Irish Economy and Budget Watch / / /Emergency Budget Announced for April 7th

Cactus Flower wrote:

When will almighty ruckshuns break out? Bread riots in Crumlin?

It won't be long now.

VIENNA, April 25 (Reuters) - Rising food prices have developed into a global crisis, United Nations Secretary-General Ban Ki-moon said on Friday. Link here.

I wasn't joking, lads, when I said get the spuds planted.

When are we going to hear something, anything at all, from our "government".

Scary stuff lads.

Any signs of rice hoarding in Galway yet?

cactus flower wrote:

Any signs of rice hoarding in Galway yet?

Nothing that my sources tell me. Sure, in these more straitened times, we'll be eating more spuds, Irish wheats and breads, fish and drinking more milk and whiskey and Guinness and all sorts of things. We won't go hungry, we feed the world!

House Prices down 8.9% in the year to March

Live Register marks time

Pension funds up 4.2% on last month

There you go!

So on a person who paid 400000 Euros for a house last year would have lost 800 Euro each week since. No more worries about about carbon because his 10 speed is ready to pedal.

Its a funny thing, the economy. I have a little business I run with my brothers, A small affair with just 8 employees. We work very hard. We buy and sell secondhand office furniture. See here www.desksandchairs.ie
We opened our third branch 6 months ago and business is going really well.
We are in the very lower ewnd of the market. A bit like the Ryanair of the office furniture industry.
All I can say is that when the economy slows like this, people actually take account of what they spend.
Before they did'nt care. if a swivel chair costs €500 sure what of it, hav'nt I got loads o money.
Now they are careful. Keeping down the cost, more efficiant with the cash.

This is not a bad thing.


The only bad thing is the rise in unemployment. Of all the curses of modern living, unemployment must be the worst.

I hope everything is done to prevent its increase and reverse it, if possable.

Johnny Keogh wrote:

This is not a bad thing.


The only bad thing is the rise in unemployment. Of all the curses of modern living, unemployment must be the worst.

I hope everything is done to prevent its increase and reverse it, if possable.

Well that's it, there are upsides to recessions. A successful recession is one which re-allocates capital funds from previously un-productive industries to more productive equivalents. If this period of retrenchment can re-assign funds from ares like overseas property to exporting companies then we will have had a good outcome from this.

Don't worry, our default speed setting in economic terms is far higher than anywhere else in the western world. In the long run, we're in good stead, Fred!

Johnny Keogh wrote:

Its a funny thing, the economy. I have a little business I run with my brothers, A small affair with just 8 employees. We work very hard. We buy and sell secondhand office furniture. See here www.desksandchairs.ie
We opened our third branch 6 months ago and business is going really well.
We are in the very lower ewnd of the market. A bit like the Ryanair of the office furniture industry.
All I can say is that when the economy slows like this, people actually take account of what they spend.
Before they did'nt care. if a swivel chair costs €500 sure what of it, hav'nt I got loads o money.
Now they are careful. Keeping down the cost, more efficiant with the cash.

This is not a bad thing.


The only bad thing is the rise in unemployment. Of all the curses of modern living, unemployment must be the worst.

I hope everything is done to prevent its increase and reverse it, if possable.

Sadly I think Johnny there is going to be plenty of second hand office furniture about. I think it is going to be difficult to keep people in work. One no-brainer would be to build affordable housing for people on the waiting list.

Did I not read that 20% of houses were vacant, we don't need any more.

youngdan wrote:

Did I not read that 20% of houses were vacant, we don't need any more.

About 15% of the housing stock is believed to be vacant, which is below the EU average of 18%. See here.

Ard-Taoiseach wrote:

youngdan wrote:

Did I not read that 20% of houses were vacant, we don't need any more.

About 15% of the housing stock is believed to be vacant, which is below the EU average of 18%. See here.

Where in this article does it say that the EU average vacancy rate is 18%?

29% vacant in Leitrim. The number will rise as transient workers return home. Some here think me to be heartless. Well my question is why is the most essential necessity of life after grub itself priced so high that 2 workers have to slave for 40 years to pay for it. Should that not be a priority for those with left leanings.

29% are vacant in Leitrim because of the "Rural Renewal Scheme", one of the crazy tax incentive schemes that have shot a hole through planning in Ireland in the last five years. The other was the Holiday Homes scheme, that encouraged housing estates to be built in beauty spots with no sewerage treatment capacity.
Developers built these houses for free, as they could be set off against tax. They may not make money on them, but they won't lose either. The losers are other tax payers who are taking up the burden of the unpaid tax.

Hmm Interesting thread...

To be honest I have been middle of the road on our economic prospects over the last 2 years. The building slowdown was coming - everybody could see this . I was on the pessimists side on this and it has been no surprise to me to see the "experts" who spouted "fundementals" for the last 2 years consistently revising down their optimistic forecasts - this baby has a long way to go yet - I remember myself and Sidewinder and few others discussing this in late 2006 - in how bad could it actually get - and it sad to see how accurate we are all turning out to be - both on the global and domestic front - its funny how in every asset boom people just lose the run of themselves completely - this time it will be different etc etc - yet the economic laws of gravity and supply and demand kick in with terrifying predicability each time - only caveat being its virtually impossible to call the top of an asset bubble -the momentum that drove it that high was irrational and thus fall back down the otherside will be equally quirky and irrational.

That aside , and more pertinent to the discussion here - is the equally bad numbers coming out of services and industry - Im am getting worried - seriously worried about this. We would appear to have the perfect storm of inflation, credit contraction and an exhausted consumer to a scale unseen since the 70's - I know Ard will try and refute this with stats etc - numbers are always playing catch up with the current situation and that situation has dramatically worsened this year so far - I tend to follow my instinctive nose on matters like this - there is a smell of fear and retrenchment out there that we dont quite know where the floor is in this recession and sorry folks we are in initial stages of a global recession - some will be affected far more than others and at different times - but in the interdependent globalized world we have created for ourselves one thing is certain - there will be no exception and nowhere to hide.

The redundancy numbers released yesterday were an eyeopener and far better indicator than the live register of where we are going.

25% were in construction
25% were in manufacturing
40% were in services.

of the manufacturing and services - 70% were in the export sector

That is worrying and is confirming my fears that there mightnt be anything to rebalance the construction slowdown - we are reaping the whirlwind of having the let the costs of largely protected domestic sector spiral out of control and it is radically affecting the competiveness of our export sector which is only now trying desperately to recallibrate itself up the value chain - something which should have started in earnest 10 years ago and there will be a fiecre amount of pain in this process.

I have to own up to the fact that I am not a disinterested party in these proceedings . On Tueday this week I had to make all of my department redundant with immediate effect (10 people) and am on redundancy notice myself as I have 4-5 weeks to finish up any outstanding business here in Ireland and ship all remaining capital equipment and further business to our asian base in Taiwan which will now be the center of operations for the company I work for as of now. in total 100 people will go over the next 8 weeks - leaving a small R/D centre here and all admin,logistics,manufacturing functions have been stripped out - presumably to make the company more attractive to a buyer and to face the reality that the semi-conductor business (mass manufacturing anyway) is finished in Europe - As manufacturers of machines and processes for this industry we are naturally the first to be affected ,normally 2 - 5 years ahead of the curve - so there is a lot of pain to come here. Dell - I give 2-5 years max before total shutdown - they will retain a shell operation here for tax reasons -but the future is east - HP have been winding down for the last year and it is accelarating at the moment - again contacts from inside Leixlip give 2-4 years before all that is left here is an R&D facility employing a fraction of the current workforce -all manufacturing of inkjet will be in Singapore where 80% currently takes place. Intel I give a slightly longer timeframe - purely due to the fact that the monster facility they are building in Dalian will take longer to come on line and the Fab in Leixlip cost them a ton and
they will want to wring every last penny out of the joint - but already the headcount is going south and the attrition rate will increase as the years go by.

All in All - not an attractive proposition - the plain fact is that investment is drying up worldwide in all sectors in the aftermath of the carnage in the banking sectors since last Autumn - credit is the lifeblood of investors - we are in for a few shaky years IMO - will be interesting to see how it pans out.

Thanks for your post Edo. I am really sorry about your personal situation and hope thinks work out for you. It may turn out better that it happened now than in a year's time when prospects are likely to be much more difficult in terms of finding a job.

I am involved in development-related work. Three months ago we assumed that we might be closed by the summer. As we are small and diverse at the moment it turns out we are really busy. I would be confident (if that is the right word) that we will not be busy next year and we are planning accordingly.

Would I be right in thinking that the firms you list represent about a quarter of Irish GDP? I am not sure what percentage of the tax base, as the tax rate is low.

The figures suggest that Irish manufacturing hit a peak in 2002 and has declined since then. Service jobs, as far as I understand it, are only spin off from manufacturing and can't be sustained without it unless traded internationally.

Because we have allowed (indeed encouraged) our costs to rise

Because it is good to have someone to blame, I have to say that both FF and FG carry a terrible culpability in this. I also despise the press who have relentlessly pumped out the "richest country in Europe" rubbish year in year out giving people the idea that they could throw money about without any thought whatsoever. The E.S.R.I. I think would have had the responsibility to warn and advise and seem to have completely lost the plot about five or six years ago.

It sounds as if you have seen this coming a while, in terms of relocation of 'footloose' industry.

What perhaps no one foresaw was the coming together of this moment with a US and UK recession, the 'end of oil'crunch, climate change, the shift to a 'multi-polar' political world and global food crisis.

The times look like being far too interesting, and will be very demanding on us to adapt to dealing with all these things at once.

Is there any 'clawback' of significance from relocating firms? And how best do you think it should be reinvested?
And is there any new way that the skills of people working for firms that have gone from Ireland can be used in Ireland?

I've been looking at the Exchequer figures in detail and they're quite encoraging in the short term. The taxation position is actually improving, going from 6% below profile in March to 3% in April. If this trend continues, we'll be above trend in 2 month's time!

Interesting post Edo - and comiserations once more on your own situation.

My brother works for one of the computer manufacturers here and he recently told me that they and a lot of other companies were moving production out of China and back here over fears of a backlash re Tibet and other human rights issues.

Did anyone else hear anything similar?

Kate P wrote:

Interesting post Edo - and comiserations once more on your own situation.

My brother works for one of the computer manufacturers here and he recently told me that they and a lot of other companies were moving production out of China and back here over fears of a backlash re Tibet and other human rights issues.

Did anyone else hear anything similar?

Really? Would his company have been one of these?

That would give significant ballast to the economy if we got a good slice of that industry back.

I'd imagine it would depend on what happens after the Olympics if that was to happen. There has been alot less international news of Tibet since the crack down and there will not be the same publicity of the Olympic flame now that it is back in China. Sadly, Tibet will likely return to one of the great chapters of forgotten conflicts in the world. That is, unless something big occurs at the Olympics.

The China situation is very fragile at the moment. A strong hand from the West may well bring about a firebrand nationalism in China which we could really do without. I've been saying it for a while now and I notice it is the leader story in the Economist this week.

Kate P wrote:

Interesting post Edo - and comiserations once more on your own situation.

My brother works for one of the computer manufacturers here and he recently told me that they and a lot of other companies were moving production out of China and back here over fears of a backlash re Tibet and other human rights issues.

Did anyone else hear anything similar?

Thanks Kate - no worries - I'll be ok - have had 10 job offers since tuesday - my skills are transferable

Kate - I would love to believe that - but thats a press release and nothing more to appease western public opinion in light of the recent contraversy - it didn't disrupt business over tiannemen square - it wont do this time- yeah they might postpone something until the olympics are over - but the trend is unstoppable

Actually - China is moving very fast up the value chain - its far cheaper to outsource the lower intelligence driven manufacturing to Indochina and India.

Basically - the Olympics aside - manufacturing is moving east full stop - R&D is where we need to be at - and in native companies - and seriously make it worth their while to manufacture here. Our main problem is that our basic cost of living has gone insanely high on the back of the easy credit associated with the domestic boom - how we resolve that will be very interesting.

Edo wrote:

Our main problem is that our basic cost of living has gone insanely high on the back of the easy credit associated with the domestic boom - how we resolve that will be very interesting.

I agree with you there. Trying to reconcile only one foreign holiday a year after years of two or three holidays a year, is really hard to do.

I have begun to cut back this year. No foreign holiday with the kids. An Oige youth hostels and a rent a cottage down the country this time.
And it feels like I going back to the 80s.
No more stupid impulse purchases for both me and her and I tell you its bloody hard.

This readjusting to a lower cost of living/lifestyle is a bitch of a thing.

I can understand how it might be too much for some and they end up topping themselves.

Quote :

Kate - I would love to believe that - but thats a press release and nothing more to appease western public opinion in light of the recent contraversy - it didn't disrupt business over tiannemen square - it wont do this time- yeah they might postpone something until the olympics are over - but the trend is unstoppable

Edo, it was mid March when we spoke about this but he was clear that it was already happening. How long it lasts will obviously be a more interesting question.