reo rockstar reviews – Legit or Scam? REO Rockstar is a new program, funded by the Preston Ely, in which all houses ruled out every month, without the use of money or credit and can tilt without risk. A property investment concept that traditionally cheap buy houses to renovate and then quickly profitable sales center "Houses the name comparison". They reflect, in contrast to the traditional method of houses, Ely, the work around the House says after her appearance with a House a REO-rock-star-system go, and place them for a profit in less than two hours.
Sunday, September 29, 2013
Sunday, September 22, 2013
Monday, September 16, 2013
16/9/2013: More pesky stuff on PMIs v Reality...
Readers of this blog would know that I have been skeptical about the Purchasing Manager Indices capacity to accurately track changes in the economic output, especially during the times of unstable trend or trend shift. The latest on the topic was recently covered here: http://trueeconomics.blogspot.ie/2013/09/1092013-pmi-and-real-economy-goldman.html
And here's the handy chart from Pictet neatly highlighting the same problem:
Not being a conspiracy theorist, I would not suggest that latest changes in Markit reporting of PMIs - and in particular dramatic shift away from actually providing broader public and analysts community with some hard numbers and in favour of providing more 'interpretations' of the data plus often unreadable charts has anything to do with the breakdown in PMIs correlations with actual activity... but it would be nice to have more accurate and data-focused releases.
Note: full Pictet note on industrial production in the euro area is here: http://perspectives.pictet.com/2013/09/13/euro-areas-industrial-production-data-back-to-reality/
And here's the handy chart from Pictet neatly highlighting the same problem:
Not being a conspiracy theorist, I would not suggest that latest changes in Markit reporting of PMIs - and in particular dramatic shift away from actually providing broader public and analysts community with some hard numbers and in favour of providing more 'interpretations' of the data plus often unreadable charts has anything to do with the breakdown in PMIs correlations with actual activity... but it would be nice to have more accurate and data-focused releases.
Note: full Pictet note on industrial production in the euro area is here: http://perspectives.pictet.com/2013/09/13/euro-areas-industrial-production-data-back-to-reality/
16/9/2013: Call me, once granny kicks the proverbial...
Structural slowdown? What structural slowdown... not in France and in particular not in the French traditional way of making the living... by inheriting it...
The chart above comes from one of the leading researchers on income and wealth distributions, Thomas Piketty. The key to reading this chart is that as a fraction of total disposable income, inheritance flows are now back at the levels last seen in and around WW1 period. The good old days of the 19th century when landed gentry and hereditary wealth class were all the rage is back in the Liberte, Egalite, Fraternite dreamland of France. Or put in more brutish, American terms - work? why bother, when inheriting things is so much more fun than earning them by merit.
16/9/2013: Bigger Question than Answers: Euro Area Banks Funding
An interesting chart from Credit Suisse (h/t to Fabrizio Goria @FGoria) on marginal funding costs of Euro area banks:
Four points to note:
- Marginal funding costs are now in line (albeit with a bit of volatility) with the costs in 2004-2006 period. This should be good, right?.. But
- Source of marginal funding is now exclusively CDS-backed as opposed to Euribor, and
- Spread over the repo rate is still consistent with the 2008 and 2011 spikes and is not getting any better with recent rate cuts
- LTROs helped, but their effect is no longer present and since late 2012 we are seemingly in a 'long-run' trend pattern or in an 'absent catalyst' base?
Question one is, if base rate creeps up, what will happen to funding costs? Question two is, if the US base creeps up, what will happen to euro area funding costs?
The latter is non-trivial: we've heard of the emerging markets rot on foot of 'tapering' talks...
16/9/2013: A Liquidity Slush or an Equity Switch?
Three more charts from BIS Quarterly (http://www.bis.org/publ/qtrpdf/r_qt1309a.pdf), showing the switch of liquidity out of the Emerging Markets into Advanced Economies...
And then from the Advanced Economies bonds into Advanced Economies equities with a small bounce up on Emerging Markets equities side too...
Two thoughts:
- There is no yield-driven bounce anymore, so pricing is not a huge help in this process; and
- Is this the end of the debt bubble and the start of the equities rise (structural, not nominal rise, driven by shift in corporate funding models) or is this a temporary slush of liquidity?
16/9/2013: Don't chill that champagne, yet... Irish Agri-food Exports
Here's one of the core reasons as to why agricultural exports are booming in Ireland:
Or more precisely, implied profit margins on sales:
So in basic terms: global food inflation is driving Ireland's agri-food exports since ca Q1 2010, while profitability improvements are contributing to the same since ca Q4 2011. The former is obviously not due to our competitiveness gains or efficiency improvements or great business strategies or policies. The latter is, err... not that much either, as costs continued to inflate since Q4 2011, albeit slower than output prices. In other words, our improved profit margin in the agri-food sector are also due to someone, somewhere on the Planet having to pay more for food.
Or more precisely, implied profit margins on sales:
So in basic terms: global food inflation is driving Ireland's agri-food exports since ca Q1 2010, while profitability improvements are contributing to the same since ca Q4 2011. The former is obviously not due to our competitiveness gains or efficiency improvements or great business strategies or policies. The latter is, err... not that much either, as costs continued to inflate since Q4 2011, albeit slower than output prices. In other words, our improved profit margin in the agri-food sector are also due to someone, somewhere on the Planet having to pay more for food.
16/9/2013: Some scary charts from BIS: Yields Blowing Up & Leverage Climbs
BIS Quarterly (http://www.bis.org/publ/qtrpdf/r_qt1309a.pdf) has some interesting analysis of the US yields:
"An examination of the rise in US bond yields between May and July reveals as a key driver the uncertainty about the future stance of monetary policy. The sell-off mainly shifted bond yields at long maturities, while the short end of the yield curve remained anchored by the Federal Reserve’s continued low interest rate policy."
"In addition, the federal funds futures curve also shifted upwards, signalling market perceptions that a policy rate exit from the current 0–0.25% band had become quite likely to occur as early as in the second quarter of 2014."
"A model-based decomposition of the 10-year US Treasury yield, which sheds light on the various drivers of these shifts, indicates that the recent yield spike was largely the result of a rising term premium. This is consistent with markets reacting to uncertainty about the extent to which an improving economic outlook would affect future policy rates. It is also consistent with uncertainty as regards the impact that a reduction in the Federal Reserve’s purchases of long-term Treasuries would have on these securities’ prices."
"In comparison, the bond market sell-offs in 1994 and 2003–04 were different in nature. During those episodes, long-term nominal yields rose together with policy rates or on the back of expected increases in future real interest rates and inflation. By contrast, inflation expectations were largely unchanged in the second and third quarters of 2013."
Basically, as we all know by now, current yields have nothing to do with inflation and are solely priced by reference to expected liquidity conditions. Or put differently, nothing but printing press matters. So much for monetary policy-real growth links...
And BIS does deliver a nicely focused warning: "Their recent spike notwithstanding, bond yields in mature markets remained low by historical standards. For one, the yields on sovereign bonds in the largest world economies had been on a downward trend since 2007. And investment grade spreads in the United States, the euro area and the United Kingdom declined respectively by 75, 110 and 190 basis points between May 2012 and early September 2013, falling past their earlier troughs in 2010 and reaching levels last seen at end-2007. The evolution of the corresponding high-yield bond indices was similar, with spreads declining by 230 to 470 basis points over the same period."
Go no further than the second chart above: reversion to the mean is going to be brutal. And this brutality will only be reinforced by the fact that quietly, unnoticed by most, leverage has returned: overall share of leveraged and highly leveraged loans in total syndicated loan signings is now at all-time high.
Starting with page 6 (above link), the quarterly is a must-read as it exposes growing problem with high risk debt accumulation by investors and that amidst the historically low rates. The system is back at end-of-2007 levels of credit underpricing. The big difference today in contrast with 2007 is that no one has any bullets left to fight the bear, should one appear on the horizon.
"An examination of the rise in US bond yields between May and July reveals as a key driver the uncertainty about the future stance of monetary policy. The sell-off mainly shifted bond yields at long maturities, while the short end of the yield curve remained anchored by the Federal Reserve’s continued low interest rate policy."
"In addition, the federal funds futures curve also shifted upwards, signalling market perceptions that a policy rate exit from the current 0–0.25% band had become quite likely to occur as early as in the second quarter of 2014."
"A model-based decomposition of the 10-year US Treasury yield, which sheds light on the various drivers of these shifts, indicates that the recent yield spike was largely the result of a rising term premium. This is consistent with markets reacting to uncertainty about the extent to which an improving economic outlook would affect future policy rates. It is also consistent with uncertainty as regards the impact that a reduction in the Federal Reserve’s purchases of long-term Treasuries would have on these securities’ prices."
"In comparison, the bond market sell-offs in 1994 and 2003–04 were different in nature. During those episodes, long-term nominal yields rose together with policy rates or on the back of expected increases in future real interest rates and inflation. By contrast, inflation expectations were largely unchanged in the second and third quarters of 2013."
Basically, as we all know by now, current yields have nothing to do with inflation and are solely priced by reference to expected liquidity conditions. Or put differently, nothing but printing press matters. So much for monetary policy-real growth links...
And BIS does deliver a nicely focused warning: "Their recent spike notwithstanding, bond yields in mature markets remained low by historical standards. For one, the yields on sovereign bonds in the largest world economies had been on a downward trend since 2007. And investment grade spreads in the United States, the euro area and the United Kingdom declined respectively by 75, 110 and 190 basis points between May 2012 and early September 2013, falling past their earlier troughs in 2010 and reaching levels last seen at end-2007. The evolution of the corresponding high-yield bond indices was similar, with spreads declining by 230 to 470 basis points over the same period."
Go no further than the second chart above: reversion to the mean is going to be brutal. And this brutality will only be reinforced by the fact that quietly, unnoticed by most, leverage has returned: overall share of leveraged and highly leveraged loans in total syndicated loan signings is now at all-time high.
Starting with page 6 (above link), the quarterly is a must-read as it exposes growing problem with high risk debt accumulation by investors and that amidst the historically low rates. The system is back at end-of-2007 levels of credit underpricing. The big difference today in contrast with 2007 is that no one has any bullets left to fight the bear, should one appear on the horizon.
Sunday, September 15, 2013
15/9/2013: A Surging... Floater...
You've seen the 'Euro area economy is surging ahead' headlines on foot of recent PMIs... and you have seen warnings on the accuracy of the indices (see http://trueeconomics.blogspot.ie/2013/09/1092013-pmi-and-real-economy-goldman.html)... but what about levels?
Ugh... 'surging'?.. or maybe 'barely floating'?
15/9/2013: BIS Quarterly: a tale of two banking systems
Two hugely revealing charts from the BIS Quarterly Review, September 2013 (http://www.bis.org/publ/qtrpdf/r_qt1309e.pdf) show exactly the remaining adjustments yet to be undertaken by the banking sector in Europe, compared to the US.
Here they are:
and
note how European banks lag US banks in assets deleveraging, and in raising capital, and are slightly lagging in terms of changes in the ratio of risk-weighted assets. In risk-weighted capital ratios, the european banks are about 1/3rd of the way shy of the US, and in terms of capital, roughly 1/2 of the adjustment to the US levels is still required.
And per operational weaknesses of the European banking system? Next we have a table:
Although different across periods, the divergences between the European and US banks are still qualitatively the same for pre-crisis and crisis periods. In particular, US banks operate at higher cost than European ones, but generate more interest income and other income.
Here they are:
note how European banks lag US banks in assets deleveraging, and in raising capital, and are slightly lagging in terms of changes in the ratio of risk-weighted assets. In risk-weighted capital ratios, the european banks are about 1/3rd of the way shy of the US, and in terms of capital, roughly 1/2 of the adjustment to the US levels is still required.
And per operational weaknesses of the European banking system? Next we have a table:
Although different across periods, the divergences between the European and US banks are still qualitatively the same for pre-crisis and crisis periods. In particular, US banks operate at higher cost than European ones, but generate more interest income and other income.
Saturday, September 14, 2013
15/9/2013: WLASze Part 2: Weekend Links on Arts, Sciences and zero economics
Due to time constraints of yesterday's TEDx talks (http://www.tedxdublin.com/), I had a shorter version of WLASze: Weekend Links on Arts, Sciences and zero economics. As promised, more is now following in part 2…
15 dynamic images of changes in the demographics across 15 countries around the world from today through 2100: http://www.businessinsider.com/15-countries-in-2100-2013-9
Very interesting changes. As a teaser: "The year 2020 will be a seminal one for Japan, with the country's capital home to the 31st Summer Olympiad and adult diapers set to outsell their baby counterparts." Just think about that line for a second… I will be posting tomorrow night my Sunday Times article from last Sunday which covered the figment of imagination that is our unwavering belief in some 'demographic dividend' for Ireland. The article addresses the question 'What happens when Germany get older, while Ireland stays younger?'
A superb article from The Atlantic on the effects that our education system's obsession with regurgitation of facts has on our ability to think:
http://www.theatlantic.com/education/archive/2013/09/when-memorization-gets-in-the-way-of-learning/279425/
This is a neat extension point to something I have been talking about in my TEDx Dublin talk earlier today - the fact that our education systems are innately incapable of producing the human capital that we will need for the future. I wrote about the related deficiencies in education systems here in my earlier Sunday Times column, with unedited version available here: http://trueeconomics.blogspot.ie/2013/08/2182013-irelands-potemkin-village.html
From the sciences side of things:
http://www.redorbit.com/news/video/the-daily-orbit/1112946481/moon-water-origins-hint-at-early-earth-091213/
We normally hear about extraterrestrial origins of things found on Earth. How about terrestrial origins of things found elsewhere in the solar system? Hm… And the daily Orbit presentation style… double hmmm…
Extraterrestrial is the best way to describe some of the DesignJunction pop-ups at the London Design Week:
http://www.dezeen.com/2013/09/13/pop-ups-at-designjunction-next-week/
Need proof?
Or how about the Digital Sunrise (it appears to be a rug, but feel free to guess):
On the serious side of things: the rest of DesignJunction is corporate and boring… no, really, see for yourselves: http://thedesignjunction.co.uk/virtual-showroom/
From the series of accidental art:
IMAGE: russian-skywalking-photographers-european-skyscrapers-designboom-10
"russian photographers and daredevils vadim mahora and vitaly raskalovym travel europe with a clear purpose -- to illegally climb to the highest point of the city's main attraction, hang off its edge, and capture their extraordinary viewpoint" via http://www.designboom.com/art/russian-skywalkers-photograph-european-buildings-from-the-air/
The thing is: to be consistent the duo must take pictures from all cities visited. Problem is: once you confine yourself to such a commitment, art becomes secondary to pursuit of locations, and as such, purely accidental. As the show linked above clearly shows, not all (by far) images are even close to possessing properties of artistic inquiry or discovery, let alone aesthetic completion and compositional integrity. Hence, accidental nature of art… Still, impressive!
http://www.art-moscow.ru/ is opening on the 18th of September. The show will feature special exhibition Russian Avant-Garde 1910-1930 with some rare paintings by less-known artists: http://www.art-moscow.ru/2642.html
Whimsical and yet somehow infused with challenges and questions work of Grigori Mayofis: http://www.art-moscow.ru/2701.html will also be on show:
In the week when Harvard awarded its annual Ig Nobel Prizes - the spoof prizes for idiotic research, it is only worth running few links on that:
http://www.cbc.ca/news/technology/shrew-eating-penis-amputation-studies-earn-ig-nobel-prize-1.1828634
http://rbth.co.uk/arts/2013/09/13/six_ig_nobel_prize_awards_received_by_russians_29823.html
And the 2013 awards summary: http://www.policymic.com/articles/63697/10-weirdest-ig-nobel-prize-winners-this-year
This weeks Part 2 is turning out to be quite a Russia-fest - not by design, just as an accident… so to conclude it - an images gallery from Kamchatka Peninsula: http://rbth.co.uk/multimedia/pictures/2013/09/11/going_to_kamchatka_to_get_a_glimpse_of_the_moon_29721.html
Enjoy the links!
14/9/2013: IMHO signs agreement with Alsop Space Ltd
Irish Mortgage Holders Association have signed an agreement with Alsop Space Ltd that ensures that Alsop Space Ltd will not undertake auctions of repossesses Irish primary residences.
Keep an eye out for more details: https://www.mortgageholders.ie/
Keep an eye out for more details: https://www.mortgageholders.ie/
Friday, September 13, 2013
13/9/2013: WLASze Part 1: Weekend Links on Arts, Sciences and zero economics
Due to time constraints of tomorrow's TEDx talks (http://www.tedxdublin.com/), this is a shorter version of WLASze: Weekend Links on Arts, Sciences and zero economics. More to follow in part 2 later, so enjoy the eclectic mix…
Let's start with the truly 'first' for humanity. This week, Nasa announced that "Voyager 1 has entered interstellar space. The NASA spacecraft, which rose from Earth on a September morning 36 years ago, has traveled farther than anyone, or anything, in history".
http://www.youtube.com/watch?v=cHsdOU9biAU&feature=youtu.be
Read about it here: http://voyager.jpl.nasa.gov/
What a fantastic achievement. A long leap for a piece of by-now-outdated technology, and a giant laps for mankind!
The taxonomy of space traversed by Voyager 1 is explained here: http://www.jpl.nasa.gov/spaceimages/details.php?id=PIA17460 with a handy graphic. And here is the hero itself, as spotted by earth-based radio telescopes back On February 21, 2013,
For large numbers lovers: the spacecraft, launched in 1977, is currently nearly 12 billion miles (19 billion kilometers) away from the sun. The picture shows Voyager 1 at 11.5 billion miles (18.5 billion kilometers) away. This was the stuff that Konstantin Tsiolkovsky (who's 156th birthday will come September 17th), Hermann Oberth and Robert H. Goddard dreamed about.
Skies, space, time still fascinate us today. On a smaller scale of achievement, but stunningly beautifully executed, here are the Ethereal Landscape Photo Manipulations by Polish photographer, Michal Karcz:
http://emorfes.com/2013/09/08/ethereal-landscape-photo-manipulations-by-michal-karcz/
His website: http://www.michalkarcz.com/
Of space:
And time:
While on concept of time, here's a shot from the past - a long mis-identified van Gogh
http://www.nytimes.com/2013/09/10/arts/design/new-van-gogh-painting-discovered-in-amsterdam.html?_r=0&hp=&adxnnl=1&adxnnlx=1378732079-VxsU8Azzq08ccDgxBuLvEw
All handy-dandy, art prices etc, but The Onion take is as usual - priceless (yes, the discovery is significant enough to make it into The Onion)…
http://www.theonion.com/articles/heartless-dutch-curators-put-deranged-scrawlings-o,33803/
Here are two highest resolution images I could find:
From things filling us with wonder and amazement to dumbing down. The former are of art, the latter is of science… or rather the study of humanity... even worse, humanity linked to politics (now the standard is set at absolute zero):
http://www.motherjones.com/politics/2013/09/new-study-politics-makes-you-innumerate
Absolutely fascinating, until you recognise that majority of economists are mathematically more numerate and politically more dogmatic than your average educated person. Which, of course, just confirms the study results... by not even being an exception to the rule…
Let's start with the truly 'first' for humanity. This week, Nasa announced that "Voyager 1 has entered interstellar space. The NASA spacecraft, which rose from Earth on a September morning 36 years ago, has traveled farther than anyone, or anything, in history".
http://www.youtube.com/watch?v=cHsdOU9biAU&feature=youtu.be
Read about it here: http://voyager.jpl.nasa.gov/
What a fantastic achievement. A long leap for a piece of by-now-outdated technology, and a giant laps for mankind!
The taxonomy of space traversed by Voyager 1 is explained here: http://www.jpl.nasa.gov/spaceimages/details.php?id=PIA17460 with a handy graphic. And here is the hero itself, as spotted by earth-based radio telescopes back On February 21, 2013,
For large numbers lovers: the spacecraft, launched in 1977, is currently nearly 12 billion miles (19 billion kilometers) away from the sun. The picture shows Voyager 1 at 11.5 billion miles (18.5 billion kilometers) away. This was the stuff that Konstantin Tsiolkovsky (who's 156th birthday will come September 17th), Hermann Oberth and Robert H. Goddard dreamed about.
Skies, space, time still fascinate us today. On a smaller scale of achievement, but stunningly beautifully executed, here are the Ethereal Landscape Photo Manipulations by Polish photographer, Michal Karcz:
http://emorfes.com/2013/09/08/ethereal-landscape-photo-manipulations-by-michal-karcz/
His website: http://www.michalkarcz.com/
Of space:
And time:
While on concept of time, here's a shot from the past - a long mis-identified van Gogh
http://www.nytimes.com/2013/09/10/arts/design/new-van-gogh-painting-discovered-in-amsterdam.html?_r=0&hp=&adxnnl=1&adxnnlx=1378732079-VxsU8Azzq08ccDgxBuLvEw
All handy-dandy, art prices etc, but The Onion take is as usual - priceless (yes, the discovery is significant enough to make it into The Onion)…
http://www.theonion.com/articles/heartless-dutch-curators-put-deranged-scrawlings-o,33803/
Here are two highest resolution images I could find:
From things filling us with wonder and amazement to dumbing down. The former are of art, the latter is of science… or rather the study of humanity... even worse, humanity linked to politics (now the standard is set at absolute zero):
http://www.motherjones.com/politics/2013/09/new-study-politics-makes-you-innumerate
Absolutely fascinating, until you recognise that majority of economists are mathematically more numerate and politically more dogmatic than your average educated person. Which, of course, just confirms the study results... by not even being an exception to the rule…
13/9/2013: Ireland's risk ratings steady: ECR
Quick updates on country risk scores from Euromoney Country Risk surveys:
Higher scores imply lower risk. For comparative, Ireland currently is at 57.81. The global heat-map is:
You can click on image to enlarge.
And Ireland's risk assessment summary:
Higher scores imply lower risk. For comparative, Ireland currently is at 57.81. The global heat-map is:
You can click on image to enlarge.
And Ireland's risk assessment summary:
13/9/2013: EU Leader Asks for Self-Censorship from the EU Auditors
If anyone needs a proof that EU elites are intrinsically incapable of accepting open, transparent & properly structured democratic governance, here it is: an EU President who seemingly explicitly advocates suppression or manipulation of facts to serve ideological purpose. This goes beyond simply paying for propaganda news channels and advertorial 'museums' or carrying out a calendar full of questionable in value activities at the expense of taxpayers. Europe's President now demands suppression of disclosure and spinning of reports by EU auditors. In effect we have a man who confuses executive power for absolute power and has a blurred notion of the role of audit in any society or institution.
Stunning admission by a senior EU leader of his innate disdain for checks and balances in the system he allegedly serves.
http://www.telegraph.co.uk/news/worldnews/europe/eu/10306461/EU-auditors-must-tone-down-criticism-of-Brussels-spending-says-Herman-Van-Rompuy.html
Stunning admission by a senior EU leader of his innate disdain for checks and balances in the system he allegedly serves.
http://www.telegraph.co.uk/news/worldnews/europe/eu/10306461/EU-auditors-must-tone-down-criticism-of-Brussels-spending-says-Herman-Van-Rompuy.html
13/9/2013: Another month, another 'look into' Irish tax rules
The regular readers of this blog are aware that I try to track the more important news items concerning Ireland's corporate tax policies. The links to these stories can be successively follows from here: http://trueeconomics.blogspot.ie/2013/08/1982013-tax-haven-ireland-in-2009-news.html
Two more items from today are worth listing in addition to the above:
Two more items from today are worth listing in addition to the above:
- An article from the Irish Independent (http://www.independent.ie/business/irish/state-to-lift-lid-on-us-firms-secret-tax-rulings-29575810.html). Couple of selective quotes: "Details of how multinational companies' tiny tax bills are calculated are to be revealed by the State for the first time." And per usual disclosure that the Stockholm Syndrome patients must have: "Irish authorities have always insisted that there are no special tax deals for companies. Under Irish law, all businesses are supposed to be subject to the same laws and tax rates." Alas, as article notes: "This is the first time information about how Ireland taxes big corporations has ever been shared outside of the Revenue Commissioners and the companies themselves... Tax rulings are so confidential that even the Department of Finance is never given details by Revenue of individual cases." Ok, nothing to see there, folks, it's just so we like secrets, we've just decided to have our own Area 51... cause we like it that way, not cause there's any smoking guns or something...
- And so we don't really have to worry about out tax policies, as the Government says we shouldn't, here's a article from the Irish Times (http://www.irishtimes.com/business/economy/eu-finance-ministers-put-state-s-tax-regime-in-spotlight-1.1525893). More selective quotes: "Ireland is likely to face tough questions about its corporate tax regime when EU finance ministers gather today in Vilnius for a two-day meeting, following confirmation that the European Commission has begun a preliminary inquiry into the country’s tax practices." Repeat with me... there is nothing in these codes to worry about. "... Ireland, Luxembourg and the Netherlands will be under pressure to defend their tax structures amid claims that all three countries may have offered tax deals to specific companies in breach of state aid rules." Clearly all G7 nations, plus all EU nations are just being taken for a ride by someone, somewhere, who got it into their heads that there is something questionable going on with Irish tax system. In case you have doubts: "Dublin moved quickly yesterday to deny suggestions that Ireland had engaged in anti-competitive behaviour, with Taoiseach Enda Kenny insisting that the State was committed to a “transparent” system. Tánaiste Eamon Gilmore said that Ireland’s tax regime was open and “statute-based”. He said his understanding was that the inquiry was part of an “information-gathering exercise which is done from time to time”." Yes, that's right folks: 'from time to time' 'routine stuff'... Would Mr Gilmore - with his wisdom and perfect knowledge of the matters suggest to us when was the last time the 'routine' thingy 'gathering' such information was done? Or when was the last time G7 and G20 discussed Ireland's tax rule before 2011-2013? Just for the record, please, Mr Gilmore?
Thursday, September 12, 2013
12/9/2013: Actual v Potential Emigration from Ireland
In recent weeks, I have seen a number of figures mentioned relating to the extent of emigration from Ireland over the recent years, ranging from 300,000 to 400,000 emigrants. Here is the summary of the data:
Actual levels of Emigration from 2009 through 2013 stand at 397,900 cumulative emigrants. Actual recorded Net Emigration from Ireland over that period stands at 120,800.
Taking into the account the trends for inward and outward migration from 2000 through 2007, Net Emigration reflective of pre-crisis trend stands at around 436,700. This number, however, assumes that the trend for inward inflow of people into the country as well as the trend for outward outflow of people from the country established over 2000-2007 were to continue into 2009-2013 period as well. As such, this number (loosely) represents the potential loss of population due to rising emigration and reduced immigration. Most of this effect is driven by reduction in the inflows of people into the country relative to trend.
While the last number is only indicative and an estimate, it does show that the true demographic cost of the crisis to Ireland is in the region of 436,700 fewer residents in this economy than could have been expected under the pre-crisis trends.
Actual levels of Emigration from 2009 through 2013 stand at 397,900 cumulative emigrants. Actual recorded Net Emigration from Ireland over that period stands at 120,800.
Taking into the account the trends for inward and outward migration from 2000 through 2007, Net Emigration reflective of pre-crisis trend stands at around 436,700. This number, however, assumes that the trend for inward inflow of people into the country as well as the trend for outward outflow of people from the country established over 2000-2007 were to continue into 2009-2013 period as well. As such, this number (loosely) represents the potential loss of population due to rising emigration and reduced immigration. Most of this effect is driven by reduction in the inflows of people into the country relative to trend.
While the last number is only indicative and an estimate, it does show that the true demographic cost of the crisis to Ireland is in the region of 436,700 fewer residents in this economy than could have been expected under the pre-crisis trends.
12/9/2013: BlackRock Institute survey: N. America & W. Europe: September 2013
BlackRock Investment Institute released its latest Economic Cycle Survey for North America and Western Europe region for September 2013.
Per summary: "This month’s North America and Western Europe Economic Cycle Survey presented a positive outlook on global growth, with a net of 71% of 119 economists expecting the global economy will get stronger over the next year. (1% higher than within the August report).
At the 12 month horizon, the positive theme continued with the consensus expecting all economies spanned by the survey to strengthen or remain the same.
The consensus outlook for the Eurozone continued to improve, where the 6 month forward outlook shifted from 75% to 86% expecting the currency-bloc to move to an expansionary phase. The picture within the bloc was not uniform however, with most respondents expecting Portugal, Greece, Belgium and the Netherlands to remain in a recessionary phase over the next 2 quarters.
With regards to the US, the consensus view firmly that North America as a whole is in mid-cycle expansion and remaining so through H2 2013."
September improvement for the global outlook was much shallower than a 10 point jump in August. Ditto for Eurozone outlook: this rose from 57% in July to 75% in August to 87% in September. Italy outlook seemed to have improved quite markedly, however.
Note: these views reflect opinions of survey respondents, not that of the BlackRock Investment Institute. Also note: cover of countries is relatively uneven, with some countries being assessed by a relatively small number of experts.
Two charts as usual:
Ireland continues to lead expectations, just as it did in previous 3 months.
In global expectations there were some notable movements in analysts' replies. 6% of analysts expected global economy to get a lot stronger over the next 12 months back in August, and this declined to 2% in the current survey. 69% expected it to get a little stronger in August and this proportion rose to 76% in September. 5% expected the global economy to get a little weaker in the next 12 months back in August, which in September rose to 6%.
In Ireland's case, in August zero percent of analysts expected the economy to get a lot stronger over the next 12 months and this remained unchanged in September survey. All analysts (100%) expected the Irish economy to get a little stronger over the next 12 months in September survey - same as in August. 57% of analysts expected the economy to be in an early-cycle recovery over the next 6 months back in August, and this fell to 50% for September survey. There was significant rise (from 0% to 17% between August and September surveys) in the proportion of analysts expecting Irish economy to be in mid-cycle expansion over the next 6 months period. The number of analysts expecting the economy to be in a late-recession over the next 6 months dropped from 43% in August to 33% in September.
12/9/2013: Lorenzo Bini-Smaghi Strikes... again
A very interesting article in Telegraph quoting from Lorenzo Bini-Smaghi's book on went inside Berlusconi's PMship at the 11th hour of his tenure. Bini-Smaghi is one of the key ECB and Euro system insiders and is hardly a naive or malinformed observer.
Link: http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100025507/italy-floated-plans-to-leave-euro-in-2011-says-ecb-insider/
If true, there are massive implications (items 1 and 2) on political/governance side and a point of deflated rhetoric (item 3):
Link: http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100025507/italy-floated-plans-to-leave-euro-in-2011-says-ecb-insider/
If true, there are massive implications (items 1 and 2) on political/governance side and a point of deflated rhetoric (item 3):
- According to information give by Bini-Smaghi, Berlusconi was effectively removed from democratically-held office due to his willingness to discuss Italy's exit from the euro. This puts a solid boot into the idea of democratic EU and limited sovereignty. If a democratically elected head of state raising concern about the suitability of his/her country membership in the common currency leads to the removal of the head of state, the notion of sovereignty is not limited (as in restricted by the letters of the treaties signed), but truncated (implying absolute exclusion of some considerations from the set of feasible policies).
- The only thing that held the Euro together in the end was not the ECB with its OMT, but convincing Merkel of the MAD consequences of Greek exit from the union. This in turn implies that there are no institutional constraints on German (or Germano-French axis) power within the union. This problem will not be fixed by all the policies harmonisation and banking supervision reforms anyone can imagine.
- Being not a specialist on Target 2, I cannot exactly / scientifically confirm or decline Mr. Evans-Pritchard's concerns about the risk transfer within the eurosystem. My understanding is that Target 2 'imbalances' on Bundesbank side are caused by deposits swelling, not assets. Here is how the system functions, in my view: peripheral bank borrows funds from the ECB against collateral. Collateral lands at ECB as an asset. Peripheral bank uses borrowed funds to repay liability to a, say, German bank. Peripheral bank writes down liability to offset the writedown of cash paid. Peripheral bank remains oweing to the ECB. German bank gets cash in exchange for writing down the asset (peripheral bank's liability) and deposits money with Bundesbank which enters as a positive entry on Target 2. Now, suppose the peripheral bank defaults on ECB loan. ECB still has a collateral claim. The net loss (loan amount less collateral value), shall one arise, is amortisable over the entire Eurosystem - all CBs, not just Bundesbank or ECB alone. And more, per Jorg Asmussen: "If a net loss remains even after taking into account all provisions and reserves, it could be recorded on the balance sheet as losses carried forward and be offset by any net income in the following years." (see: http://www.ecb.europa.eu/press/key/date/2013/html/sp130611.en.html). Finally, I do not know where he is getting the information that Bundesbank is selling offset securities to any banks to balance out inflows of funds to German banks from the periphery.
Note: many thanks to Lorcan Roche-Kelly (@LorcanRK) for acting as a sounding board for my doubts on Target 2 and the link to Asmussen's speech above.
Tuesday, September 10, 2013
10/9/2013: PMI and the real economy: Goldman Sachs notices disconnect
So ZeroHedge picks on Goldman Sachs taking the Euro area PMIs apart along the same lines as my recent criticism of the headline index: http://www.zerohedge.com/news/2013-09-09/goldman-pours-cold-water-exuberance-european-pmis.
Here is my take:
Here is my take:
- Irish Services PMI detached from reality: http://trueeconomics.blogspot.ie/2013/09/592013-cautionary-note-on-irish.html
- Irish Construction Sector PMI tracking itself, rather than actual construction activity: http://trueeconomics.blogspot.ie/2013/09/292013-sunday-times-august-25.html
- Both Manufacturing and Services PMI failing to explain/track economic growth: http://trueeconomics.blogspot.ie/2013/07/772013-irish-manufacturing-services-pmi.html
- The point at which Markit stopped reporting actual sub-indices series or even current month values: http://trueeconomics.blogspot.ie/2013/07/772013-services-pmi-for-ireland-june.html
And so on...
Monday, September 9, 2013
9/9/2013: E. European economies assessment by EU Commission
New paper on Eastern European economies from the EU Commission, titled "The EU’s neighbouring economies: managing policies in a challenging global environment" (Occasional Papers 160 | August 2013 : http://ec.europa.eu/economy_finance/publications/occasional_paper/2013/pdf/ocp160_en.pdf) provides some in-depth stats and analysis of 16 core neighbouring economies, including in the context of the Arab Spring and Russia partnerships.
Here are some interesting stats relating to Russia.
An interesting perspective on the overall Eastern European and CIS economic realm from the point of view of Russia-EU links: "High dependence on both the EU and Russia, along with still weak institutions, is a major drawback for the Eastern neighbours, particularly since the Russian economy shows a relatively high correlation with the EU economy." This suggests that Eastern 'neighbourhood' is not offering a good hedging potential for real economic activities and financial markets - both propositions that are yet to be formally tested, as far as I am aware.
The main pathways for risk transmission between Russia and EU are: financial markets and real trade.
Two tables to highlight risk transmission pathways between EU and Eastern neighbourhood and Russia in terms of trade and tourism :
Forward conclusion: "The Eastern neighbours as a whole, but also the Maghreb
countries (which also benefit less from the buffering role of the GCC countries) seem more exposed to a prolongation or intensification of the euro area crisis, especially since under such scenario the Russian economy is likely to increase its co-movement with the EU cycle."
Another pathway for risk transmission is remittances flows. Chart below illustrates:
However, in recent years, remittances out of Russia have been performing well:
FDI inflows side: "The exposure of the Eastern neighbours to EU FDI also varies significantly across countries. In the region, Ukraine is clearly the country most exposed to changes in EU FDI. In fact, the largest FDI inflows in Ukraine in 2010 (in terms of equity capital invested, i.e. excluding reinvested earnings and intra-company loans) came from the EU (54%) and from Russia (16%). Exposure of other neighbours (e.g. Belarus) to EU FDI is more limited, notably because of the importance of other regional investors, including Russia."
Extent of output links up between Eastern neighbours and Russia is pretty severe for a number of countries:
"The fact that Russia’s growth is also strongly correlated with that of the EU (the coefficient is 0.9 for the period 2000-13" compounds the problem of risks transmission.
More recent data confirms the same:
Quite an interesting set of pathways when it comes to intra-EM risks transfers.
Sunday, September 8, 2013
8/9/2013: Dublin's 'burgeoning' workforce attracts MNCs? Err... what?..
A quick post. Recent research note from one of the highly regarded property research outfits in Ireland cited the following sources of Ireland's success in attracting nine out of ten largest tech companies to Dublin: "low corporation tax rates and a burgeoning workforce which is young, educated and English speaking." This references not some abstract period of, say, 'since 1990' or even 'since 2000', but the last few years, as the argument is then carried over as a reason / a causal explanation for the reported boom in prime office rents in Dublin in H1 2013.
While I do not want to pick any fights over anything, least of all the 'young' bit (read my Sunday Times column from today on 'demographic dividend') or 'educated' part (see my view of our education system and skills/human capital on this blog) or 'English speaking' (slightly ironic, given tech employers are complaining about the lack of foreign languages skills availability in Dublin), I wonder what this 'burgeoning workforce' references.
Here is data from CSO on Dublin's workforce for Q2 (or H1) in every year on record:
Can you spot 'burgeoning'? In Q2 2013, there were 555,100 persons aged over 15 in employment in Dublin region. This represents second lowest level of employment (after Q2 2012 when the number was only 7,700 lower at 547,400) since Q2 2004. In other words, our workforce 'burgeoned' into a 10-year slump in terms of employment.
Now, in terms of labour force numbers, in Q2 2013 there were 630,500 in labour force in Dublin. This marked an increase of only 6,200 on Q2 2012 and marked the second lowest level reading since Q2 2006. With all the positive demographics and the tech sector boom cited by the property researchers, the burgeoning we might have experienced in labour force levels terms was consistent with the hitting a 7-year slump. Slightly more 'burgeoning' than employment figures, but still not exactly exciting enough to stir any tech companies rushing into Dublin.
Note: I reference two numbers in relation to the 'workforce' term: labour force and employment. The latter measures those who currently work, the former includes the latter, plus the unemployed, excluding those in education and training. I seriously doubt US tech giants are coming here for the pool of the unemployed. Which means that the 'workforce' that can be expected to be strongly positively correlated with incentives for the MNCs to locate here would be measured by employment figures, not by general labour force ones.
8/9/2013: WLASze Part 3: Weekend Links on Arts, Sciences and Zero Economics
This is the third post of WLASze: Weekend Links on Arts, Sciences and zero economics. Previous two posts are linked here.
Just a couple of sets of links this time around.
An interesting blogpost asking "How do we distinguish between “lucky” world [chess] champions like Khalifman and “convincing” world champions like Fischer? How can we be confident that the winner of a match is really the best player in the world?" Lucky for us, the post describes statistical techniques available to do just that:
http://www.chessbase.com/Home/TabId/211/PostId/4011019/are-the-chess-world-champions-just-lucky-040913.aspx
The problem is not a trivial one, especially in the environment such as chess. We come to think about luck as applying in the cases where random outcomes are possible within the game rules or set ups. Alas, randomness can be induced into a game setting by simply having two humans facing each other. In a way, Kasparov's matches against the IBM computers have potentially shown that just one human is sufficient to induce randomness into the game.
Dezeen has two articles on buildings skinned with plants: vertical gardens.
Here's one in Paris II: http://www.dezeen.com/2013/09/08/the-oasis-of-aboukir-green-wall-by-patrick-blanc/. It is a stunning example of a vertical garden and, frankly, makes me want to replicate the exercise with my own garden wall.
The really significant bit - aside from stunning aesthetic and complex, beautiful design - is that the building is a historical one, in Paris II. In other words, the city allowed this bold intervention into cityscape and architecture to proceed. They deserve recognition for doing so. The effect is superb.
They do have some experience with vertical gardens in public spaces, however. Here's another project Vertical garden of the Musee du Quai Branly in Paris, France, also created by Patrick Blanc
Maturing design for the workspace/house in Linkebeek, Belgium created by Samyn & Partners and the same Patrick Blanc:
Another article is about providing an offset lattice of plants to a historical building: http://www.dezeen.com/2013/09/07/gnration-by-carvalho-araujo/
What a superbly complex, multi-use, challenging regeneration project. "The project uses the concept of occupation as motif," explain the architects. "It explores the boundary between an abandoned existing structure and a new invader construction who takes over the space." Another superb effort!
You can see more stories about planted walls and buildings at the bottom of the first post (scroll to the bottom of the page here: http://www.dezeen.com/2013/09/08/the-oasis-of-aboukir-green-wall-by-patrick-blanc/). My favourites are:
http://www.dezeen.com/2013/03/13/sportplaza-mercator-by-venhoevencs/
http://www.dezeen.com/2012/11/08/house-in-travessa-do-patrocinio-with-green-walls/
http://www.dezeen.com/2012/06/18/green-cast-by-kengo-kuma-associates/
Enjoy!
Just a couple of sets of links this time around.
An interesting blogpost asking "How do we distinguish between “lucky” world [chess] champions like Khalifman and “convincing” world champions like Fischer? How can we be confident that the winner of a match is really the best player in the world?" Lucky for us, the post describes statistical techniques available to do just that:
http://www.chessbase.com/Home/TabId/211/PostId/4011019/are-the-chess-world-champions-just-lucky-040913.aspx
The problem is not a trivial one, especially in the environment such as chess. We come to think about luck as applying in the cases where random outcomes are possible within the game rules or set ups. Alas, randomness can be induced into a game setting by simply having two humans facing each other. In a way, Kasparov's matches against the IBM computers have potentially shown that just one human is sufficient to induce randomness into the game.
Dezeen has two articles on buildings skinned with plants: vertical gardens.
Here's one in Paris II: http://www.dezeen.com/2013/09/08/the-oasis-of-aboukir-green-wall-by-patrick-blanc/. It is a stunning example of a vertical garden and, frankly, makes me want to replicate the exercise with my own garden wall.
The really significant bit - aside from stunning aesthetic and complex, beautiful design - is that the building is a historical one, in Paris II. In other words, the city allowed this bold intervention into cityscape and architecture to proceed. They deserve recognition for doing so. The effect is superb.
They do have some experience with vertical gardens in public spaces, however. Here's another project Vertical garden of the Musee du Quai Branly in Paris, France, also created by Patrick Blanc
Maturing design for the workspace/house in Linkebeek, Belgium created by Samyn & Partners and the same Patrick Blanc:
Another article is about providing an offset lattice of plants to a historical building: http://www.dezeen.com/2013/09/07/gnration-by-carvalho-araujo/
What a superbly complex, multi-use, challenging regeneration project. "The project uses the concept of occupation as motif," explain the architects. "It explores the boundary between an abandoned existing structure and a new invader construction who takes over the space." Another superb effort!
You can see more stories about planted walls and buildings at the bottom of the first post (scroll to the bottom of the page here: http://www.dezeen.com/2013/09/08/the-oasis-of-aboukir-green-wall-by-patrick-blanc/). My favourites are:
http://www.dezeen.com/2013/03/13/sportplaza-mercator-by-venhoevencs/
http://www.dezeen.com/2012/11/08/house-in-travessa-do-patrocinio-with-green-walls/
http://www.dezeen.com/2012/06/18/green-cast-by-kengo-kuma-associates/
Enjoy!
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