Monthly Archives: February 2015

A little night music for the Eurogroup





A Little Night Music is a great musical. In Act II Desiree looks back ruefully on her folly, and in particular her throwing up a chance at happiness with Frederick. She tries to get him back, he being in an unhappy marriage, but he declines. Eventually of course, they get together after the ungrateful wench to whom Fred is married runs off with his son.

Its not hard to take parallels with the Greek situation. Rueful musing on the folly of throwing over the Drachma, desperate attempts to make a bad situation work, a crisis, and …. well, lets see

In the meantime, some lyrics, which Yanis may have been humming last night.  Tune in later for a performance from Frances Coppola, to match My Favourite Greek Things

The Germans give nicht

Grexit looms quick

Drachmas at last on the ground

The euro will tear

Please send back the clowns


The union’s adrift

An Ordoliberal split

Podemos is gain-ing ground

But the center wont move

Why are there clowns?

Please, send back the clowns


Let them stuff Tbills

in banks

Extend a loan, defer, then theyre yours

Another long meeting again and wit is quite spare

Few there are kind

Sense is not there


Don’t you love farce?

Who’s fault? Its clear

We all colluded and winked

Now Greeks they pay dear

The Eurogroup clowns

Oh, those scary clowns

Oh, bother, there here


The center is rich

Peripherys blitzed

It isn’t a union you know,

Common currency its clear

And designed by clowns

Its run now by clowns

Well shielded its clear

A Song for Europe – Mario’s favourite things

Here’s hoping someone will sing this … my voice would etch lead…


Haircuts on Greek bonds, ELA exploding

LTROs and OMTs , liquidity flowing

Wondering which of the lefties will win

These are a few of my favorite things


Deposits eroding and capital oozing

Taxes evading and cronies a schmoozing

Yanis going cheap via Ger-man Wings

These are a few of my favorite things


13 month salaries , no privatisation

Structural reforms that are stuck at the station

Facing the Troika what will it bring?

These are a few of my favorite things


When the Dawns comes

When Putin rings

When I’m feeling sad

I simply remember my favorite things

And then I don’t feel so bad

Lessons for 2015 from 1919…

In 1919 Lord Keynes penned a wonderful tome, The Economic Consequences of the Peace. It is a profound work, written by him to express his concern, as an economist, with the punitive and inflexible approach being taken to German debt. It contains nary an equation but is one of the best pieces of economic analysis you will find anywhere. It would be well worth a read by the politicians of Europe.

You cant expect Greece to immiserate itself forever

Germany should realise that a settlement that is generous to Greece will hurt in the shortterm but reap benefits longterm

Debt reduction is the best way forward, then and now…

Handily enough, now as then much of the debt is owed “internally” in a bloc of so called allies…

Just set the payments in such a way as to make it in everybodys interest that Greece trades and prospers

Irving Fisher in 1922 got it spot on…

This government in Greece is soft-medium left. The Nazis await in the wings. Deal with Syriza or reap dragons teeth…

Should we benchmark taxes to lure back immigrants?

The government seems to think so.  Apparently its the income tax that is holding us back.

Reform of the income tax system to encourage emigrants to return home is being considered by the Government in the run-up to publication of the spring economic statement.
Under the plans, the tax system would be benchmarked against countries such as the UK, Australia, US and Canada.
The initiative, which would focus on the marginal tax rates and middle-income earners, is aimed at encouraging emigrants to come home as the economy improves. Ireland’s tax competitiveness, especially on personal tax, has been identified as an issue to be addressed.

Right. And if the government say it so and say it in the Irish Times, it must be so.

Lets see. The OECD are a mine of information. Amongst them is a wonderful subsite called “taxing wages” Its a lovely tool and gives a quick snapshot of the tax wedge. It looks at the incidence of income tax, employee and employer PRSI. It is a hard stark fact that the latter, the employer contribution to social security, which lowers Irish tax incidence. Unpalatable, unpleasant, but a fact…

Here is what it says for Ireland as of 2013 (remember things have gotten better since then…). Ireland is in RED, OECD average in BLUE.  No, this doesn’t take account of the cost of living, the water charges, the state of the roads or any other issue which gets conflated. Its about tax.  Still think we should lower tax on labour?

Screenshot 2015-02-06 07.18.40

This trend, for Ireland to take a lower tax wedge than the OECD average, is a persistent feature of Irish tax policy.

Screenshot 2015-02-06 07.21.45