economics finance politics

The Joy of Self-Employment in Ireland

An ironic title as such joy is largely confined to the freedom to pick your work hours that exists in a quite limited sense if you’re providing services to people and you have to fit around their schedules.
Let’s look at the positive side:

  1. You’re the boss. Customers or clients may harass or harangue you but at least the boss won’t bully you.
  2. You have some flexibility regarding place and time of work that you may otherwise not be afforded as a PAYE worker.
  3. Expenses. You get to factor in some expenses associated with a home office into your tax bill. More on this later.
  4. Job security in the sense that you are ultimately responsible for whether you have it rather than a VP or SVP with no personal stake in your life deciding you need to be downsized because your division doesn’t look good on his spreadsheet or you’re at a grade where his costings suggest he could bring in someone younger to bugger up your job.
  5. The sense of achievement that comes with making it on your own.

lack of foresight or willful ignorance?

A friend of mine suggested that my comments about the government’s bungling of the banking sector clean were hindsight and that foresight was rare. Well, while I agree that foresight was rare, we saw a mass mobilisation of academic economists against the government’s plan while it was happening. Therefore I don’t believe it’s in any way fair to say that the criticism was hindsight.

It wasn’t just hindsight. People suggested it
Even stuff like this
suggesting that Roubini and Buiter disagree on NAMA is nonsense. Roubini’s version of NAMA crystalises losses for bond-holders in the banks. That plan was never put into effect as the ECB bullied us into paying almost all the speculators back. NAMA as implemented is totally dumb. Krugman thinks it’s dumb aswell.
And the fundamental flaws of NAMA (as impelmented) were pointed out by the infamous “20 economists” letter
But because the government and a decent portion of the electorate are anti-intellectual and therefore distrustful of advice coming from academics or journalists imho they decided to ignore it. Instead we opted to listen to eurocrats with the most horribly vested interests in Eurozone currency stability at the cost of the Irish taxpayer. It was dumb at the time, it’s still dumb.
We setup a bad bank and left the existing banks to “wither and die” as confidence in their ability to hold deposits withered. We could have setup a good bank but we implemented half a plan.
I think I’ve been pretty damn consistent over the past few years and there was no special insight beyond doing some calculations based on publicly available data AND reading the opinions of non-Irish bankers discussing their fundamental problem with both ECB and Irish mgt of the banking crisis.
We needed to draw a line under the debts and give them a good bank to invest in. We could have swapped out debt in the old banks for equity in the new one. People like McWilliams aren’t fortune tellers and they’re not cranks. All they do is do some simple sums and pay attention to what the people who count are saying. That’s not the ECB, it’s the investment bankers who would have taken losses on the chin if they’d been given a credible plan to move the economy forward, giving them a share in the profits. All we gave them, and Irish deposit holders, was more risk. Hence, people took their money out en masse.

The good bank scenario was suggested by many economists. It ties in with the nationalised banking sector proposal whereby an intermediate stage would be a semi-public good bank where depositors could leave their money with some confidence they would suffer from a “Computer says no” shock at the ATM machine.

economics politics

Ireland versus Iceland

Iceland would win. Consider what has happened to these 2 countries since 2008. Iceland are not part of the EU and held a public referendum to accept the terms of a repayment deal for money lent by British and Dutch governments as a result of the IceSave crisis.The public rejected the initial terms of the deal (93% against) and the government used this result to negotiate a new and more favorable deal.

Let’s look at the terms. They’re paying fixed rates to both NL and UK. 3% to the Netherlands on £1.2Bn STG and 3.3% to the UK on £2.3 Bn STG. Good terms so far but it gets even better. Payments will not begin until July 2016 and cannot continue beyond 2046. Iceland has also secured a limit on the amount it is expected to pay out relative to its national growth. Payments cannot be lower than 1.3% of Iceland’s GDP nor exceed 5%.