Recession is over - stop beating the beards

Sleepy

Flamed Diving wrote: »

I never said it was a return to growth, but it is slowing earlier than I expected.

The PS does seem to need reform, but simply saying this does not impress bond markets, and for this short time, we need access to them, as do we need to show the European Commission and ECB that we are taking solid measures of cut expenditure.

We could have slashed the budgets of each department by the required amount and placed the relevant ministers in the position of actually having to do their jobs by each providing a detailed show of where they were making the cuts in their departments. (e.g. Education could remove it's Oireachtas Leave entitlement, cut salaries on a sliding scale, get rid of increments etc. Health could show where the HSE was going to be trimmed of fat).

Even if it could, we wouldn't do it. Small open economies should not float their currencies and they definitely should not devalue them.

Got a link to the thread? I seem to remember our last devaluation pre-EMU as having a positive effect? Open to correction, I was a schoolboy when this happened.

Entirely? Sorry, but you are going to have to be reasonable and come back to reality.

Sorry: almost entirely.

Yes, services which are not capital intensive are something that Ireland can produce the goods at. Now, if I were you I would probably say something like:

but I don't deal in extremes. I see the future where we must still encourage FDI, while developing further our own international services. You could liken it to hedging our bets, however, given Ireland's size and openness, we will always be subject to outside forces. No matter how good our economic policy.

Did you see me arguing to raise corporation tax? Certainly we should encourage FDI, it should not, however be our raison d'etre as it's not something we can rely on indefinitely. We just cannot compete with lower cost countries in this field. We're already losing some of our FDI and it's having massive impacts on the areas where it's happening.

imme

T real deal J wrote: »

I saw that today too. I sent the author an email back.

"On an annual basis, GDP fell by 7.4 per cent in the year to the end of October, compared to a 7.9 per cent decline in the preceding quarter".

This is meaningless. The rate of economic contraction has slowed? So what.

"The latest Quarterly National Accounts, which were published this morning, indicate that on a seasonally adjusted basis there was a 0.3 per cent increase in Gross Domestic Product (GDP) from July through to September"

from a 4-12 week period (not specifically stated) on a "seasonally adjusted basis" (?) GDP grew by 0.3%. Again so what.

I'm not suprised garbage like this makes headlines. It is ireland after all.

do you not understand 'seasonally adjusted'?

@OP, Interesting choice of thread title. I take it by 'beards' you are referring to various Union leaders. "Beating the Beards", who is beating the beards?

Flamed Diving

Amhran Nua wrote: »

If you would do us a favour and point out where the articles are factually incorrect, that would be great.

I didn't say that they were. But I just don't trust second/third hand reports, especially from journalists (spit). Give me the raw data.

Amhran Nua wrote: »

Its not called the lowest form of wit for nothing.

You asked for it.

Amhran Nua wrote: »

I could link to more newspaper articles, detailing the month on month fall in Japanese exports, or the $82 billion stimulus package, but that wouldn't interest you.

No, only the data, or a journal paper would interest me. You are getting it!

Amhran Nua wrote: »

So you're telling us that the growth from about 2001 onwards was entirely due to MNCs... I see.

Nope. You are really losing it.

Amhran Nua wrote: »

I'm trying to work out the relevance here?

As am I...

Amhran Nua wrote: »

You have still failed to tell us all where this growth is going to come from, instead apparently getting ever more agitated as your assertions are systematically deconstructed. Lets try to keep it cordial.

I am very calm, about to head out and meet my girlfriend for dinner. The lack of economic knowledge that some internet stranger possesses is of little interest, you are merely aiding me in the wasting of time. Plus, I don't like Mi-Wadi.

Amhran Nua wrote: »

Heh.

Heh.

egan007

Sleepy wrote: »

It's not that egan007, it's that we don't want the government (or the media) spinning a fairly small positive indicator into much more than it is. Statistical juggling won't improve things, action will.

Sure - and a positive national attitude will.

Amhran Nua

Flamed Diving wrote: »

I didn't say that they were. But I just don't trust second/third hand reports, especially from journalists (spit). Give me the raw data.

You asked for it.

No, only the data, or a journal paper would interest me. You are getting it!

Nope. You are really losing it.

As am I...

I am very calm, about to head out and meet my girlfriend for dinner. The lack of economic knowledge that some internet stranger possesses is of little interest, you are merely aiding me in the wasting of time. Plus, I don't like Mi-Wadi.

Heh.

Wow, I haven't seen a tirade like that since primary school to be honest. You refuse to accept acknowledged evidence, boast of your own extensive knowledge of economics while derogating everyone else's, with nary a fact to back that up, refuse to provide any answers to questions put to you, and throw in a bit of personal abuse for good measure.

Sleepy

egan007 wrote: »

Sure - and a positive national attitude will.

How? By re-inflating a property bubble? By getting people spending more money they don't have on their credit cards?

Unless you're referring to the unions taking an positive approach towards reform the public sector (i.e. negotiating reasonable redundancies rather than spitting the dummy if a worker is only offered twice their statutory entitlements etc) or politicians taking a positive approach by re-structuring our system of government in which case I'm behind you.

But a "sure we'll be fine" attitude isn't going to help, it's part of what got us here. We need to think positively about doing the hard work rather than trying to be positive about any little indication that this "big bad thing" might be over...

egan007

Very cynical, Why did you ask and then answer your own question with a worst case scenario answer.

If you can't see how positive thinking is better than the negative rut we are in then me explaining it on a soon to be forgotton thread won't make any difference.

md23040

Flamed Diving wrote: »

A little evidence to back these assertions would be really nice.

Sorry for being pedantic, but you want evidence that Ireland and the globe are entwined in an asset led deflationary environment ala Japan 1990's. Have you watched the news from September 2008 for evidence? How many commercial banks and merchants banks have gone to the wall, how many trillions were spent by governments on keeping the system together from September 28th 2008 when the financial system and Ponzi scheme nearly fell apart (date when Congress voted against the recovery package) Do you remember the debacle of AIG, Lehman’s, Goldman Sachs or Anglo nearly to home, to name a few casualties?

Also generally companies are up to their eyes in debt from overpriced M&A activity or purchase of physical assets through expansion, as are governments who are pouring good money after bad to keep the markets alive, as well as consumer who borrowed way past safe limits. Now that credit has curtailed all asset have deflated big time and all the above groups are in a tail spin.

In short everybody mistook credit for wealth, Ireland more so compared to nations such as Germany, but that doesn't matter because America caught the credit bug and it’s the engine of the world, the main driver of global GDP. In short like America, our country is bankrupt.

nesf

md23040 wrote: »

Sorry for being pedantic, but you want evidence that Ireland and the globe are entwined in an asset led deflationary environment ala Japan 1990's. Have you watched the news from September 2008 for evidence? How many commercial banks and merchants banks have gone to the wall, how many trillions were spent by governments on keeping the system together from September 28th 2008 when the financial system and Ponzi scheme nearly fell apart (date when Congress voted against the recovery package) Do you remember the debacle of AIG, Lehman’s, Goldman Sachs or Anglo nearly to home, to name a few casualties?

Also generally companies are up to their eyes in debt from overpriced M&A activity or purchase of physical assets through expansion, as are governments who are pouring good money after bad to keep the markets alive, as well as consumer who borrowed way past safe limits. Now that credit has curtailed all asset have deflated big time and all the above groups are in a tail spin.

In short everybody mistook credit for wealth, Ireland more so compared to nations such as Germany, but that doesn't matter because America caught the credit bug and it’s the engine of the world, the main driver of global GDP. In short like America, our country is bankrupt.

An asset bubble doesn't necessarily mean a Japanese style 10 year recession, there was a lot more to the Japanese situation that merely a real estate and stock market bubble.

SkepticOne

nesf wrote: »

Sensible analysis by Karl Whelan here: http://www.irisheconomy.ie/index.php/2009/12/17/ireland-out-of-recession/

Honestly, am not surprised in the slightest. Getting GDP positive was the easy task, getting GNP positive was always going to be the real challenge for the country.

He seems to have said very little in his post. He says the result is consistent with a bottoming out of the economy but then goes on to list caveats.

So which is it? Is the economy really bottoming out or do these caveats outweigh the figure? It is depressing that he can't come to a conclusion despite his qualifications.

Here's why we're not at the bottom.

1. As pointed out on this thread, we need to look at GNP rather than GDP to get a good idea of what is going on in the economy that ordinary people live in. This is still declining. It does look like it is declining as a somewhat slower rate but we could still be a long way from the bottom.

2. We're looking at figures that have been adjusted for inflation in Ireland. It makes a lot of sense to adjust for inflation in countries that have their own currency since otherwise printing money would artificially inflate the numbers. It makes somewhat less sense in Ireland where we share a currency. If you adjust for Eurozone inflation as opposed to Irish inflation (or deflation), even that seasonally adjusted GDP figure will show contraction.

3. The figure only shows positive change when seasonally adjusted and as Dr Whelan points out this is likely to be unreliable.

4. We're still looking at gloomy figures from other parts of the economy.

5. The deflationary effects of the budget cuts plus more to come.

nesf

SkepticOne wrote: »

As pointed out on this thread, we need to look at GNP rather than GDP to get a good idea of what is going on in the economy that ordinary people live in. This is still declining. It does look like it is declining as a somewhat slower rate but we could still be a long way from the bottom.

Sure but buoying tax revenues from export growth will have a positive effect on GNP so GDP is still very important. Unemployment appears to be bottoming out and this could indicate that we're close to the bottom. Or both indicators could be bull traps, we'll see. As it is, the GDP figure on its own isn't something that would raise eyebrows, but the bottoming out of unemployment makes it a slightly stronger case though since there is a large emigration factor here this will depress economic activity as well.

SkepticOne wrote: »

2. We're looking at figures that have been adjusted for inflation in Ireland. It makes a lot of sense to adjust for inflation in countries that have their own currency since otherwise printing money would artificially inflate the numbers. It makes somewhat less sense in Ireland where we share a currency. If you adjust for Eurozone inflation as opposed to Irish inflation (or deflation), even that seasonally adjusted GDP figure will show contraction.

It makes absolutely no sense to use Eurozone inflation versus Irish inflation since we're interested purely in Irish data.

SkepticOne wrote: »

3. The figure only shows positive change when seasonally adjusted and as Dr Whelan points out this is likely to be unreliable.

He didn't say that. He said "not particularly reliable" which isn't the same thing. Yes this is splitting hairs territory but what he said translates as "sometimes wrong", what you said translates as "wrong most of the time".

SkepticOne wrote: »

4. We're still looking at gloomy figures from other parts of the economy.

Doesn't matter when what you're interested in is the economy as a whole. We can have continued decline in one part of the economy and the economy as a whole bottoming out. The economy bottoming out doesn't mean all of the economy has bottomed out only that on average it has.

SkepticOne wrote: »

5. The deflationary effects of the budget cuts plus more to come.

Indeed. Only the most absurdly optimistic would try to definitely call the bottom as Q3 09. It'll take a quarter of solid GDP growth (unadjusted) for that to be done I think by most commentators. There's just too many uncertainty right now to call it either way.

SkepticOne

nesf wrote: »

Sure but buoying tax revenues from export growth will have a positive effect on GNP so GDP is still very important. Unemployment appears to be bottoming out and this could indicate that we're close to the bottom. Or both indicators could be bull traps, we'll see. As it is, the GDP figure on its own isn't something that would raise eyebrows, but the bottoming out of unemployment makes it a slightly stronger case though since there is a large emigration factor here this will depress economic activity as well.

I agree about the GDP figure. Unfortunately it is not a good indicator of the sort of economy the ordinary person inhabits. I would also be very ware of the bottoming out of unemployment. This could be due to migrants going home (one of the comments on the blog) rather than any pickup in the economy. We also need more data before concluding that it has in fact bottomed out.

It makes absolutely no sense to use Eurozone inflation versus Irish inflation since we're interested purely in Irish data.

I don't fully agree with this. Whilst it makes sense to take into account local inflation or deflation in Ireland, another reason to take inflation into account is gone, namely that a country with its own currency can simply create money leading to inflation but this does not mean that the real economy is expanding. This aspect doesn't apply to Ireland yet we still calculate our figures the same way.

He didn't say that. He said "not particularly reliable" which isn't the same thing. Yes this is splitting hairs territory but what he said translates as "sometimes wrong", what you said translates as "wrong most of the time".

No problem with this. I'm happy with "not particularly reliable".

Doesn't matter when what you're interested in is the economy as a whole. We can have continued decline in one part of the economy and the economy as a whole bottoming out. The economy bottoming out doesn't mean all of the economy has bottomed out only that on average it has.

What I meant to say here was other economic indicators rather than other areas of the economy. I agree with your point.

Indeed. Only the most absurdly optimistic would try to definitely call the bottom as Q3 09. It'll take a quarter of solid GDP growth (unadjusted) for that to be done I think by most commentators. There's just too many uncertainty right now to call it either way.

Isn't this a bit of a cop out? Obvously we can't say with absolute certainty what is going to happen but surely we can say that the overwhelming balance of probability points to continued contraction. I would be extremely surprised if the economy has not contracted in hard Euro terms by this time next year and would be willing to put money on it.

nesf

SkepticOne wrote: »

I agree about the GDP figure. Unfortunately it is not a good indicator of the sort of economy the ordinary person inhabits. I would also be very ware of the bottoming out of unemployment. This could be due to migrants going home (one of the comments on the blog) rather than any pickup in the economy. We also need more data before concluding that it has in fact bottomed out.

Well. The reality on the ground is that condition will be still tough in many areas when the country comes out of recession technically. You'll find no disagreement on this point among economists. This is more the debate about what ordinary people are going through and what overall economic numbers say which are different.

SkepticOne wrote: »

I don't fully agree with this. Whilst it makes sense to take into account local inflation or deflation in Ireland, another reason to take inflation into account is gone, namely that a country with its own currency can simply create money leading to inflation but this does not mean that the real economy is expanding. This aspect doesn't apply to Ireland yet we still calculate our figures the same way.

Well, the reason we use Irish deflation is that we're really interested in actual changes in volume here rather than just Euros. So if there's a 5% increase in volume but there's been 5% inflation, we say there was no real growth (i.e. inflation adjusted growth) because the same amount of "stuff" was produced/sold.

SkepticOne wrote: »

.Isn't this a bit of a cop out? Obvously we can't say with absolute certainty what is going to happen but surely we can say that the overwhelming balance of probability points to continued contraction. I would be extremely surprised if the economy has not contracted in hard Euro terms by this time next year and would be willing to put money on it.

Yeah, but GDP will also depend on conditions in our export markets so if they recover there will be a pickup associated with this that might counteract any continued worsening in the internal economy. There isn't an overwhelming balance of probability precisely because unemployment has slowed and we've seen some pickup in GDP! In meteorological terms, the forecast is changeable with showery spells, neither a downpour nor a drought. :P

ei.sdraob

SkepticOne wrote: »

Whilst it makes sense to take into account local inflation or deflation in Ireland, another reason to take inflation into account is gone, namely that a country with its own currency can simply create money leading to inflation but this does not mean that the real economy is expanding.

oh look, talking about deflation/inflation figures is rather useless in most countries and this one

considering that Housing/Rent etc (which is the largest purchase/cost in a persons life)

is excluded from inflation formula


otherwise we would have had double digit inflation figures for last decade, making it very obvious theres something wrong

nesf

ei.sdraob wrote: »

oh look, talking about deflation/inflation figures is rather useless in most countries and this one

considering that Housing/Rent etc (which is the largest purchase/cost in a persons life)

is excluded from inflation formula


otherwise we would have had double digit inflation figures for last decade, making it very obvious theres something wrong

The CPI tracks mortgage interest payments and rents as part of the basket of goods. What it doesn't track is house prices themselves.

ei.sdraob

nesf wrote: »

The CPI tracks mortgage interest payments and rents as part of the basket of goods. What it doesn't track is house prices themselves.

not the case in UK or other countries (which makes it fun watching people compare inflation figures)

the above is useless as the cost of housing/shelter needs to be counted fully. what happens when a person (me) gets housing without taking out a mortgage or has a large deposit, yep we get excluded from the figure

nesf

ei.sdraob wrote: »

not the case in UK or other countries (which makes it fun watching people compare inflation figures)

the above is useless as the cost of housing/shelter needs to be counted fully. what happens when a person (me) gets housing without taking out a mortgage or has a large deposit, yep we get excluded from the figure

There's a explanatory note on the different methods used here: http://www.cso.ie/surveysandmethodologies/surveys/prices/documents/houseprices&cpi.pdf

The biggest problem is with people confusing an index of price level with an index of cost of living. Two very different things. Inflation is about the former.

ei.sdraob

nesf wrote: »

There's a explanatory note on the different methods used here: http://www.cso.ie/surveysandmethodologies/surveys/prices/documents/houseprices&cpi.pdf

The biggest problem is with people confusing an index of price level with an index of cost of living. Two very different things. Inflation is about the former.

does an increased price level (inflation index) not lead to an increased cost of living (index of cost of living)
now if housing price level which is not included (inflation index) goes up, the (index of cost of living) go up but this change is not reflected in (inflation index)


this is what happened in Ireland and other countries, the biggest purchase/cost in people lives is not counted properly or at all, which is crazy
since the inflation index is used by central banks as a guide for interest rates... you see where that leads....

garbage in > garbage out as they say in software world

SkepticOne

ei.sdraob wrote: »

oh look, talking about deflation/inflation figures is rather useless in most countries and this one

considering that Housing/Rent etc (which is the largest purchase/cost in a persons life)

is excluded from inflation formula


otherwise we would have had double digit inflation figures for last decade, making it very obvious theres something wrong

If you were to include actual house prices in the inflation figure (I'm not saying it should be included) then you might see Ireland out of technical recession due to the collapse of house prices. However I think most people would agree that it would be the definition of recession that would be at fault in this instance.

ei.sdraob

SkepticOne wrote: »

If you were to include actual house prices in the inflation figure (I'm not saying it should be included) then you might see Ireland out of technical recession due to the collapse of house prices. However I think most people would agree that it would be the definition of recession that would be at fault in this instance.

how would it? house prices are still falling so are rents

of anything including the figures would have made the peak inflation much higher, and the current deflation lower

SkepticOne

ei.sdraob wrote: »

how would it? house prices are still falling so are rents

of anything including the figures would have made the peak inflation much higher, and the current deflation lower

Yes, but if businesses are closing and people are being laid off yet simply due to falling house prices contributing to deflation we are out of recession then really we would have to re-examine how we are defining recession. It would become something of a meaningless concept if we were to stick to the real GDP based definition.

I think we've become too focussed on contracting real GDP as the sole measure of recession. It is merely a rule of thumb and even as a rule of thumb it is much less applicable Ireland than other countries.

ei.sdraob

SkepticOne wrote: »

Yes, but if businesses are closing and people are being laid off yet simply due to falling house prices contributing to deflation we are out of recession then really we would have to re-examine how we are defining recession. It would become something of a meaningless concept if we were to stick to the real GDP based definition.

I think we've become too focussed on contracting real GDP as the sole measure of recession. It is merely a rule of thumb and even as a rule of thumb it is much less applicable Ireland than other countries.

how does being deeper in recession due to housing costs being properly accounted for

equals being out of the recession?

nesf

ei.sdraob wrote: »

does an increased price level (inflation index) not lead to an increased cost of living (index of cost of living)
now if housing price level which is not included (inflation index) goes up, the (index of cost of living) go up but this change is not reflected in (inflation index)

The price level is part of the cost of living but multiple other factors are involved like tax burden, availability of various services like childcare and so on.

SkepticOne

ei.sdraob wrote: »

how does being deeper in recession due to housing costs being properly accounted for

equals being out of the recession?

I didn't say we would be deeper in recession due to falling house prices. I said that falling house prices, if they are to be included in inflation (deflation) figures would boost real GDP figure (since real GDP is adjusted for inflation) and that this might have the paradoxical effect of the end of recession according to a particular technical definition.

My point was that we would probably abandon that definition since it stops being meaningful.

SkepticOne

nesf wrote: »

Well. The reality on the ground is that condition will be still tough in many areas when the country comes out of recession technically. You'll find no disagreement on this point among economists. This is more the debate about what ordinary people are going through and what overall economic numbers say which are different.

Well, the reason we use Irish deflation is that we're really interested in actual changes in volume here rather than just Euros. So if there's a 5% increase in volume but there's been 5% inflation, we say there was no real growth (i.e. inflation adjusted growth) because the same amount of "stuff" was produced/sold.

I think my point to ei.sdraob applies here. If the definition of recession based on contraction of real GDP ceases to have much meaning then we need to come up with new definitions. There's no single official definition to start with so we are free to do this.

ei.sdraob

SkepticOne wrote: »

I think my point to ei.sdraob applies here. If the definition of recession based on contraction of real GDP ceases to have much meaning then we need to come up with new definitions. There's no single official definition to start with so we are free to do this.

no arguments there
GDP, inflation etc figures are fiddled with and tweaked so much
that they fail to reflect the real state of economy

hell even things like unemployment figures are suspect


theres lies, theres damned lies and then theres statistics

hence why i think the true economy is always worse than these figures paint

Flamed Diving

Amhran Nua wrote: »

Wow, I haven't seen a tirade like that since primary school to be honest. You refuse to accept acknowledged evidence, boast of your own extensive knowledge of economics while derogating everyone else's, with nary a fact to back that up, refuse to provide any answers to questions put to you, and throw in a bit of personal abuse for good measure.

As expected. Right in the net.

Flamed Diving

md23040 wrote: »

Sorry for being pedantic, but you want evidence that Ireland and the globe are entwined in an asset led deflationary environment ala Japan 1990's.

No, I don't. And I couldn't bothered reading the rest of your post if you are going to continue strawmanning.

imme

Flamed Diving wrote: »

As expected. Right in the net.

are you playing football/games

Flamed Diving

imme wrote: »

are you playing football/games

All I want is for people to stop regurgitating what they read in the paper. Nothing wrong with it, as long as you combine it with some data/sources, but many posters on this forum treat newspaper articles as fact. They are not. This is why when I see people making assertions with no source, I call for one and mainly I just get evasion. I repeat, not some article written by a professional liar journalist, a verifiable source.