Category Archives: Economics

If you go down to the woods today …

Crone Woods

… you’re in for a big surprise. Four years after Bord Snip first suggested privatising Coillte. Three years after Brian Lenihand and Brian Cowen agreed with the Troika that we should sell off state assets to clear the debt. Two years after the current government started trying to put a price on what the harvesting rights of the trees should be sold for. Two weeks after Simon Coveney promised that the cabinet was going to make a decision within two weeks  … the whole idea is going to be quietly shelved.

Simon Coveney was previously reported as being scheduled to bring the matter to cabinet for debate and a decision yesterday. That didn’t happen, and I understand while it has officially been long fingered for several more weeks, some in government are suggesting that this will be the first step in just quietly shelving the proposal.

One government source said to me that Pat Rabbitte would not have told the Dail that the  prospect of a sale was looking more and more unlikely every day if he didn’t seriously believe that was the case. What has to be agreed now I understand is how this would be presented to the Troika – who will need to be convinced that there is a sound financial reason for the government reneging on something previously agreed, and that the are not just caving in to pressure.

The increasingly vigorous campaign to keep our 10 national parks and 150 woodland amenity locations open to the public will claim a victory. That issue was always something of a red herring though. It is virtually impossible to extinguish rights of way and owners/managers of private forestry already let the public roam freely.

This was about what the sale would yield. And as I reported on Drivetime here, the numbers just didn’t add up and the level of investor interest may have been hugely overestimated.

IMPACT on behalf of its 600 members employed by Coillte commissioned Peter Bacon & Associates to study the financial dividend from a sell off. Though their conclusions naturally enough emphasise the downside but rather starkly highlight that the revenue generated would be equivalent to three weeks of interest payments on our national debt. Shrewd campaigning, but it would appear that many in government had already arrived at a similar conclusion.

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Filed under Drivetime, Economics, Environment, Politics

No Planet B

Atmospheric Carbon Dioxide passed a significant milestone at the Hawaiian monitoring station that has been recording these things longer than anywhere else on the planet. I did a piece for radio where you can hear the officials from Mauna Loa Observatory analyse the significance of this in their own words.

There is little a generalist like me can add to the Climate Change debate that hasn’t already been argued, but allow me to share this graph with you, which you mightn’t have seen.

Climate Efforts vs Global CO2 rise

It charts efforts at a political level to check our carbon emissions and maps them against the unstoppable progress of atmospheric CO2 through the previously unthinkable threshold of 400 molecules for every million molecules of air.

Or rather it charts the redundancy of those political efforts. It is a crude index, but an eloquent way of saying that Carbon Emissions Trading lies in tatters; austerity has brought coal back into fashion with a vengeance; and governments all over thew world are letting themselves off the hook of their commitments.

I could go on, but this is a scientific debate and the scientists say it much better than journalists – so listen here to the significance of another signpost now in the rear view mirror

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Filed under Climate Change, Drivetime, Economics, Environment, Politics, Society

“Weetabix is a treat”

Podcast: http://t.co/rhmiB6QK The impact of cutting Children’s Benefit

I’m blogging this from my phone so excuse me for being brief but my fingers are just too big to be typing at any great length.

I met three unremarkable yet absolutely remarkable people today. Unremarkable because they are like many of the 92,000 people receiving the One Parent Family payment or living very similar lives to some of the other 470,000 on the live register.

Remarkable because they  . . . well just listen to Jacqueline Kelleher in the Drivetime podcast. She spends her son James’s entire Children’s Benefit on childcare so she can work part time. A €10 cut in that Benefit means it is no longer worth her while financially to work. But she will continue to work and will cut back the food budget.

We walked around the supermarket figuring out what she was going to cut back on from now on. “Milk” was the depressing answer. How do you tell your four year old son he can’t have a glass of milk? “He’s a smart boy, he understands things are hard”. He also understands that Weetabix is a treat that he only gets on months when there’s a little bit more wriggle room in the household budget.

The text and twitter response to this report was noteworthy. “Irritating” to listen to dole scroungers “whining”, said one. Giving these people Child Benefit was like “rubbing lard onto a fat pigs backside”. I said noteworthy, but not worthy of further comment. Jacqueline told me if you got pregnant to claim benefits it wouldn’t be more than a few months before you realised that you had made the “worst decision of your life”.

James would love a Batman Castle for Christmas. His remarkable mum is going to make him one instead.

Please listen to the podcast and tune in tomorrow to hear Aisling.

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Filed under Drivetime, Economics, Politics, Society, Unemployment, Welfare

Arriverderci Silvio, Ciao Dr Doom

One hour before I head to the airport …..  yet again. I feel that I have single handedly kept Michael O’Leary in check shirts this week. But as I leave, sitting here on the side of the Via Nazionale, there’s a bit more urgency to Rome than when I arrived two days ago.

Carabinieri buzz about in their squad cars, a police helicopter circles the city centre. Riot police are hidden around the side of many government buildings. The political pace has picked up. I just spotted three bus loads of a military brass band being given an escort through town. Whether they are rehearsing a final hurrah for Silvio or preparing to herald the arrival of Mario is not clear.

You’d have to imagine it’s something Silvio has arranged for himself because no unelected government coming to power with the single unfortunate mandate of inflicting pain on its people would afford itself that level of pomp and circumstance. But then again … this is Italy.

The pace of things is definitely picking up here. The Senate has just voted in favour of an austerity package. When it’s passed in the chamber tomorrow (which seems to be a given) Berlusconi will resign. President Napolitano could then go through the pretence of calling all the party leaders and asking them if they thought they could form a government but in reality the call has already been made and Mario Monti has already begun putting a programme together. He’ll have is feet under the desk in Berlusconi’s office by Wednesday morning at the latest.

So  it’s all go … but only on the political front. The cancer in the economy is metastasising. Put simply increasingly nobody wants to lend to Italy at competitive rates because they don’t believe it can service its debt any long, and if nobody will lend to it at a price it can afford Italy won’t be able to service its debt any longer. Somewhere Joseph Heller chuckles.

Up until today I had only heard people talking about Italy having a liquidity problem. Short term cash flow issues, if you will, that would be solved by an orderly departure of Silvio Berlusconi from the stage. But now some are muttering about possible solvency issues. It’s not clear to me if they mean now or in the future if cash flow isn’t sorted out.

Can that really matter? Private lenders won’t give it money at a rate it can afford long term. Lenders of last resort don’t have access to the kind of cash it would take to plug the gap. And the government would have to generate a 5% surplus just to meet the interest bill on the €1.9trillion debt. That’s being stuck between a rock and a hard place with the added dilemma of the waters rising around you.

Dr Doom, Nouriel Roubini, who is to the global economy what Morgan Kelly has been to the Irish one had a scary op ed piece in the Financial Times this morning. He didn’t see a way out for Italy short of the  ECB becoming an “unlimited lender of last resort”. And who would do that if there is even a sniff of insolvency in the air.

His argument was a lot more nuanced than my summary but essentially if the third biggest economy in the Eurozone goes south so too does the eurozone. Reaction in Italy is interesting. I gave his piece to a Journalist, an Economist and a Politician today. The first two said he was spot on. The politician completely disagreed using the well worn “fundamentals are sound” argument. But then he’d have to say that as he’s probably going to be a minister in the new government.

His name is Enrico Letta and I’ll post a link to my Drivetime interview with him when it’s been podcast by my colleagues back at base.

 

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Filed under Economics, Euro, Foreign, Politics

Going the full Monti – notes from Rome and Athens

“He is a man of his word. I trust him. If he says he will go then he will go”. Maria tells me, stirring a third sugar into her coffee. She is not happy about the manner of his departure but “Enough is Enough”  –  Basta she says  – a uniquely Italian way of saying “That Does it”

Even through Bunga Bunga and all his other self inflicted losses of dignity Maria and so many of her older generation of voters stood behind Il Cavaliere. But now that he says himself he feels liberated by his decision to not seek re-election …. now it is time to accept that the pressure is too much to bear.

Italians seem a little bit behind the curve of events though. There is little awareness of the reluctance of investors to lend to the country just so it can service the interest payments on its two trillion euro debt.  Though I did hear some sarcastic talk that they should have known something very serious was afoot when Berlusconi recently postponed the release of his fourth album of love songs.

While conversation in Europe moves on to the possible shape of a two tier Europe and who would be in or out debate in Italy is still rooted in the politics of personality. Giving your support to the technocrats technocrat, Mario Monti, will be enough to reassure the markets we are serious about wanting to be perceived as being serious is the gist of what a man reading the business section of La Stampa tells me.

If this was the week that Italy realised that Berlusconi might be bad for business in Athens they had little but contempt for their politicians. On Tuesday and Wednesday as the wrangling and jostling for position of interim Prime Minister continued I sampled opinion among those hit hardest by austerity.

“This is not the Europe we dreamt of” Train Company employee Akis Margaritis told me. “This is a European Junta. A fourth Reich” He was expressing a common view that it didn’t matter much who was in the new government because everything was now being dictated from Brussels. How often have you heard that view in the last thirty years – except now for Greeks it is the undisputable case.

I heard little other than jaded cynicism being expressed towards the Greek political classes. There was a general feeling that whatever a politician said in opposition once in power they would impose further austerity. For that matter I also heard little or no responsibility being accepted. “I might have to give up going to the cinema and theatre” one public servant moaned about the impact of cuts. Greece’s bloated public service with its overpaid staff is as big if not bigger an obstacle to recovery as tax evasion.

The two main parties in Greece – the socialists and the conservatives – were very deeply embedded in Greek society. At the next election they are facing a rout of similar proportions to that suffered by Fianna Fail. Voters are shifting their allegiance to the further ends of the political spectrum. In Athens city centre I was surprised to see far right party Golden Dawn brazenly flying a Nazi styled banner over its headquarters proclaiming “Greece for the Greeks”. They are nothing more than a fringe grouping now but as things stand Greece will be in Austerity mode possibly as far into the future as 2027.

Just like Greece eventually settled on Lucas Papademous as its newly unelected leader Italian voters are being asked to shift their allegiance to a new prime minister with no mandate either. One man at a bus stop pointed out that the Italian Parliament was voting that day on budget cuts that had been decided by unelected EU officials and they would be implemented by an unelected government of former EU officials. Isn’t that what happens when the people you elect don’t run your affairs properly? He turned away from me.

We’ll all be lucky if it’s just national pride that is a bit wounded by the time this ends.

 

 

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Filed under Economics, Euro, Foreign, Politics