{"id":17418,"date":"2011-12-19T18:01:46","date_gmt":"2011-12-19T07:01:46","guid":{"rendered":"https:\/\/billmitchell.org\/blog\/?p=17418"},"modified":"2011-12-19T18:01:46","modified_gmt":"2011-12-19T07:01:46","slug":"hows-poor-old-ireland-and-how-does-she-stand","status":"publish","type":"post","link":"https:\/\/billmitchell.org\/blog\/?p=17418","title":{"rendered":"How’s poor old Ireland, and how does she stand?"},"content":{"rendered":"

\t\t\t\tLast Friday (December 16, 2011), Ireland’s Central Statistics Office published their – National Accounts<\/a> – for the September quarter 2011 and guess what? Things just became worse. Ireland is now nearly two years in the enforced austerity and all the deficit terrorists have been watching it closely for signs of life. The slightest upturn in GDP growth has brought a salvo of attacks on any one daring to oppose the harsh austerity. Well, I also watch it closely and the pattern that is unfolding is consistent with predictions. Things are getting worse not better. The only growth “engine” has been exports and with austerity spreading that market will not be strong enough to sustain growth when domestic demand is being ravaged by austerity.
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\nThe title of today’s blog comes from the song – Wearin’ o’ the Green<\/a> – beautifully sung by the famous Irish tenor John McCormack<\/a>.<\/p>\n

\nO Paddy dear, and did ye hear the news that’s goin’ round?
\nThe shamrock is by law forbid to grow on Irish ground!
\nNo more Saint Patrick’s Day we’ll keep, his color can’t be seen
\nFor there’s a cruel law ag’in the Wearin’ o’ the Green.<\/p>\n

I met with Napper Tandy, and he took me by the hand
\nAnd he said, “How’s poor old Ireland, and how does she stand?”
\n“She’s the most distressful country that ever yet was seen
\nFor they’re hanging men and women there for the Wearin’ o’ the Green.”<\/p>\n

So if the color we must wear be England’s cruel red
\nLet it remind us of the blood that Irishmen have shed
\nAnd pull the shamrock from your hat, and throw it on the sod
\nBut never fear, ’twill take root there, though underfoot ’tis trod.<\/p>\n

When laws can stop the blades of grass from growin’ as they grow
\nAnd when the leaves in summer-time their color dare not show
\nThen I will change the color too I wear in my caubeen
\nBut till that day, please God, I’ll stick to the Wearin’ o’ the Green.\n<\/p><\/blockquote>\n

So, how’s poor old Ireland, and how does she stand?<\/p>\n

Ireland was the first of the EMU nations to embrace the austerity mantra – the first of the governments to openly engage in economic policy malpractice by abandoning their responsibilities to advance public purpose. The data supporting that claim is easily available (see below).<\/p>\n

But at each sign of growth, the conservatives have been jumping up and down claiming victory.<\/p>\n

Remember the news in the middle of last year that Ireland was defying the critics of austerity. For example, this Reuters news report (June 30, 2010) – Ireland exits recession but recovery fragile<\/a> – quoted a Moody’s economist who said:<\/p>\n

\nRealistically, sustained growth is unlikely to take hold until late next year, with continued pressure both at home and abroad\n<\/p><\/blockquote>\n

There were many similar predictions about Ireland.<\/p>\n

Then this year we read that in the June quarter 2011 – Ireland’s trade surplus hits record high in June<\/a>. <\/p>\n

US academic economist Tyler Cowen (a Chicago School devotee) claimed (September 22, 2011) that the – Irish recovery from “austerity” update, not exactly the Keynesian story<\/a>.<\/p>\n

My prediction has been constant. It will be very difficult for Ireland to grow at all while it is cutting domestic demand and austerity elsewhere is damaging its export markets (mainly the UK).<\/p>\n

Please read my blog – Fiscal austerity – the newest fallacy of composition<\/a> – for more discussion on this point.<\/p>\n

The CSO said in their most recent National Accounts release that:<\/p>\n

\nInitial estimates for the third quarter of 2011 show seasonally adjusted decreases of 1.9 per cent in GDP and 2.2 per cent in GNP compared with Q2 2011. Comparing Q3 2011 with the same quarter one year earlier, GDP at constant prices registered a decrease of 0.1 per cent while GNP was 4.2 per cent lower.\n<\/p><\/blockquote>\n

The following graph shows quarterly growth rates in real Gross Domestic Product (GDP) and Gross National Product (GNP) from the first quarter 2007 to the June 2010 quarter. Clearly the GDP growth in the June 2010 quarter is what everybody is focusing on. The most recent quarter shows a 2.7 per growth although GNP continues to be negative.<\/p>\n

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First, you need to first understand the difference between GDP and GNP. This is a particularly important point when it comes to understanding the Irish predicament (both before the crisis and now. Wikipedia<\/a> is a reasonable place to start in this respect (but not always). A more thorough understanding of these concepts is provided in the excellent publication from the Australian Bureau of Statistics – Australian National Accounts: Concepts, Sources and Methods, 2000<\/a><\/p>\n

The two concepts are defined as such:<\/p>\n