The Irish Green Party has melted down at the polls, at both local level (where they won almost nothing) and at national level (where they won nothing and were even beaten by an independent who left the party a few months ago. But what’s at the core of the party’s problems?
The two views  I have heard about the Party’s medium-term prospects (from very different sources) are:

Continue reading →

The Irish banks have run into some serious problems. The core of these problems are quite simple. But eight months forward from the official emergence of the crisis, there is no sign of an answer. There is serious criticism of the possible solutions that are coming up.Everyone is afraid that we will end up with a bunch of zombie banks, and that the people who caused the problem, property developers and bank officials, will end up being rescued from their sorry situation by the taxpayer.
Most of the objections are still tactical, rather than strategic. Zombie banks or a few rescues aren’t the biggest problem. The real problem is that we are going to end up with a zombie banking system, and that the government will end up as its political guardian.

So the problem is simple: the banks’ net assets are less than zero. The loans they have given out, for which they borrowed money from depositors and other lenders, are no longer considered likely to be repaid in full, or anything near it.
Solving the problem is far from simple. The following issues arise.

Continue reading →

According to Napoleon, a leader is a dealer in hope. There are all the technical changes and tough cuts that have to be made at a time of recession, but more than anything else, a political leader needs to deliver hope to his or her people.

Like every other commodity, there are different types of hope. There is false hope, which was groundless from the beginning. There is dashed hope, which could have come to something, but didn’t for whatever reason. Then there is real hope, which is often a tiny glimmer at the bottom of a box of troubles.

So if you want to get some hope in post-celtic tiger Ireland, who are the main dealers open for business, and what’s the quality of the goods they are offering? For starters politicians have mostly missed out on buying into a hope franchise. They believe that they if they stare at the numbers long enough and argue enough, that they can bypass the hard reality. They can’t. Our economy has a serious issue. There’s no point pussy-footing around it. Painful decisions have to be made, and they are the people who are going to have to make them.

But there are alternative suppliers in the marketplace. The Ideas Campaign is the latest dealer in hope. From the website: ‘The Ideas Campaign is about asking people for ideas to stimulate economic activity. It is challenging people in Ireland to be innovative and creative and to play their part in planning this country’s economic recovery.’

However, there is a risk that this will turn into false hope. The one idea that have come from the campaign so far seems naive. The Irish Times reports that Aileen O’Toole, the founder of the Ideas Campaign “cited one idea from a man who works with a social housing group who sees plasterers and plumbers walking past his rundown houses on their way to collect social welfare payments. He believes many tradesmen would be willing to lend him their skills for the greater good during a period of unemployment. ”
It seems like a nice idea to have people work for free whilst they are on the dole. But this hardly seems fair. For one thing, it will undermine contractors who are tendering for work with social housing groups (and who presumably have to pay their tradesmen). For another, adding more housing to an already oversupplied housing market is unlikely to do much good. Still another problem, it seems wrong that distributors and manufacturers would get money for the raw materials they supply, but that tradesmen who work and install them get nothing. The idea that there is a quick fix to our economic woes would be a false hope.
But still, the Ideas Campaign is onto something here, something that can be the foundation of real hope. Even if the idea isn’t quite as feasible and simple as it might seem, it stimulates thinking. More importantly, it stimulates involvement. People are involved in the economy. The undoubtedly hard changes that are coming will then seem like part of a recipe for getting things moving again, rather than a relentless parry of wage cuts.

Thats where hope arises. The belief that we are engaged together in doing something that will make a difference, even if that difference will take a long time to achieve and will take a lot of pain.
Look at the issue of unemployed tradesmen – maybe the problem is that the social housing group can’t afford to employ tradesmen, because rates are too high? Then we need to make it possible for tradesmen to work for an acceptable price, rather than hoping they will work for free. Maybe we just have too many tradesmen, in which case we need to retrain some of them. We should look at everything, including the minimum wage, if that’s what what it takes to get things working again. Or maybe we need to look at the structure of the housing market, to make the existing housing stock available to more people, then that’s what we should do.
Hope is not about coming up with fast, simple answers. There are few or none of these for an economy that is in the mess ours. However, there are lots of ways to make things better and every possibility that things will turn around, if we focus on our strengths and keep working at it.

So to succeed in dealing hope, the Ideas Campaign needs to focus on the process as much as the actual ideas. As well as trying to pick winning ideas, I hope they will put all the ideas they have out there for people to think about and discuss, maybe in a discussion board format. They should certainly get the opinions of the great and good through an advisory committee, but they should also take the time to engage with people, to listen and to explain. Where has the money gone? What will we do? What are our economy’s (and our country’s) strengths?

If it does that, it will make more progress in moving us forward than the politicians have so far.

I have a little project that I want to get together that involves modifying a Fonera to do various things. I need some help with the electronics part of it. Is there anybody around town who can help with this?

Richard Tol writes in today’s Irish Times about how to turn the Irish economy around. You probably don’t see it in the online edition, but the subeditor responsible for the front page has summarized the article as ‘Privatize them all’. (Some comment on ‘The Irish Economy Blog’

The cuts are pretty small when you consider the context – it costs 60 billion to run the country, we will only get 40 billion in taxes. The plan is to cut back by a few billion, and just borrow the rest. Of course, the debt will bear down on us in the future.

It’s always nice when the international press pays attention to you.

In a further blow to the ailing economy, Google has decided to abandon plans to locate up to 100 software engineering jobs in Ireland because it was unable to find enough qualified candidates here.

A little over-dramatized in the Evening Herald but a very serious issue. We are not turning out enough engineers and we are not attracting enough engineers from abroad.

David McWilliams thinks that the Irish public is being a little unrealistic in its assessment of the Ryanair bid. He is right. The comments give an indication of how unrealistic the public is. But the reality is that Aer Lingus is a minnow in a world of eagles and it has to be bought by somebody if it is to avoid the disastrous fate of Alitalia and many other flag carriers before it.

It is interesting to see the perception people have of Ireland’s biggest airline. There is an assumption that because Ryanair does one particular thing well, or a particular way, that it cannot do anything else.

J.C Flowers is one of the companies apparently interested in investing in and restructuring Irish banks, in particular, Bank of Ireland. The same company took over Long Term Credit Bank of Japan and restructured it into Shinsei (‘rebirth’) Bank which according to Joichi Ito describes as ‘an example of how legacy companies in Japan can be turned around with good management and smart methods’.

A lot of people are concerned that foreign investors will do something radical with the Irish banks. But the reality is that this is what is required. Our banking is not anything like as efficient as it could be and our bankers are nowhere near as smart as they thought they were. If the sector does not restructure itself now, it will have restructuring forced upon it by competition from across the eurozone within a few years. It is worth reading what former Bank of Ireland CEO Michael Soden has said. Leaving things the way they are is just not an option.