Cetic Tiger ROARS on.

freedomlover

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Latest figures on the economy make nonsense of politically-motivated
claims that the economy is heading for recession. In the past week alone
the CSO has released the following figures:

(1) manufacturing output UP 13.9 per cent in volume in the first quarter

(2) retail sales UP 7.2 per cent in volume in the first quarter

(3) An increase in employment of 76,000 in the first quarter of 2007 as
compared with a year ago.

In short, the Celtic Tiger ROARS on. The only evidence for a slowdown is
that two economic forecasting organsations predict it. These are ESRI and
DAVY. So, its illuminating to look at the past record of these two
organisations. The only question to be asked is whether their hopeless
forecasting record is the result of incompetence or whether its because
their forecasts are politically-motivated.

From the Irish Times - 28 September 2001:

"ESRI is predicting growth of 2 per cent in 2002"

FACT:

the eventual outcome was that GDP grew by 6.0 per cent in 2002 and
GNP grew by 3.2 per cent in 2002

From the The Observer - 21 October 2001:

"Robbie Kelleher, of Davy Stockbrokers, said the economy had fallen off
a cliff and that growth in 2002 would be minus 3 or 4 per cent"

FACT:

the eventual outcome was that GDP grew by 6.0 per cent in 2002 and
GNP grew by 3.2 per cent in 2002

From the Irish Times - 8 July 2003:

"ESRI has cut its growth forecasts for this year. It has revised down its
Gross Domestic Product (GDP) forecast for 2003 from 3 per cent to 2.6"

FACT:

the eventual outcome was that GDP grew by 4.3 per cent in 2003

From the Irish Times - 14 April 2004:

"In its latest economic forecast, Davy predicts that growth will slow to
2.6 per cent in 2005"

FACT:

the eventual outcome was that GDP grew by 5.5 per cent in 2005 and
GNP grew by 5.4 per cent in 2005

From the Irish Times - 11 August 2005:

"Stockbroking firm Davy has lowered its forecasts for growth in GNP in
2006 to 4 per cent"

FACT:

the eventual outcome was that GDP grew by 7.4 per cent in 2005
 


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So pray tell who has been making "politically-motivated claims that the economy is heading for recession" ?

- a recession, defined as two successive quarters of negative economic growth.

Apart from possibly cronies of yours on pub stools, I don't know of anyone who has any credibility in economics who has made such a claim.
 

freedomlover

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Headline to article in Irish Times last Monday:

"Inevitable recession awaits poll winners".

By Michael Casey.

Point is we have two of the worst economic forecasting organisations in the world.
 

Defeated Romanticist

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There will be no recession if we vote right
 

I'm in Labour

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freedomlover said:
Point is we have two of the worst economic forecasting organisations in the world.
My apologies. I couldn't agree more and it's been like that for quite some time.
 

Seos

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freedomlover said:
Headline to article in Irish Times last Monday:

"Inevitable recession awaits poll winners".

By Michael Casey.

Point is we have two of the worst economic forecasting organisations in the world.
I didn't read the article but recessions are sort of inevitable.

Whether it happens in the next 5 years is hard to know, it's likely for a slowdown in growth to happen, a few big factors would have to work together for a recession though, it would probably be an outside effect not internal that would cause one though.
 

freedomlover

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Death is inevitable but it doesn't mean you're going to die this year or in the next five years or in the next ten years. Ireland hasn't had a recession since 1983. We didn't have one after the dotcom bubble burst, or after 9/11 or after the quadrupling of oil prices. None is even remotely on the horizon. We can easily go another decade or two without one. But, the Irish Times and some economists have been predicting one every year. Sometime in the next few weeks David McWilliams will be making his one millionth prediction of an Irish economic crash. The Irish Times is going of its way in this election campaign to con voters into believing one is just around the corner. The figures I quoted in my first post make a nonsense of that. Geraldine Kennedy should resign.
 

Rich OC

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While I agree with the gist of the posts about the ESRI (consistently wrong) and Davy (who release these things as a form of advertising - so "Economy to do OK" doesn't really cut it), there was a slowdown which began at the end of 2002 and continued for quite a bit of 2003. Who can forget all of the "Charlie McCreevy lied to us" hysteria after the last election?

The situation then, as now is that we don't need recession for economics to be a reason to upset people - a slowdown from the continuing high growth rates will feel as if we are in a recession.
 

Seos

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freedomlover said:
Death is inevitable but it doesn't mean you're going to die this year or in the next five years or in the next ten years. Ireland hasn't had a recession since 1983. We didn't have one after the dotcom bubble burst, or after 9/11 or after the quadrupling of oil prices. None is even remotely on the horizon. We can easily go another decade or two without one. But, the Irish Times and some economists have been predicting one every year.
That's exactly why they're predicting one. To use your analogy it's like when someone has gone past the life expectancy sure they could live another 30 years but it's unlikely. Of course it's just their best guess with likelyhood on it's side and they should call it that and not a "prediction".
Sometime in the next few weeks David McWilliams will be making his one millionth prediction of an Irish economic crash. The Irish Times is going of its way in this election campaign to con voters into believing one is just around the corner. The figures I quoted in my first post make a nonsense of that. Geraldine Kennedy should resign.
They would make the point that they are just reporting what the economists are saying and if that happens to sell newspapers then all the better... The economists who want to be well known can predict that we'll hit part of the economic cycle and look smart when we do. The media has not reported properly on economy at all, it reports dramatic things like closures while the statistic that more jobs have been created then have gone is just one article once per quarter.
 

freedomlover

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There isn't even any sign of a slowdown. Of course, the business cycle hasn't been eliminated. Some years will be worse/better than others. Not every year from now on will be as good as 2006. But, there is nothing to suggest that average (I emphasise average) growth over the next 20 years will be any less than over the past 20 years (i.e. about 5.5% growth on average, but including some years when its above that and some years when its below that).

The situation re ESRI and DAVY and the way the Irish Times is using their forecasts to generate a 'feel-bad' factor among the electorate is quite remarkable . Economics is the only area of life where the forecasts of 'experts' about what will happen in the future get more prominence than what has actually happened in the recent past. Thus, the fact that Ireland had had the highest economic growth in the EU-15 in each of the past 3 years (and in 8 of the past 10 years) gets zero coverage in the media but instead the impression is generated that the economy is about to implode because a number of forecasters, with an abysmal track record for accurate prediction, say so. And its these predictions of doom in the near future that provide the economic background to this election rather than the actual reality of continuing boom. Contrast this with, say, sport. If a team had just won their third All-Ireland in a row, would there be a clamour for a change of management merely because some 'experts', with a track record of forecasting wrongly almost every year, made a prediction that next year the team was going to get knocked out in the first round. I hardly think so.

Davy of course can do what it likes, they're a private company. But, I help fund ESRI through my taxes. So, why should I fund an organisation that is either hopelessly incompetent or else deliberately issuing pessimistic forecasts to boost the electoral prospects of political parties its in sympathy with.
 
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Rich OC said:
While I agree with the gist of the posts about the ESRI (consistently wrong) and Davy (who release these things as a form of advertising - so "Economy to do OK" doesn't really cut it), there was a slowdown which began at the end of 2002 and continued for quite a bit of 2003. Who can forget all of the "Charlie McCreevy lied to us" hysteria after the last election?

The situation then, as now is that we don't need recession for economics to be a reason to upset people - a slowdown from the continuing high growth rates will feel as if we are in a recession.
Exactly.

There is a slowdown in prospect in 2008 and the construction is the primary motor of the economy.

It's only a fool would argue that an economy that is dependent on foreign firms for 92% of our exports and a construction sector for almost a quarter of GDP output is not vulnerable in the long-term - when there is more competition for foreign direct investment and we have become a high cost economy.

Should we all swallow the spin about becoming a world class knowledge economy in six years when the business sector continues to get just crumbs in venture capital compared with overseas investment in property?

Construction - direct and indirect- accounts for more than 30% of annual tax revenues.

CRH, Ryanair and Denis O'Brien's Digicel are the only Irish related companies of significance that have become significant international players in the past decade.

There is no need to forecast a recession but we have become a petro-like economy, as if construction will be a sustainable option in a decade's time.

In fact by 2016, more than 100,000 in the sector from 282,00 will be looking for work.

In early 1998, the total employment in the sector was 126,000.

We are not like Sweden or Finland with our base of significant international companies.

Most Irish-owned exporting firms do not have a presence beyond the market.
 

blindjustice

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freedomlover said:
Latest figures on the economy make nonsense of politically-motivated
claims that the economy is heading for recession. In the past week alone
the CSO has released the following figures:

(1) manufacturing output UP 13.9 per cent in volume in the first quarter
Our Manufacturing and exporting section declined last year to its worst since 1981. FACT.

(2) retail sales UP 7.2 per cent in volume in the first quarter
This is boosted by January sales.
(3) An increase in employment of 76,000 in the first quarter of 2007 as
compared with a year ago.
63% (Approx) of the jobs created in our economy in the past 12 months were created in the construction industry and civil service combined.
Dont even start about GNP because too much of it is from the construction industry. We have nothing but borrowed money and we have lots of that. We were the second most privately indebted country in the world in 2005. Since then our borrowings increased by 30%. The statistics are not out yet but we could very well be the most indebted country in the world right now.
 

blindjustice

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Theres over 40,000 properties for sale on daft.ie alone. New developments that include sometimes hundreds of properties are mostly counted once. Last Summer we had 15,000 properties for sale.
If these dont sell soon we wont be needing a quarter of a million builders.
 
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freedomlover said:
There isn't even any sign of a slowdown. Of course, the business cycle hasn't been eliminated. Some years will be worse/better than others. Not every year from now on will be as good as 2006. But, there is nothing to suggest that average (I emphasise average) growth over the next 20 years will be any less than over the past 20 years (i.e. about 5.5% growth on average, but including some years when its above that and some years when its below that).

The situation re ESRI and DAVY and the way the Irish Times is using their forecasts to generate a 'feel-bad' factor among the electorate is quite remarkable . Economics is the only area of life where the forecasts of 'experts' about what will happen in the future get more prominence than what has actually happened in the recent past. Thus, the fact that Ireland had had the highest economic growth in the EU-15 in each of the past 3 years (and in 8 of the past 10 years) gets zero coverage in the media but instead the impression is generated that the economy is about to implode because a number of forecasters, with an abysmal track record for accurate prediction, say so. And its these predictions of doom in the near future that provide the economic background to this election rather than the actual reality of continuing boom. Contrast this with, say, sport. If a team had just won their third All-Ireland in a row, would there be a clamour for a change of management merely because some 'experts', with a track record of forecasting wrongly almost every year, made a prediction that next year the team was going to get knocked out in the first round. I hardly think so.

Davy of course can do what it likes, they're a private company. But, I help fund ESRI through my taxes. So, why should I fund an organisation that is either hopelessly incompetent or else deliberately issuing pessimistic forecasts to boost the electoral prospects of political parties its in sympathy with.
The artichect of the modern Irish economy TK Whitaker precisely had the likes of you in mind when he promoted the plan to establish the ESRI that would be separate from his own Department of Finance i.e allow it to give advice free of the influence of political gombeen men.

Deal with the specifics of an open economy that cannot survive on a construction boom longterm while its domestically owned firms in the exporting goods/services sector are contracting.

Your generalities are the stuff of the pub and the analogy with sport just indicates how much of an economic illiterate you are.

It's you who is incompetent not the ESRI, It was Prof John Fitzgerald who forecast the emergence of the Celtic Tiger period. As to its most recent forecast, if you see this as implying an impending explosion of the economy, you are not only incompetent but an idiot as well :shock:
 

freedomlover

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Predictions. Predictions. Your problem is that you can't tell the difference between predictions for years ahead and today's actuality. So, you know how many will be unemployed in construction in 2016? But, in 2002 you were making similar predictions about how many would be unemployed in 2007. Wrong then. Wrong now. Anyone can churn out predictions about how bad things will be in a decade's time. Your web site has been predicting imminent economic collapse in Ireland since De Valera was in power, or at least it seems like its that long. I could write to the Board of Manchester United asking them to sack Alex Ferguson because I predict they'l be relegated in 2016. They'd laugh at me. People should do the same with you. Your claims somewhat flatter Finland. These are the growth figures for manufacturing output in Ireland and Finland in the first quarter of 2007 compared with the first quarter of 2006 (from Eurostat)

changes in volume of manufacturing output between 2006 and 2007:

[ 1] Ireland +13.9% (after 3 months)
[15] Finland -1.7% (after 3 months)
 

freedomlover

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Since you are so pally with John Fitzgerald, ask him why the ESRI forecasts I quoted above turned out to be so hopelessly wrong. Would he be related by any chance to the Taoiseach who was in power when our economy was in boom in the early 80s? I wonder if ESRI forecasts would be more favourable to Fianna Fail if Bertie Ahern's daughter was the one ESRI employed to make them. Can you name any organisation from outside Ireland (and therefore devoid of political bias) which is NOT forecasting that the Irish economy will grow more rapidly than those of the Nordic countries over the next decade? You omit the main reason why Ireland is performing better than the Nordic countries. Its because taxes on the wealth-producing sectors in Ireland are far lower than in Nordic land and because we don't have the same welfare dependancy culture that has destroyed the will to work in the Nordic
countries. Look at our absenteeism rates, a fraction of those in Finland and Sweden. I'm not the only one who thinks Ireland is doing better than Denmark, Finland and Sweden. A couple of hundred thousand Poles, Estonians, latvians and Lituanians have come to live in Ireland. And how welcome they are. But these countries are next door to the Nordic ones. Its no distance from Estonia to Finland, its a few hours on the bus from Poland to Denmark. Why are they all bypassing those countries to come to Ireland?
 

Rich OC

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My mistake, I thought this was a discussion about economics ...

Just repeat "This time it's different, this time its different ..."
 

freedomlover

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How very apt and prophetic.

From the Irish Times - 24 January 1998:

Ireland's long tradition of pessimism.

By Dr Garret Fitzgerald (ex-Taoiseach).

Because of our history, the Irish have a long tradition of pessimism. There are ALWAYS
PROPHETS OF DOOM. And for those who decide to adopt it, this stance has advantages.

First, it has the merit of precluding accusations of naivety which, because of our
traditional inferiority complex, are greatly feared in our society. AND, SECOND, WHEN
THE CALAMITY FAILS TO OCCUR, THERE IS LITTLE DANGER ANYONE WILL REMEMBER
THE PROPHECY.
 

ibis

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freedomlover said:
Death is inevitable but it doesn't mean you're going to die this year or in the next five years or in the next ten years. Ireland hasn't had a recession since 1983. We didn't have one after the dotcom bubble burst, or after 9/11 or after the quadrupling of oil prices. None is even remotely on the horizon.
Hmm. Actually, the economy unquestionably staggered in 2001. House prices flattened, and rather a lot of businesses went bust. Fortunately (?), the "great global liquidity splurge" rescued us. Internally, I think we were due one then.
 


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