28/11/2013: Irish Mortgages Arrears: Q3 2013

Numbers are out for Residential Mortgages Arrears in Q3 2013 and the data shows that the chronic problem of mortgages distress is still with us with little change after months of tough talks from the authorities, 'resolute' actions from the banks and a barrage of legislative, regulatory and rhetorical changes.

Top of the line numbers are still frightening, albeit things have largely faltered out on most fronts.

• Total number of PDH accounts at risk or defaulted (defined as all accounts currently in arrears, restructured and not in arrears, and in repossessions) at the end of Q3 2013 stood at 185,604, down 329 accounts or 0.2% from Q3 2012. 
• Over the 12 months through September 2013, number of BTL accounts at risk or in default rose 3,022 (+5.9%) to 54,094. 
• Thus, total number of mortgages accounts currently at risk or defaulted at the end of Q3 2013 stood at 239,698, which is 1.1% higher than in Q3 2012. 
• Total outstanding volume of mortgages at risk or defaulted for both BTL and PDH mortgages at the end of Q3 2013 was EUR46.77 billion, up EUR1.75 billion on year ago.
• As of the end of Q3 2013, 20.3% of all PDH mortgages accounts and 36.65% of all BTL mortgages accounts were either in arrears, restructured due to previous arrears or in repossession. 
• Across the entire system, 26.18% of all mortgages accounts and 33.6% of all mortgages volumes outstanding in Ireland were at risk or defaulted at the end of September 2013.

Deleveraging process is not working either:

• Total outstanding volume of mortgages debt in the country was EUR138.88 billion in Q3 2013, only 2.4% lower than a year ago.
• Total number of mortgages accounts fell to 915,746 in Q3 2013, down 3.08% y/y.
• Residential mortgages in arrears rose to 141,520 accounts (+0.1% y/y) and BTLs accounts in arrears numbered 40,426 (+10.35% y/y). Thus total number of accounts in arrears was up 2.2% y/y.
• Total outstanding volumes of mortgages in arrears stood at EUR36.56 billion in Q3 2013, up 5.8% y/y (comprising EUR25.56bn in residential mortgages volumes +4.75% y/y and EUR11.0bn of BTLs +8.32% y/y).
• Total amounts of actual arrears rose to EUR3.479bn in Q3 2013, up 28.2% y/y.
• Repossessions rose to 1,566 in Q3 2013 from 1,503 in Q2 2013 and 1,358 in Q3 2012. Residential repossessions rose to 1,050 from 1,001 a quarter ago and 944 a year ago. The process of repossessions remains very slow and is likely to accelerate in the near future.

These figures clearly show that banks-driven approach to the process of resolving the mortgages arrears crisis, adopted by the Government and the financial sector regulatory authorities is not delivering. To-date, the speed of mortgages arrears restructuring and resolution is disappointingly slow.

Some charts to illustrate the trends:

28/11/2013: Irish Residential Property Prices: October 2013

Irish Residential Property Prices index (RPPI) for October was published yesterday showing continued and rapid convergence in Dublin prices toward national levels.

Overall National all-properties RPPI rose 6.12% y/y in October 2013, having posted 5th consecutive month of annual rises. Compared to peak, National RPPI stands down 46.82% and is up 8.27% on crisis trough. 3mo MA of RPPI is 3.96% higher than for previous 3mo period. Cumulated 24 months change is now -2.53%.

National Houses RPPI also rose strongly, posting a gain of 5.86% y/y and marking the 5th consecutive annual rise. The index is 45.23% below its peak and 8.23% above the crisis period trough. Cumulated change over the last 24 months is -2.69% and 3mo average through October is up 3.95% on previous.

National Apartments RPPI is up a massive 11.68% y/y and is 15.1% above the crisis period trough, although the index is still 57.55% below the peak. Cumulated 24 months gain is +0.77% and 3mo average through October is now 4.49% ahead of 3mo average through July.

National ex-Dublin RPPI declined 0.29% y/y. last time the index posted positive gain was in February 2008. The rate of decline is moderating significantly, however, as shown in the chart below. The index is now 46.89% below its peak and 3.48% above the crisis trough. Cumulated change over the last 24 months is -9.16%, but 3mo average through October 2013 is 0.69% above 3mo average through July 2013.

Dublin RPPI (all properties) rose massive 15.02% y/y in October, marking 10th consecutive annual rise and third consecutive rise in double-digits. The Index is now 49.89 below its peak and 17.63% up on crisis period trough. Cumulated 24 months change in the index is +6.81% and 3mo average through October is 8.31% ahead of 3mo average through July.

Decomposition of Dublin RPPI:

Dublin Houses RPPI rose 14.61% y/y in October. This was the third month of double digits annual gains and the 10th consecutive month of positive annual rates of growth. The index is down 48.19% on peak and is up 17.43% on crisis trough. Cumulated 24 months gains are 5.62% and 3mo average through October is 8.7% higher than for the 3mo period through July.

Dublin Apartments RPPI posted the fourth consecutive double digits annual rise with a gain of 18.01% y/y. This is the 5th consecutive month of positive annual growth rates. The data is exceptionally volatile and, as CSO points out, is based on thin volumes.Overall, apartments prices are down 56.28% on the peak and are up 20.3% on the crisis trough. Cumulated 24 months gains are at 9.65%.

Top-line conclusions:

• Dublin prices are converging back toward longer term equilibrium levels. These, in my opinion, should be around -20-25% of the peak, to return us to inflation-consistent growth path.
• The rate of convergence is very strong and disturbing. This is probably due to one-off factors that are likely to run their course over time.
• It is likely that the prices will overshoot the new equilibrium trend on the way up and will then moderate back toward trend.
• The rest of the country is in the flat-line pattern and can see a psychological boost from Dublin. This boost is unlikely to be sustained in the short run.
• Uncertainly is significant in the market in the short run (through 2014-early 2015) due to the backlog of unresolved mortgages arrears and Nama holdings.
• Long-run equilibrium for the national prices is also around -25-30% on pre-crisis peak.

Table below summarises the levels of equilibrium indices and the shortfall on equilibrium:

28/11/2013: To OMT or not to OMT?

Per Irish Times report (http://www.irishtimes.com/news/politics/ecb-warns-bailout-exit-limits-ireland-s-options-1.1608426) "In remarks to The Irish Times, ECB executive board member Jörg Asmussen said leaving the bailout without a credit line meant Dublin did not meet conditions for the bank to buy Irish debt under its bond-buying programme." He is referencing OMT programme.

We knew that. Despite the fact that just a week ago, Minister Noonan claimed that "leaving the bailout without a precautionary credit line neither rules Ireland in nor out of accessing the ECB's Outright Monetary Transactions (OMT) programme. It has been speculated that going it alone without the safety net of a credit line would ban Ireland from the ECB scheme. "There is a misunderstanding in Ireland, even at the highest level of economic thinking, about OMT," Mr Noonan told TDs yesterday." (http://www.independent.ie/business/irish/we-can-still-access-ecb-aid-noonan-29771886.html)

Ouch...

Note: I wrote about this problem two weeks ago: http://trueeconomics.blogspot.ie/2013/11/15112013-exiting-bailout-alone-goods.html. I was clearly 'misguided'...

27/11/2013: Irish Employment by Sectors: Q3 2013

In the previous post I looked at the data from QNHS on broader measures of unemployment in the economy (http://trueeconomics.blogspot.ie/2013/11/26112013-broader-unemployment.html). This time, let's take a look at employment numbers across various sectors. The data below is not seasonally adjusted, so these are actual counts.

Starting from the top:

• Overall employment levels at the end of Q3 2013 stood at 1,899,300 which represents a rise of 3.15% y/y. Over the last 12 months, employment averaged 1,865,930 which is 1.54% ahead of employment levels 12 months average through Q3 2012.
• Relative to pre-crisis levels (average of 2008), employment is still down 10.76%, but compared to the crisis period trough we are up 4.07%.
• Current levels of employment are the highest since Q2 2010.
• Agricultural employment changes are well highlighted by the CSO and as such I will not interpret these here.
• Non-agricultural private sector employment is at 1,308,200 in Q3 2013, up 2.98% y/y. 12 months average level through Q3 2013 is at 1,278,950 up 0.99% on 12 months average through Q3 2012. Not exactly spectacular change, but still a welcome positive reading. Relative to pre-crisis 2008 average, non-agricultural private sector employment was 14.96% lower in Q3 2013.
• Public sector and state-controlled sectors (health and education) employment fell 0.99% y/y to 480,500. 12mo average through Q3 2013 was at 486,930 which is 0.16% down on previous 12mo average through Q3 2012. Not exactly a massive drop-off. However, compared to 2008 average, employment in this category is 1.2% higher in Q3 2013 - a poor omen for the claims of significant reductions in public and state-controlled employment. 

Chart to illustrate:

Welcoming changes in the higher value-added sectors of the economy:

• ICT sector employment stood at 82,000 in Q3 2013, up 4.86% y/y. 12mo average through Q3 2013 is at 80,750 and this is up 2.34% on 12mo average through Q3 2012. Levels of employment in the sector in Q3 2013 were 14.77% ahead of 2008 average.
• Professional, scientific and technical activities employment rose to 113,300 in Q3 2013 up 10.86% y/y and the 12mo average through Q3 2013 stood at 106,350 which is 7.1% higher than in 12 months through Q3 2012. Nonetheless, the sector employment levels in Q3 2013 were 2.22% below the 2008 average.
• Administrative and support services employment stood at 64,700 in Q3 2013, down 2.85% y/y and 12mo average through Q3 2013 was at 61,350 which is 4.66% below the average through Q3 2012. The sector employment is still well below 2008 levels - down 15.73%.
• Financial, insurance and real estate services employment fell 0.78% y/y to 101,500 in Q3 2013 and 12mo average through Q3 2013 was at 100,730 down 0.93% on 12mo average through Q3 2012. Compared to pre-crisis levels (2008 average) employment in this sector is down 5.10% in Q3 2013.

Education, Health and Public Administration all showed continued weaknesses:

• Public administration and defence, compulsory social security sector employment declined 3.61% y/y to 96,100, and 12 mo average through Q3 2013 stood at 95,600 or 4.66% lower than over 12 months through Q3 2102.Relative to 2008 average, employment in the sector is now down 8.63%.
• Education sector employment rose 0.14% y/y to 140,800. Sector employment averaged 145,980 in 12 months through Q3 2013 which is 1.02% ahead of 12 months average through Q3 2012. However, compared to 2008 average, Q3 2013 level was 3.13% lower.
• Human Health and Social Work sector employment was down 0.57% y/y in Q3 2013. 12mo average through Q3 2013 stood at 245,350 which is 0.99% higher than 12mo average through Q3 2012. Compared to 2008 average, Q3 2013 reading was 8.62% higher.

Employment in Industry is quietly running slightly up despite overall decline in goods exports values:

• Industry ex-Construction sector employment rose 4.72% y/y in Q3 2013 to 242,000 and was up in 12mo average terms by 1.3%. However, compared to pre-crisis average for 2008, Q3 2013 reading was still 15.98% lower.
• Industry including construction sector employment rose 4.58% y/y to 347,300. In 12mo through Q3 2013, employment in the sector was up 0.59% compared to 12 months average through Q3 2012. Relative to pre-crisis average for 2008, employment in sector stood massive 34.15% lower in Q3 2013.
• Meanwhile, services employment rose 1.30% y/y in Q3 2013 to1,439,200. In 12mo through Q3 2013 employment averaged 1,423,050 which is 0.7% higher than for the same period in 2012. Compared to 2008 average levels, Q3 2013 employment in Services stood at -2.64%.

So on the net - some good aggregate numbers. Rates of increases, especially averaging-out over 12 months (4 quarters) period are still not exactly spectacular, but we do have overall growth in employment and this growth is also present in the higher value-added sectors. 

Here is the summary of changes for the period since the current Government took office:

26/11/2013: Broader Unemployment & Underemployment in Ireland: Q3 2013

This is the first post on the QNHS results for Q3 2013, covering broader metrics of unemployment as reported by the CSO, plus the State Training Programmes (STP) participation.

Terminology first:

Per CSO data:

• PLS1 (unemployed persons plus discouraged workers) unemployment rate stood at 13.8% down from 14.8% in Q2 2013 and 16% in Q3 2012. Compared to peak, PLS1 is now 2.4 percentage points lower. Q3 2013 rate stands at the lowest since Q4 2009.
• PLS2 (PLS1 + Potential Additional Labour Force) rate declined from 16.2% in Q2 2013 to 15.2% in Q3 2013. The rate was 17.1 in Q3 2012. Current rate is the lowest since Q1 2010 and is down 2.1 percentage points on the peak.
• PLS3 (PLS2 + others who want a job, not available & not seeking for reasons other than being in E/T) rate fell to 17.5% in Q3 2013 from 18.2% in Q2 2013 and is now down 1.5 percentage points on Q3 2012. PLS3 is down 1.7 percentage points on peak and is the lowest reading since Q1 2010.
• PLS4 (PLS3 + underemployed) was at 23.5% in Q3 2013, down on 24.7% in Q2 2013 and on 25.5% in Q3 2012. Relative to peak the rate is down 2.3 percentage points and this marks the lowest reading since Q4 2010.
• Adding State Training Programmes participation data from the CSO Live Register reports, PLS4+STP measure is now at 27.0% down on 27.8% in Q2 2013 and 28.9% in Q3 2012. Compared to peak the measure is down 1.91 percentage points and the measure is at its lowest level since Q1 2011.
• Finally, adding estimated emigration rate, PLS4+STP rate rises to close to 28.0% in Q3 2013, down on 28.7% in Q2 2013. This is an estimate, so should be treated with caution.

Charts to illustrate and summarise:

While the above data is positive, it should be treated with some caution, as the turnaround in employment driving the above statistics is reflective of significant increases in part-time and self-employment figures. In addition, with just 4 quarters of downtrend in the series so far, the dynamics, while encouraging, are yet to be fully established.

Additional good news was provided by the Labour Force numbers:

• Labour Force numbers rose to 2,182,100 in Q3 2013 from 2,165,800 in Q3 2012, gaining 16,300 year on year.
• Labour force numbers were up 44,600 on crisis period trough in Q3 2013.
• Crisis trough to pre-crisis annual average stands at 136,400. Last 12 months average relative to pre-crisis average stands at -115,450, which means we are around 2.5-3 years out from closing the gap.

Stay tuned for more analysis tomorrow.

24/11/2013: WLASze: Weekend Links on Arts, Sciences & zero economics

This is WLASze: Weekend Links on Arts, Sciences & zero economics. Enjoy!


Shopping malls rarely inspire - both in terms of exterior architecture and interior design… their utilitarian purpose combines with aesthetic of the masses to produce bland, dentally-inspired greyness… unless, of course, it is a shopping mall in Sweden, where extreme capitalism collides often spectacularly with extreme socialism to produce unexpected visuals. Behold this Van-Damme-Volvo-ad (http://www.youtube.com/watch?v=M7FIvfx5J10) equivalent in the shopping mall architecture:
http://it.phaidon.com/agenda/architecture/articles/2013/november/14/malmos-melted-shopping-mall/
After all, energising those satiated consumers to spend their money on things other than social justice requires visual experiences that are truly spectacular...

Three sets of links relating to space next.

First, NASA's latest Cassini images of the Titan - with high resolution section showing Northern Lakes (Salt Flats): http://saturn.jpl.nasa.gov/photos/imagedetails/index.cfm?imageId=4900
H/T: @raluca3000 @NASAWebbTelescp (click on image to enlarge)

Second, a beautiful set of visuals to put the relative dimension of the Earth and our solar system compared to some stars out there:
http://www.mbandf.com/parallel-world/our-sun-is-extremely-large-our-sun-is-fairly-small

The page above comes courtesy of a fantastic Mechanical.Art.Devices (M.A.D.) Gallery http://www.mbandf.com/mad-gallery/explore/ A fascinating glimpse into the world of unique engineering and design… (not strictly space image, but so elegant, it might just be stellar)...

Three: one hell of a cool story, via arstechnica, from the Antarctica, where earlier this year, scientists discovered Ernie and Bert, "two neutrinos with energies over 100 times higher than the protons that circulate in the LHC. Now, the same team has combed through its data to find an additional 26 high-energy events, and they've done a careful analysis to show that these are almost certainly originating from somewhere outside our Solar System."
http://arstechnica.com/science/2013/11/south-pole-detector-spots-28-out-of-this-world-neutrinos/

And in a related story, http://arstechnica.com/business/2012/04/coolest-jobs-in-tech-literally-running-a-south-pole-data-center/ arstechnica covers the jobs at the South Pole data centre where they have to "heat the air used to cool… data centre".

Brilliantly written and fascinating!


Science Gallery at TCD is featuring this week in dezeen with a story about the latest show "Grow Your Own - Life After Nature" that runs through 19 January 2014 and is worth visiting…
http://www.dezeen.com/2013/11/20/olafur-eliasson-tears-used-to-make-human-cheese/ See @ScienceGallery

A brave show, pushing the bounds of what we consider aesthetically acceptable and blending these bounds with what we consider both art and science. And the science bit is not about the actual physical stuff, like growing cheese culture based on human body excretions-produced bacteria. Instead, it is a science of our self-awareness, the compartmentalising nature of our understanding of the acceptable. In many ways, this is about ethics reaching beyond their own domain into aesthetics. As we commonly have a problem with seeing the animal that provides us with a steak in their living condition, we have a problem seeing (let alone tasting) a slice of cheese that was grown from the bacteria harvested from our bodies.

"Selfmade is a series of ‘microbial sketches’, portraits reflecting an individual’s microbial landscape in a unique cheese. Each cheese is crafted from starter cultures sampled from the skin of a different person. Isolated microbial strains were identified and characterised using microbiological techniques and 16S ribosomal RNA sequencing. Like the human body, each cheese has a unique set of microbes that metabolically shape a unique odour."

We then frame the whole experiment into what is ethically or aesthetically acceptable to us: "Cheese odours were sampled and characterised using headspace gas chromatography-mass spectrometry analysis, a technique used to identify and/or quantify volatile organic compounds present in a sample."

I will leave you at this and suggest you explore the said boundaries on your own…



Interesting show in London's St Petersburg gallery: Vladimir Baranov-Rossine: From Cubism to Surrealism:
http://www.saintpetersburggallery.com/exhibitions.html

Apparently, the first exhibition in 30 years retrospecting his works in Europe.

While on Russian art, an amazing collection of rare Allies posters highlighting the role of the Soviet army during the World War 2: http://rbth.co.uk/multimedia/pictures/2013/11/14/wwii_lend-lease_posters_campaigning_for_soviet_troops_31715.html

And travelling further in time, an unseen until recently collection of early photographs of life in Russia from the beginning of the 20th century
http://www.businessinsider.com/prokudin-gorskii-photos-of-russian-empire-2013-9#a-water-carrier-poses-for-prokudin-gorski-in-the-street-25
Here's a sample - both in colour and original print:

Readers of WLASze would know that I am not a big fan of Zaha Hadid, having written before my opinion about her over-exposed, over-worked studio. However, where credit is due, it should be given. Fantastic aesthetic and total absence of respect for balance can be a cool combination. This building confirms:

http://www.designboom.com/architecture/innovation-tower-by-zaha-hadid-at-hong-kong-polyu-11-20-2013/


And for the last bit - an absolutely fantastic Gel talk by Vi Hart on mathematical applications to music composition:
http://vimeo.com/29893058?utm_content=bufferb7b81&utm_source=buffer&utm_medium=twitter&utm_campaign=Buffer

Enjoy!

22/11/2013: 'Clean exit': spin vs non-spin

Yesterday, I tweeted in response to the quote by An Taoiseach Enda Kenny concerning Ireland's 'exit' from the bailout as follows:

'Clean'? 'Break'? 'Right'? 'Course'? Is he randomising words off refrigerator magnets? RT @harrymcgee: Making ‘clean break’ from Troika was right course, Kenny http://t.co/C6rwa1G3lz | Cause, you know - it is neither a break (2-pack) nor 'clean' (debt still there), nor 'right' (retro debt relief not in place), nor a 'course' (cause we didn't have a choice - the money run out & the pot is empty).

The quote contained in this Irish Times article: http://www.irishtimes.com/news/politics/making-clean-break-from-troika-was-right-course-kenny-says-1.1604418 was as follows:
"Taoiseach Enda Kenny has asserted that the Government took the right course of action in making a ‘clean break’ from the Troika despite its own independent economic advisers recommending the State should have accepted a precautionary line of credit."

Let me explain why I have take the statement to task.

Word 'clean' implies that we have severed whatever attachments to the bailout we had in exiting the bailout. Alas, there were two such attachments to severe:

1. Troika oversight. This still remains, albeit in slightly altered form: http://trueeconomics.blogspot.ie/2013/11/17112013-ireland-to-remain-subject-to.html Note that, per my analysis here: http://trueeconomics.blogspot.ie/2013/11/15112013-exiting-bailout-alone-goods.html, our exit from oversight can be interpreted as ejecting the more positive side of the Troika and retaining the oversight by the less positive (from our interest perspective) members. Further note, Minister for Finance explicitly admitted that there was no exit from the oversight.
2. Financial ties to the bailout. These ties were not even reduced, let alone cut, since the entire debt we owe the Troika is still outstanding to the Troika.

Word 'break' implies an act of breaking free from something - the act of the doer. Ireland did not 'break' away from the bailout, but rather we have run out of the bailout terms. We completed drawing down the loans available per bailout. We completed the process on time (without overruns) and without requesting another bailout. But we did not 'break' from the bailout.

Thus, one cannot claim that we made a 'clean break' from the bailout, but rather that we have moved to the second stage of the bailout: paying down the loans.

Was the 'exit' a right choice? Time will tell. Fiscal Council thinks (as I do) that on balance of things, we should have secured a precautionary line of credit. Moreover, we can now clearly kiss goodbye any chance of a retrospective debt deal on legacy banks debts. Not being within a bailout disallows us to extend an argument of hardship arising from these debts, and by removing the IMF from the oversight process, we have now removed the strongest advocate of such a deal we had, after the Ballyhea-Charleville group of protesters and other similar groups. Note: Irish Government ranks, in my view, as a distant third force in asking for such a deal.

Thus one cannot argue that the 'exit' was a 'right choice' as it clearly fails to achieve the objectives that would have made it 'right'.

Lastly, the issue of the word 'course'. Course implies an option of direction undertaken. Ireland had no such option. We have completed the first stage of the bailout - conditional loans disbursement. Full stop. Altering this 'course' of completing the first stage would have required us negotiating a new bailout - something that was clearly not feasible, given the problems Germany and rest of the EU have encountered in Greece and given the fact that the IMF is desperate to stop lending in the Euro area. The entire process of Euro area bailouts has cost IMF hugely in terms of reputational costs and risks. The Fund came to severe blows with the EU and ECB over the policies and structures of the bailouts and it has run out of the road in extending more funding to the Euro area states beyond the funds agreed. In short, neither Germans, nor the IMF were looking forward to lending us any more cash should we request another bailout. Which means there was no 'course' nor a choice of action to take.

The good news, we do not need another bailout. The Irish people and the Government deserve a credit on this. The bad news, we neither exited the bailout, nor achieved a clean separation from the Troika, nor pursued a correct path of action on structuring our completion of stage 1 of the bailout. The Irish people certainly are not to be blamed for these. Which leaves only one question open: is our Government to be blamed?

I neither desire to answer the last question, nor to deal with what the potential answer might be.

22/11/2013: Euro area banks: leveraged through the nose... still

All you need to know about European banks sickness (it is still raging), the state of European regulations and quality oversight over the banks (it is still crap) and just how far we have travelled from the causes of the crisis (not far at all) in one chart:

European bounds set for the banks are a joke. A bizarre joke. And yet, Europeans call this a 'reform'. And regulators in the countries with completely dysfunctional banks (e.g Ireland) harp on about their banks 'compliance' with or 'meeting' the 'European standards'...

Notice, under the US proposed standards, leverage ratio requirement will be raised to 6% for FDIC-insured banks... meanwhile in Europe, 3% is 'rigorous' and 'robust' and 'safe' and 'never again' level...

Time to smell the roses. Going at the current rate of 'reforms', it will be decades before this European mess is sorted and by then, Europe won't matter to the rest of the world... will not matter at all... backwater with a few nice museums and some statues of the Great Leader Hermit von Frompy strewn across the lovely fields of wheat...

Oh, and if you still think that Newbridge Credit Union is a Big Story - my suggestion is: time for a visit to your friendly head doctor?..

22/11/2013: Freedom of Press in Ireland: 2013

I recently tweeted on the subject of press freedom assessment of Ireland, but have not blogged the numbers. So correcting for this shortcoming, here's the latest assessment of Ireland by the Reporters Without Borders under the Press Freedom Index:

• From 2011 through 2013 we are ranked 15th in the world in terms of freedom of press;
• In 2013, we were ranked 14th in Europe (not EU or EA) in freedom of press;
• Our worst ranking on the record was 17th achieved in 2003;
• We were ranked 1st in the world in 2004-2005 and again in 2009;
• We ranked in top 10 in the world in 2002, 2004-2010

Here is our 'neighbourhood' in terms of top 20 ranked countries in 2013, compared to 2010-2012 average:

I will be speaking and participating in a panel discussion at NUJ event tomorrow, focusing on the Future of Journalism: http://www.nuj.org.uk/events/the-future-of-investigative-journalism-in-ireland/

PS: For those who might ask why I was invited: I used to work as the Group Editor of Business & Finance magazine and its sister publications for a number of years and subsequently was non-executive director of the publishing house.

22/11/2013: German GDP - no surprise to the downside

German GDP figures out: Q2 2013 confirmed at +0.7% q/q, Q3 2013 final at 0.3% q/q. Year-on-Year Q3 2013 at +1.1%, exports up only +0.1% q/q, imports up +0.8% q/q.

A chart (via @moved_average):

And the chart lesson? Recovery period: 2010-to-date: Trend growth down-sloping, volatility consistent with 2002-2007 period. The latest recovery sub-period - unconvincing.

More on euro area growth: http://trueeconomics.blogspot.ie/2013/11/20112013-euro-area-zaporozhetz-of-growth.html

21/11/2013: Art = Rubbish Investment Despite 6%+ Average Annual Returns?..

Two interesting recent studies on economics of investment in art markets worth reading.

The first study, titled "Does it Pay to Invest in Art? A Selection-Corrected Returns Perspective" by Arthur G. Korteweg, Roman Kräussl and Patrick Verwijmeren (October 15, 2013) "shows the importance of correcting for sample selection when investing in illiquid assets with endogenous trading. Using a large sample of 20,538 paintings that were sold repeatedly at auction between 1972 and 2010, we find that paintings with higher price appreciation are more likely to trade. This strongly biases estimates of returns. The selection-corrected average annual index return is 6.5 percent, down from 10 percent for traditional uncorrected repeat sales regressions, and Sharpe Ratios drop from 0.24 to 0.04. From a pure financial perspective, passive index investing in paintings is not a viable investment strategy once selection bias is accounted for. Our results have important implications for other illiquid asset classes that trade endogenously."

The study is solid on econometrics and shows very clearly how the selection bias mechanism drives abnormally high reported returns for art. This, in my view, sets a new standard of analysis for the sector. The study is available here: http://ssrn.com/abstract=2280099.

Another paper, titled "The Investment Performance of Art and Other Collectibles" by Elroy Dimson and Christophe Spaenjers (September 2, 2013) was authored by finance specialists who should have known better to test for selection biases. They did not. Which means that some of the econometrics reported should be suspect. Still, the study is interesting if only because it covers not only fine art, but also philately and musical instruments.

Per abstract: "We assess the long-term financial returns from high-quality collectible real assets, and review the unique risks that are associated with such investments. Over the period 1900-2012, art, stamps, and musical instruments (violins) have appreciated at an average annual rate of 6.4%-6.9% in nominal terms, or 2.4%-2.8% in real terms. Despite the similarity in long-term returns, short-term trends can vary substantially across these different types of emotional assets. Collectibles have enjoyed higher average returns than government bonds, bills, and gold. However, it is important to recognize the quantitative importance of transaction costs in collectibles markets. In addition, price volatility is larger than is suggested by conventional measures of risk, and these assets are also exposed to fluctuating tastes and potential frauds. Yet, despite the large costs and many pitfalls, investment in emotional assets can pay off, because of the non-financial yield they provide."

The study is available here: http://ssrn.com/abstract=2319338

20/11/2013: Euro Area: the Zaporozhetz of Growth?..

"Ello... Ello... Stagnation calling... Is this Europe?"

Two snapshots from the recent ECB staff forecasts for the euro area performance: 2012-2014... Real GDP in the range of cumulative 3-years growth of... -0.0076%... 2014 rapid expansion of the forecast range of 0.9-1.2%... If this is the engine of growth, then this is the engine of mobility:

Update: The Zaporozhets of Growth is now spilling coolant (oil has drained already):

Via BBVA Research.