The ‘Financial Times’ might not be the most obvious place to go to for football commentary, but in Simon Kuper, the financial paper of record has one of the most engaging football correspondents in the business.
His article on the demise of England’s soccer team got me thinking about the economy. On Monday morning, Kuper made the following observation about England’s defeat to Germany:
“It emerged at half-time that Lukas Podolski, Germany’s winger, had hit a top speed of 31.5kmh. His teammates Bastian Schweinsteiger, Mesut Ozil and Thomas Muller all exceeded 25kmh. They flitted past Englishmen such as Gareth Barry, John Terry and Matthew Upson who were stuck at 21kmh.”
And anyone who saw Ozil skin Gareth Barry for Germany’s fourth goal could be mistaken for thinking they were watching an over-35s Sunday morning team pitted against the Usain Bolt first 11. The English seemed to be playing a different game to the Germans.
And that is the point, they were.
The Financial Times’ point is that Germany have adapted to the new game which is a game of speed, whereas England still opts for lion-hearted, stout yeomanry in defence and heavy-set, beefy lads up front.
Whether you agree totally with this analysis, the central idea that the English are being left behind by the changes in the international game is hard to disagree with.
Here is where the comparisons with sport and economics overlap. Twelve years ago, Germany was thrashed by Croatia in the World Cup; they were also unimpressive in the subsequent European Championship. They regrouped and apparently instructed their youth coaches to focus on speed and passing accuracy. Two of England’s tormentors on Sunday, Mesut Ozil and Thomas Muller, were 21 and 20 years old and are the product of this new thinking.
Germany had a footballing crisis and reacted to it. The crisis gave the Germans the opportunity they needed to change. Ireland is having its economic crisis, but are we, like the German football authority, going to take this as our opportunity to change?
The rules of football have changed because different teams have emerged with different skills and the game has moved on. The teams that are successful are those who have gone for passing and speed. So England, Italy and France have been sent packing, while Uruguay and Germany prosper.
The Dutch have always passed and put great store in teaching children to pass and pass and pass again, letting in football parlance, “the ball do the work”.
Argentina have always played this way. The thing I love most about Argentina is the diminutive size of their forward line. For years Argentina favoured the small, quick, skillful, little guy over the lumbering, “belt and braces” target man. From Diego Maradona, to Pablo Aimar, to Javi Saviola, to Carlos Tevez and Leo Messi, there has rarely been an Argentinean attacker with flair above 5ft 7! They have set the standard and others have followed.
If world football has moved on, so too has global economics. The model of land, banks and credit as a wealth generator has been exposed lamentably. Any country that tries to resuscitate that will be as guilty as the football manager who sticks to two hulking centre-halves to play against skillful, quick attackers.
Countries, after a crisis, should identify the problems and never again repeat the mistakes of the past and move on. Countries should also be aware of what is happening elsewhere to see what the rest are doing.
Unfortunately, our reaction to the crisis has been a predictable effort to protect the positions of the “insiders” who got us into this mess.
The present government policy, through NAMA and bailing out the banks, is trying to put the “humpty dumpty” of the “feudal” land economy back together again. In this effort, it is being ably abetted by the professional “fee takers’ who dominate the advisory game in Ireland. This week we see just how significant these fees are. NAMA will dole out €2.8bn in professional fees alone!
But this reversion to the property carry-on will only make us revert to a landlord-based economy, which has more in common with the 17th Century than the 21st Century. The professional class of fee-takers is a dressed-up version of the old-fashioned gombeen. They create nothing but curry favour and are paid a fee to stand between the citizens and the creditors pretending to act in the national interest when actually they are acting in self-interest.
All the while, the rest of the world moves on.
And if we want a real game changer we must move on from the tyranny of these “fee-takers” and an economy that celebrates “wealth-makers”. We can see this in the countries that are doing well, they are countries where nimble brainpower and enterprise rather than brawn and property are rewarded.
One thing we see throughout history is that the government of a country simply has to set the tone right and invariably the entrepreneurs do the rest. The recurring idea appears to be the government should invest in infrastructure at all costs. Infrastructure enables growth. Look at so many of the spurts in economic activity — they were prompted by innovation, which accompanied massive infrastructure investment.
For example, the invention of refrigerated ships led to a boom in agricultural exports from Uruguay to Argentina and prompted the grandfathers of the present wonderful footballers to emigrate from Europe. Or take the more recent invention of the internet, we see that infrastructure does not in itself create growth, but it does enable growth.
So the State must get its infrastructure right. In a recent report on telecoms (www.tif.ie) it was calculated that a full roll-out of broadband in Ireland would cost €2.5bn — or about a tenth of the cost of the Anglo bailout. So this State is prepared to waste €22bn on Anglo and not invest productively in telecoms. Extraordinary.
This week, The Economist Intelligence Unit and IBM business have released ‘e-readiness’ global rankings. Ireland has come in 17th (or in World Cup parlance, a second-round knockout).
If the Government’s knowledge economy stuff is to have any basis in reality, we need to be in the top five globally, which is currently: 1. Sweden; 2. Denmark; 3. US; 4. Finland; 5. Netherlands.
In football, how you react to the crisis is as important as the crisis itself. Do you learn any lessons? Do you see what the rest of the world is doing and adapt? Or do you bury yourself in nostalgia and play to stout defenders — all heart no brain — and try to stick to what you have always done? Do you defend the system rather than the result?
The choice is yours? The stakes couldn’t be higher.
Hi David, I hope you are enjoying the world cup. Not sure if the lessons of football can directly be applied to the world of economics, but howandever … lets concentrate on the economics. > Ireland is having its economic crisis, but are we going to take this as our opportunity to change? The model of land, banks and credit as a wealth generator has been exposed lamentably. Countries, after a crisis, should identify the problems and never again repeat the mistakes of the past and move on. The present government policy, through NAMA and bailing out the banks, is… Read more »
Its worse than you think David, our fools have managed to get us relegated from the first division. All these over-weight or over leveraged property galoots have elbowed their way into the team under the FF management, the original Celtic Tiger has been shafted back onto the bench with no offer or stimulus to play. You are right its like all these fools you see in the parks on Sunday Mornings, wearing corsets etc. to hold back their gut or middle age spread that comes from failure to keep fit on an ongoing basis as all Business’s have to do.… Read more »
Enterprise, like football, is about vision. You pass the ball into the free space, not where your team mate is, but where he will be when the ball gets there. Like Apple, you design an iPad, not for a market that exists but for one that will have people queuing overnight to buy it when it is announced. Apple scored another goal with iPhone4, despite Adobe suggesting it was offside because it didn’t support their antiquated Flash technology. The linesmen correctly kept their flags down because the promise of html5 kept Apple onside. If anybody in the government wants to… Read more »
Excellent article – reluctance or inability to change is the road to extinction in all evolutionary processes. Our policy makers are literally analogue men in a digital world when it comes to the importance of broadband. The feudal land based values still have priority among our elite because of the inherent insecurity associated with living in a country that has always been dependant on another for its survival – today on multinationals. We were never buccaneers.
Hi David, Great article, and you clearly understand the beautiful game (is there anything you don’t understand now?) and this article reminds me of something Kevin Myers wrote a few months ago about how Ireland, England, Scotland and Wales no longer produce high quality footballers as they used to before. A lot of it has to do with the environment we live in now. As Graeme Souness said on RTE last week, he grew up in Edinburgh in a neighbourhood where no one had cars parked outside their house, leaving the streets free for kids to play in free from… Read more »
The fundamental truth about this article is that the insiders are playing Fiddleywinks while the rest of us are togging out with round shaped balls. Two different games in town. NAMA Utd will never get up to promotion levels and the outsiders aren’t even shown the rules of the game, let alone be allowed to play.
Back to work.
David. ‘The present government policy, through NAMA and bailing out the banks, is trying to put the “humpty dumpty” of the “feudal” land economy back together again. In this effort, it is being ably abetted by the professional “fee takers’ who dominate the advisory game in Ireland. This week we see just how significant these fees are. NAMA will dole out €2.8bn in professional fees alone!’ For anyone operating in reality on a daily basis the assertion above found in Davids article is a fair and empirical assessment of the situation the ‘outsiders’ are faced with, I reckon anyway. This… Read more »
In todays FT http://www.ft.com/cms/s/0/3c25c36c-83af-11df-b6d5-00144feabdc0.html Suds says: “Herman Van Rompuy, the president of the European Council, has been charged with making recommendations to the council on the reform of the eurozone’s governance in October. It is both desirable and inevitable that his proposals will represent a substantial step forward in the integration of the European political economy. Recent experience points to a more binding surveillance of national economic, not merely budgetary, policies.” So its goodbye to national sovereignty, except for UK and a few other stragglers. This is what we sacrifice in exchange for writing off €1.7 Trillion debts. Seems like… Read more »
@Malcolm.
Is it any wonder this is happening when what we are all stuck with is ‘money creation’ in the hands of private corporations.
Is the international game changing all that much?? Sure, the balance of power is shifting – from nation states to greater economic areas, from the west to the east – but I would contend that the game is still the same. It is in the interests of the political and economic elite to be separated from the mob, that way they can’t be held accountable for ripping them off – this has been the way since the days of tribal elders and pagan priests who lived off the surplus production of neolithic farmers. The cycle of boom and bust hasn’t… Read more »
Excellent article. Enjoyed the cartoon about Biffo. There are strong similarities between the performance of the England soccer team and the Irish state. Something which the ‘slag the Brits’ brigade in this country seem to be blind about. I was reminded of Biffo on Sunday Afternoon. Pat Spillane was commenting on the decision making on the Dubs sideline. Spillane pointed out how Dublin used a defensive strategy in the League. Then Wexford outfoxed them in their first Championship game, and the Dubs boss had to change. So he opted to use an attack strategy. And it won the game for… Read more »
So you are saying, when the Government brings on the Economic Crouch in the last 10 minutes, it is time to really worry?
Unbelievable.
http://www.marketwatch.com/story/goldman-shorted-615m-of-its-cdos-rmbs-2010-06-30
Of course this is probably within the rules. But equally, it is also possible that civil suits on the basis of misrepresentation could eminate from this. I mean GS were saying one thing and doing another. I imagine shareholders in Bear Stearns, Lehman Brothers and AIG must be furious.
Thx again D for great article. There’s a severe lockdown in Ireland INC against any of the innovative approaches to the economy that you mention. It would appear those with nimble brains are regarded as threatening outsiders. The logical consequence of this view is that the insiders croney nepotism weltanschung world view is brainless and devoid of any possibility of an adequate response to change in a changing world. Change for the better is something that should be sought and embraced rather than denied. Typical of this fear of change is the approach to the banking crisis. Little even in… Read more »
I’ve noticed before how Pravda’s No Frontiers show always plugged Aer Lingus flights, always highlighted Dublin & sometimes Cork Airport as the only departure points, Shannon, Knock and other Regional Airports never got a look in for this shameless promotion. So Michael O’Leary had enough of this bullsh1t and took Pravda to court and won! http://www.independent.ie/business/irish/ryanair-complaint-against-no-frontiers-is-upheld-2239528.html These holiday programmes were interesting and informative in the 80s and early 90s. This is no longer the case in 2010 where people can examine different holiday destinations with the click of a mouse, without some D list celebrity making an A list lifestyle… Read more »
DMcW >>This week, The Economist Intelligence Unit and IBM business have released ‘e-readiness’ global rankings. Ireland has come in 17th (or in World Cup parlance, a second-round knockout).<>We should be very carefully managing the level of infrastucture, now is probably NOT the time to get into even more debt to pay for it.<< Borrowing isn't so much the problem as what you do with the money. Putting current and future generations into hock by pouring 22bn into the blackhole of Anglo is a shocking waste. DMcW's point is that putting 2.5bn into developing a proper high-speed ubiquitous network is a… Read more »
http://www.independent.ie/business/irish/doubt-cast-over-claims-that-recession-is-over-2240995.html And many more cogent doubts cast here. Brian Lenihan has performed an excellent service in providing Gaelic-Prop to the massed ranks of these so-called financiers in the “Markets”. Armageddon was staved off over the last two years but sadly, as the serious analysts pointed out on here, there was no covert plan B to protect the Irish People. We still pay the same price as the rest of the invalids to borrow money. Austerity now begets sterility. The country is stagnating and a comparison between the reactive capability of our Civil Service “Intelligentsia” to the moribund, dogmatic EU apparachiks… Read more »
Furrylugs : Bulls Eye
One interesting fact to emerge yesterday, after it had made its way out through the heavy mist of spin and misrepresentation I might add, was the fact that groceries and the basic commodities still remain 30% above the Europeans in price terms that is. I say price because I am never really convinced about quality but that’s another issue. Now in the face of a massive depression and economic collapse it did surprise me that ,let alone had these grocery retailers maintained their margins in Ireland but they had maintained their differentials with their cousins in Europe, NO mean feat… Read more »
Guys, as I maintain all along, us Irish may whinge a moan, but in general we are well off. Life is proceeding as normal. No riots, no sense of revolt. I cannot believe it’s a matter of taking it on the chin – stiff upper lip etc. But then do we ape British policies. So I am optimistic that all is not lost. A swingeing 25% cut across all gov depts, dump a lot of regulation and ID cards – which should mean the depts should have more than enough resources left over to do some real work for a… Read more »
Knowledge economy is a misnomer for being organized to cope with the new realities in highly outsourced and majority temporary contract labour (meaning insecure) environment. Domestic market has yet to leverage the knowledge economy in the same way as the Irish exporters.
Knowledge economy is taking over with or without the Government’s consent. It is the new multinational with fewer boundaries and lesser affiliations without the bureaucracy.
Relying on my memory, Ron Greenwood as manager of West H*m put down his team’s defeat in the first leg of a semi-final agains Eintracht Frankfurt to the fact that the English game was a good 20 years behind the Europeans technically. And the Hammers were one of the ‘flair’ teams then – this was I think a little bit before Jack Charlton took Boro to the top of Div 1 with his brutal kick and rush style. I mention this only to illustrate the contemporary amnesia in discussing any topic, as if it had never been noticed before. Even… Read more »
Enda Kenny has just appointed Michael Noonan as Finance Spokesperson. This is unbelievably stupid. FF must be absolutely delighted. Noonan was instrumental in gifting the 2002 general election to Ahern. All the Noonan promises will be recirculated by FF if there is a general election. Chances are FF will go soft on Noonan so that Noonan will not be taken out of Finance. Is Kenny really serious about the economy, when he puts that clown in charge of the Finance brief ? The economy is in crisis, and Kenny has moved two economists out of position. Could Cowen get any… Read more »
Concerning the drive to have/become a knowledge economy…..it is very difficult to go from a Bullshit economy like we had in the Ahern years, to a knowledge economy….without a very deep and probing analysis of our own attitudes to education, information, personal development, state over-reach, transparency, market freedom from oligopolistic control, financing, and training. In fact, I would say that while some people get it, a lot deliberately don’t because it is in their vested interests to go back to the insider driven ‘arrangements’ that used to control the economy, and which almost collapsed in 2008. The problems here are… Read more »
Bruton get’s enterprise, how convenient! Do these guys have not a penny worth of pride and self respect, ops sorry, of course they do not! This country is fucked up beyond repair, then again, no one but the Irish public is to blame, they had ample time and opportunity to do something about it, now, it is too late, and they can all be Irish again, eventually piss a shamrock in the snow or rip off their own country men. Great! As this government in Ireland has outlived all legitimacy, this site here has outlived it’s purpose, the articles are… Read more »
Noonan will always be the Village Schoolmaster who seeks to snoop out the bullyboy at the back of the class and pile up his snide remarks in that process .He is an Old Dog that cannot shake of his old spots and can never change his narrow mindness and predictable vocabulary of a know all that knows nothing about Finance.His bullwork tries to raise a false air of a west limerick knight of darkness that will never show any light in a flashbulb.
You don’t need to be an economist to be Spokesman for Finance. A sceptical and questioning mind is a very good start ; Noonan fits the bill. I welcome his appointment. There is little or no correlation between soccer and economics. Had Frank Lampards goal stood, as it should have, who knows what would have happened. The Germans may well have caved in with the shock of losing a 2 goal lead in 2 minutes, and the whole premise for David’s article would have been invalidated. How fast Lucas Podolski can run relative to John Terry is of little relevance… Read more »
Nor should we eulogise too much are Argentinian football. Everyone remembers the ‘Hand of God’ in 1986. People forget the shenanigans and the cynicism they displayed in 1978 when they hosted the tournament – http://en.wikipedia.org/wiki/1978_FIFA_World_Cup. This culminated with disgraceful cheating in extra time in the final against Holland. Every time a ball was played towards the Argentinian defence, their defenders caught the ball. No-one was even booked, they should have finished the game with a maximum of 9 men. Nothing to do with economics as far as I can see, but worth pointing out seeing as they seem to be… Read more »
hi, thanks for all the helpful comments as always. george and john allen thanks for all your contributions over the past months and years. unfortunately you seem, from your comments, to have been swayed by what others write about me many of whom are defined by nothing more than the quality of their own sneering. that said, thanks for your time and i hope you find a vibrant forum elsewhere. all the best and hope things go well for you in the future, david
Good Morning David , Last night there was a healthy discussion and I hope that none of it is seen to be an attack on you and what you believe in.It was meant to add to what you have been doing and to evolve what you want to do.I dont believe those other journalist nevertheless neither do I ignore what they say.I will always read your articles and books and will continue to encourage everyone I know to do likewise.Maybe we might call these moments as a ‘Moon Wobble’ July 3rd. I hope that you have a great week end… Read more »
Hi David, Keep up the excellent work and its great that you can bring complicated international finance and economics to the average guy on the street and they understand what you are talking about. Well done :-) This is what we have learned in the last few days. All the claims for people claiming unemployment has soared in the USA. The home stimulas has stopped and as a result home sales in the USA has fallen by 30%. The markets are basically saying that the reason there is growth (very small amount) is because of the stimulus packages that the… Read more »
I have been trying to tease out why Fianna Fail let the Country down. We all know this has been happening for years and years, and it follows the same pattern, time and time again, with their leader usually leaving under some cloud or other, disgraced but still in denial. It finally occurred to me that FF could be suffering from a prolonged dose of Groupthink, and that it was this Groupthink as part of their inherent culture that leads to the disasters that we have seen for generations. To make groupthink testable, Irving Janis devised eight symptoms indicative of… Read more »
Georg.
And, this is painful this is, on the *fanboy* daftness your comment s slung my way can I deflect with the following.
Stanley Kubrick first second and last I am a fan of. Then Freud and Picasso and Einstein. Thats it. I cannot see anybody out doing those three guy’s.
David and all, I would like a more serious discussion on the knowledge economy and indeed knowledge economics (if such a topic exists in profession). More importantly, I think you should have a separate link on this. Like many above, I am very frustrated and feel powerless at the shenanigans of the last few years and indeed the last few weeks. I am not at all happy we have any alternative leadership and your “Insiders” Abbey act etc. merely depicts an invidious nature of affairs where it is a loose loose for the common man. I am also appalled by… Read more »
Well, even those reformed capitalist former Marxists the Russians are trying the become more entrepreneurial. Hilarious. Should we be imprisoning our oligarchs like the Russians ? Or maybe we should be ensuring that the entreprenuers that are constrained by market rigging, nepotism, done deals, closed shop markets, insider behaviour, start getting a chance. http://www.bloomberg.com/news/2010-07-01/russian-revamp-of-predatory-legal-system-may-free-100-000-entrepreneurs.html Even more interesting, the Russians have not formed a committee, or a taskforce. I am sure they have quangoes, but none are mentioned here. While our leaders sit around dithering, time-wasting, pretending to know something, and playing punch and judy, the world moves onwards. Here is… Read more »
The following has, to my mind, relevance to David’s reference to the ‘feudal’ land economy we are doing everything we can to prop up. Hudson often refers to the role of land as an asset to be ‘financialized’, pledged as collateral for debt. Tull brought up Henry George a good time ago. Here’s Crotty’s view. From Raymond Crotty, A Radical’s Response (about 1986): “The Irish establishment, more durable than the walls of Jericho, did not crumble when Irish Agricultural Production was published. Indeed, apart from the odd, mainly favourable notice in obscure journals, Ireland and the world proceeded after the… Read more »
Coldblow.
Ireland can as a political and social entity do what Crotty brilliantly states.
One acre of land can be made available to every Irish citizen over the age of 21 for the princely sum of I cent and this acre can never be sold on for a price higher.
Gombeenism /World Cup Rules/ Mafia / Mossad/ Secret Service / Irish Financial Regulation / FBI What is the difference ? Answer : None -Other than geography . Where do Illegal Irish Passports be obtained in Dublin? Answer : An Irish Mandarin who speaks Gaelic, drinks in Nesbitts/ Dohenys ,watches GAA and is not married. Why are the Politicians of USA and Russia rubbishing away the recent spy scandal ? Answer : Because to acknowledge the truth would reveal more than we already know and cause a World Wide Financial Depression to go deeper.That means everyone looses more. Thus best policy… Read more »
David, as you know On Wednesday last European banks had to repay 12-month loans of more than 400 billion euros to the European Central Bank (ECB). These loans bolstered them at the time of the global banking crisis. They had the option to borrow from other banks at rates of 0.30% to 0.35% for three months… or to roll over their exposures with the ECB for three months paying 1%. Hence, any bank that can borrow from normal markets should do so, because the rate differential is large. So the exercise was seen by the markets as a test of… Read more »
Reality Check. The whole notion of the banks been *stressed checked* and it been trusted is off the wall. If banks are *stressed checked* in an even handed way then their over extended predatory lending a few years ago what happened there. Also. the banks solvency problems is another joke. If I pass my personal debts onto my next door neighbour, or, even better my kid’s, I pass my debts onto my kids does that make everything better again in the economy. This is just crazy this notion of banks cleaning up their accounts by passing the rot onto someone… Read more »
Malcolm & Wills, my point is that last Wednesday was a very significant event — It showed that the European Banks trust each other at least to a degree that in stock market terms would be termed a “support level” i.e. a bottom in market dynamics pointing to upside potential. Make no mistake, If the Banks did not trust each other at all (due to the perceived level of toxic debt) the help would have been sought from the ECB. Last Wednesday was not a recovery by any means but it was a welcome breather from all the volatility of… Read more »
Wow Tull, I hope your not part of Zeitgeist or Something :)
“WE” = the people, investors, the economy.
BBC commentator has seen last Wednesday in a glass half full way. Really what did he expect – The whole crisis to quick-fixed in one day? “Update, 12:40: Eurozone banks have borrowed 131.9bn euros of three-month money from the ECB, which is about a third less than analysts were predicting. It certainly implies that strains in the wholesale funding market are less acute than some feared, and that fewer banks than it was thought are being deprived of finance from commercial sources. That said, 131.9bn euros is a non-trivial sum of money. And with the market rate for bank-to-bank money… Read more »
Oops should have wrote – glass half empty :)
Reality Check = Tim?
— keep it comin!
D.McWilliams wrote: So this State is prepared to waste €22bn on Anglo and not invest productively in telecoms. Extraordinary. With all due respect I am surprized that you would ever consider Irish government hypothetically “investing” that amount in the telecom infrastructure as being a “good” scenario. Or any government. Would you really trust these people? I would venture a prediction that had they been given that money to spent on building broadband infrastructure, they would first spent 11B eu on consultants (their relatives), hired 10,000 extra office staff (more relatives) and then asked for another 22B eu to finish the… Read more »
Deco.
Check this article out in the Indo relating to property developer who supposedly is bankrupt and yet has managed to still maintain full ownership on 32 apt’s in ballsbridge.
http://www.independent.ie/opinion/analysis/broke-mcnamara-is-registered-owner-of-32-dublin-apartments-2245479.html
I think we should ask Japan what they could have done better to manage their stagnation over the last few years. If there was a future graph to be drawn for Europes developed economies currently I would say it would be following Japans trend over the last decade. Japan has also found out many cases of high level collusion and we could certainly do with stronger laws in Ireland to prevent collusion. Also we should follow Signapores example on housing. They have 85% of people in ‘social housing’ and 90% of those own their house. Signapores GDP ranks among the… Read more »
On another note the bailing out of Anglo Irish is just funny. All you can do is laugh at the fact future generations will be slaving away paying for that. Basically one day we heard the news, the goverment had Nationialised Anglo Irish. No debate, no consulation with the people on what was the biggest decisions of the crisis. I then from my limited experience could tell on the day it was a big mistake, basically because Anglo had very little deposits from the normal Joe and had speculated wildly in property whose price was only going to fall. Then… Read more »
Apropos of nothing, really: I once knew someone who harbored a secret dream to be even more heroic than Walter Mitty.