8/9/2013: Priory Hall Is Enda Kenny's Problem to Solve

Gene Kerrigan in the Sunday Independent has a very passionate column on the relationship between the Government leadership and the case of the Priory Hall residents.

The column is here.

On foot of my tweets earlier today, few of you asked to get my response on the issue. Here is the summary in the form of my earlier tweets:

7/9/2013: WLASze Part 2: Weekend Links on Arts, Sciences and Zero Economics

This is the second part of this week's WLASze: Weekend Links on Arts, Sciences and zero economics. Part 1 is available here: http://trueeconomics.blogspot.ie/2013/09/792013-wlasze-part-1-weekend-links-on.html

Some superb photographs from the unfortunately very short anthology of Russian photography of the 20th century:
http://rbth.ru/articles/2012/05/25/an_anthology_of_russian_photography_of_the_20th_century_15720.html

And another fantastic retrospective - on Soviet design:

http://rbth.ru/multimedia/pictures/2013/08/29/imagennation_soviet_things_29319.html


A very exciting article on collecting experimental evidence on dark energy:
http://www.sciencedaily.com/releases/2013/09/130903151759.htm?utm_source=twitterfeed&utm_medium=twitter&utm_campaign=Feed%3A+sciencedaily%2Fmost_popular+%28ScienceDaily%3A+Most+Popular+News%29
"Moonless nights outside the Cerro Tololo astronomical observatory in Chile are so dark that when you look down, you can't see your feet." This stuff is deservedly poetic… And more on the same experimental work: http://www.sciencedaily.com/releases/2012/09/120917104651.htm


British Journal of Photography reported last month that John Paul Getty Museum - one of the largest collections world wide - has opened free access to its digital archives, making "collections of digital images available for all uses without charge, marking a radical shift in its long-standing policy of charging for commercial use of its work." Read more: http://www.bjp-online.com/british-journal-of-photography/news/2289455/j-paul-getty-museum-opens-up-its-collections-of-images#ixzz2eF3d0xHi The project is amazing in scope: "more than 4600 high-resolution images representing 4,689 objects will be download-able" and it is amazing in the range of uses allowed on an open access basis: "for academic and commercial use without restrictions". See http://www.getty.edu/research/tools/photo/index.html.


It is interesting to note that unlike the sale of the Bank of Ireland art collection back in 2010 (http://www.theartnewspaper.com/articles/Art%20market%20news%20in%20brief%20%E2%80%94%20August%202010/21328) Anglo sale did not make much of a news in the world of arts. Fair play - financial media and general irish interest media did cover the sale. Even the cross-publication, like The Guardian did not cover any of the details of the sale. The sale raised EUR281K - a pittance by any measure, but in excess of the pre-auction estimates (alas, these were provided by a domestic auctioneer, and are not confirmed by any major auction house outside Ireland). But what the sale and its coverage really highlights is the cardinal change in the art market since pre-bailout. Rumour has it, Anglo spent around EUR2 million on its 'art'… and back in 2012 its collection was appraised at cheerfully idiotic 'less than EUR1 million' (http://www.broadsheet.ie/2012/02/06/anglo-irish-bank-working-largely-in-the-medium-of-crap/). Some 18 months later… that shrunk to EUR281,000. "…it's time we began to laugh and cry and laugh again," as Leonard Cohen put it.


Amazing images of spring storm set against the setting of the Milky Way skies:

via http://wordlesstech.com/2013/09/04/spring-storm-milky-way/


Lastly, one of the greatest economists (or may be just thinkers) of our times, Ronald Coase died this week at the age of 102. Here are some articles worth reading concerning his life and work:
http://www.newyorker.com/online/blogs/johncassidy/2013/09/ronald-coase-and-the-misuse-of-economics.html
http://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/1991/coase-bio.html
http://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/1991/coase-lecture.html
His seminal article: The Nature of the Firm is available here: http://onlinelibrary.wiley.com/doi/10.1111/j.1468-0335.1937.tb00002.x/full
His second most influential paper was The Problem of Social Cost: http://grecof2.econ.univpm.it/esposti/wiki/lib/exe/fetch.php?media=didattica:coase_jle1960.pdf
Here's an excellent summary of his top 5 papers: http://www.washingtonpost.com/blogs/wonkblog/wp/2013/09/03/ronald-coase-is-dead-here-are-five-of-his-papers-you-need-to-read/
This year's NPR interview with Coase: http://www.npr.org/blogs/money/2012/05/09/152197483/nobel-laureate-ive-been-wrong-so-often-i-dont-find-it-extraordinary-at-all

My favourite quote: in reply as to what Coase thought of his failure to correctly anticipate the rapid rise of China's economic power, her said: "I've been wrong so often I don't find it extraordinary at all." That is one cool thinker in my book.

May his soul RIP!

7/9/2013: WLASze Part 1: Weekend Links on Arts, Sciences and Zero Economics

Welcome again to the WLASze: Weekend Links on Arts, Sciences and zero economics post for this weekend.


Art Under Attack: Histories of British Iconoclasm is a show to run at Tate Britain from 2 October 2013 - 5 January 2014. Here are some details: http://www.tate.org.uk/context-comment/blogs/what-happened-painting. This promising to be a fascinating tour through history of philosophy of art, the linkages between art, politics and social / political / religious values. One of the shows that I certainly would love to see.

The topic of 'Art under Attack' is very current, around the world. Here is an example from today's Russia: http://www.telegraph.co.uk/news/worldnews/europe/russia/10269778/Police-seize-painting-of-Vladimir-Putin-in-a-negligee.html. Artist page: http://www.saatchionline.com/Altunin.

And I linked recently to the story of art censorship in Ukraine: http://trueeconomics.blogspot.ie/2013/08/482013-wlasze-part-2-weekend-links-on.html

When it comes to censored art, Russian has a long running tradition. Here's an archive of the Soviet period underground photography sold at Sotheby's: http://rbth.ru/multimedia/pictures/2013/07/23/soviet_underground_photos_went_under_hammer_at_sothebys_28321.html

And while on Soviet history page, recall the release of the arrested archives and manuscripts of Vasily Grossman, covered last week: http://trueeconomics.blogspot.ie/2013/09/192013-wlasze-part-2-weekend-links-on.html

A word might be mightier than a sword, but art (including, of course, art based on language) is mightier than a word… and to see this, just trace the history of prosecution of arts across the centuries.


October 3, Dublin will host a very promising show by photographer Luis Diaz "Colora Experimenta": https://www.facebook.com/events/213139445518974/permalink/213139748852277/
Preview of the book is here: http://www.blurb.com/books/4489196-colora-experimenta

An interesting article on the 'vanity' skyscrapers: http://www.dezeen.com/2013/09/05/space-wasting-vanity-skyscrapers-revealed/ And while on 'vanity' architecture: the Walkie-Talkie skyscraper in London - yes, the one that melted a Jaguar, fried eggs and gave unearthly glow to people in the street below is still in the news. Here is an interview with its creator: http://www.dezeen.com/2013/09/06/we-made-a-lot-of-mistakes-with-this-building-says-walkie-scorchie-architect-vinoly/


Dezen also has details of the London Design Festival 2013:
http://www.dezeen.com/london-design-festival-2013-submissions/ from 14th to 22nd of September.


On science side:

My recent post on 3 papers attempting to determine if there are selection biases in identifying those who opt for careers in public services as opposed to private sector. The debate is fascinating and under-developed at this stage. Link here: http://trueeconomics.blogspot.ie/2013/09/692013-research-into-public-sector.html


In August, researchers from Lund University in Sweden have confirmed the existence of a previously unknown chemical element, which was originally discovered by Russian scientists. The new element has atomic number 115 (super-heavy element) and is yet to be named… Putinium maybe? Or Khodorkovskinum? Or will Gasprom steal the show and sponsor the element naming contest that will produce something along the lines of Pipelineum? http://www.lunduniversity.lu.se/o.o.i.s?news_item=6082&id=24890 Clearly, chemistry is far behind celebrity economics in naming stuff...


Clive Cookson, Science Editor of the FT recently wrote about the experiments that allowed biomedical scientists to grow human stem-cells into pea-sized mini-brains with a neural structure similar to the brain of a developing non weeks old embryo: http://www.ft.com/intl/cms/s/0/57d40cba-0f05-11e3-ae66-00144feabdc0.html#axzz2dI1NPJiz. This research while fascinating, opens new floodgates in terms of ethical and philosophical implications. Which, in and by itself, is nothing new to science.


And from growing brain-like structures, even if embryonic, we also moved to simulating the evolution of embryonic structure of the early universe. University of Chicago physicists "have reproduced a pattern resembling the cosmic microwave background radiation in a laboratory simulation of the big bang, using ultracold cesium atoms in a vacuum chamber"
http://www.sciencedaily.com/releases/2013/08/130829092845.htm. Images (high resolution, so click to enlarge) from NASA files track evolution of the early universe simulation:
4-year microwave sky below:

9-year microwave sky above.


Stay tuned for more WLASze links later...

6/9/2013: Research into Public Sector Human Capital

Are public servants / civil servants intrinsically (ex ante) lazy or altruistic or both or neither? Not much of the debate about this academically so far, but here are three ground-breaking papers coming from German and global data (emphasis mine):

"Intrinsic Motivations of Public Sector Employees: Evidence for Germany " by Robert Dur and Robin Zoutenbierz (December 6, 2012: http://www.roa.unimaas.nl/seminars/pdf2013/Robert%20Dur.pdf)

Abstract: "We examine differences in altruism and laziness between public sector employees and private sector employees. Our theoretical model predicts that the likelihood of public sector employment increases with a worker's altruism, and increases or decreases with a worker's laziness depending on his altruism. Using data from the German SocioEconomic Panel Study, we find that public sector employees are significantly more altruistic and lazy than observationally equivalent private sector employees. A series of robustness checks show that these patterns are stronger among higher educated workers; that the sorting of altruistic people to the public sector takes place only within the caring industries; and that the difference in altruism is already present at the start of people's career, while the difference in laziness is only present for employees with sufficiently long work experience."


"Working for a Good Cause" by Robert Dur and Robin Zoutenbier (May 15, 2013, CESifo Working Paper Series No. 4227: http://ssrn.com/abstract=2265180)

Abstract: "A rich literature in public administration has shown that public sector employees have stronger altruistic motivations than private sector employees. Recent economic theories stress the importance of mission preferences, and predict that altruistic people sort into the public sector when they subscribe to its mission. This paper uses data from a representative survey among more than 30.000 employees from 50 countries to test this prediction. We find strong evidence for a mutually reinforcing role of altruism and mission alignment in sorting to the public sector, particularly among highly educated workers and among workers in less-developed countries."


"Public Sector Employees: Risk Averse and Altruistic?" by Buurman, Margaretha , Delfgaauw, Josse, Dur, Robert and Van den Bossche, Seth,  (June 28, 2012, CESifo Working Paper Series No. 3851: http://ssrn.com/abstract=2094954)

Abstract: "We assess whether public sector employees have a stronger inclination to serve others and are more risk averse than employees in the private sector. A unique feature of our study is that we use revealed rather than stated preferences data. Respondents of a large-scale survey were offered a substantial reward and could choose between a widely redeemable gift certificate, a lottery ticket, or making a donation to a charity. Our analysis shows that public sector employees are significantly less likely to choose the risky option (lottery) and, at the start of their career, significantly more likely to choose the pro-social option (charity). However, when tenure increases, this difference in pro-social inclinations disappears and, later on, even reverses. Further, our results suggest that quite a few public sector employees do not contribute to charity because they feel that they already contribute enough to society at work for too little pay."

Non-scientific polemic based on the above is here: http://opinion.financialpost.com/2013/07/23/william-watson-civil-servants-not-born-lazy-they-learn-it-at-work/

I presume there were no major errors in Excel spreadsheets anywhere around the above studies...

6/9/2013: Euromoney Country Risk Survey: Upgrading Irish Banking Sector Risks Outlook

Some good news for Ireland out of a number of surveys today. First, BlackRock Investment Institute survey of country experts shows Ireland improving economic outlook 6 months forward - details here: http://trueeconomics.blogspot.ie/2013/09/692013-blackrock-institute-survey-north.html

Now, Euromoney Country Risk survey shows significant improvements in market experts assessment of Irish banking sector stability:

While both reflect opinions of experts, including experts within the specific sectors, the two are good indicators of the general direction toward gradual improvement in country economic outlook. Let's hope the Budget 2014 and mortgages arrears workouts do not derail this trend.

6/9/2013: BlackRock Institute survey: EMEA: August 2013

BlackRock Investment Institute released its latest Economic Cycle Survey for EMEA region.
 Note: my note on survey results for North America & Western Europe is available here.

Per summary: "... this month’s EMEA Economic Cycle Survey presented a generally bullish outlook for the region. 

The consensus of respondents describe Slovenia, the Ukraine, Croatia, Egypt and Russia currently to be in a recessionary state, with an even split of economists gauging Slovakia to be in expansion or contraction. Over the next 2 quarters, all these countries are expected to stay in a recessionary state except Russia, Slovakia and Croatia. 

At the 12 month horizon, the positive theme continues with the consensus expecting all EMEA countries to strengthen or remain the same, with the exception of the Ukraine and Turkey."

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.

Here are two summary charts:

6/9/2013: BlackRock Institute survey: North America & Western Europe: August 2013

BlackRock Investment Institute released its latest Economic Cycle Survey for North America and Western Europe region.

Per summary: "This month’s North America and Western Europe Economic Cycle Survey presented an improvement in the outlook for global growth over the next 12 months – the net proportion of respondents with a positive outlook increased to 70% from 60% last month. 

The consensus outlook for the Eurozone was particularly positive, where the 6 month forward outlook shifted from 57% to 75% 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, while the consensus has shifted to expect expansion for France, Spain, Finland and Ireland over the next 2 quarters. An even mix of economists expect Italy to be expansionary or recessionary at the 6 month horizon (and similarly so for Norway, outside of the currency-block). 

With regards to the US, the proportion of respondents expecting recession over the next 6 months remain low, with the consensus view firmly that North America as a whole is in mid-cycle expansion and remaining so through H2 2013."

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.

Here are two summary charts:

5/9/2013: WEF on Ireland's Competitiveness - detailed analysis

World Economic Forum Global Competitiveness Report 2013-2014 puts Ireland's competitiveness in 28th place, one position worse in global rankings than in 2012-2013 report. Here are summary stats.

First, top 30 countries (2013-2014 ranks) and their recent performance history:

Several points of note:

• Compared to two years ago, there is only one new addition to top 10 performers group: Hong Kong. Denmark - ranked 8th in 2011-2012 report is now ranked 15th.
• Switzerland and Singapore are unchallenged ranked 1 and 2.
  Despite a recession, Finland ranks ahead of Germany and in venerable 3rd place. Sweden, meanwhile, lost 3 places over the last two years.
• Ireland's competitiveness 'neighbourhood' now includes Brunei and Malaysia, with such 'stars' of global competitiveness as Saudi Arabia, UAE and Qatar outperforming Ireland significantly.
• China and Puerto Rico are snapping on our heels. Iceland, Estonia, Oman, and Chile are nearby as well.
• We ranked 9th in EU18 euro area.

Ireland's relatively poor performance is highlighted in the following table, showing our overall decline from 22nd position worldwide in 2008-2009 to 28th in 2013-2014 reports. Blue colour codes improvements on 2008-2009 ranks and red codes deterioration in rankings.

The table above shows that Irish rankings are severely depressed by the Macroeconomic Stability (134th), Financial Markets Sophistication (85th) and Market Size (57th). We can't do much about the latter one, of course. We rank below where we should be in terms of Infrastructure (26th) and in terms of Institutions (16th), Higher Education and Training (18th), Labour Market Efficiency (16th), as well as across both sub-components of Innovation factors.

Full report is available here: http://www.weforum.org/content/pages/competitiveness-library and on page 222 there is a handy summary for Ireland's scores. Here's a chart mapping Ireland relative to its peers average:

There is very little in the above chart that distinguishes Ireland to the better side of the average Innovation-driven economy. The largest gaps in our favour are found in Goods Market efficiency (largely thanks to the EU common trade area, plus our severe dependency on imports, normal for a small open economy), and Institutions (ditto for the EU, plus common law etc). Best way to describe us, using the above chart - abstracting away from Macroeconomic and Banking crises - is average for our group.

In case you think otherwise, our own assessments confirm the above conclusion:

Notice that - again aside from the financial crisis - our top 5 drags on performance are: Inefficient government bureaucracy; Inadequate supply of infrastructure; Insufficient capacity to innovate and Tax rates. All are of our own making.

Should you care to see more: here are the details. Reading the below, keep in mind, we really should be aiming to be in top 12-15 in the world, if not better. We certainly market ourselves as if we are in top 10 at the very least...

5/9/2013: ECB Boldly Goes Nowhere... again

The longer it lasts, the uglier it gets... ECB stays put (predictably) on rates today is adding 57th month that the policy rates are deviating from the historical mean, with the 'hill' to mean reversion getting steeper:

Currently, mean-reversion implies an almost 200bps hike without overshooting. Factoring in historical overshooting, we are into 250-300bps territory. Good luck thinking that 'gentle' tapering or 'gradual' restoration or whatever else you might call it going to be painless...

Oh, and for all of this, what do we have on the rates side?

At least, for its pain, the Fed has boldly gone where no one, save for Japan, have travelled before when it comes to rates. Euro area, meanwhile, has been playing chicken with itself...

5/9/2013: IBM: 64% of global CMOs want to approach customers as individuals

Since 2009, IBM Institute for Business Value has been surveying C-level executives around the world to  assess the development of digital economy.

Recently, IBM released some headline numbers for the forthcoming (October) survey for 2013:

• 64% of CMOs want to approach customers as individuals
• 71% of CIOs see communication moving towards more social/digital collaboration
• Majority (55%) of CHROs foresee increasing organisational openness
• Just 34% of organisations have an in-depth understanding of their customers
• But 78% expect their organisations to have an in-depth understanding of their customers by 2017
• Only 1 in 5 organisations has the capacity to use Big Data with just 40% intergating internal and external data sources, just 18% using Big Data to identify new products and services
• 77% of all CFOs support products and services innovation

Handy info graphic (you can click on it to enlarge):

5/9/2013: Irish Services Sector Activity Index: July 2013

Monthly Services Activity Index from the cSO is out for July. Some interesting movements in the series.

• Wholesale and retail trade sub-sector activity expanded m/m on seasonally adjusted basis by 2.46% in July 2013, having posted a m/m decline of 1.49% back in June 2013. 3mo MA through July 2013 was down 2.19% on 3mo MA through July 2012 and 6mo MA is down 4.21% y/y.
• Transport and storage sub-sector posted a m/m expansion of 1.86% in July 2013, following a contraction in June 2013 of 2.08%. 3mo MA is up 3.84% y/y and 6mo MA is up 4.36%.

• Accommodation and food services sub-sector activity contracted 0.76% in July 2013 m/m, having posted an expansion of 1.06% in June 2013. 3mo MA is now up just 0.32% y/y and 6mo MA is up 1.27% y/y.
• Administrative and support services sub-sector activity shrunk 1.24% m/m in July 2013, having posted 5.25% growth in June 2013. 3mo MA is now up a massive 23.76% y/y and 6mo MA is up 22.04%.

• Information and communication sub-sector activity shrunk 4.01% m/m in July 2013, having posted growth of 1.71% in June. 3mo MA is now up 8.01% y/y and 6mo MA is up 9.23% y/y.
• Professional, scientific and technical activities sub-sector is down 4.68% m/m in July, having posted an 1.74% expansion in June. 3mo MA is down 6.64% y/y and 6mo MA is down 3.23% y/y. 

Lastly, overall index:

• Services sector activity fell 0.82% m/m in July after posting growth of 0.37% m/m in June 2013.
• 3mo MA through July 2013 was up 2.73% y/y against previous 3mo period MA growth of 2.09% y/y.
• 6mo MA is up 2.41% y/y.

 Overall, still solid performance in the Services sector, with monthly (seasonally adjusted) changes not exactly stellar, but gains of the previous months continue to carry the sector to annual expansion.

5/9/2013: A Cautionary Note on Irish Services PMIs

having just written about the Irish Services PMI performance in August, here's an update on the link between PMI and actual Services Activity Index, published by the CSO (one month lag).

The latest data from CSO on Services Index will be analysed in the subsequent post, but for now a health warning reminder: Services PMI has barely any bearing on the actual Services activities in Irish economy:

Basically, correlation - from January 2009 through July 2013 - between the Services PMI and CSO Services Activity Index is exceptionally poor: it stands at just 0.1367. Services PMI readings have no explanatory power when it comes to tracking performance of the Services Activity Index. On log-changes chart, PMI is capable of capturing just 0.0071% of variation in Services Activity Index. On straight levels even less. Lags are not yielding any meaningful improvements in explanatory power, neither do non-linear models.

In my view, this testifies to the extreme skews in PMI survey data to reflect the role of MNCs in ICT and IFSC sectors here.