Has the government reacted appropriately to the economic crisis?

David Bloch, MD of the Brightwater Group comments:

The Government are clearly not impressing people with their handling of the economy, but I’ve noticed the statistics improve slightly since the budget… but not by much.

There are so many issues to go through and everyone has their opinion, all differing. I’m an MD of a recruitment company and my expertise is people, so I’m going to stick mostly to the human angle.

First-off, the government have done some things that were initially heralded as smart, like the Bank guarantees. NAMA was recommended and backed by the ECB. Ireland’s budget has been generally applauded internationally. As for the last 10 years, well they haven’t been entirely wasted by the government with huge infrastructural developments across the country… our debt to GDP ratio 20 years ago was about 100%, in 1997 it was 60% and in 2007 it was down to 20%. This has enabled the government to respond now. Also, the government has been somewhat handicapped by Ireland being part of the EMU, thus losing control of interest rates and even our currency - over the last 10 years it was difficult to slow the growth of the economy with EU interest rates so low and now, when we want to the interest rates even lower to heat things up, we can’t because bigger economies like Germany are more afraid of inflation than deflation. However… Delivery is everything!

The above paragraph could easily be rewritten about the US. We could decry the printing of money, the waste of trillions of dollars etc, but we just love Barack Obama! We love him because he stands before us, tall, handsome and confident and we WANT to believe everything he’s telling us. I’m afraid the converse is true of Brian Cowen and his government.

If this is a war (and it is perhaps a modern, first-world type war fought economically and politically), then we need Churchill, not Chamberlain. We need a leader who makes speeches that inspire us. We need a vision of the future, and we need it delivered by a person we want to believe in. On these criteria, I’m afraid Brian Cowen is definitely not the right person. Policy is not enough, good or bad.

I guess I can’t help but add a few positive statistics:

1. In the early 1990’s Ireland’s technology industries consisted of just 19,000 people. Today, they employ 91,000
2. There are 1 million more people employed in Ireland today than there were 10 years ago
3. Ireland’s GDP per capita (an individual’s economic output) - if the EU average is 100 – is 135. (Germany 117, UK 114, Japan 107) etc.
4. Ireland’s exports are down 5.9% this year – but Germany 16.5, Italy 15.9, UK 9.8 are worse!
5. The IDA brought in 130 investments into Ireland in 2008 and that’s continuing in 2009 – they’re able to do that because Ireland is a great country in every way. Now, if the Media would just get On Side (sorry, couldn’t help that… it’s my pet hate)!

NB. I have just been sent some interesting stats from an MD colleague which I found interesting which he titled: GREEN SHOOTS (IRISH ECONOMY)

• (a) Retail sales, other than those for the motor trade, appear to have stabilised - these are the volume indices for Nov 08 to Feb 09:
  

  Nov 08	106.5
  Dec 08	107.6
  Jan 09	106.5
  Feb 09	107.9

• (b) Seasonally-adjusted manufacturing output volume in Jan and Feb 2009 was 4.9% higher than in 2008 Q4 . Ireland was the only EU country to record an increase in this period.
• (c) Seasonally-adjusted average exports value in Jan and Feb 2009 was 6.8% higher than in 2008 Q4. Ireland was again the only EU country to record an increase in this period.
• (d) Manufacturing output and exports are holding up much better in Ireland than in any other EU country. In the first 2 months of 2009, manufacturing output and exports were both down 1% in Ireland compared with the first 2 months of 2008. In other EU countries the falls were of the order of 15% to 25% (with the EU average fall being 18%).
• (e) The ISEQ rose by 18% in April - as far as I can see (and I couldn't check every country), the ISEQ was the best-performing index in the OECD in April.
• (f) Ireland's harmonised inflation rate in March was the lowest in the EU27.
• (g) Ireland's merchandise trade surplus is soaring and is now running at an annualised rate of 44 billion (3.7 billion in Feb), compared with the Central Bank forecast of 30 billion for 2009.
• (h) Ireland is now heading for a balance-of-payments surplus in 2009, barring some unforeseen calamity in the remainder of 2009.
• (i) The increase in unemployment appears to be slowing. These are the seasonally-adjusted increases since Oct 08:
  

  Oct 08	15,900
  Nov 08	16,400
  Dec 08	16,400
  Jan 09	33,000
  Feb 09	26,700
  Mar 09	20,000
  Apr 09	15,800

However, one thing omitted in most media analyses of the April figures is that the increase in male unemployment slowed much more than for females. Over the years, there has often been a surge of about 2,000 to 3,000 in the number of females on the Live Register in April, with a corresponding drop in May, because of the Easter school holidays and the fact that the bulk of school employees are female. CSO seasonal-adjustment never seems to fully take it into account. We'll have to wait until the May figures to see if this was in evidence in April. But, for the record, the seasonally-adjusted increases since Oct 08 for males and females were:

Oct 08	male	11,500	female	4,400
Nov 08	male	13,000	female	3,400
Dec 08	male	12,500	female	3,900
Jan 09	male	22,900	female	10,100
Feb 09	male	18,200	female	8,500
Mar 09	male	13,900	female	6,100
Apr 09	male	9,300	female	6,500

As can be seen, while there was a very large drop between March and April in the male unemployment increases, that for females rose. If my theory is correct, then this could be explained by the 'Easter school holidays' effect mentioned above. If this is correct, then the underlying increase in female unemployment in April would have been around 4,000 (rather than the 6,500 published) and for total unemployment around 13,300 (rather than the 15,800 published).