No good thing ever came from the crooked timber of partition.

John Quiggin, who is listed in the side column of links is a well known Australian economist who often writes on a blog called Crooked Timber.

At the moment, as noted by Paul Krugman, John is writing a book on Zombie economics. Basically the trust of the book is going to be ideas that should have been canned by history are proving really persistent and instead of staying buried are rising again.

The neo-liberal, chicago school or free-market crazies who made such a mess of things have seen the world economy steered away from disaster by huge govt. interventions. Something which they thought should never happen.

Perversely it seems the success of the Keynesians priming the pump is actually giving the neo-liberals room to survive and regroup.

As Krugman says "Now that we seem to have avoided a full replay of the Great Depression, a large part both of the economics profession and of the political establishment seems ready to pretend that none of it happened."

In sth Ireland though we have no such debate. Instead Fine Gael are keen to try out the same old ideas as FF . Fianna Fail is proposing a deflationary solution thats sucking life out of the economy (look at those tax returns) and Fine Gael spent months telling everyone how they were going to cut jobs in the public services. Michael Taft notes "the effect of cutting 17,000 public sector jobs - as measured in the ESRI simulation in its working paper 287 - is fiscally irrelevant but economically damaging. By the 4th year, the borrowing requirement falls by only 0.1% of GDP but the GDP falls by 0.7% (the effect on the domestic economy is even worse - at 1%). However, the effect on consumer spending (-1.1%) and employment (-0.8% or about -15,000 jobs) makes the cut extremely damaging."

Recently this type of Fianna Fail-Fine Gael approach was labelled a death spiral for the country in the Wall Street Journal of all places.

In America the debate is oscillating between two schools of thought. Here there is only one school of thought with two parties pushing it. Whoever will win the next election will lead to little change as many have long known.

George Lee for all his faults eventually saw this and decided he couldnt stick with Fine Gael. He couldnt stick with a party pushing deflation just like Fianna Fail. He should have spotted it earlier but sure no one is perfect.

If Lee wants to do the country some service then he can start to show how Fine Gael and Fianna Fail are the two sides of the one coin pushing a deflationary death spiral.

Welcome the real world George.

You have just joined the growing group of people who know that Fine Gael and Fianna Fail offer no useful solutions to our current problems.

The strange quiet surrounding the passing of Thoams McGiolla

Below is a piece received from Red Rebel.

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Strange how An Phoblacht failed to mention the death of Tomas McGiolla except for an article by Micheal MacDonnchadh on the founding of the paper in 1970 which briefly mentions him.

McGiolla went from being a right wing Catholic of privileged farming background in the 1940s to leading a Stalinist Party to ending up a bitter old man who had fallen out with his erstwhile comrades one by one or sometimes six by six throughout his political life. His journey from being an alleged member of a Catholic Secret Society called Maria Duce, to his joining the IRA in the 1950s, to his Presidency of Sinn Féin in the 60s and the turn to the left, to the Leadership of Official Sinn Féin, to Sinn Fein the Workers Party with its Stalinist Democratic Centralism, to the Workers Party and to his betrayal by those who left to form Democratic Left and who now run the Labour Party, is a fascinating story.

The recent book by Hanley and Millar, The Lost Revolution, throws a lot of light on this journey but it is by no means the full story and a previous book by Sean Swan called Official Irish Republicanism (sic) 1962 to 1972 fills in some of the gaps. The Workers Party became the most successful Socialist party ever in the 26 Counties (having 7 TDs elected to Leinster House) before its inherent contradictions, its secret cadres and its military fund raising, amongst other reasons, led to disagreement and disintegration.

The statement by ex-member Eamon Gilmore now leader of the Labour Party highlighted by Conor Foley in a letter to An Phoblacht this week shows the political amnesia, the u turns, contradictions and animosity that McGiollas followers suffered from faced with the National Question.

The Stickies weren’t wrong about everything. Indeed in my view they were right about a lot of things especially on the economic situation of the 26 counties, the promotion of workers rights and the need for a Socialist solution, but I think they failed to understand the colonial nature of the 6 county problem and the depth of Loyalist sectarianism.

When they turned away from confronting the Loyalist Statelet and began to try and reform it they eventually floundered. Lessons for us all there maybe?

Government fails to meet need despite oversupply of properties

Here is an article from Eoin O'Broin from this weeks an phoblcaht


Government fails to meet need despite oversupply of properties




There are more than 100,000 households on local authority waiting lists in the 26 Counties while 300,000 homes lie empty across the state. It just doesn’t make any sense.

Official government figures claim that only 56,000 households are on the waiting list. However this figure is from April 2008.

Since then the recession has caused a dramatic increase in the numbers seeking social housing.

Last December, The Irish Independent published new figures obtained from the Department of the Environment which estimated that the housing list was closer to 100,000 households.

Even this figure is an underestimation, though, as the statistics exclude many categories of households, including those deemed by local authorities to be living in overcrowded or materially unsuitable accommodation, or people in transitional housing programmes.

In January the National Institute for Spatial and Regional Analysis (NISRA) released an estimate of the number of vacant homes in the state. Combining a number of sources of data they have estimated that there are 302,625 vacant homes, not including holiday homes, across the 26 Counties.

NISRA have also produced an interesting analysis of the relationship between house building and population growth, county by county.

Their study estimates that from 2006 to 2009 the supply of houses in the state outpaced projected population growth by 154%.

For example, in their study NISRA estimated that Dún-Laoghaire Rathdown would need an additional 538 units to meet its projected population growth from 2006 to 2009. However during that period an oversupply of 7,139 units of accommodation were built. That’s an oversupply of 1,224%!

Dublin City Council had the largest oversupply in terms of actual numbers, with 15,363 units representing an oversupply of 401%. Cork County came second with an oversupply of 11,018 or 115%. Limerick City had the largest percentage oversupply in the state, with a massive 1,252%. Only Galway City came close to matching supply and demand, with a 2% oversupply.

Despite this oversupply of housing, in each of these areas housing waiting lists also increased during the same period.

If the Irish Independent figures published last December are correct, then local authority waiting lists have increased by 130% since 2005.

The newspaper’s figures estimated that the waiting lists in Dún Laoghaire-Rathdown included 4,406 households; in Dublin City included 6,108 households; in Cork County included 4,880 households; and in Limerick included 1,468 households.
In each case, the number of vacant homes identified by NISRA significantly exceeds the number of families deemed by the Department of Environment to be in need of local authority housing.

The reason for this situation is very simple. During the Celtic Tiger housing supply was determined primarily by market forces, central government tax incentives, and developer-led planning decisions at a local level.
Little if any consideration was given to strategic planning based on social need.
Central and local government failure explains why there are hundreds of thousands of vacant homes side by side with hundreds of thousands of people in need of housing.

Moral hazard or moral turpitude in the hotel industry.

Last week the labour court was hearing how it was necessary for the irish hotel sector, and other hospitality sector companies to cut minimum wages in order to increase their survivability.

Their survivability is something that interests us of course. We want to see strong economic activity in the country, companies paying decent wages and keeping the local and national economy ticking over and folks in jobs.

Many folks in Ireland and of course the media will meekly accept that this is bad but necessary. But rather than tackle the usual Govt. spoon fed line that There Is No Alternative (TINA) to shafting these ordinary people I'd like to focus on another common phrase these days - moral hazard.

one defintion of moral hazard is:

Moral hazard occurs when a party insulated from risk may behave differently than it would behave if it were fully exposed to the risk.

Which means if I know you'll bail me out every time I fall flat on my face then why should I change my behaviour and cop on.

and...

Moral hazard arises because an individual or institution does not take the full consequences and responsibilities of its doings, and therefore has a tendency to act less carefully than it alternately would, leaving another party to hold some responsibility for the consequences of those actions.

Less careful than it otherwise would! Leaving another party to hold some responsibility! Could this in anyway be similar to whats happened to the minimum wage workers. Is it possible that they are carrying the can for others mistakes.

Sinead Pentony in an excellent post on the progressive economics site TASC looks at the issue of hotel insolvency and examines an important twist on the minimum wage issue being discussed.

Peter Bacon of NAMA fame has reviewed the south Irish hotel industry and found a mess - (As an aside its interesting to note how Bacon is the go to man for reports it seems – NAMA, reports for the car industry, for the Hotel industry etc etc.)

The hotel sector is insolvent basically. But this is no recent swing of events. Its not one bad year that’s turned the tide on a healthy sector. No quick plaster of a minimum wage cut will do here. Far from being a bad patch the report makes apparent that the hotel sector has much bigger issues. By the end of 2008 there were a total of 59,000 hotel rooms in the south of which 15,000 should be closed down urgently. In other words there is gross over capacity. How could this have been allowed to happen? More on that later.

Not only is there gross over capacity there is also an estimated €1billion in debt in the industry which is not secured by assets. This was clearly an industry out of control. What could have driven such insanity or is it case of “we are where we are” and somehow or other this just magicked out of thin air.

Well the report highlights a couple of reasons why this happened. Firstly tax breaks for the hotel sector created significant over-supply of hotels. Hotels whose viability was questionable from the outset. According to Bacon the stock of new hotels has been seriously insolvent since 2005 and in every year since 2002, new hotels on average have been insolvent from the year of their construction. Clearly there was no useful strategic vision for this sector and that falls into the Govt’s. lap. Tourism is a key aspect of our economy and here as elsewhere they failed to provide positive direction and leadership

The report also highlights the sorry nexus with the financial institutions and banks. The report suspects banks are keeping afloat a large number of insolvent hotels so as to avoid any write downs of their loan books. The banks want to keep open these walking dead hotels because they “need … hotels to remain open for seven years to allow investors to avail of capital allowances and to avoid the creation of a tax liability due to a clawback”. In order to ensure the developers continue to enjoy the advantage of tax breaks which created about 25% unneeded room capacity and landed the sector with €1 billion in unbacked loans the banks are going to take it easy on the hotels and developers and let the zombie hotels keep on going..

The upshot is that hotels with a fighting chance are being forced to compete against “zombie hotels” who are remaining only to ensure previously granted tax breaks are enjoyed. The whole hotel sector is now paying the price and saveable jobs are being put at risk. And whats worse there is suspicion that the solvent hotels are not being lent sufficient credit because the zombies are more important to the banks.

How to solve this dilemma? The Bacon report recommends the next financial act allow these zombie hotels leave the sector without having to pay back the tax incentives.

As Tasc notes :
Essentially, the Report is recommending that developers who took advantage of tax breaks to build hotels that were never going to be viable should not be subject to the clawback of those capital allowances - because they won’t have an incentive to close these hotels but rather, keep them open for the seven years, which will further undermine the hotel industry.

This is the moral hazard described earlier. The rules are bent later in the day to help the developers who over supplied the market. And who will bend the rules. The Govt. that put in place the policies that caused the over supply in the first place.

The estimated amount of hotel related capital allowances which remain to be claimed or have already been claimed, and which potentially could be clawed back by the Revenue, are estimated at over €1.5bn.

The Govt. was instrumental in driving the build up of significant over –capacity without, demonstrably, any clear plans for the tourist sector with the end result that the entire hotel sector is a mess.

So whats the plan? The first step is to cut the minimum wages of those working in the hotel sector which brings us back to our definition of moral hazard. The hotels, developers and Govt. walk away from the problem about as happily as they can and someone else, the minimum wage workers carry the can for a total lack of strategic vision by the govt.

The debate in the background is about wages destroying our competitiveness. Yet nary a peep about the lack of purpose to Govt. planning, the introduction and abuse of distorting tax allowances and what may well be another bailout of developers. All of which have cost us hugely and are the real problem.

There will be no increase to Irish competitiveness while the issue of gross mismanagement and either lack of strategic vision or maybe simply corruption is tolerated in southern Ireland.

So let the Media propose reducing the minimum wage down to zero if they want for hotel workers! Maybe then we could have a debate on what the real problem is and what will help our economy re-establish itself.

Will minimum wages cuts make up for the blind work that brought hotels so low?
Will it wipe of the €1billion in unbacked debt?
Will it make south Ireland a country that invests wisely, plan for the future and structure its growth in a sustainable way?

As David McWilliams said today “The country needs to be fixed, not patched up”.

Hacking the minimum wage is a patch and a patch designed to leave those who have really destroyed compeitiveness off the hook.

US cannot afford it's Empire

Received this from Roger Cole of the Peace & Neutrality Alliance

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The US cannot afford its Empire. President Obama has asked the US Congress for $3.8 trillion for the fiscal year 2011 to run the Empire, only
33% of which will be paid for by taxes resulting in a $1.3 trillion deficit. This at a time when more US citizens according to Prof. Warren of Harvard are going bankrupt than getting divorced and the middle class of the United States is being destroyed.


According to Winslow Wheeler of the Center on Defence Information the annual cost of running the military-industrial section of the Empire is well over $1 trillion a year. The simple realist fact is that the US Empire is destroying the lives of its own people to maintain itself. It is also destroying the lives of the people who live its vassal states like Ireland where the cost of guarding its de facto US Airforce base at Shannnon Airport is nearly €10m to date. The simple realist fact is that those of us on the Peace & Neutrality Alliance by opposing Ireland's participation it these wars are the only people offering an alternative to the massive economic crisis caused by this neo-liberal militarist ideology that has dominated the corporate media for decades. On the 14th of February 2010 PANA will be supporting the Shannonwatch BLACKHEART vigil at Shannon Airport. We will be holding a conference on Wednesday 10th of February at 11.00am to encourage the med! ia to give the event coverage prior to the event.

It is nearly 7 years since PANA, the NGOPA and the IAWM organised a massive demonstration against the war and Ireland's participation in that war. Yet at the last election Fianna Fail, Fine Gael and the Labour Party all made it crystal clear they supported the war and Ireland's participation in the war thus endorsing the neo-liberal militarist agenda that has caused Ireland's economic meltdown. Only a clear and decisive break with this ideology will restore peace and economic stability, starting with the termination of the use of Shannon Airport in the war and the withdrawal of the 7 Irish soldiers taking part in the occupation of Afghanistan.

Roger Cole
Chair
Peace & Neutrality Alliance
http://www.pana.ie/

Fás: New Board - Same Old System.

This is an article received from Red Rebel.

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The new Fás Board appointed by Mary Coughlan shows once again how the system of capitalist cronyism is perpetuated while the public is duped by the Government and the media into believing that reform is taking place. Phrases such as ‘accountability and transparency’ ‘new slimmed down Board’ and ‘root and Branch reform’ abounded throughout media reports which reflected Government spin and led to very little comment or questioning by a compliant media.. Ok so the Board was cut from 17 to 11 members. There will be rolling membership (which I presume means that there will be changes in membership during the lifetime of the Board) allowing the Minister make even more appointments. The new act makes the FÁS Director General accountable to the Oireachtas. It bans directors and staff of FAS from any involvement on matters where they have a conflict and also provides protection for whistleblowers who report serious wrongdoing in the organisation. Sounds lovely but the reality may prove to be a little different. First of all this is just another Government appointed Quango. The Quangos' combined annual budget was €13bn in 2006, according to a Think Tank for Action on Social Change report, and it's sure to be even more now. This is more than the projected total Government budget deficit of 9.4 billion euro for the year.


So lets take a look at who is on the Board. The new Chairman of the Board, Michael Demspey from Wexford is a former senior director of the mulit-national Bristol Myers Squibb, and a board member of BIM . He will have a fellow St. Mary's CBS old boy at the FÁS table as a newly appointed board members is Tony Dempsey, a former Fianna Fáil TD from Wexford. Martin Hogan ( innovation manager at Dun Laoghaire Institute of Art, Design and Technology) and of course a member of the Green Party is also there as is Donegal Fianna Fail supporter Margaret Sweeney (CEO of Postbank Ireland). This is the same Margaret Sweeney who pocketed a tax-efficient exit package of €529,315 plus pension contributions of €250,000 and her €25,000 Mercedes, bringing the total to over €800,000 from Aer Rianta in 2004 after less than a year in the job. Seán Gallagher, Managing Director, Smarthomes Limited;Board Member, InterTradeIreland and sometime TV personality. Emer Gilvarry Solicitor; Managing Partner, Mason, Hayes and Curran.Ms. Annette Hughes, Director, DKM Economic Consultants; Member, Euroconstruct; Member, National Competitiveness Council.. Séan Ó Longáin, Barrister; Former Chief Executive Officer, County Donegal Vocational Education Committee. r. Brendan J. Murphy, resident, Cork Institute of Technology. The usual Golden Circle of the Cream of the Country. Good at creaming it more like as friends of the establishment.


There is no appointee representing workers, the disabled or the unemployed. The Board is also in breach of the Government’ own Equality Legislation of a minimum of 40% female representation with only 3 women appointed. It is about time these Quangos were done away with and an executive of full time workers appointed from within the organisation under the direct control of a Minister who would have to appear with the executive before an Oireachtas Committee every year to account for their performance.

Thatcher to Blair to Brown - The failure to address inequality.

This link was received from a reader of the site. He stated ....

This document which relates how Britain has not changed that much since those dark days of Thatcher and her Neo Liberal Chicago school of Econmics. For more information on that era please refer to Naoimi Klein's excellent book: The Shock Doctrine.


Since 1997 Britain has had a Labour Party in power, but a Party that has ignored it's core policies and is unfrotuantely drifting away to the right and is now probaly more to the right that what the Tories were in 1979.

I-re call the first effect of that bitch Thatcher age about 9 when the Free Milk was cut from our school in Newcastle , Co Down and then on, her continued attack on working class people.

http://www.equalities.gov.uk/pdf/NEP%20Summary.pdf