Chairman of BP & Goldman Sachs predicts Irish economic recovery - Financial Times

hatrickpatrick

http://www.ft.com/cms/s/0/4b946536-2787-11de-9b77-00144feabdc0.html?nclick_check=1

Nice to see someone who's kept his head on and not jumped on the doomsayer's bandwagon...

For those who don't want to read the article, he's basically underlining that by keeping our low corporate tax rate, and inducing price deflation, we will emerge from the global downturn in a very competitive position. He also pointed out that as an export based economy, our exports are predicted to fall by considerably less than many other countries during the global crisis.

The article is titled "Celtic Tiger sharpens its claws for recovery".
Funny that a British newspaper is being so positive about Ireland whilst the Irish press are consigning our economy to the depth for an endless upcoming gloom. I just hope enough Irish people read the Financial Times to see this article. It might offset some of the plummeting consumer confidence caused by our own press' dismal forecasts...

MoominPapa

The FT is very skeptical of the Irish economic model. Peter Sutherland is, probably, the most respected Irishman in the International Corporate and high finance spheres. This is just the FT giving him some space for a opinion piece can't be seen as representing the general editorial opinion of the paper. It can be seen as Sutherland doing his "patriotic duty" though

nesf

He's got a point in that if we successfully deflate our economy by reducing private and public sector wages and reel in our Government spending then we'll be in a fairly decent position as a small export driven country assuming that the rest of the world recovers and is open to trading with us.

The issue being that successfully deflating our economy is going to be very painful and we haven't half done enough yet, so it's a bit early to be calling it as done and dusted to be honest.

daveirl

This post has been deleted.

nesf

daveirl wrote: »

This post has been deleted.

Ah but our export sector supports a whole plethora of SMEs around them. Look at the fallout from Dell closing in Limerick, the real job losses were in the non-export sector that was dependent on Dell for business as well as services companies feeding off both of the above.

damnyanks

The trick with economists is that they are only as good as the historic numbers they are presented with. THe whole point of a recovery plan is to make these numbers useless in the sense that a new strategy is adopted.

I'd go with Sutherlands predictions anytime of the week. Proven metal.

Purple Gorilla

I'd rather believe Sutherland's article Purely because if everyone read it and listened to it, they'd start spending again once the downturn is "meant" to be over It will become a self-fulfilling prophecy

Time Magazine

Purple Gorilla wrote: »

I'd rather believe Sutherland's article Purely because if everyone read it and listened to it, they'd start spending again once the downturn is "meant" to be over It will become a self-fulfilling prophecy

I disagree.

What determines output is productivity, not consumption.

Although there are links between productivity, consumption and expectations, ultimately it's productivity that drives GDP growth.

I'd rather if the motto of this recession wasn't "Let's stay optimistic", but rather if we all adopted "Let's be realistic."

Purple Gorilla

The Economist wrote: »

I disagree.

What determines output is productivity, not consumption.

Although there are links between productivity, consumption and expectations, ultimately it's productivity that drives GDP growth.

I'd rather if the motto of this recession wasn't "Let's stay optimistic", but rather if we all adopted "Let's be realistic."

I agree we need to be realistic, but at the same time we need to encourage people to spend.
RTE constantly having these daily specials on the 6:1 news about job losses etc. doesn't help consumer confidence at all and just pushes people to think "That could be me...I better not buy that *insert product*"

YoY in the past 3 months, VAT revenue has dropped by nearly 1 billion. If we had that billion back, then that could've made a lot of the Supplementary Budget's cuts and increased taxes redundant.

With people spending again, it would create some new employment in the retail sector which in itself would inspire confidence and take a few peopleo off the dole.

I completely understand that falling consumer confidence is just one part of all of our problems but I think at this point, anything we can do to help the economy should be welcomed

ynotdu

hatrickpatrick wrote: »

http://www.ft.com/cms/s/0/4b946536-2787-11de-9b77-00144feabdc0.html?nclick_check=1

Nice to see someone who's kept his head on and not jumped on the doomsayer's bandwagon...

For those who don't want to read the article, he's basically underlining that by keeping our low corporate tax rate, and inducing price deflation, we will emerge from the global downturn in a very competitive position. He also pointed out that as an export based economy, our exports are predicted to fall by considerably less than many other countries during the global crisis.

The article is titled "Celtic Tiger sharpens its claws for recovery".
Funny that a British newspaper is being so positive about Ireland whilst the Irish press are consigning our economy to the depth for an endless upcoming gloom. I just hope enough Irish people read the Financial Times to see this article. It might offset some of the plummeting consumer confidence caused by our own press' dismal forecasts...

I have to admit i did not follow the link to read the article by P.S:)
it is because I have lost my rating as either the glass is half empty or it is half full brigade.in fact my glass was stolen!:eek:

Diarmuid

damnyanks wrote: »

I'd go with Sutherlands predictions anytime of the week. Proven metal.

I thought we've had enough of listening to politicians over economists when it comes to the economy?

egan007

The Economist wrote: »

I'd rather if the motto of this recession wasn't "Let's stay optimistic", but rather if we all adopted "Let's be realistic."

90% if the problem is that the motto is 'let's totally freak out'

Time Magazine

egan007 wrote: »

90% if the problem is that the motto is 'let's totally freak out'

I put far more blame on the property bubble, which meant we built houses/hotels nobody wants. And lured young men into professions that are massively over-supplied given that nobody wants a house (construction, plumbing, etc.) We could fix this recession overnight if we all decided we wanted two homes instead of one home and one car, but that would be making people change for the sake of the economy. Personally I far rather the POV that you should make the economy work for the people.

Confidence is part of the problem here, agreed. However there is a much more fundamental problem that there are hundreds of thousands of our peers who are did a plumbing apprenticeship when really it would have been better had they studied Science.

silverharp

Purple Gorilla wrote: »

I agree we need to be optimistic, but at the same time we need to encourage people to spend.
RTE constantly having these daily specials on the 6:1 news about job losses etc. doesn't help consumer confidence at all and just pushes people to think "That could be me...I better not buy that *insert product*"

YoY in the past 3 months, VAT revenue has dropped by nearly 1 billion. If we had that billion back, then that could've made a lot of the Supplementary Budget's cuts and increased taxes redundant.

With people spending again, it would create some new employment in the retail sector which in itself would inspire confidence and take a few peopleo off the dole.

I completely understand that falling consumer confidence is just one part of all of our problems but I think at this point, anything we can do to help the economy should be welcomed

I think you have it back to front , if your house was cold , you wouldnt put a lighter up against the thermometer to get the temperature up. You need to dig deeper and consider where the spending was coming from in the first place? if at the margin it was equity extraction, zero down car loans, running up credit card debt , then it was not sensible spending in the first place. The consequence was that businessmen over expanded because they didnt know where their income was derived from. No doubt people wold like to turn the clock back to 2005 but it aint going to happen

eamonnm79

The Economist wrote: »

I disagree.

What determines output is productivity, not consumption.

Although there are links between productivity, consumption and expectations, ultimately it's productivity that drives GDP growth.

I'd rather if the motto of this recession wasn't "Let's stay optimistic", but rather if we all adopted "Let's be realistic."

Alan Greenspan would probobly disagree with you there.
He used to say that the thing that would enable him to most to run the economy was understanding peoples moods.

Sutherlands efforts much like Obama talking of green shoots in America is to convince people that they should start spending again.
Its a psychological kickstart that they believe is required.
And if this is the case manipulating stats in order to help kickstart consumption is easy to justify. Right?
Its the same as companies hiding losses in order to keep their share prices high.


Personally I am more of your frame of mind that what we need is reality, not optimism.
Its over optimism/greed that causes economic bubbles to become so over inflated.
The less based on reality our moods and information are, the biggert the booms and busts. I do not think this idea is unrelated to our present economic woes.

Tricity Bendix

Inducing deflation to encourage consumer spending? Does not compute...

moceri

IT WOULD be some comfort right now if there were a moratorium on the use of the word “we” by certain people, writes FINTAN O'TOOLE

People like, for example, Peter Sutherland. He was pontificating on RTÉ Radio 1’s This Week programme on Sunday. Not about the “we” to which he actually belongs: Goldman Sachs, whose European operations he heads and whose behaviour he absolutely refused to discuss.

Sutherland was talking rather about another, more notional, “we”, a commonality of Irish interest that embraces everyone from himself to the old lady whose home help services are being slashed. “We,” he told us, “have to gird our loins to take tough decisions and see it through . . . This is where we show our mettle.”

This rallying cry might be more impressive if Sutherland had girded his own loins and shown some mettle when “we” really needed him to do so. He is one of the most distinguished Irishmen of his generation, a man of immense ability and capacity to lead. Precisely because he is idolised in the Irish business community, he had the opportunity to change the culture of Irish banking. Had he taken it, “we” would not be in the loin-girding business at the moment.

Actually, Sutherland had this opportunity twice – first when he was chairman of Allied Irish Banks from 1989 to 1993, and president of the Irish Bankers’ Federation (IBF).

As a former attorney general, he discovered something truly staggering: that his own bank had been colluding in a systematic fraud on the State through the organised evasion of Dirt tax. He was not responsible for that fraud, but he was responsible for what happened when the bank’s internal auditor, Tony Spollen, discovered it.

What did he do? As he explained to the Dáil’s public accounts committee (PAC): “The issue of non-resident accounts and Dirt was an issue which was essentially one for management. Management, as I understand it, believed that the issue was under control.”

He passed the Dirt issue to a sub-committee (headed by a participant in the Ansbacher scam) which decided that there was not a problem because AIB had an informal Dirt amnesty from the Revenue. (It didn’t.) Sutherland, as he put it himself, “did not intervene in any way”. All that really happened under his leadership was that the internal auditor Spollen was shifted out of his job, though Sutherland insisted that this had nothing to do with him either.

Sutherland had a second chance to face up to the scale and implications of the rottenness in Irish banking when the scandal emerged. During the PAC’s hearings and after its scathing report, he could have taken some personal responsibility and led a process of profound moral change. Instead, we learned what he really means by the word “we”. He threw his prestige behind AIB.

Of the handing over of the issue to a sub-committee, he said that “everyone, I think, was basically happy with the process”. He stood over his own behaviour, even with the benefit of hindsight: “If I were to do it all over again, I wouldn’t change one iota of the steps that we took in terms of having an objective analysis of the situation and coming to a fair and proper conclusion.”

He explained that he never raised the question of an industry-wide fraud on the State at the IBF when he was its president. Had he done so, he said, “It would have ended up simply with, I suspect, statements by all of the chief executives or chairmen: ‘Oh, yes, absolutely, we’re doing it the best we can’, and so on.”

When the PAC report was published, with its damning conclusion that “eminent” bank directors did little to enforce ethical standards, Sutherland had nothing to say. Given that he was the most eminent of all, that silence was one of the reasons why the culture of Irish banking remained so lethally intact.

And Sutherland has sailed blithely onwards, indefatigably smug and unshakeably self-assured. His “we” is now more copious, stretching as it does to the whole field of global finance capitalism.

He was a director of Royal Bank of Scotland when it engaged in the recklessness that has cost the British taxpayer at least £45 billion (€52.55 billion) so far, and sat on the remuneration committee that lavished huge bonuses on its chief executive.

He is a big figure in Goldman Sachs, a bank which Gordon Brown accused of “moral bankruptcy” for its decision to pay out bonuses of $5.4 billion (€4.2 billion) less than two years after it had to be bailed out by the US taxpayer.

This is the same Goldman Sachs that has been accused of helping Greece to hide the reality of its public finances – a subject Sutherland did not mention when he was urging fiscal responsibility on the Greeks on Sunday.

The illusion that Sutherland wishes to maintain is that there is a “we” that includes ordinary citizens and high-flyers of global finance in a shared pain. There is no such “we”.

There is just us and them.

http://www.irishtimes.com/newspaper/opinion/2010/0511/1224270130001.html

http://www.politics.ie/culture-community/129506-we-peter-sutherland.html