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Europe's 'Success Story' Double Dips: Irish Economy Re-Contracts, As Predicted
Remember Europe's so-called success story - Ireland? Time to scratch it off the list, as the "best performing" PIIG, and "peripheral reform" wunderkind, just reminded everyone that the only true success story in Europe is that other I country - Iceland, after its fourth quarter GDP unexpectedly dropped 0.2%, well below consensus estimates of a 1.0% GDP boost. Odd - recall that back in October, following the announcement that Greece would be allowed to extract a bondholder haircut, initially at 50% and ultimately at 78.5%, we said that "this means that Portugal, Ireland, Spain and Italy will promptly commence sabotaging their economies (just like Greece) simply to get the same debt Blue Light special as Greece." Looks like Ireland is well on its way to doing just that, and the GDP slide is actually not all that surprising. Next: prepare for more "surprising" GDP misses from Portugal, Spain and, of course, Italy.
From Business Week:
Ireland’s economy unexpectedly contracted in the fourth quarter, pushing the nation back into recession, led by a drop in exports and government spending.
Gross domestic product fell 0.2 percent from the third quarter, when it slipped 1.1 percent instead of a previously reported 1.9 percent, the Central Statistics Office said in Dublin today. Economists forecast a gain of 1 percent, according to the median of five estimates in a Bloomberg News survey. The economy expanded 0.7 percent from a year earlier.
Irish Finance Minister Michael Noonan said last week that he expects to cut the government’s growth forecast for this year as exports slow and consumer spending continues to contract. Ireland is struggling to revive its domestic economy as austerity measures weigh on household demand and unemployed remains above 14 percent.
“We think the boost by the external sector is likely to fade over the coming quarters and that domestic spending will continue to contract,” said Ben May, a London-based economist at Capital Economics Ltd. “As a result of that, Ireland will fall back into recession.”
Exports fell 1.1 percent from the third quarter and government spending dropped 3.4 percent, the statistics office said. Consumer spending rose 0.5 percent in that period, while investment advanced 14 percent.
...
Unemployment stayed at 14.2 percent in February, close to the highest level since the 1980s, when the country last endured similar austerity measures. Retail sales declined 0.8 percent in January from the previous year, and 3.7 percent percent from the previous month.
“Uncertainty over the world economy and euroland in particular is likely to weigh negatively on the country’s growth prospects,” said Alan McQuaid, an economist at Dublin-based Bloxham, which is forecasting 0.5 percent growth this year. “There is little to be optimistic about as regards the Irish consumer and personal expenditure in the immediate future.”
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GNP -7,1% YoY. Just wow...
Commence with operation Crush Precious Metals.....not real sure what to do after that.
Nothing to see here.......move along.
Operation CPM doesn't start until 8:30. Like it always does on Jobless Claims days.
Sometimes they show up early........the devils work is never done.
I'm waiting for sub-30s. Any day now.
my neighbor's aunt makes $67 hourly on the laptop. She has been fired from work for ten months but last month her check was $20142 just working on the laptop for a few hours. Here's the site to read more .... http://lazycash9.com
"sabotaging their own economies"? or just stop overreporting their statistics? I miss here the increase of the last years of the Irish exports to the rest of the eurozone, for example - here just mentioned as a small Year on Year decrease
for the peripherals, the EUR is acting a bit like a gold standard - watch closely, then growth-uber-alles-approach is a tad more difficult this way...
----
look at the future, fellow muppets: "investment advanced 14 percent" - try to do this at home, if you can...
Strangely enough, all this means is a slow moving 'debt jubilee' for the EU periphery at the cost of more financial 'oppression'.
UK will ease again soon, and that will spark create an even bigger chasm between them and the EU.
I'm still wondering on Mr. King's intentions - yes, he will ease further eventually, but he seems to want more discretionary regulatory power from parliament...
"I want to be able to say to a bank: I don't like the way you operate, change it" (paraphrased from memory)
And there I was thinking "blondes over redheads again."
Makes less = print more...why worry?
(sarc off)
Bollocks!
Want a laugh?
George Osbourne yesterday proudly announced in the budget that the UK sells more to Ireland than it does to India, Brazil and Russia combined!
I hope we got 'cash up front' for those goods - otherwise we just shot ourselves in the foot again!
To be fair to the Draper, he was suggesting we might want to change that relationship somewhat...
Thanks for keeping the balance - however I fear our foreign policy of the Falklands, Syria and Iran and the immigrant cap is not going to change the relationship with Brazil, Russia and India respectively.
Draper? - is this a wall paper reference?
http://www.osborneandlittle.com/ Daddies business
WOTW...BBC blogs...a while back?
Yes - banned because I don't conform.
Even Osbourne accused the BBC of 'misleading people' this morning - I don't know what to think now.
Liars calling liars liars - wow - there's a conumdrum for us to untangle.
"Yes - banned because I don't conform."
Repeatedly even.
Good to see you here!
The BBC blog got very Mickey Mouse anyway, better off in the free world of ZH
Liars calling liars liars - wow - there's a conumdrum for us to untangle.
Such group of sociopaths is called the political class. (Read yerterday's ZH contributor's perspective on sociopaths in politics!)
Problem is that it takes extraordinary events or crises - likely war - to change this behavior (or "behaviour" for our friends across the pond).
I did my part helping the Irish economy. I bought some Guinness last night.
Bailey's!!
iQE?
I hear this is very bullish for equities.
Alex, let's try "Moral Hazard" for $1200.....
Tyler,
In real terms GNP fell 6% in 2011 in Ireland. That's because the used a negative deflator on the current figures to derive the constant figure quoted. That deflator of -6% is from the 2009 chained index reflecting deflation during that year. In 2011 there was inflation of 3%.
To correct the 2010 figure GNP needs to drop from €132.5 Billion to €119 Billion in 2011. That's a technical correction of 10%.
The economy has contracted by over 25% since 2007, more severe than the US Great Depression.
Also GNP is the appropriate measurement, not GDP as the multinational sector boosts GDP by 25% over and above GNP.
@Cassandra
GNP at current market prices
Y2003 :119,257m
Y2004 :127,682m
Y2007 : 163,413m (peak)
Y2011 :123,879m
Thats over a 24% decline in my book.
If they wrote off the private debt back in the day via a bank bond default they could have risen taxes on the now spare mortgage money to lets say Italian like fuel prices.
We would have had something more like a artifical tax devaluation that would have made the economy more sustainable.
But they choose to protect the Bond holders at all costs including the sacrifice of the rump physical economy.
You can't tax money that ain't there.
PS our population has exploded during those years mainly via Immigration.
April 2006 : 4,239,848
April 2011 : 4,581,269
A rise of 8.1% in 5 years............ so GNP per head declines are huge.
You are witnessing the utter destruction of a economy & society.
only thing selling is guiness
I love how the narrative is "unexpectedly"....with 14.2% unemployment how is this unexpected?
It's unexpected because the authorities thought this lie was " a deal done"
http://www.irishtimes.com/newspaper/ireland/2012/0317/1224313472692.html
The unexpected part is "shit, the proles don't actually believe it!"
I don't think I could handle another 'Summit', I really don't.
If Ireland continues like this it will need to auction of its State Art Gallery of Potato Prints