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Monday, April 26, 2010

Irish public and private pensions


The scandal of the likes of the European Commissioner, Máire Geoghegan-Quinn, drawing an Irish pension of €107,325 while on a salary of €238,918 in her current post and building up new pension credits, highlights the huge discrepancy between public and private pensions in Ireland.

Corruption is conventionally viewed as the receipt of proverbial brown envelopes for votes or influence. However, there are many variations and when politicians create a very special system for themselves and other public staff, while the majority of private sector staff have no occupational pension and most new entrants to pensions in the private sector have no guarantee of a particular end payment, it is symptomatic of a corrupt system.

The public sector pension scheme is linked to the current salary paid in respective of a person's last job before retirement. However, even though pensioners got a Bertie Ahern benchmarking payment gift, when public sector salaries were cut in the Budget in December 2009, public sector pensions were not reduced.

Geoghegan-Quinn retired from politics in 1997 and two years later, she was appointed by Taoiseach Bertie Ahern to the European Court of Auditors.

She has been drawing a pension since 1999 while earning a high salary and building up entitlement to a fourth public pension.

Speaking in Cork today, Minister for Foreign Affairs Micheál Martin said Geoghegan-Quinn should reflect on her pension because it represents a practice from a different era. “She is not doing anything different to people who were in similar situations in the past. But we are in a different situation and in my view people in such situations should reflect on that because of the climate we are in. It is imperative that we show leadership in that regard.”

Martin is of course a hypocrite having kept his teaching job open since 1989.

In 2008, Geoghegan-Quinn received a ministerial pension of €62,945, according to the Department of Finance, and a former TD’s pension of more than €44,380.

She is paid an annual salary of €238,918 in her current post, having secured the research, innovation and science portfolio last November. Her spokesman said she was not in receipt of a pension from her previous role with the European Court of Auditors in Luxembourg.

Minister for Finance Brian Lenihan today said the Government had no power to strip a person of the pension they had earned.

He said that the terms were not changed for her: "She entered public life in this country in 1975 ... there are many people who get double pension payments from the Irish State at every level".

The current Chief Justice gets a pension of about €70,000 annually for his previous job as Attorney General.

Minister for Finance Brian Lenihan, speaking on RTÉ's Morning Ireland , said he had taken legal advice on the issue from the Attorney General, adding the Government cannot strip someone of their pension that they have earned. "That's not allowed in our legislation - legally, you can't do it. If that's the position, there is nothing that parliament can do short of a referendum on Máire Geoghegan-Quinn's pension."

"If we're going to move beyond that . . . it's open to anyone to make a contribution from their pension to the Minister for Finance - many have, and I want to acknowledge that, and many can reflect on the difficult economic circumstances Ireland is in and decide to assist voluntarily."

Mr Lenihan said taking this step was a matter for individuals to consider their own circumstances. He went on to say that age of retirement and double payment of pensions were issues to be examined, "particularly for very large sums, where someone's combined effect of the pension is that they have an income of more than €100,000 and they are under 65 - clearly there is a need to review that position".

The Minister said "definite pension proposals" were being brought forward by Government this year.

Geoghegan-Quinn's current job was a patronage gift from Taoiseach Brain Cowen and of course the issue of the pension would never have crossed his mind.

Geoghegan-Quinn, who has an abrasive personality, was annoyed when recently questioned on the issue when on a recent visit to Dublin, and she cancelled an agreed interview with RTÉ News.

Monday, March 15, 2010

Irish Innovation Taskforce report

Taoiseach Brian Cowen launched the report of the Innovation Taskforce, in the Science Gallery, Trinity College Dublin on Thursday, March 11, 2010. Picture shows (l to r) Aisling Miller and Irene Mencke as they show the Taoiseach a DNA sample, the two students are Post Grad Science students.

Irish Innovation Taskforce report It may seem strange that the same people who believed that the property bubble had brought Ireland a permanent free lunch,  have now bought into the fairytale that investment in innovation could create up to 215,000 net new jobs by 2010.

After 50  years, the total jobs supported by the State inward investment agency, IDA  Ireland,  may fall to the 1998 level of 118,000 in 2100.   So Brian Cowen, the Minister for Finance during the high point of the property bubble, has got his fairytale marketing brochure and in years to come, we will read of public money being flushed down new sinkholes even more than was wasted during the boom on IT projects and overpriced construction projects.

Anyone wonder why a real knowledge economy like Denmark could implement a broadband system with the best coverage in the world  while despite truckloads of money, we could only limp?

A start-up requiring finance wouldn’t have a chance by producing a business plan replete with just aspirations and pious hopes; no  SWOT (strengths, weaknesses, opportunities, threats) analysis or detail on the markets for the products and competitors.

However, the public policy document does not meet these minimum requirements.

Ireland and leadership at a time of crisis


Innovation Ireland Taskforce's aspirational report; US banks / credit-card companies contribute most money for start-ups - - not venture capital companies



Innovation Taskforce Report


Taoiseach launches Innovation Ireland Taskforce report; Says important marketing message for Ministers to carry abroad for St. Patrick's Day


Innovation Ireland Taskforce: Yet another 120,000 jobs plucked from the air by insiders?; In UK 2,900 high-tech companies in business since 1991 have only 40,000 jobs


Spin cannot hide lack of new thinking on jobs
 - - Irish Times article by Michael Hennigan 

IDA Ireland Horizon 2020 Strategy: Lack of coherence on changes facing existing Irish-based multinationals/ challenges of adapting model for China and India - - Prof. Seamus Grimes


Irish Economy blog threads:

More on the Innovation Taskforce

Innovation Taskforce Report Released


Hennigan on the IDA Strategy

Wednesday, February 10, 2010

Irish celebrity economists and "living room" credibility via RTÉ

On Monday, George Lee the former economics editor at the Irish State broadcaster RTÉ, resigned his seat in Dáil Éireann, which he won in a by-election in June 2009, to return to his full-time public sector job.

He cited lack of influence in policymaking in his party, Fine Gael, even though he didn't publish one significant policy proposal himself since his election.

It seems nothing has changed since Bertie Ahern's era of fantasy economics.

Despite the evidence that George Lee had not the motivation to produce any detailed proposal himself, his gullible admirers persist in arguing that he should have had a key role in economic policymaking.

He had 2 direct staff and access to Oireachtas research facilities and as I said previously for whatever he wished to propose, he had an inside track to the media.

Besides, he had long holidays to produce some new ideas/proposals.

I write this as an individual who has put forward several proposals on reform.

The same gullibles put all the blame on Richard Bruton for poor personal relations.

It's only a fool would believe that Lee's sole motivation in resigning was because he had no influence on policy when he couldn't be bothered developing any proposals himself.

He has been good at using the media to sell his version of the story and he has of course a mainly receptive audience in the media world.

Mr Deeds goes to Washington fighting for the little guy while having an insiders safety net in his former public sector operation!

David McWilliams styles himself a "high-profile economist" along with Lee in the Irish Independent and not surprisingly supports his media colleague and writes: "I have huge respect for his talents and know that he has "living room" appeal. Ordinary people believe him because he has been both right and honest in his work over the years. What the insiders don't understand is that he has done his time, just not in the Dail. He has done his time where it really matters, in people's living rooms."

This is the fantasy world where being on television gives people more credibility than experience in the real world of business or whatever.

There are of course no insiders in RTÉ!!

Are people idiots to swallow this tripe?

I guess Bertie Ahern and Charlie Haughey also had "living room" appeal at some stage.

Finfacts article: George Lee and the job he hated

Thread on the Irish Economy Blog

Song tribute:

The George Lee Song : words and music the Corrigan Brothers (Gerard, Brian and Donncha Corrigan) and Pete Creighton:

http://www.youtube.com/watch?v=d9HGwak29tQ

Sunday, January 31, 2010

Miep Gies and uncommon valour

Photo: Anne Frank Museum, Amsterdam

Miep Gies, shelterer of the Frank family, died on January 11th, aged 100.

The Economist often publishes obituaries on remarkable people who seldom rank in public consciousness alongside sports "legends" and Hollywood bimbos.

The magazine says in its current issue: "BY HER own account, Miep Gies did nothing extraordinary. All she did was bring food, and books, and news—and, on one fabulous day, red high-heeled shoes—to friends who needed them. It was nothing dramatic. But she also bought eight people time, and in that time one of her charges—a teenage girl called Anne Frank, the recipient of the shoes—wrote a diary of life in the “Annexe”. In these four rooms, above the office of Anne’s father, Otto, where Mrs Gies worked as a secretary, eight Jews hid for 25 months in Amsterdam in 1942-44."

In 1984, at the University of Michigan, Miep gave a lecture, named in honour of Swedish diplomat Raoul Wallenberg who had saved the lives of an estimated 200,000 Jews in Hungary by issuing them  Swedish certificates of protection.

When her employer, Otto Frank, asked her if she was prepared to take  responsibility for his family in hiding, she answered “yes” without  hesitation. “It is our human duty to help those who are in trouble,”  Miep said in Ann Arbor, Michigan. “I could foresee many, many sleepless nights and a miserable life if I had refused to help the Franks. Yes, I have wept countless times when I thought of my dear friends. But still, I am happy that these are not tears of remorse for refusing to assist those in trouble.”

Miep tried to rescue the Frank family after they were taken from the attic, attempting to bribe the Austrian SS officer who had arrested them. Miep even went to Nazi headquarters to negotiate a deal, fully aware that this bold move could cost her life.

Last October, an asteroid between the planets Mars and Jupiter became known as Miep Gies, in honor of the Dutch woman.

The International Astronomical Union (IAU) said it wanted to draw attention to the steadfast courage of the then 100-year-old last surviving helper of the Frank family.

The asteroid, which was was discovered in 1972 and would become known worldwide as Miep Gies, consists of rock and has a diameter of around 7 kilometres.

Tsutomu Yamaguchi, a double nuclear survivor, died on January 4th, aged 93 But in 2005 his son Katsutoshi died of cancer at 59, killed by the radiation he had received as a baby.

The Economist wrote: "WHEN he had stopped crying, Tsutomu Yamaguchi would tell you why he called his book of poems “'The Human Raft'. It had to do with the day he forgot to take his personal name-stamp to work, and had to get off the bus. Much was on his mind that morning. He had to pack his bags to leave Hiroshima after a three-month assignment as an engineer in the Mitsubishi shipyard; there were goodbyes to say at the office, then a 200-mile train journey back to Nagasaki to his wife Hisako and Katsutoshi, his baby son."

Yamaguchi was in Hiroshima on a business trip when the United States dropped the first atomic bomb on the morning of Aug. 6, 1945. He was getting off a streetcar when the so-called Little Boy device detonated above the city.

Yamaguchi said he was less than two miles away from ground zero that day. His eardrums were ruptured, and his upper torso was burned by the blast, which destroyed most of the city’s buildings and killed 80,000 people.

He spent the night in a Hiroshima bomb shelter and returned to Nagasaki, his hometown, the following day. The second bomb, known as Fat Man, was dropped on Nagasaki on Aug. 9, killing 70,000 people.

Yamaguchi was in his Nagasaki office, telling his boss about the Hiroshima blast, when “suddenly the same white light filled the room,” he said in an interview last March with the UK newspaper The Independent.

“I thought the mushroom cloud had followed me from Hiroshima,” he said.

Marek Edelman, the last military commander of the Warsaw ghetto uprising, died on October 2nd, aged 90.

The Economist wrote: "Going to the gas chamber or the mass grave with quiet, considered dignity, like many of the residents of the Warsaw ghetto, was another way: far more admirable and more difficult, he thought, than running through random bullets as he did. But it was not for him. Only by dying as publicly as possible, loudly and with his gun blazing, could he let the world know what the Nazis were doing to the Jews in Poland."

Sunday, January 24, 2010

Non-Stop News and Ireland's Charlie Bird

The current issue of the New Yorker magazine, has an article on the pressure to entertain or perish in news provision, which has fed the press’s dominant bias: not pro-liberal or pro-conservative but pro-conflict.

Meanwhile, in the city where news is one of the dominant industries, Washington DC, Charlie Bird, the resident bureau chief for Ireland's State broadcaster, RTÉ, is surprised that he hasn't a prominent role at events such as White House briefings, maybe believing that he should have had some preference because he's Irish and he feels isolated as a one-man show, with presumably a camera crew on hire as needed.

Why does RTÉ have Bird based in Washington, and currently in Haiti, when he could never cover stories as a well connected local would?

Apart from St. Patrick's Day, why spend maybe $1m or more on this self-indulgence when so many other areas are subject to cutbacks?

It's costly public relations for a management who reckless overspent during the boom and more than half the organisation's income comes from a tax.

As for Haiti, there are probably more well-paid journalists there than relief workers and is it really vital to have Charlie Bird there to give his Irish audience some special insight. they would miss from all the feed reports available to include in news reports - - at a much lower cost

“I don’t know what madness possessed me to take on this job,” The Sunday Times reports Bird exclaims in a documentary about his time in the American capital, to be broadcast Monday on RTÉ One. “I’m a home bird rather than a Washington person.”

“I didn’t know a soul in Washington and was facing into a whole life away from friends and family,” he says on the documentary. “It’s taken me a lifetime back home to build up solid political contacts, and in DC I started from scratch. I have to say it all felt a little daunting.”

He had been warned what to expect. “People who have come here before, who were working for RTÉ, have always spoken about the loneliness of the place,” Bird said. “At my age, I find it even more so. People have this notion that, when foreign correspondents are abroad, everything is fantastic, it’s hunky dory. It takes time to get to know people. I didn’t know anybody. I have to admit I found it really lonely.”

The Sunday Times says in his characteristic habit of referring to himself in the third person, he says: “Nobody gives a flying fiddler who Charlie Bird is in Washington.”

Of course they don't.

It's like a priest arriving in Rome expecting the locals to tug the forelock.

The New Yorker says in September, Pres. Obama spoke at a memorial service for former CBS news anchor Walter Cronkite, in New York. In his speech, Obama said that Cronkite’s standard was “a little bit harder to find today.” During the 2008 election, Obama was the object of near-veneration, but now that the President has rolled out his ambitious initiatives, he bristles at the way he’s treated in the media.

The magazine says in the current issue, Ken Auletta examines the Obama Administration’s fraught relationship with the media (subscribers only). The President’s chief speechwriter, Jon Favreau, tells Auletta that the President is on a mission “not just to change politics in Washington but to change the culture of Washington, and the media is part of it.” Auletta draws on dozens of conversations with Administration officials and Washington reporters to illustrate how this mission has not been entirely successful, as both the President and the press struggle to deal with the new media landscape.

Auletta writes, “The news cycle is getting shorter—to the point that there is no pause, only the constancy of the Web and the endless argument of cable. This creates pressure to entertain or perish, which has fed the press’s dominant bias: not pro-liberal or pro-conservative but pro-conflict.”

  • Robert Gibbs, the White House press secretary, tells Auletta, “What used to drive one or two days of coverage and questions is now readily subsumed every few hours.”
  • David Axelrod tells Auletta, “There are some really good journalists there, really superb ones. But the volume of material they have to produce just doesn’t leave a whole lot of time for reflection.”
  • The New York Times’s Peter Baker says, “We are, collectively, much like eight-year-olds chasing a soccer ball. Instead of finding ways of creating fresh, original, high-impact journalism, we’re way too eager to chase the same story everyone else is chasing, which is too often the easy story and too often the simplistic story—and too often the story that misses what’s going on.”
  • NBC’s chief White House correspondent, Chuck Todd, in a typical day does eight to sixteen standup interviews for NBC or MSNBC; hosts his new show, “The Daily Rundown”; appears regularly on “Today” and “Morning Joe”; tweets or posts on his Facebook page eight to ten times; and composes three to five blog posts. “We’re all wire-service reporters now,” he says.
  • The former White House communications director Anita Dunn says, “When journalists call you to discuss a story, it’s not because they’re interested in having a discussion. They’re interested in a response. And the need to file five times a day encourages this.”
  • Jay Carney, Vice-President Joe Biden’s spokesman, tells Auletta that budget considerations now keep reporters from travelling with politicians. “Eventually, there’s a loss of what the public knows.”
  • “This White House, like others, does its best to manipulate press coverage,” Auletta writes, and is known for its discipline.

Sunday, January 17, 2010

Michael Hennigan Jnr returns to Philippines



Michael Hennigan Jnr, who is a Finfacts director, is returning to Ireland today with his girlfriend Jane Brownlee, after three weeks in the Philippines and Malaysia.

It was a magical trip for Michael to where he was born and adopted at the age of 10 months in 1986.

Michael commented on the work of Irish priest Father Shay Cullen (pictured above): "I was amazed and moved by the work he is doing, and has accomplished. He is completely on the ball regarding the media and is able to use his knowledge to make people listen. His PREDA organisation is doing very well with the connection with fairtrade."

Michael also met two remaining Irish priests in the main parish in Olongapo, Donal O'Dea and Fintan Murtagh. Father O'Dea also has responsibility for the descendants of the original settlers on the islands who are known as Aeta (black in Tagalog  -- the dialect of the main Philippine island of Luzon). They and the Aborigines in Australia, have a direct line with the first humans who left Africa and turned right towards Asia, 60,000 years ago.

Sunday, January 10, 2010

Bertie Ahern as an artist of some kind?


An Taoiseach Bertie Ahern T.D. (in canary coloured pants), the then President in Office of the EU, together with leaders of the G8 at the 2004 summit at Seal Island, Georgia, US.

Whether or not Bertie Ahern is an artist or as taoiseach was some sort of artist, it is a joke that he would benefit from a tax exemption system that was introduced in the 1960s to help struggling artists.

I recently noted in a piece on the raft of pre-Christmas books on the Celtic Tiger that it will also be interesting to note how many of the authors who have set out to show how the Irish economy was ruined by a corrupt system that evolved to protect insiders and promote crony capitalism, will take an advantage of the 1960s era tax break for indigent artists and apply to an Inspector of Taxes, who has the odd job of deciding if factual books are works of "artistic merit."

It is of course laughable that an Inspector of Taxes decides on the "artistic merit" of a factual book.

Labour TD Ruairí Quinn, who has availed of the exemption, said there very few direct accounts from Irish politicians of their time in office and this was something that should be encouraged - - the system is already very kind to them and they receive large tax-free sums during their careers and very generous pensions.

“But that’s a separate issue to the one of taxation. I think in the context now where we have a serious shortfall in tax revenue all of these schemes have to be looked at,” he told RTÉ News at One.

The Irish Examiner commented:

BERTIE AHERN did nothing wrong when he secured tax-free status under the artists’ exemption scheme for earnings from his autobiography. This, after all, is small cheese to a man who can claim travel costs even though he has a state car and driver.
But what he did do was to show how daft the scheme is and how discredited it has become. Though a threshold of €125,000 was imposed in last December’s budget, this indulgence, in its current form, is no longer appropriate.
It will have to be reshaped to help artists establish careers but it can’t be open-ended. People should only be allowed avail of if for, say, five years. It should only be available to anyone whose primary income is generated through the arts.
The spirit of the original legislation must be restored because what we have now is a shabby tax dodge of the most offensive kind.

Monday, December 28, 2009

Avatar the Movie



The Wall Street Journal reports that sci-fi film "Avatar" led the way to Hollywood's biggest US box-office weekend of all time. With a box-office total over the last three days of $278 million, this weekend's films beat the old record of $260.8 million from July of 2008, according to estimates from Hollywood.com.

James Cameron's 3-D epic "Avatar" took the top slot at the box office over the Christmas Day weekend, bringing in $75 million. Guy Ritchie's action-oriented retooling of "Sherlock Holmes" grabbed second place with $65.4 million. The film set a new record for a Christmas Day opening by grossing $24.9 million on Friday.

In the gaming age, many modern films appear to rely more on computer generated visuals rather than an engaging plot. In "Avatar," James Cameron, the director of "Titanic," presents spectacular imagery, decades after 3-D films made their debut.

I saw the film last week in Kuala Lumpur and while the technology is more impressive than the storyline set in 2154, it has a contemporary theme with a big corporation led by a military commander with a style that would have been admired by President George W. Bush, using "shock and awe" against the forest people on the distant moon Pandora, to secure mineral rights.

The Financial Times' John Gapper said "Avatar" will probably be one of the biggest money-spinners for Rupert Murdoch's News Corp, since Cameron's 1997 "Titanic," epic.

Gapper noted that in contrast with Murdoch's conservative slant, that film also had a rather leftist tone, with the poor people stuck in steerage displaying more moral fibre than the rich folks above.

Saturday, December 26, 2009

From Celtic Tiger boom and bust to the boom in books




There has been a lot of attention on the large number of books on the boom and bust of the Celtic Tiger, which have been launched for the Christmas selling market.

Independent senator, Shane Ross, appears to have hit the jackpot with his targeted subject of Irish bankers' central role.

Ross' book, The Bankers, is about the people who ran the banks - - chief executives, chairmen/chairwoman - - as distinct from other senior managers and directors who nominally had roles in running the organisations but in practice went with the flow.

Be it politics, the senior public service, business and religious organisations, that is the default pattern because it is the reaction that generally pays -- recessions and busts are rare events that lead to questioning of the insiders in a society.

Simply, in the money economy, the individual who takes a public stand against conventional wisdom, is usually the loser.

Last June, in an article on Finfacts, I asked: "Why did so few shout stop? There is a simple answer. Challenging conventional wisdom often comes at a high price and the whistleblower is more often than not the biggest loser. Any amount of legal protection will not change this reality across the globe. However, a society needs to have dissidents, to evolve."
The imbalance between self-interest and the public interest is often at the root of economic and business crashes.

Harvesting public anger is an old trick in politics and it is common for angry people to gullibly bank their hopes on the proverbial snake oil salesmen.

Some of the recently published books on the Irish economic crash, add some knowledge or focus on pertinent issues but it's also important to remember that self-interest is also at play here.

For example, the Prime Time Investigates programme, which last Monday, on the State broadcaster RTÉ, focused on bankers, is very unlikely to examine mismanagement in its own organisation - - including not only excess boom pay for so-called "star" broadcasters, but also for senior management - - even though it is an issue of public interest because of the compulsory licence tax/fee.

The programme also made a passing mention of former chief executive of Irish Nationwide Building Society, Michael Fingleton, giving special treatment to journalists in return for exposure on RTÉ and the newspapers, but it was the issue of his express processing of loan applications for politicians, that received in-depth attention.

It has been said that Shane Ross, who is business editor of The Sunday Independent, is very tough on public company boards with the exception of the board of the newspaper's owner.

Of course life involves compromises but it is a relevant point to make.

In September 2000, the then Sunday Business Business Post journalist Emily O'Reilly lambasted Ross for what she termed the former stockbroker's pitching of the shares in the public floatation of State-telco Eircom and later heading a public crusade against the company.

O'Reilly wrote: "Ross has made a virtual third career out of board bashing. As business editor of the Sunday Independent and part-time commentator on Today FM's Last Word programme, he and presenter Eamon Dunphy have developed a neat double-act. Outrage is the theme as the two handsomely paid media buddies rail against the handsomely paid business buddies on various company boards."
O'Reilly herself showed that she was another insider like the wealthy Shane Ross, and she hit the earnings jackpot when she was given the job of Ombudsman, which was a patronage plum in the gift of Minister for Finance, Charlie McCreevy. Her salary was hiked four or fivefold, to the level of a High Court judge.

Economist David McWilliams in his newspaper columns also mainly focuses on the banking crisis but he has noticeably refrained from taking a stand on the issue of public/private sector pay as if he does not wish to risk his appeal, for a section of the public.

 The public should bear in mind that the authors of the current round of books on the crisis, are generally well-connected and like the many in the supporting role of the Celtic Tiger crash, would unlikely take principled stands that would endanger their earnings potential.

A reader of the Irish Independent let rip at one of the recent articles on bankers: "I see that David McWilliams' latest analogy to explain the easy credit foisted upon us all by the evil bankers is one of drug dealers peddling their illicit wares to unwitting low-end junkie addicts (Irish Independent, December 23).

Believe it or not, most of us normal folk actually do have the capacity to comprehend such far-out concepts as 'banks' and 'credit'.

This constant dumbing down of his is becoming as tiresome as it is insulting. Please ask him to stop."

The story of the crash is a lot more complicated than the imagery of selfless heroes bringing dastardly villains to account, on behalf of a population of victims.

Indeed, the victims seldom merit the interest of trade union leaders or commentators.

It should be about a people who have for too long tolerated a broken political system with limited accountability and where the buck appears to stop nowhere.

Unless the process is changed, there will be further economic mismanagement in future and more material to analyse for generally wealthy journalists.

Finally, in due course, it will also be interesting to note how many of the authors who have set out to show how the Irish economy was ruined by a corrupt system that evolved to protect insiders and promote crony capitalism, will take an advantage of the 1960s era tax break for indigent artists and apply to an Inspector of Taxes, who has the odd job of deciding if factual books are works of "artistic merit."
David McWilliams - - a short-termist like his Celtic Tiger villains?

Wednesday, December 23, 2009

Wall Street Journal



Thursday, November 19, 2009

Cowen: A dyed- in-the-wool conservative

It would be indeed news if the leader of a very conservative country like Ireland was other than a dyed- in-the-wool conservative.

Britain bequeathed a 19th century era governance system complete with Victorian secrecy and it remains basically as inherited in 1922.

The only transparency on public spending is via parliamentary question s and Freedom of Information requests.

It's an inadequate hodge-podge of a system that provides little transparency in a system where the State conspires with private clients to maintain what ids termed "confidentiality" - - which is without any doubt not in the public interest.

It severely impacts accountability and protects connected individuals who benefit as insiders in the system.

Taoiseach Brain Cowen is a man without vision who would not be expected to question well established routines.

As a minister in several governments, he went with the flow.

He was not the author of one single innovation of significance, since his election to Dáil.

In the Irish system, that was not an issue of any relevance.

Cowen claimed on Wednesday this week in the Dáil, that the Freedom of Information (FOI) Act was being abused by long-winded requests.

He said public servants were being forced to spend an inordinate amount of time "trawling through" files when they could be doing other work.

"It is an expensive and time-consuming aspect of Government work," he said.

"I have no problem whatsoever with the legitimate use of the Freedom of Information Act for individual citizens or, indeed, for others,

"However, the idea of the department trawling every question that comes in from people who, perhaps, regard the departments of State as a source of generating information was not within the contemplation of the Freedom of Information Act and, to be honest; it is an abuse of the process," he added.

Why not try some radicalism?

Transparency on public spending with few exclusions, such as grants to foreign direct investors?

Political and economic reform in conservative Ireland and the promise of an "everlasting boom"

Monday, October 26, 2009

The euro, sterling and Irish SMEs

Economist David McWilliams wrote in the Sunday Business Post yesterday that Ireland trades in a currency that is sky-rocketing against our two main trading partners, Britain and the US.
He says we need a hyper-competitive exchange rate. We need an exchange rate that allows companies to export, rather than making it difficult for them. Yet the finest minds in Ireland are doing the opposite.

Should the travails of the SME sector in exporting to the UK with a weak currency, be solved by quitting the Euro?

Like much else in life, there are no panaceas and why are Irish SMEs unable to develop markets in the 16 member country Eurozone with a population of more than 300 million?

McWilliams says exports took off after a devaluation of the Irish punt in 1993 but as many others do, he conflates exports from the dominant US-owned sector with indigenous firms.

Exports exploded off from the mid-1990's not because of devaluation but because in the years preceding it; Ireland was getting 25% of US greenfield investment in Europe and from the entry of Intel in 1989, Dell in 1990, Microsoft significantly extending its software operations and companies such as HP, opening big manufacturing facilities, coinciding with the US high-tech boom, exports from these firms dwarfed SME exports.

Have a look at the charts on this page, which show that the value of exports from domestic firms basically flatlined from 1991.

The devaluation had no impact.

http://www.finfacts.ie/irishfinancenews/article_1016593.shtml

As regards the euro, I assume Ireland wouldn't have joined the EMS if its main US FDI firms had objected to it.

Today, these firms remain crucial for the Irish economy.

The typical Irish SME does not export compared with counterparts in Europe and over the past decade, little headway has been made in developing markets in the common currency area.

The EMS has expanded from 11 to 16 countries and so there is a big potential market without having to worry about exchange rates.

Quitting the euro to help the SME sector is hardly a serious proposal.

A more serious treatment of the challenges facing SMEs would be to address the fundamental problems facing them.

Developing new markets where there is little tradition of doing this, unfortunately means that there are no short-term eureka solutions.

Wednesday, October 14, 2009

Ryanair and hidden charges


Ryanair's Chief Executive, Michael O'Leary
After Monday's BBC’s Panorama programme with its “hatchet job” and “lies” (Ryanair’s terms), the Daily Telegraph on Wednesday reported that "the smile is back on the face of the airline’s foul-mouthed boss."

“We’d like to thank BBC Panorama for giving us this heaven-sent publicity opportunity during one of the shittiest times of the year,” a beaming Michael O’Leary said at a press conference in London on Tuesday.

The newspaper said that even before the programme aired on Monday, the Ryanair Pravda machine had cranked into overdrive with various pre-emptive howitzers.

Not least that the BBC hacks had flown with the wrong airline to doorstep O’Leary in Dublin. “If you are investigating Ryanair, the least you can do is bloody fly on us to interview me,” he chortles. “This is why the BBC finances are in such a mess. They prefer to have their fries and sausages with the two other people flying on the route with British Midland.”

A key allegation was familiar. That Ryanair’s ever-expanding extra charges - - check-in, baggage, booking et al - - mislead and infuriate its passengers

Michael O'Leary denied to the BBC that he had shook hands on a deal with John Leahy, Airbus' chief commercial officer, in 2001 and then went to negotiate with Boeing.

Maybe or maybe not.

O'Leary also rejected claims on hidden charges.

The last time I flew with Ryanair, I was trying to book a flight from Dublin to Cork two years ago, with an Irish issued credit card but an overseas address.

The website had limited system had a limited number of countries on a drop-down menu and "other."

The screen jammed and I had no option but to select "other" and in the final charge, there was a €12 credit card processing fee for charging a cast of about €20.

BBC video of interview with Michael O'Leary

Finfacts report: Why hate Ryanair? BBC's Panorama asks Monday; Michael O'Leary condemns ‘Hatchet Job’ agenda

Thursday, September 03, 2009

The Swedish bank rescue model and Irish "bad bank' NAMA

From Anglo Irish Bank's Annual Report 2006

The launch of the Irish State "bad bank" NAMA - - the National Assets Management Agency -- to quarantine and absorb toxic property loans valued at about €90 billion - - equivalent to more than half Irish GDP - - from Irish banks, has created controversy because the discount on the loans won't be related to the market value of the underlying secured property but to a range of assumptions of mainly insiders, who will determine what is termed "long-term economic value."

One proposal is that value of loans would be set looking back at property market cycles - - which had averaged seven years in duration - - since 1971.

These cycles have been heavily influenced by periods of reckless public spending and a system of land rezoning that makes land scarce in a country that is 4% urbanised.

On Sept 16th, Minister for Finance Brian Lenihan will provide an outline on how the valuation system will work.

SEE: European Central Bank, NAMA and long-term economic value

The Swedish bank rescue model is often touted in Ireland as a template to use for the Irish bank rescue but loans were not transferred by the Swedish because of the difficulty of valuing them.

US Treasury Secretary Tim Geithner announced a plan to clear toxic assets from US banks' books but the issue of valuation, effectively killed the chicken in the egg.

Nobel laureate Joseph Stiglitz at the time of the launch, was reported to be very unhappy. “‘The Geithner plan is very badly flawed," Stiglitz told Reuters in an interview during a Credit Suisse Asian Investment Conference in Hong Kong. He said the US government is basically using the taxpayer to guarantee against downside risk on the value of these assets, while giving the upside, or potential profits, to private investors, he said: "Quite frankly, this amounts to robbery of the American people. I don’t think it’s going to work because I think there’ll be a lot of anger about putting the losses so much on the shoulder of the American taxpayer.”

Also last March, Peter Thal Larsen and Chris Giles of the FT, presented a detailed analysis of the model and it is not all it's cracked up to be.

Larsen/Giles wrote: "one of the first things visitors who ask about the 1992 bail-out are told is disconcerting. 'There is nothing Swedish about what people call the Swedish model," says Stefan Ingves, the Riksbank's governor, in his spartan office. Mr Ingves was a finance ministry official in the early 1990s and headed the Bank Support Authority, the agency Sweden set up to resolve its crisis. "What we did was to put the thing together but we did not invent the wheel - we used the knowledge that we could find wherever we could find it in other parts of the world.'"

The writers said: "Contrary to the myth that surrounds the Swedish model, the authorities nationalised only two banks: Nordbanken, which was already state-controlled, and Götabanken. Co-operative and savings banks were merged but other private banks ultimately chose to raise private capital."

Private banks were encouraged to place their bad loans in separate entities. However, in contrast with the recent debate in the US, the authorities never contemplated removing bad assets from those banks.

"There is nothing Swedish about what people call the Swedish model," said Stefan Ingves, governor of the central bank, the Riksbank.

Ingves was a finance ministry official in the early 1990s and headed the Bank Support Authority, the agency Sweden set up to resolve its crisis. "What we did was to put the thing together but we did not invent the wheel - we used the knowledge that we could find wherever we could find it in other parts of the world."

"We refused to buy assets from privately owned banks because it would have been impossible for us to agree on the price and we were never in the business of giving privately held banks subsidies," he said.

Sweden's banking system was relatively small. When Stockholm issued its guarantee, banks' total liabilities represented little more than a year's gross domestic product.

Sweden's kroner was devalued and during the recovery period, the international economic backdrop was positive.

Larsen/Giles write, that if the Swedish experience can provide some pointers for today's stressed-out policymakers, the country's subsequent approach offers a lesson in what not to do.

Having tackled the crisis, the authorities conspicuously failed to put in place longer-term reforms to help avert similar problems in the future. "The regulatory framework we put in place in the early '90s had sunset clauses. So the sun set and that was it," said Ingves. "The politicians felt, 'that won't happen again'," says Staffan Viotti, an adviser to Ingves and adjunct professor at the Stockholm School of Economics.

The FT says that during the recent credit boom, Sweden's banks embarked on another growth spurt, expanding their lending throughout the Nordic region and particularly in the Baltic states, where Swedish lenders account for a large chunk of the banking system.

The following article has links to material on NAMA, Irish house prices since 1970 compared with other developed countries and the corrupt land development system:

Kelly tells High Court Irish property prices are likely to fall back to mid-1990s levels

Thursday, August 20, 2009

Irish Economy: A banking crash inquiry?

UCD Economist Colm McCarthy

Last Monday, UCD economist Colm McCarthy who chaired the so-called "Bord Snip Nua" report, which recommended more than €5 billion in public spending cuts, said in a radio interview that a televised inquiry should be held by the Oireachtas on the reasons for the banking crash.

McCarthy said the “real bailout” was a bailout of depositors to prevent “a complete financial collapse.”

That meant that the taxpayers were going to end up footing the bill to some degree.

He said the general public still had not had a “thorough explanation” for what went wrong with "the Irish banking system.”

He said he believed an inquiry along the lines of the Dirt inquiry, by an Oireachtas committee for example, would greatly enhance public understanding of what had gone wrong in the banks.

Where should one start? — from where the fish rots: poor governance with limited accountability in a multi-seat system with clientism and pandering to vested interests dominant, in a culture where plundering the public purse is far from a vice; political parties relying on soundbites, rather than detailed policies and then in government outsourcing on grand scale to the consultancy industry while responding to events only when there a crisis, or more often than not, a dire crisis; cronyism; Victorian era secrecy benefiting the insiders; a culture where the supporting cast within the system, keep their heads down, accept benchmarking whether its is viewed as a sham or not - - a few years later in 2007, partake in another pay bonanza with the Secretary-General of the Dept of the Taoiseach getting a 25% rise.

It is worthy of note that despite the reckless mismangement, nobody saw fit to resign on a point of principle from the ranks of the senior civil service or the Central Bank.

Within the official circle was the State broadcaster RTÉ - - the political leaders’ preferred route to the public. The ineffective format of the Dáil, coupled with 2-minute door step interviews and a compliant RTÉ management coasting on an advertising bonanza, meant that there was never a risk of having to give what could be termed a forensic interview - -unless it was a self-serving response to a tribunal leak.

As regards economists, the academic economists may have had a disdain for the some of the prominent financial service economists, who were essentially well-paid PR men for the moneychangers, but these people provided the “intellectual” support for the boomsters.

In 2004 Bank of Ireland’s Dan McLaughlin had declared a “Golden Age of Construction,” at a construction industry dinner and then in 2007, said “there are a number of economic viewpoints about the Irish economy which are often voiced but have little in the way of support from the facts. One often hears that growth is unbalanced but a glance at the data from 2001 to 2006 shows average GDP growth of 5.3%, with all components growing in a 4.5% - 5.5% range.”

A year before, the myopic economists at NCB had produced their 20/20 Vision report, and again underpinned the fantasies of the politicians.

In June 2006, I wrote the following:
  • Foreign companies were responsible for 87% of Irish exports in 2005
  • Dell and Intel are Ireland’s biggest exporters. 2. Irish investors ploughed €30 billion into local and overseas commercial property in the past 5 years
  • Investment of €133m has been made in 75 Enterprise Ireland supported companies since 2001
  • One in five Irish private sector workers are dependent on construction and more than 100,000 will become unemployed within 10 years
  • No Irish-owned company has floated on the Nasdaq Stock Exchange since 1999. 5
  • Most workers in Irish-owned companies have no occupational pension.
  • The Irish Government awarded special pay increases to all current and retired public sector workers, including politicians, in return for a benchmarking performance system. Targets introduced are basically unmeasurable and aspirational
  • William Prasifka, the chairman of the Competition Authority, recently said that “in too many areas, Ireland has not willingly embraced competition.”
  • New Irish housing units are among the most expensive and the lowest quality in the Developed World
  • Since the end of 2003, output per worker in Ireland has been almost static. 10. Most foreign companies will have relocated from Ireland by 2025
  • In 1970, Ireland’s national debt was as healthy as it is now: just ten years later it was one of the worst in the world

BaNama Republic, NAMA and "long term economic value" as "demographics" is disinterred from bubble wreckage

Tuesday, July 28, 2009

Irish Royalty or Beggars on Horseback?

Ceann Comhairle (Speaker of Dáil Éireann - - the Irish Lower House) with his counterpart, Bernard Accoyer, President of the French National Assembly

It's no secret that the Irish Exchequer is for plundering by a legion of vested interests and the political class

There is no mileage in supporting parsimony in using public funds.

If we Irish want to blame the British, we might as well, as it's as good a self-serving excuse as any, but it puts our elite in the same class as the stereotypical African dictator.

We can look back to the early decades of the State for inspiration and there is much to admire but an RTÉ 1 documentary in 2004, showed that money also had its malign influence, when it detailed how Fianna Fáil party founder Eamon de Valera had funds that were raised in the US during the War of Independence (1919-1921), diverted for the establishment of the Irish Press newspaper, which ended up in the control of his own family.

The Sunday Tribune has reported that former Minister of Arts, Sport and Tourism, John O'Donoghue, his wife Kate Ann, and his private secretary Therese O'Connor, ran up a travel bill of over €126,000 and possible a multiple of that, in the space of just two years.

Among the expenditure were a series of €900-a-night hotels, €7,591 on "airport pick-ups" during a two-day trip to London, €120 for hat rental, €250 for water taxis and €80 to "Indians for moving the luggage".

On one luxurious trip to Venice, the former arts minister, his wife and the civil servant ran up hotel bills of €5,834 at the Albergo San Marco, the Hotel Cipriani and the San Clemente Palace. The ministerial entourage travelled to Italy by government jet, where they were collected by a private airport boat and taken to their luxury accommodation.

The water taxi to and from the airport cost €250, while the minister, his wife and O'Connor claimed a further €1,300 in subsistence and expenses.

On another trip to Paris, Kate Ann O'Donoghue's hotel bill included €56 for a haircut, but this was later paid back as "personal expenses".

The €56 saved will be scant consolation to the taxpayer when set against the €900 a night the former minister paid out for an "apartment" in the Hotel Le Bristol during two days at the hotel.

The Tribune said on another occasion, O'Donoghue, who is now Ceann Comhairle, stayed in even more expensive accommodation with the nightly room rate at the Hotel Montfleury in Cannes costing €990 a night, and a total bill of almost €5,000. Car hire for that trip, related to the famous film festival in the Mediterranean city came to €9,616, according to the figures released under the Freedom of Information Act.

Asked to comment by the Irish Times on Monday, the department said: “Ministers, given the nature of the brief, travel abroad to high-profile events, such as the Venice Biennale, the Olympics, the World Cup matches, all of which are regarded as contributing to the promotion of Ireland as a tourism destination and a venue for international sports events. The costs of flights and accommodation for such events invariably involve a high premium worldwide.

“In relation to the procuring of accommodation and car hire, every effort is made to secure the best possible rates for the Minister and the delegation. The cost of facilities at airports relates to fees charged at a standard rate.”

Tourism development and promotion was “one of the key objectives of the department.” The tourism sector was “underpinned by the arts and sports sectors, which also serve to enhance the tourism product.”

“Given the nature of the arts, sport and tourism brief, it is customary and necessary for the Minister to attend major events in Ireland and abroad. International marketing is regarded as an essential activity in the attraction of tourists to Ireland.”

Of course it is and what else can you say?

Is it any wonder that the average citizen gives the two fingers to pleas for sacrifice from these chancers?

Anyway, shur what's the big deal being made by small minded losers when it's a drop in the ocean in a €60 billion spending.

Add up all the feather bedding and reckless use of public funds and it would come to more than a molehill.

Ask UCD economist Colm McCarthy.

Is it any wonder that they want to keep public spending information in the Victorian age?

And for the information released via the Freedom of Information Act, the Irish Government asked for €523 for copies of the expense claims. What was released was incomplete, and did not include the cost of flights or the use of the government jet, which would easily double the travel bill.

The Bull came to public prominence in the 1990s by advocating a zero tolerance to crime and that was copied from the then New York Mayor Rudy Guiliani.

The Waste Land - - Bord Snip, Irish Public Spending Transparency and the motto "Never do anything for the first time"

Lenihan publishes Bord Snip report; Proposes €5.3 billion in spending cuts and public sector staff reductions of 17,300; Says public pension cost at 30% of salary

Monday, July 20, 2009

Bord Snip 2009 - - a response to Ireland borrowing nearly €400 million per week


UCD Economist Colm McCarthy.

The report of the group, known as An Bord Snip Nua, which was published on Thursday, contains proposals for saving €5.3 billion annually on Irish public spending - - less than 10% of the annual total.

Its recommendations include, merging of local authorities, cuts in hundreds of millions of euro worth of allowances for State employees and a reduction of €1.5 billion from the social welfare budget.

The report also calls for 17,000 State job losses, including a €300 million reduction in the Health Service Executive’s paybill.

Speaking on RTÉ Radio's This Week programme yesterday, UCD economist Colm McCarthy said the current situation, where the Government was borrowing nearly €400 million per week, could not be allowed to continue.

I made the following comment in the Irish Economy Blog - - on its Bord Snip threads:

Main thread

To me, the key issue is not ideology or the level of waste in different sectors but the dysfunctional nature of the Irish State.

Whether it’s public or private, the gravy train has had a kaleidoscope of characters; €1.6 billion annually for State drug purchases, which have an ex-factory price of €1 billion (even the factory price itself has a subsidy); multi-millionaire farmers on public welfare, then hitting property purchasers with a hidden tax through the corrupt rezoning system; huge outlays on IT projects via the opaque procurement process, for private consultants and then the cornucopia of allowances and other perks available in the public sector, led by the political class, while the majority of private sector workers do not even have a basic occupational pension scheme.

The biggest unreformed vested interest is at the top and I cannot recall any proposals of radical reform from the 216 members of the Oireachtas, most of whom are nonentities, in response to the current crisis.

In recent months, Senator David Norris made a plea in the Irish Times for the retention of the Seanad. It is however instructive, that his own significant contribution to Irish society, would always leave his membership of that defunct institution, as a footnote.

The cost of running the Oireachtas has increased at an annual rate of 12% in the past 5 years.
There has been resistance on both sides of the aisle to sacrificing priviliges and embracing radical change in the archaic system.

The 1828 US term, “‘to the victor belong the spoils,” likely sums up the outlook of the Opposition.

All roads lead back to the political system and Ireland needs to badly look in the mirror.
In contrast to the propaganda, the country remains deeply conservative.

Since a government collapsed in 1951, through pressure from the Catholic Church and the medical profession, the significant change in the system has been the neutering of the influence of the Catholic Church, related to its history of child abuse, and trade union power becoming focused on the public sector, because of its exclusion from much of the private sector.

The system of political clientism remains essentially the same and the vested interests retain their power, with the top earners in the medical profession post-1951, no longer against “socialised” medicine but having a well-healed foot in both camps.

An example of the insider system of little accountability is provided by the first “benchmarking” award, where a system of checks and balances could not work.

They all got the increase and the same Secretary General of the Taoiseach’s Department, five years later was given another 25% pay increase - - as were his 3 retired predecessors.

Inside the loop was RTÉ, the State broadcaster with a virtual monopoly in domestic TV broadcasting and while ministers never took issue publicly with evidence that the benchmarking system was a sham, they were never held to account elsewhere either.

The same people who resist necessary radical reform of the system and a surrender of their own over-the-top perks, are now responsible for selling the béal bocht to a public they had convinced a short time ago, that the free lunch had been invented.

Exports

Caution is required when bragging about export success when the better performance than elsewhere recently, is based on the operations of less than 20 American-owned firms.

Knowing the facts about Irish exports is not an easy process.

This week a public statement read: “Enterprise Ireland today reported that its client companies achieved new export sales of €1.3bn in 2008, bringing the total value of exports from Enterprise Ireland-supported companies to €14.3bn. This represents a net increase of 3% on 2007, which was itself a record year for export growth.”

So what does “new” mean?

EI confirmed to Finfacts on Friday that no additional exports came from new client companies of the agency.

Exports sales grew by €400m but but the €1.3bn makes a better headline.

Even the total figure is a guess.

More in:

Health thread

Energy, Environment and Transport thread

Finfacts article:

The Waste Land - - Bord Snip, Irish Public Spending Transparency and the motto "Never do anything for the first time"

Thursday, July 09, 2009

Pharmaceutical output from US-owned firms the bright star of the Irish economy

US pharmaceutical firm Merck's principal Irish plant at Ballydine, County Tipperary

The latest Irish manufacturing data shows the contribution being made by the US-owned pharmaceutical sector.

IBEC Chief Economist David Croughan commented today on the May Irish production figures: "Although the total figures recorded only a modest decline and compared well with many other economies, which have suffered sharper falls in output, the strength came almost entirely from the 18.7% growth in pharmaceutical output.

"Output in other modern sectors such as computers, electronic and optical equipment was down by over 22%. Output in the traditional sectors fell by an annual 13.8% in the first five months of the year, with very large declines of between 30% and 46% recorded in metals and engineering, non-metallic mineral products and wood."

Service exports fell in Q1 and about 20 US firms are responsible for 70% of merchandise exports.

In the pharma/medical devices sector, about 10 US firms are responsible for 57% of exports in Q1 2009.

It’s good that we have the US firms but let’s not brag about “our great success” and dispense with questions on why we have been a failure in developing a significant indigenous sector after 50 years of FDI.

The reason why there has been a such a steep fall in the economy is that the property boom sustained so many jobs.

In the period 1998 to Dec 2007, excluding the internationally traded goods/services sector and direct construction, more than 400,000 new jobs were added.

After 2000, jobs in the internationally traded goods/services sector fell by 11,000.

The property bubble added 127,000 jobs in construction and 400,000 in the public services, indirect property supporting services, distribution and tourism.

In 2006, the peak year of the bubble, 83,000 new jobs were added. Only 6,000 were in the internationally traded goods/services sector.

Average pay in construction was €40K compared with the industrial wage of €31K and that’s not including additional allowances in construction.

During the boom, the windfalls plus lending from Irish banks, made the Irish the second biggest investors in commercial property in Europe.

Typically, €10-€15 billion went annually into commercially property while venture capital investment was generally les than €200 million annually.

As for competitiveness, the World Bank said in 2007 that Ireland was among the four most expensive countries in the world.

Anyone who travelled, would not have been surprised with that information but as regards the issue of competitiveness, the dominant US -owned sectors and the indigenous sectors should not be lumped together.

Last month's IMF report on Ireland, does refer to the fall in our share of FDI in recent years, in contrast with the superlatives from the IDA but there are many more issues at play than local costs.

During the boom, apart from Ryanair, there was no big local export success and the hopes in the late 90’s for the high-tech sector were not realised.

So indigenous exports are still mainly concentrated in traditional sectors and dependent on the traditional market, the UK.

The best potential market sector for Irish firms is the Eurozone and if food producers have trouble selling to Tesco at home, it would not be easy elsewhere.

According to the ECB, Irish unit labour costs rose by 33% in the period 1999-2007, compared with Germany’s 3% and Finland’s 11%. Of course new product development and so on are are also relevant but if prices are out of line, the task of breaking into a new market is not an easy one.

Irish Economy: Home Truths on Irish Exports as Ireland faces a changed global economy in the decade ahead

Sunday, June 14, 2009

Developing Irish Export markets; Easier said than done

Ireland has no future in low-cost manufacturing and cash-strapped companies should focus their business efforts on exports and trade with new world economies, the head of Enterprise Ireland said this week.

A new generation of Irish companies with international links involved in the smart economy were making healthy profits, Enterprise Ireland chief executive Frank Ryan said.

Ryan told the Public Accounts Committee (PAC) of the Dáil that the way forward for businesses was through the smart economy, leaving behind an old industrial era.

"There’s no future in low-cost manufacturing," he added.

There were small companies with links to technology and computing making turnovers of over €50 million, he said.

Ryan added that businesses needed to target new economies like Brazil, India, China and Russia among countries. It's all easier said than done.

Irish SMEs haven't had a tradition of exporting and while 55% of total exports from Ireland in 1973, the year of entry to the European Economic Community, went to the UK, more than 50% of exports from Irish-owned firms still go to the UK.

Irish Economy: Home Truths on Irish Exports as Ireland faces a changed global economy in the decade ahead

Waterford Glass

When Tony O'Reilly headed Heinz, he often spoke about the importance of creating world recognised Irish brands and then put a lot of money into Waterford, which had more than 3,000 employed in the 1970's.

A combination of poor management; changing consumer tastes and cost structure, doomed the enterprise.

John Foley, chief of the Waterford Crystal unit, said in 2007 that the group employed 1,300 staff in Indonesia for the same wage costs as 90 staff in Britain, itself a cheaper labour market than Ireland.

Even after the industry had died in the 1850's, the craftmanship of the renowned glassmakers of Bohemia, was brought to Waterford in 1947 by Charles Bacik, grandfather of Senator Ivana Bacik, and the old brand was revived.

It is not easy to create a significant brand in a market such as the US and it would be foolish for Ireland to leave the Waterford brand die.

Louis Vuitton bags may be made in China or all but the design of the iPod is Asian, but consumers view them as French and American products.

Receiver appointed to Irish operations of Waterford Wedgwood; Glass making in Waterford dates from 1783; Czech immigrant Charles Bacik revived industry in 1947

The Irish Economy Blog featured a story on the US PBS Wide Angle film on the demise of Waterford Glass:

Sunday, June 07, 2009

McCreevy's Property Tax Incentives: Haughey's Artists' Tax Exemption for Artists and "Artists"

Charlie McCreevy speaking as EU Internal Markets Commissioner

Charlie McCreevy, the Finance Minister for the good times, gave out a lot of goodies to various sports.

It's easy to be generous with other people's money

McCreevy gave £20m of government money to the GAA, for the redevelopment of Croke Park. The horsey folk in his Kildare constituency, including Puncestown Racecourse, did well during his tenure and for sports folk such as Padraig Harrington and Brian O'Driscoll, double the pension reliefs available to the great unwashed.

The Sunday Independent today reports the right for high sports earners to claim back 40 per cent of their earnings in tax relief over a period of 10 years once they retire, could be abolished next year.

The Commission on Taxation will recommend that Finance Minister Brian Lenihan pulls the plug on various tax reliefs when it publishes its report in July.

The reliefs under threat also include the artists' tax exemption (which allows artists to earn up to €250,000 tax-free every year) and patent tax relief, according to a source close to the commission.

McCreevy's former boss Bertie Ahern, may well be puzzled as to why people are blaming him for the economic crash when everything was so hunky-dory during his lovefest with property developers.

At least, he gets some benefit-in-kind from doling out more State funds, without having to pay tax on it himself.

The former taoiseach is to get seats worth around €192,000 at the new Lansdowne Road stadium.

The FAI has given Ahern two seats in the Presidential Box at the new Aviva Stadium, which is due to open its gates next year.

However, in theory the seats have no monetary value so Ahern will not be subjected to Gift Tax.
Business Editor Senator Shane Ross makes a reference in today's Sunday Independent to "my imminent book on Ireland's bankers."

Ross would likely cover the additional property tax incentives, which McCreevy recklessly introduced at a time when the property boom was begining to accelerate.

An interesting question is will Ross claim a Haughey era tax incentive for indigent artists if the exemption remains?

Bizarrely, Revenue tax inspectors decide on the "artistic merit" of a book and RTÉ presenter Gerry Ryan who earns as much as a significant newsroom for reading from newspapers and doing interviews, was granted tax-free status under the artists’ exemption scheme by the Revenue Commissioners for earnings from his biography, which was generally regarded as self-indulgent pap.

The tax-free perk had already been granted to John Hearne for his work in editing on the tome Would the Real Gerry Ryan Please Stand Up, which was published last year.

In 2008, RTE's then chief reporter Charlie Bird and rugby writer and NewsTalk 106 presenter George Hook, were among the individuals whose memoirs were deemed to be art.

It way well seem as much of a joke as McCreevy's property incentives and have as much merit.