Ireland and will be facilitated by the Chartered Institute of Housing (CIH), supported by its consultancy arm, ConsultCIH Limited. Organisations supporting the Commission include: the Northern Ireland Housing Executive, the Northern Ireland Federation of Housing Associations, Co-ownership Housing, the Construction Employers Federation, and the Voluntary Sector Housing Policy Forum.

The Commission is being created to drive cross-sector consensus on a long-term vision for the future of housing, which is critical for Northern Ireland’s social and economic development. The Commission intends to capitalise on the growing benefits resulting from the devolution of power and the work of the Northern Ireland Executive, its departments and the Northern Ireland Assembly.

Lord Best said: "I am delighted to accept the invitation to Chair the Commission on the Future for Housing in Northern Ireland. I have been struck by the progress made in housing policy and practice in recent years, particularly since the restoration of devolution, and by the level of partnership working across the housing sector. These provide excellent conditions for the work of the Commission, and I sincerely hope that the recommendations arising from the Commission will be of benefit to the Northern Ireland Executive and to relevant Ministers, as they take forward their important work to shape the future of Northern Ireland".

Grainia Long, Principal Policy Advisor to the Commission and Director of CIH Northern Ireland said: "Housing in Northern Ireland has benefited substantially from devolution. The New Housing Agenda published by the Minister for Social Development, the wide ranging planning reform proposed by the Minister of the Environment, and a host of policy initiatives from the Northern Ireland Executive aimed at building sustainable communities, bode well for the future.

"The Commission is a timely opportunity to contribute to, and build on that work, and to create a long-term vision for housing in contributing to Northern Ireland’s future. I’m delighted that Lord Best has agreed to Chair this Commission, and that he and his Commission colleagues will be devoting their time to this important issue. I have every confidence that the Commission will play a central role in how we build places and communities in Northern Ireland in the future".

Drink Driving - Zero tolerance required

Minister of Environment Sammy Wilson is to announce a consultation on stricter limits regarding drink driving. This is a welcome step, however, the limit should be zero. Ok there is a natural level of alcohol, medicines...but surely that can be proven these days.

Zero alcohol in a drivers system is a priority its not even that politically brave as which party is going to vote for drink driving?

As for penalties these need to be a lot tougher before anyone will take notice and they need to be imposed a lot faster. They could include a rolling license suspension up to and including losing the licence.

First drink driving offence - automatic disqualification from driving for six months

Second drink driving offence - same as above but for 12 months and prison time

Third drink driving offence - lose the license and prison time

I would rather have a few very selfish and stupid people lose their license than hear of another innocent road victim.

I hope the responses to the consultation take the matter seriously and push the Minister to the only logical conclusion as regards drink driving.

Tuesday, 7 April 2009

Tough budget for RoI

Finance Minister Brian Lennihan announced his emergency budget today. Was it a fair one? well it was tough on everyone. The announcements were based around cuts in benefits such as childcare prior to them being abolished. As with most economies there is an effort to get the construction industry back into shape with the announcement that a National Infrastructure Bond is to be created and an Enterprise Stabilisation Fund to protect jobs is launched. Cigarettes have risen by 25c and diesel by 5c.

What does this mean for NI? Well Brian Cowen spoke at a CBI dinner in the last few weeks promising that the proposed investment in crossborder roads was still on the agenda as well as the idea of a Dublin Belfast Economic Corridor. The other impacts could include a mass exodus of shoppers from the South to the border cities and towns like Newry. There is also the possibility of increased smuggling which could go to fund dissidents.

For more on the budget

From the G20 to this budget it must be clear to politicians and business people that the only way to get the recovery started is to work together. Crossboder skills, jobs and investment strategies need urgently developed, properly supported and implemented without the usual redtape are the only way to survive the recession and be able to take full advantage of the recovery.

Blogging holiday is over

The guys have suggested that I start to blog again. So we will give it another go.