Comments on: The Luck of the Irish http://crookedtimber.org/2009/04/29/the-luck-of-the-irish/ Out of the crooked timber of humanity, no straight thing was ever made Sat, 21 Nov 2009 12:41:15 -0800 http://wordpress.org/?v=2.8.6 hourly 1 By: Antti Nannimus http://crookedtimber.org/2009/04/29/the-luck-of-the-irish/comment-page-1/#comment-274129 Antti Nannimus Thu, 30 Apr 2009 19:59:23 +0000 http://crookedtimber.org/?p=10887#comment-274129 Hi, This is probably great news for the sales of Guinness Stout and Irish whiskey though. Have a nice day! Antti Hi,
This is probably great news for the sales of Guinness Stout and Irish whiskey though.
Have a nice day!
Antti

]]> By: John Quiggin http://crookedtimber.org/2009/04/29/the-luck-of-the-irish/comment-page-1/#comment-274067 John Quiggin Thu, 30 Apr 2009 10:37:44 +0000 http://crookedtimber.org/?p=10887#comment-274067 Iceland looks like a case where there is a big difference between GDP and GNP. Economic activity in Iceland (GDP) may not have fallen that much but (I suppose) the aggregate income accruing to Icelanders (GNP) has been cut drastically by the losses incurred by the banks, and now borne by the Iceland government. For day-to-day macroeconomic management, GDP is more use, but in assessing the impact of the financial crisis, GNP is more relevant. Iceland looks like a case where there is a big difference between GDP and GNP. Economic activity in Iceland (GDP) may not have fallen that much but (I suppose) the aggregate income accruing to Icelanders (GNP) has been cut drastically by the losses incurred by the banks, and now borne by the Iceland government. For day-to-day macroeconomic management, GDP is more use, but in assessing the impact of the financial crisis, GNP is more relevant.

]]> By: dsquared http://crookedtimber.org/2009/04/29/the-luck-of-the-irish/comment-page-1/#comment-274065 dsquared Thu, 30 Apr 2009 10:09:48 +0000 http://crookedtimber.org/?p=10887#comment-274065 I think the interesting question is "what year has Irish GDP been rolled back to?" If it's somewhere around 2004/5 then they're still well ahead of the game. It's pretty unarguable though that the Irish bubble was an artefact of euro membership. The real and substantial improvements were made in the 1990s and had to do with a big one-off shift in female labour force participation. Since euro implementation, what's happened is that the rental yield on commercial and residential property has tracked the yield on government bonds, all the way down (and given that rents are sticky, the burden of adjustment to the yield has been nearly all on capital values). Any readers with access to the Multex research distribution system can see that I predicted this ahead of time in December 2006, by the way, which was the point at which it was clear that falling bond yields had ceased to support the property market. I think the interesting question is “what year has Irish GDP been rolled back to?” If it’s somewhere around 2004/5 then they’re still well ahead of the game.

It’s pretty unarguable though that the Irish bubble was an artefact of euro membership. The real and substantial improvements were made in the 1990s and had to do with a big one-off shift in female labour force participation. Since euro implementation, what’s happened is that the rental yield on commercial and residential property has tracked the yield on government bonds, all the way down (and given that rents are sticky, the burden of adjustment to the yield has been nearly all on capital values). Any readers with access to the Multex research distribution system can see that I predicted this ahead of time in December 2006, by the way, which was the point at which it was clear that falling bond yields had ceased to support the property market.

]]> By: ajay http://crookedtimber.org/2009/04/29/the-luck-of-the-irish/comment-page-1/#comment-274064 ajay Thu, 30 Apr 2009 09:21:42 +0000 http://crookedtimber.org/?p=10887#comment-274064 26: please, God, not another wave of memoirs. 26: please, God, not another wave of memoirs.

]]> By: mollymooly http://crookedtimber.org/2009/04/29/the-luck-of-the-irish/comment-page-1/#comment-274030 mollymooly Thu, 30 Apr 2009 02:12:03 +0000 http://crookedtimber.org/?p=10887#comment-274030 GDP growth was so high for so long that a 15% decline will only push us back a few years. But it won't be 15% spread evenly across everyone. GDP growth was so high for so long that a 15% decline will only push us back a few years. But it won’t be 15% spread evenly across everyone.

]]> By: Britta http://crookedtimber.org/2009/04/29/the-luck-of-the-irish/comment-page-1/#comment-274023 Britta Thu, 30 Apr 2009 01:13:59 +0000 http://crookedtimber.org/?p=10887#comment-274023 Hopefully this question is not too random, but what are the material everyday effects for normal citizens of a collapse like this? Breadlines and begging children in the street? More people on the dole? Vague idea of austerity but life as usual? Fewer vacations? I guess my question is, will there be a tangible decline in the standard of living for a significant portion of Irish people, similar to the one that accompanied the depression in the US and Europe in the 30s? (I mean, beyond bankers selling summer homes in Spain or trading down on their Porsches, that sort of thing). Hopefully this question is not too random, but what are the material everyday effects for normal citizens of a collapse like this? Breadlines and begging children in the street? More people on the dole? Vague idea of austerity but life as usual? Fewer vacations? I guess my question is, will there be a tangible decline in the standard of living for a significant portion of Irish people, similar to the one that accompanied the depression in the US and Europe in the 30s? (I mean, beyond bankers selling summer homes in Spain or trading down on their Porsches, that sort of thing).

]]> By: Jon Livesey http://crookedtimber.org/2009/04/29/the-luck-of-the-irish/comment-page-1/#comment-274014 Jon Livesey Wed, 29 Apr 2009 23:45:31 +0000 http://crookedtimber.org/?p=10887#comment-274014 I think the most interesting issue here is how the situation in Ireland has managed to flat-foot the meme-merchants. I wish I had a Dollar for every time I have read a web-comment in the past decade that amounted to nothing more than "Look how rich/successful/dynamic, etc Ireland is." Usually this meme was posted in a very triumphalist tone, as though Ireland's -heavily subsidized - growth somehow invalidated everything you knew about economics/history/Europe/The Galaxy. Now the Ireland meme-merchants have gone silent, but pretty soon they will be back with some other empty-headed sound-bite that is supposed to disprove this that and the other for ever and a day, or at least until that one blows up in their faces as well. I think the most interesting issue here is how the situation in Ireland has managed to flat-foot the meme-merchants.

I wish I had a Dollar for every time I have read a web-comment in the past decade that amounted to nothing more than “Look how rich/successful/dynamic, etc Ireland is.”

Usually this meme was posted in a very triumphalist tone, as though Ireland’s -heavily subsidized – growth somehow invalidated everything you knew about economics/history/Europe/The Galaxy.

Now the Ireland meme-merchants have gone silent, but pretty soon they will be back with some other empty-headed sound-bite that is supposed to disprove this that and the other for ever and a day, or at least until that one blows up in their faces as well.

]]> By: bert http://crookedtimber.org/2009/04/29/the-luck-of-the-irish/comment-page-1/#comment-273998 bert Wed, 29 Apr 2009 22:18:53 +0000 http://crookedtimber.org/?p=10887#comment-273998 <blockquote>If Ireland had got into this position with the punt then things would have been even worse, but then it might not have done.</blockquote> Right. Outside the euro an inflationary housing boom would have fed through to higher interest rates, dampening down all that debt-fuelled craziness. Boom and bust, perhaps, but not armageddon.
If Ireland had got into this position with the punt then things would have been even worse, but then it might not have done.

Right. Outside the euro an inflationary housing boom would have fed through to higher interest rates, dampening down all that debt-fuelled craziness. Boom and bust, perhaps, but not armageddon.

]]> By: Henry http://crookedtimber.org/2009/04/29/the-luck-of-the-irish/comment-page-1/#comment-273987 Henry Wed, 29 Apr 2009 21:25:49 +0000 http://crookedtimber.org/?p=10887#comment-273987 This is plausible (although I think that the internal political factors were much more important). And the piece does indeed acknowledge that competitive devaluation would be a good thing. When I get a life again, I want to do a series of posts on Roy Foster's _Luck and the Irish_ which has a lot of interesting things to say. This is plausible (although I think that the internal political factors were much more important). And the piece does indeed acknowledge that competitive devaluation would be a good thing. When I get a life again, I want to do a series of posts on Roy Foster’s Luck and the Irish which has a lot of interesting things to say.

]]> By: Chris Bertram http://crookedtimber.org/2009/04/29/the-luck-of-the-irish/comment-page-1/#comment-273983 Chris Bertram Wed, 29 Apr 2009 21:16:56 +0000 http://crookedtimber.org/?p=10887#comment-273983 Well I guess there's always the "compared to what?" point. If Ireland had got into this position with the punt then things would have been even worse, but then it might not have done. At least the UK has the competitive devaluation option, which Ireland doesn't have. Well I guess there’s always the “compared to what?” point. If Ireland had got into this position with the punt then things would have been even worse, but then it might not have done. At least the UK has the competitive devaluation option, which Ireland doesn’t have.

]]> By: astrongmaybe http://crookedtimber.org/2009/04/29/the-luck-of-the-irish/comment-page-1/#comment-273974 astrongmaybe Wed, 29 Apr 2009 20:16:08 +0000 http://crookedtimber.org/?p=10887#comment-273974 Piling on after everyone has pointed out the ropeyness of the comparison…. but I’d imagine Germany between, say, 1942 and 1945 had a fairly steep GDP drop too? Piling on after everyone has pointed out the ropeyness of the comparison…. but I’d imagine Germany between, say, 1942 and 1945 had a fairly steep GDP drop too?

]]> By: Henry http://crookedtimber.org/2009/04/29/the-luck-of-the-irish/comment-page-1/#comment-273951 Henry Wed, 29 Apr 2009 17:36:19 +0000 http://crookedtimber.org/?p=10887#comment-273951 Chris - <a href="http://www.thepropertypin.com/viewtopic.php?f=19&t=21186&start=0" rel="nofollow">this piece</a> makes the case that the euro is the only thing stopping Ireland from going down the toilet completely. There may be counterarguments, but I'm not able to think of 'em. Chris – this piece makes the case that the euro is the only thing stopping Ireland from going down the toilet completely. There may be counterarguments, but I’m not able to think of ‘em.

]]> By: john b http://crookedtimber.org/2009/04/29/the-luck-of-the-irish/comment-page-1/#comment-273932 john b Wed, 29 Apr 2009 15:59:23 +0000 http://crookedtimber.org/?p=10887#comment-273932 Ajay - Iceland did have a fake construction boom (there are a lot of half-finished buildings there), it's just that it was far, far smaller than the fake financial boom. But yup, point taken on the fish 'n' aluminium thing. Ajay – Iceland did have a fake construction boom (there are a lot of half-finished buildings there), it’s just that it was far, far smaller than the fake financial boom. But yup, point taken on the fish ‘n’ aluminium thing.

]]> By: Paul http://crookedtimber.org/2009/04/29/the-luck-of-the-irish/comment-page-1/#comment-273924 Paul Wed, 29 Apr 2009 14:56:32 +0000 http://crookedtimber.org/?p=10887#comment-273924 It won't be the first time that the Irish have been up against it. The "experts" and "suits" helped get us into this mess. I call it a recession despite what the parrots in D.C. may put out. A lot of best sellers will come out of this misery ! It won’t be the first time that the Irish have been up against it. The “experts” and “suits” helped get us into this mess. I call it a recession despite what the parrots in D.C. may put out. A lot of best sellers will come out of this misery !

]]> By: Zamfir http://crookedtimber.org/2009/04/29/the-luck-of-the-irish/comment-page-1/#comment-273922 Zamfir Wed, 29 Apr 2009 14:42:36 +0000 http://crookedtimber.org/?p=10887#comment-273922 And the Eire of the Roi is the Dauphine. And the Eire of the Roi is the Dauphine.

]]>