Most forecasters are arguing that the Irish economy will slow down in 2017 —but there are valid reasons for believing that the economy will accelerate from here.
We are now in the fourth year of a recovery. Normally, this gives rise to worry, because all economies have cycles and most cycles are five- or six-year affairs. Therefore, we should be factoring in a peaking and a levelling off of activity.
There are also the shocks of Brexit and Donald Trump to contend with. Lots of people believe that these political events are, by definition, bad for Ireland economically; I think the opposite will be the case.
The UK is much more likely to experience a debt-fuelled boom in the next two years — more likely to be driven by an ongoing middle-income housing boom in the south than some sort of post-Brexit recession. Even if there is a ‘hard Brexit’ and EU tariffs are imposed on British goods, these tariffs are likely to be modest. In reality, the UK economy is large enough and strong enough to withstand a short trade fracas with the EU — and it will be short. The froth will be blown off the top of the London property market — and that’s a good thing — but England suffers from a housing shortage in a country where incomes, employment and the population are all growing.
In addition, the UK has its own currency, so lots of pain is reflected in the currency, and even here the worst is over.
In the USA, it is clear that Mr Trump is going to be like Reagan on steroids. It will be game, set and match to corporate America. The ideology of his politburo of plutocrats is outrageously transparent, and can be summed up by the expression: “The business of America is business”.
This means that the budget deficit will be expanded dramatically, and the dollar is likely to go through the roof. Janet Yellen in the Federal Reserve will put up interest rates, but with the economy close to full employment, the net result will be like an America of the 1980s. Profits will soar and Chinese money escaping China will have the same effect on American asset prices that Japanese money had in the 1980s.
Obviously, with such a narrow business focus in the cabinet, legislation to drive up earnings will be enacted. In short, profits more than patriotism will dominate Mr Trump’s America.
The new story that will be sold to the American people will be about explaining that in order to make America great again, Mr Trump first has to make America rich again.
Thus, the rich will get richer while the poor will get job opportunities in the expanded public works schemes that the Trump administration envisages. So we have Reagan on speed.
For Ireland, these two developments are positive because an internally combusting UK is good for Irish tourism and agriculture. In addition, a Britain in a trade scrap with the EU implies that the 50/50 investment decisions that an emboldened corporate world makes in Europe will favour Ireland over Britain.
The question is whether corporate America continues to invest abroad, particularly given the Trumpian rhetoric about bringing American capital home and replacing corporate outsourcing with insourcing.
In this regard, we come back to the earlier point about the business of America being business. Despite what was said in Wisconsin at election time, it is quite unlikely that those business titans at Mr Trump’s cabinet table will back full-scale protectionism that would imperil the global interests of American business.
Mr Trump and those around him understand they need to sell their goods to rich Europeans and they need Chinese savings to buy the American IOUs that are going to be needed to rebuild American infrastructure.
It’s obvious that Mr Trump will try to bring back a few factories from Mexico (and this also suits his domestic race agenda) but the idea that corporate America is about to retreat from the world makes no business sense. Only initiatives that make business sense will pass Mr Trump’s cabinet.
Mr Trump is more Reagan than Roosevelt. Like Ronald Reagan, he will split the world into friendly countries and unfriendly ones and will behave accordingly. In the pantheon of American bogeymen, China is to Mr Trump what the Soviet Union was to Mr Reagan. American relations with Asia are much more likely to change than American relations with Europe.
Back to Ireland, and I see the main drivers of economic growth here — apart from foreign investment, tourism and exports — are demographics, income, interest rates, house prices and taxes.
Ireland’s demographics are strong. The population is growing and this typically presages strong spending growth, provided incomes are growing. Obviously, the most important determinant of income is employment, and employment is growing impressively. So incomes are growing too. Interest rates are also crucial, not least because this is a highly indebted country. Thanks to Europe’s travails, Eurozone rates will remain historically low, facilitating a gradual strengthening of Irish balance sheets.
Many ordinary family balance sheets in Ireland have still not recovered from the property crash. Low interest rates help this healing process. House prices are rising and will continue to rise. The impact on those people who own property is that they feel richer and, when they feel richer, they tend to spend a bit more. This will be a feature of 2017.
Finally, it seems that taxes will not rise any further from here, unless the State decides to give away more goodies at budget time or grant a massive pay increase to the public sector that will have to be paid for by the rest of us.
Taken together, there is very good reason to be optimistic, economically at least, about 2017.
Right now, the story is that the world is about to end with Brexit and Mr Trump. This seems plausible because we are entering different times. But just because the background noise is different, it doesn’t mean that the economy has to go into some sort of spasm.
The spasm is occurring in the political class, who have seen their old certainties rocked, but for those of us faced with change all the time, 2016 was business as usual.
2017 is going to be more of the same. All the small decisions that each of us makes every day — the decisions that drive the economy — are likely to be made, no matter who runs the show in the White House or Whitehall.
I am confused. This article appeared in last Saturday’s Independent and is up on his blog today. What is going on?
Another point of view by Hugo Salinas Price
Very good analysis. I think that there are two differences between the challenges President Reagan had to face and the ones President Trump will have to face (that may not necessarily invalidate the premises of the article, but they are certainly a food for thought: 1. The US had a small debt compared to the 20 trillion President Obama has left as his legacy. 2. When President Reagan took power, the interest rates were already quite high, so they could go down or they could go up (they went up, thus strenghtening the dollar f…g over countries like Jaruzelski’s socialist… Read more »
Truthist, Moving my response to your comment lest you miss it (and keeping it short and sweet): “Incidentally, I am long familiar with Polish cinema. Wajda the director & a movie I saw in 1980?s by another director I think ; “No End”. Poland has had a flair for cinema. . I hope that u appreciate to NOT appreciate the movie on Michael Collins. Vested interests ensured that the movie would be useless.” I think you would like this movie (about the education in the 50s Poland – the worst period in the history of occupatant-enforced socialism in Poland –… Read more »
Damn the debt, full steam ahead has been the cry for 40 years or more. Most economists insist the debt does not matter. The US has run a deficit every year based on credit. Other nations have accepted US dollars of constantly diminishing value , as payment for solid goods of value, produced by sweat and toil. The US dollars have flooded the world with reserves that are stockpiled hither and yon but mostly in Japan and China. The US has lived in a fashion that it could not afford without debt but which it has become accustomed to. Mooves… Read more »
I just came across this article in the Daily Bell. It expounds on my attitude to economics and economists.
“”The best thing that economics could do in the modern era is to shrink itself drastically and return to a science advocating free market solutions. It should advocate as little government as possible and the greatest amount of self-determination for the most people possible.
Conclusion: If it did this, It would become a real profession again, albeit a smaller one, surviving in the nooks and crannies of academia. But that is where it should be.
“”And Black Magic or Alchemy is exactly what the bankers who met on Jekyll Island practised in order to set up the Federal Reserve Bank. This would be the central bank of the US that would be owned by private bankers and for the benefit of these bankers. This extremely clever and devious conspiracy followed the words of Mayer Amschel Rothschild who 100 years earlier had said: “Give me control of the nation’s money and I care not who makes its laws.””
David, I think you are somewhat correct with respect to Trump. It will be Reagan on steroids. It is a different set of businessmen to Obama. Obama installed more Wall Streeters than any US President. Trump has simply gone for waht he perceives as “proven winners”. This time the Us Labour market will have a floor, as a result of “the wall”. And this means wage inflation at the lower end (which is urgently needed to take the bottom rung out out of poverty). However, for the middle classes, I do not see much respite. It is quite possible that… Read more »
Regarding the essays I append. Sometimes I agree and at other times I put up as an alternate view. you cannot assume that I agree unless I indicate so. and then with such a complex matter one agrees with a part but not the whole. :)
Sorry mispelled, Grzegorz.
“… no matter who runs the show in the White House or Whitehall.”
Even if the White House & Whitehall is run by that special little democracy — u know, the one that says there should be no nation states & borders but its own “expanding” ones 8-) — in the Middle East ?
US Media outraged by Russia, won’t Notice Israeli plot on UK Parliament
Apropos of Scotland’s own version of Fianna Fail
Scottish Nationalist Party [ S.N.P. ]
Aanirfan.blogspot.com is very anti-Trump. Even anti-Trump’s Re ; Trump’s worthy interior policies. . Of course, there are parts of Trump’s interior policies that I : x] am doubtful of as to their worthiness y] am against z] do not understand ; I am still a learner And, of course, even for some of the worthy interior policies I am disappointed with some / most / all — depending on the issue — Trump’s line of argument to justify them. . But, there is much worthiness to Trump’s interior policies e.g. manifesto for 1st 100 days in office So, I am… Read more »
Trump’s Rising Civil War With the CIA
Here’s one way Trump is planning to spoil things for Ireland in 2017!
‘Trump pledge on pharma industry threatens Ireland.’
One of the points that our useless Irish media ignored concerning Trump’s press conference, (in their eagerness to depict Trump as the most evil ruler ever), is that Trump will reward the states that voted for him, and have been steadfastly GOP.
There is a precedent for this. Obama and Clinton both delivered for Wall Street and the Military equipment sector. Trump is doing the same thing for Kansas (wheat), Michigan (auto manufacturing) and Texas (beef).
I am not buying the BS from the Irish media.
Mr Jaroslaw Kaczynski gave an important interview for the Hungarian weekly “Heti Válasz. I have quickly translated geopolitically interesting excerpts from it. “In Central and Eastern Europe there is a variety of complex projects. For example, to create a common energy security that would stretch the region hitherto limited to the Baltic Sea, to the Black Sea and the Adriatic. I can also mention the already embodied Chinese initiative called 16 + 1, which is a cooperation agreement between Beijing and the countries of Central and Eastern Europe”. “All of this has already created a counterweight to the efforts of… Read more »
Ref. Deco January 11, 2017 at 10:29 am Ireland’s minimum wage is nonsensical. Ireland’s dole level is mad. Perceiving from context, & recalling his previous posts, I trust that Deco is saying here that both are “too high”. Although, in most cases he qualifies to say that these incomes are only survival monies for to cope with rip-off Ireland. However, what never gets mentioned by anybody is that there are persons on social welfare who do not even get the statutory payments that they are entitled to ; e.g.s Child Benefit Rent Allowance Dependent Adult Allowance And, this because the… Read more »
I have reviewed the article again, and I actually disagree with some of it’s key assumptions. One has to be careful when writing for a newspaper that is owned by a Telecoms billionaire running out of cash now that the Democrats have lost power in Washington. I am of the opinion that Irish Agriculture is now facing a serious predicament. Basically, the margins are no longer there. Irish tourism is snookered by a mimumum wage that is absurd if you are trying to operate a hotel in Mayo, where the business level is not there. The state has jacked up… Read more »
Hollywood peado endorsed by an actress who probably forgot what people have remembered….
Fpr a change, some positive news about Ireland as a technology hub: https://www.businessworld.ie/news/Major-15-year-genomics-research-alliance-formed-in-Ireland-567175.html My experience with TCD: science (biology in particular): thumbs up. Could compete with the best economics : mixed views – some lecturers very good. Messrs Gurdgiev and Lucey probably know more about the economy than any of us (sorry if I hurt someone’s ego). political science : thumbs down (i.e. their ridiculous Brexit debate, which imbued with conviction that out of all people in Ireland who can read, they are the least informed) philosophy : hmm – I know one of their Professors. Philosophy in TCD is… Read more »
Why is there no debate on the number one problem? The corruption of the banking system and the policy of the bankers is the leading cause of the erosions of personal and national freedoms. Coming to a place near you soon is the ban on cash. At which point all your financial transactions will be recorded. A bank run will never take place as nobody will be allowed or able to withdraw your own money from a bank. The corruption of the bankers will be hermetically sealed off from any investigation and remedy by any person or political entity. Be… Read more »
“Sovereign bonds are over 50% of this market and it is governments worldwide that have been the most profligate in creating debt. No government will ever be in a position to repay this debt with real money. The problem they now have is that they can’t even afford to service the debt. This is why around $15 trillion of government bonds now carry negative interest rates. This includes over 50% of the bonds issued by Germany, Netherlands, Sweden and Finland. In Switzerland, virtually all government bonds are below 0%. (not shown).”” Von Greyerz
?ssl=1 Weak dollar – a sign of a mismanaged economy “For anyone under the illusion that the dollar is a strong currency, just look at the chart below of the US$ against the Swiss Franc. During my working life, I have seen the dollar fall 76% against the Swissy. Hardly the sign of a strong currency. It now looks like the next leg down of the dollar is imminent. Against the Swissy, I would expect another 50% fall of the dollar to 0.50. That doesn’t mean that I believe that the Swiss Franc will be a strong currency. But I… Read more »
Come on David, do you really think the Hierarchy in the E.U favour us submissive Irish in the current fragile climate and with the threat of Italy and France leaving the Euro at some point??? The idiot of a man called Phil Hogan is telling the media what he has been told to say by the gangsters at E.U level… “We must cut our ties with Britain”…. Britain were the very ones who lent us £7 Billion when the crash happened and we are connected to Britain by Northern Ireland. I think maybe you are listening to too much propaganda… Read more »
The old saying.
News doesn’t happen, it gets made , There’s an agenda to everything.
Really became apparent during Trump campaign before we started hearing the term ‘Fake news’.
Kruscvhev said ‘The capitalists will sell us the rope with which we will hang them’. In this case The western freedom of speech facilitated by the internet encouraging the disgruntled to knock western institutions.
But don’t forget Litvinenko…
The email notifications are not coming through for me now.
I’m in the same boat as Tony except with less gold to weigh me down!
“Politicians are the worst of all in this respect – one only has to listen to claims and counter-claims during the U.S. Presidential election run-up, or ahead of the Brexit vote in the UK to understand that one side or the other – or usually both – is blatantly lying, or being exceedingly ‘economical with the truth’. And these claims are being made by people who are supposedly pillars of our society.
Why should the security services, or even an outgoing or incoming U.S. President be any different? They all have their own agendas and prejudices.”
Syrian army says Israel fires rockets at military airport near Damascus 13/01/2017 . . Israel always says — & in robotic voice — that it “has the right to defend itself”. But, what about Syria ? Does Syria have the right to defend itself from Israel ? Does Syria have the right to defend itself fro Trump ? Trump is about to enable that “special little democracy 8-)” in the Middle East to become Greater Israel. So, no giving back of The Golan Heights by Israel to its rightful country ; Syria. . Trump through enabling the expansion of former… Read more »
12h12 hours ago
US political discourse has sunk to level of schoolyard or barnyard.
Since caught abusing children, liberals retaliate by inventing anything.
“”The elite have not only failed, they have also created a dysfunctional, parasite-ridden, wealth-destroying economy.
“Better deals” won’t help. We are well past the point of declining marginal utility of the government and its policies.
The economists are right.””
I, Truthist, believe that USA Democrat Party’s Victoria Nuland regime in Ukraine shot / gunned down the Malaysian Airlines Airplane MH-17. . Note ; Irish woman on board that flight. Irish State’s government [ Fine Gael regime ] basically accused — without any justifiable evidence to back its assertions — Russia, & pro-Russia rebels in Donbass, of downing that airplane. . 11.01.2017 Author: Christopher Black HEADING Trump and MH-17 : Just One Step Too Far ? EXCERPT The propaganda campaign by the NATO war alliance against Russia has several components. The newest elements are the surreal allegations being made by… Read more »
‘Damaging’ transgender curriculum is about to invade 7-year-olds’ classrooms in the UK
70 nations with the final solution for the Israeli problem
Brilliant dreamland scenario.
The Real News from Greg Hunter
US wants war this week before Trump inauguration.
@ Grzegorzhe U say above ; “… strongest partner ; And there are only 2 : US or China Since Poland would not ally with the 3rd power ; Germany. REDACTED BY TRUTHIST I beg to differ ; There are NOT 2 strongest “powers”. The concept “power” is valid extra understanding because of ur reference to 2 distant ‘players’ & they are considered as actual powers by the hot polloi. And, there are certainly NOT more than 2 strongest “powers” Rather, there is only 1 strongest power. The strongest power is ; Israel The Israelis should be glad I say… Read more »
Ur latest info on Poland delegation air flight to Russia incident is duly copied & pasted into word-processing document & given useful name for retrieval. Henry Makow would be very interested to publish an article penned by guest writer on this issue ; He has sincere keen interest in it ; Because, he is circumspect about Putin being as squeaky clean that he is being billed to be by Makow’s alternative media peers. Makow — Jewish by birth — is very concerned about: apparent freemason handshakes by Putin Putin’s close affinity with Chabad movement in Russia the Poland delegation air… Read more »
@ Grzegorz I intend to return to u with thoughts on ur country’s nemesis Mr. Kevin McCarthy based in Kinsale, Co. Cork. I suggest that u construct table per ur main subjects of interest ; incl. anti-Poland AND anti-Polish Mr. Kevin McCarthy based in Kinsale, Co. Cork I will get digging on him & around him. Deeper info. will take time. I despise war-mongering. I same as Mr. Stiglitz in his concern for Ireland 8-) “I just wanna stop the hurt.” We all should construct tables for all the main subjects & sub-subjects therein. Tables that are often reviewed &… Read more »
David, I called a mate of mine back in Dublin last night, he didn’t feel that “there is very good reason to be optimistic, economically at least, about 2017.” The banks are on him about his house which is in serious negative equity. He was on an easy payment plan for the last few years but now they want repayments based on the actual mortgage, not what he can afford. Meanwhile here in Australia, we have a problem – actually two problems. The USA, who we are aligned with militarily & China our biggest trading partner. Mt Tillerson this week… Read more »
USA Democrat Party’s VICE-President Joe Biden caught again on camera being a paedo ;
Obviously, all political parties have such people.
THIS is How You Can Tell If Trump is The REAL Deal
NOT FOR THOSE SQUEAMISH ABOUT MAMMON
“The Money-Shot” of UK Parliament MP Ms. Joan Ryan getting down mean & dirty with official from Isr…l’s embassy ;
QUESTION FROM TRUTHIST
Similar disgusting behavior from Irish TDs & Irish State Civil SERPENTS ?
Anyone want to come to my inauguration party Friday? Yeah Im taking the day off and celebrating. I have an old Nixon presidential inaugurtation street sign, made of aluminium, that my dad kept when they took them down in the late 60’s. He was a cop in D.C. when I was a small boy. Here is a picture of one just like mine.
The Dreadful Few are in the process of closing off Russia’s access to the Mediterranean through Turkey. And, Victoria Nuland determined to “f..k the EU” is on all fours presently trying to insert — back-door style — Turkey into EU. Oww ! ; That will be super-painful for EU countries Cyprus is the unfortunate pad for Victoria to slide Turkey in. Big Greece not used. ; Just little Greece / Cyprus which has deposit of Turkey on it already. … ARTICLE If the State Department succeeds in orchestrating the coup in Cyprus which the author details, it could lure Turkey… Read more »