Current Account

Who said the World Bank was humourless?

John Collins — Tue, 17 Apr 2012 11:44:14 +0000

In case you missed the news Dartmouth College president Jim Yong Kim was appointed new head of the World Bank on Monday. Whatever about the controversy over Dr Kim’s appointment he certainly seems to have a sense of humour – and a little talent in the singing and dancing department.

The video below shows Dr Kim (at about 2:05 in) taking part in Dartmouth College’s fourth annual “Idol” contest and he looks like he’s “having the time of his life”. You couldn’t make it up.

Click here to view the embedded video.

Out of the mouth of babes…

John Collins — Wed, 04 Apr 2012 12:59:45 +0000

Sometimes it just takes a child to see the blindingly obvious. Jurre Herman, an 11-year-old from the Netherlands, has won a special mention in the Wolfson economics prize, for his simple plan for how Greece might leave the euro. Pitched against the great and the good of professional and academic economists, he drew a simple but surprisingly insightful diagram of how Greece could return to the drachma and pay off a lot of its euro debts in the process (image after the break).

An orderly Greek exit from the euro as seen by 11-year-old Jurre Herman

Some features we particularly like of young Jurre’s entry:

the frown on the face of the Greek stickman returning his euros
his pizza analogy for the euros raised which will be sliced up for Greek creditors
his plan for fines for Greeks who try and hoard their euros or take them overseas
Jurre charmingly reveals his father helped with the translation but the proposal is all his own work
we note the judges, despite drawing international media attention to the young lad, have awarded him with a €100 voucher

On a more serious note, the five shortlisted entries for the £250,000 prize can be viewed here while Jurre’s entry is here.

As a bit of background, the award is sponsored by Next chief executive and Tory peer, Lord Simon Wolfson. The competition is to come up with the least disruptive way to break-up the euro. Interestingly chairman of the judges, Derek Scott, himself a former economic advisor to Tony Blair, described the euro as a “doomsday machine” which is undermining democracies as well as economies. Not exactly an award that comes without biases then.

Which makes it even more surprising that Time magazine’s Rana Foroohar blithely writes the “prestigous” award puts euro breakup on the agenda without providing any of this context. “The fact that we now have several published answers to that question written by serious economists makes the breakup issue all the more pressing,” writes Foroohar. Clearly a £250,000, or $400,000 as she notes, had nothing to do with the interest from serious economists then?

The vampire squid gets jabbed by one of its own

John Collins — Wed, 14 Mar 2012 15:46:01 +0000

Rolling Stone famously described Goldman Sachs as “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money”. While it’s a fabulous quote one of the world’s oldest, most successful, and probably most controversial investment banks probably laughed the article off. The number of Goldman clients who still read Rolling Stone is negligible.

But in today’s opinion pages of The New York Times Goldman Sachs gets firmly stabbed between the eyes by one of its own. Greg Smith is a 12 year veteran of Goldman. Having started as a college intern he has worked his way up so that the clients he now works with “have a total asset base of more than a trillion dollars.” Smith even appeared in Goldman’s recruiting video and was heavily involved with the bank’s graduate intake. But no more.

“I knew it was time to leave when I realized I could no longer look students in the eye and tell them what a great place this was to work.”

In this disarmingly honest article Smith says Goldman has got too greedy and has lost sight of doing the best for its clients. The making money at-any-cost culture has come to dominate, and that doesn’t bode well for the chances of the bank seeing out another 143 years.

It’s one thing for a journalist to criticise the culture at Goldman. But when your departing executive director, leads the firm’s US equity derivatives business in Europe, the Middle East and Africa, goes public with his complaints, you’ve got real trouble.

What has Europe ever done for us?

John Collins — Mon, 30 Jan 2012 14:22:10 +0000

Quite a lot if you look at the graphic below. With impeccable timing, the Institute of International and European Affairs, which describes itself as “Ireland’s leading think tank on European and International affairs”, has published an info-graphic giving an overview of the actions that the European authorities have taken to date to tackle the crisis. The timing is good of course as it ties in with today’s latest “crisis summit” in Brussels where European leaders are expected to agree the wording of the fiscal pact. Click the graphic below to see the larger, more legible, version.

Davos reaches out to the masses

John Collins — Mon, 09 Jan 2012 14:27:23 +0000

A member of the Swiss special police forces stands on the roof of a hotel in Davos as the annual meeting in the alpine resort got under way last January. Photograph: Reuters

With everyone from Bono to Archbishop Diarmuid Martin, Peter Sutherland to George Soros, heading to the exclusive Swiss ski resort of Davos every January, it’s little surprise that the annual meeting of the World Economic Forum has been accused of being a little exclusive. Although the number of bankers in attendance has fallen off since the crisis of 2008, the annual event, which takes place from January 25th-29th this year, can still be considered Glastonbury for the world’s monied and powerful elite.

The Forum is now using social media to try and change those perceptions and this year is pushing its Ask a Leader programme hard. Using its YouTube channel the public is being asked to submit questions it would like to see answered by “heads of state and government, leaders from business and civil society, heads of international organizations, as well as media and academics”. The submitted questions will be voted on with the most popular getting a response from a special video booth at the event.

It’s hard to see how the views of the hoi polloi will make much impact at the end of the month but those who feel excluded from the proceedings in Davos can’t say they weren’t asked for their opinion.

There’s Hole in my Euro: A little euro xmas ditty courtesy of Donal O’Mahony of Davy

John McManus — Mon, 19 Dec 2011 10:32:31 +0000

There’s a Hole in my Euro

There’s a hole in my euro, dear Angie, dear Angie,

There’s a hole in my euro, dear Angie, a hole.

Then fix it, dear Nicky, dear Nicky, dear Nicky,

Then fix it, dear Nicky, dear Nicky, fix it.

With what shall I fix it, dear Angie, dear Angie?

With what shall I fix it, dear Angie, with what?

With EFSF, dear Nicky, dear Nicky, dear Nicky,

With EFSF, dear Nicky, dear Nicky, EFSF.

EFSF is too small, dear Angie, dear Angie,

EFSF is too small, dear Angie, too small.

Then lever it, dear Nicky, dear Nicky, dear Nicky,

Then lever it, dear Nicky, dear Nicky, lever.

Will ECB help lever, dear Angie, dear Angie?

Will ECB help lever, dear Angie, will it?

Nein nein shall it lever, dear Nicky, dear Nicky,

Nein nein shall it lever, dear Nicky, nein nein.

Then how shall we lever, dear Angie, dear Angie?

Then how shall we lever, dear Angie, just how?

Sell insurance, dear Nicky, dear Nicky, dear Nicky,

Sell insurance, dear Nicky, dear Nicky, insurance.

Investors won’t buy it, dear Angie, dear Angie,

Investors won’t buy it, dear Angie, won’t buy.

Then call IMF, dear Nicky, dear Nicky, dear Nicky,

Call IMF, dear Nicky, dear Nicky, IMF.

But Chrissy’ll need funding, dear Angie, dear Angie,

Chrissy’ll need funding, dear Angie, funding.

Try G20, dear Nicky, dear Nicky, dear Nicky,

Try G20, dear Nicky, dear Nicky, G20.

EU must give first, dear Angie, dear Angie,

EU must give first, dear Angie, EU.

E200bn tops, dear Nicky, dear Nicky, dear Nicky,

E200bn tops, dear Nicky, dear Nicky, E200bn.

We’ll still need more, dear Angie, dear Angie,

Still need more, dear Angie, need more.

ESM so, dear Nicky, dear Nicky, dear Nicky,

ESM so, dear Nicky, dear Nicky, ESM.

With EFSF alongside, dear Angie, dear Angie?

EFSF alongside, dear Angie, alongside?

The same cash ceiling, dear Nicky, dear Nicky,

Same cash ceiling, dear Nicky, the same.

Then kill PSI, dear Angie, dear Angie,

Then kill PSI, dear Angie, kill it!

Need fiscal compact, dear Nicky, dear Nicky,

Need fiscal compact, dear Nicky, then yes!

Can’t lose my sovereignty, dear Angie, dear Angie,

Just can’t lose my sovereignty, dear Angie, I can’t!

Will save you the allusion, dear Nicky, dear Nicky,

Will save you the allusion, dear Nicky, allusion.

Johnny Bull won’t wear it, dear Angie, dear Angie,

Johnny Bull won’t wear it, dear Angie, won’t wear.

Don’t need him, dear Nicky, dear Nicky, dear Nicky,

Don’t need him, dear Nicky, dear Nicky, just don’t.

Will “other elements follow”, dear Angie, dear Angie?

Will “other elements follow”, dear Angie, will they?

May Draghi their feet, dear Nicky, dear Nicky,

May Draghi their feet, dear Nicky, Draghi.

Then still a hole in my euro, dear Angie, dear Angie,

Still a hole in my euro, dear Angie, a hole.

Business ♥ this budget

John McManus — Tue, 06 Dec 2011 20:36:49 +0000

No doubt about it…

Some chinks of light for technology industry in Budget 2012 – Deloitte

Budget 2012 tax measures are Business Aware – Chartered Accountants Ireland

2% stamp duty rate to attract foreign investors – Deloitte

Irish Tax Institute says export led tax measures will help Irish companies target international markets

Lowering of Commercial Stamp Duty will Stimulate Moribund Property Market – Dublin Chamber

Decision not to reduce the current level in tax relief on pension contributions welcomed by Aviva Ireland

We warmly welcome the commitment today by Minister Noonan that legislation will be introduced in 2012 to address the issue of very cheap alcohol – Vintners’ Federation

Surveyors say measures in Budget 2012 will stimulate activity in property and construction sector;

Institute of Directors in Ireland welcomes Government supports for business in Budget 2012

The Irish Exporters Association(IEA) Welcomes Minister Michael Noonan’s Budget 2012 – Stating it Will Provide Major Boost to Export Growth Prospects

CIF: property market measures welcome but mixed budget for construction

And the winner is….

John McManus — Tue, 06 Dec 2011 20:05:41 +0000

This year’s budget lottery winer is a key talent attracted to Ireland for business expansion purposes who spends 60 days a year in any of Brazil, Russia, India, China & South Africa, whilst engaged in r&d activities. He/she would qualify for three separate tax breaks.

Ideally they should earn less than €10,036 – to be exempt from the universal social charge – and be looking to buy a house this year, if not a commercial property. to avail of a range of tax concessions.

Oh yes…if they had a relation looking to sell then the family farm, this is also their year as various measures to encourage farming and the transfer of farms were announced.

The losers are all householders, even those very rich ones who don’t live here and have tried to avoid the domicle tax buy dumping their Irish passports. They can also look forward to paying more to tax their environmentaly friendly beemer and more DIRT on their savings…..

Dont beleive us….read the following from PwC………..

On Personal Tax
On Personal tax, Mary O’Hara, HR & Reward Partner, PwC said “Given the amount of speculation and leaks in advance of Budget 2012, there was probably more good news than bad for individual taxpayers. On personal tax, the Government did stick to their promise of no changes in income tax rates or credits. In addition, a number of measures designed to incentivise employment were announced. These include:

- A special assignee relief programme to attract key talent to Ireland for business expansion purposes, which will be welcomed both by multinationals and indigenous employers
- Tax relief where an individual spends 60 days a year developing markets for Ireland in Brazil, Russia, India, China & South Africa, which will clearly be welcomed by exporters
- A scheme for delivering tax efficient bonuses to individuals involved in R&D activities, which should go some way to addressing CEOs’ concerns over the retention of key talent.

Mary O’Hara also commented that there was good news for certain categories of individuals, including:

- Those earning less than €10,036, who will benefit from an exemption from the Universal Social Charge from 1 January 2012 house buyers during 2012, who will benefit from enhanced mortgage interest relief (25% for first time buyers and 15% for others).

Along with the €100 charge for all householders, a number of other areas targeted for less favourable treatment include:

- The domicile levy, which has come under the spotlight, with the removal of the citizenship requirement motoring, with increased motor taxation from 1 January 2012 and the threat of a VRT review savings, with increased DIRT deductions (up from 27% to 30%)”

On VAT
On VAT Tom Corbett, VAT Partner, PwC said “The increase in VAT rate from 21% to 23% from 1 January 2012 will present challenges for businesses to implement the required pricing, documentation and systems changes in the short timescale. It is critical that steps are taken immediately in order to be ready for the new year.”

On business tax/corporate tax
On business tax, Jean Delaney, Tax Partner, PwC said ” the Minister’s plans for encouraging focus on emerging markets, dealing with high value skills shortages and driving innovation are to be welcomed”. On corporate tax, Jean Delaney added “that the Minister affirmed again the Government’s commitment to the 12.5% tax rate while introducing changes to the R&D tax credit regime designed to encourage SME’s in particular”.

On Pensions
On Pensions Alan Bigley, PwC Pensions Partner, said “The Minister has introduced a relatively small number of revenue generating measures in the Pensions area principally around distributions from ARF’s and the full abolition of employer PRSI relief on employee pension contributions.

However despite signals to the contrary there have been no further reductions in the Standard Fund Threshold or the tax relief applying to pension contributions.

The Minister has stated that incentives for supplementary pension will have to be reformed.

We would see these reforms as possibly including:

Further reductions in the Standard Fund Threshold.
Reductions in tax relief on contributions.
Possible retention of the pensions levy.

It is unfortunate that we have continued uncertainty in the regime which will apply to taxation of pension savings in the medium term. Pension savings are a long term commitment and individuals need to have certainty as to the taxation regime which will apply to these commitments.

On stamp duty/capital gains/property
On stamp duty and capital gains tax, Tim O’Rahilly, Tax Partner, PwC said “The Minister has reduced the top rate of Stamp Duty on commercial real estate from 6% to 2%. In addition, he has introduced a Capital Gains Tax exemption for property purchased between today and 31 December 2013 provided the property is held for seven years. There measures are very welcome as they make Irish real estate relatively attractive from a tax perspective for Irish and international investors. “

Budget Day 1: a recap at a glance

John Collins — Tue, 06 Dec 2011 14:32:40 +0000

Dublin-based McCarthy Accountants and Loud SEO have teamed up to create this impactful infographic of the cuts announced yesterday. And to think we are only half way through!

Herald Budget predictions: round two

John Collins — Tue, 06 Dec 2011 13:27:43 +0000

The Evening Herald is splashing with the headline “Smash, Now Grab” as it reveals what it expects to be included in the tax measures of Budget 2012 that Michael Noonan will announce this afternoon. The Herald wasn’t as accurate as usual in yesterday’s predictions, but it did have some details that weren’t out elsewhere, such as the closure of Garda stations.

Here’s their main predictions for today:

2 percntage point increase in VAT (thank you German parliamentary budget committee)
PRSI to cover rental income
5-10 per cent hike in motor tax (will raise €50 million)
Unspecified increase in Dirt tax on savings
€100 household charge
Carbon tax increase on petrol, diesel and heating oil

Most of this of course has been out already. Despite the attention grabbing headlines it seems the Herald is not getting the same standard of Budget leaks from the FG/Lab government that it did from FF administrations.