ECB surprise & hawkish move to cut basic interest rate to a record 0.25%
Another ECB rate cut won’t revive the Continent’s growth.
The best argument for a rate cut is that euro-zone inflation has been falling all year and came in below 1% in October. The central bank’s sole mandate is price stability, which means preventing excessive price changes in both directions. ECB President Mario Draghi made clear Thursday that the lower inflation outlook was the most important calculation behind the rate cut. The central banker has refused to pretend that a 25-basis-point cut in banks’ refinancing rate is the difference between euro-zone salvation and damnation, which can’t be said of some commentators.
Mr. Draghi also dismissed fears that low inflation is about to turn into a deflationary spiral. Not long ago, moderately improved business surveys were supposed to presage a strong European revival. Now, “dangerously low” inflation is said to threaten the recovery.
As Mr. Draghi pointed out, recent low inflation is due in large part to stable food prices and falling energy prices, as well as the effect of previous VAT increases dropping out of the data. But even a proper, prolonged dose of low inflation wouldn’t be the worst thing for Europe.
European Central Bank President Mario Draghi Bloomberg
Inflation has been falling most in euro-zone countries where wages have been falling most, which is good for real household income and consumption in those countries. The one euro country experiencing out-and-out deflation is Greece, where relative price adjustment has been a stated goal of crisis resolution.
A weaker euro will be a boon for German exports, which the U.S. Treasury and others blame for holding back euro-zone recovery. The new government in Germany isn’t about to open its spending floodgates, which is what European Keynesians are really demanding when they complain about insufficient German “demand.” The better complaint is that Berlin won’t cut taxes, which would lift German growth and thus its demand for other countries’ exports.
Lower interest rates and more generous central-bank liquidity will also help unfreeze credit in the European periphery. Funding conditions have been looking better of late for euro-zone banks, but those banks still aren’t lending to the real economy. Easier money will induce some banks to lower their lending rates. But actual improvement in the growth prospects of countries like Italy and Spain would do more to get credit flowing again.
This goes to the bigger point about Europe’s recovery, which is that it is not and has never been in the central bank’s hands. Mr. Draghi reiterated on Thursday that fiscal, labor-market and other reforms are the real way out of the euro crisis.
The danger for many years has been that easy money would remove the pressure on governments to use pro-growth policies to revitalize their economies. As the ECB’s rates approach the zero lower bound, the temptation will be to try “unconventional” monetary policy in the form of more asset purchases. Mr. Draghi’s challenge is to keep his sights on price stability when all about him are clamoring for more.
Josephine Feehily fails to back down on property tax payment deadline & methods
Revenue chairwoman Josephine Feehily faces Oireachtas Finance Committee to explain collection of household tax
Revenue Commissioners chairwoman Josephine Feehily arriving at the Oireachtas Committee on Finance, Public Expenditure and Reform sitting today to discuss issues around the payment of Local Property Tax.
Ms Feehily appeared before the Oireachtas Finance Committee this afternoon to explain the approach of Revenue to the collection of the tax, which was first introduced in July this year.
There has been widespread public criticism that taxpayers paying by plastic card have had to pay the 2013 tax and the 2014 tax within one year.
Answering questions from TDs and Senators at a well-attended meeting, Ms Feehily consistently said the retention of credit and debit card data was high-risk compared to the other methods of collection, in terms of security.
Retaining such information would present difficulties when it came to compliance with the Data Protection Act, she said.
The responsibilities of Revenue was to collect taxes in the State in the most efficient and secure fashion, she continued, strongly indicating that Revenue would prefer homeowners to pay using other methods which would allow them to pay in 2014 rather than in November this year. These include a single debit authority (a once-off deduction from a bank account on March 21st next year), or weekly or monthly salary deductions or direct debit payments, which are paid across the entire year.
While insisting there would be no concession in relation to credit or debit cards for 2014, Ms Fehily did say the Revenue would be willing to look at the situation again in advance of the 2015 tax. Nonetheless, she said she could not give any commitment to change. She emphasised the reluctance of Revenue to retain data from cards.
“I can’t look at it for this year. It’s not possible,” she said.
“These risks we have to look at very carefully. We would have to create systems and [would have to] charge taxpayers.
“It’s certainly not possible to introduce it this year. I have committed to look at it for next year. If we got into it, there would be costs,” she said.
Ms Feehily revealed that some 205,000 householders out of 988,000 taxpayers who paid in a single lump payment in 2013 had filed their returns as of today. She said it comprised a compliance rate of 35 per cent, which was very good, as there was still three weeks to go to the online deadline date.
She said there was a definite trend towards taxpayers choosing a single debit authority (money taken from bank accounts on March 21st, 2014) than card payments.
Some 15 per cent of those who had filed already had paid by debit card and a further five per cent by credit card. That total of 20 per cent so far compares to the 53 per cent who chose to pay that method for 2013.
Suggestions were put by committee chairman Ciaran Lynch, Fianna Fáil’s Michael McGrath and Kieran O’Donnell from Fine Gael that a two-stage mechanism could be set up where taxpayers could indicate card payment as their preferred method by the filing date, and then pay by credit card on or before January 1st, 2014.
Hundreds of Irish homes found with high levels of cancer-causing Radon gas
More than 400 homes around the country have been identified with high levels of the cancer causing gas radon in the past 18 months.
According to figures from the Radiological Protection Institute, one home in Tralee, Co Kerry had 26 times the acceptable level.
The institute says that occupants were receiving the equivalent radiation dose of around 18 chest X-rays a day.
Ten other homes, five in Kerry, three in Galway and one each in Clare and Wexford were identified with radon levels more than 10 times the acceptable level.
Critical shortage of nursing homes beds for Ireland’s aging population,
SAYS NURSING HOMES IRELAND CHIEF
Calls are being made for the Government to put a strategy in place to deal with our ageing population.
Nursing Homes Ireland is warning there’s a critical shortfall in long term residential beds – and the Government needs to act.
It says over 4,000 new nursing home beds are required by 2016.
There are currently more than 27,000 elderly people in nursing homes.
CEO of Nursing Homes Ireland Tadhg Daly says that figure is set to increase dramatically over the next decade.
“That’s based on the CSO statistics and also some research by the ESRI,” he said.
“What they’re predicting is that given the aging demographic, and, whole sometimes we talk about over-65s, the real issue for nursing home care is those over 80 and over 85, that is the ‘older old’, and people with more complex medical needs.
“So what it means is that, based on those figures, there will be a significant increase in demand for the care of older persons generally, but specifically in terms of residential care.”
Sharp increase in suicidal farmers calling Irish helpline over financial troubles
Financial woes and the fodder shortage has left many farmers in an extremely difficult situation, says suicide prevention charity Console.
INCREASED STRESS HAS led to a massive jump in the number of farmers ringing a special rural helpline over the past six months.
Suicide prevention charity Console said calls to its farm and rural stress helpline increased by over 300 per cent as financial woes and the fodder shortage left many farmers in an extremely difficult situation.
The charity received more than 5,200 phone calls between March and September, compared to just over 1,300 in the previous six months.
“Often callers to the helpline are in great emotional pain and many are on the brink of ending their own lives,” said Console CEO Paul Kelly.
Kelly said that the biggest problems for callers are money worries, rural isolation, and loneliness.
He cited the fodder crisis earlier this year – when farmers began to run out of dried hay and feed for cattle because of the unexpectedly cold and wet winter – as being a major source of worry for many farmers which put a strain on marriages and relationships.
“Farmers are naturally private people, they tend not to talk about their problems but to suffer in silence,” said Kelly.
IF YOU ARE IN A TOUGH SITUATION AND NEED TO TALK TO SOMEONE ABOUT IT, PLEASE TRY THESE CONTACTS HERE:
- Samaritans 1850 60 90 900 or email jo@samaritans.org
- Teen-Line Ireland 1800 833 634
- Console 1800 201 890
- Console’s Farm and Rural Stress helpline 1800 742 645
- Aware 1890 303 302
- Pieta House 01 601 0000 or email mary@pieta.ie
European Satellite to fall to earth, but nobody is sure where its going to land
A European satellite that mapped Earth’s gravitational field in exquisite detail will be pulled down by gravity to its fiery destruction sometime in the next few days.
Where and when it will crash no one knows. It could be almost anywhere on the globe. About 25 to 45 fragments of the one-ton spacecraft are expected to survive all the way to the surface, with the largest perhaps weighing 200 pounds.
It is the latest in a parade of spacecraft falling from the sky in what are worryingly called “uncontrolled entries.” About 100 tons of debris will fall from the sky this year alone. There are, however, no known instances in which anyone has been injured by space debris.
“It’s rather hard to predict where the spacecraft will re-enter and impact,” said Rune Floberghagen, the mission manager for the European Space Agency’s Gravity Field and Steady-State Ocean Circulation Explorer, or GOCE. “Concretely our best engineering prediction is now for a re-entry on Sunday, with a possibility for it slipping into early Monday.”
GOCE (pronounced GO-chay) ran out of propellant last month and has been dropping about 2.5 miles a day. As of Wednesday, it was still 113 miles up as it circled the Earth once every 88 minutes. Its orbit goes almost directly over the poles, and as the planet rotates, almost all places on Earth pass beneath it at some point.
Two years ago, NASA’s decommissioned Upper Atmosphere Research Satellite, tumbling out of control, worried people around the world until it splashed harmlessly in the Pacific. Later that year, the Russian spacecraft Phobos-Grunt launched into orbit, but then malfunctioned. Instead of heading toward Mars, it crashed back to Earth a couple of months later, again falling in the Pacific without incident.
The chances that a chunk of GOCE or any other space debris will injure anyone are tiny, but not zero. Dr. Floberghagen said the debris will endanger about 15 to 20 square yards of the Earth’s surface. “If you compare that to the surface of the planet, it’s a very small number,” he said.
An uncontrolled re-entry was always the planned fate for GOCE, which was launched in March 2009. Unlike most spacecraft, which use thrusters to adjust their orbits, it has a highly efficient propulsion system called an ion engine. Unlike thrusters, the engine can fire continuously to offset atmospheric drag.
That allowed GOCE, with its sleek, airplanelike shape, to maintain a low orbit, just 160 miles up and later 140 miles. From that perch, it made gravity measurements that were much more accurate and detailed than previous ones.
“We can actually map, see geology, in the gravity map,” Dr. Floberghagen said. “This is something that is quite unique, actually.”
For example, by combining GOCE’s gravity measurements of the surfaces of oceans with altitude measurements from other spacecraft, scientists have created global maps of ocean currents.
The data will also help scientists study ice sheets and convection in the Earth’s mantle, and help oil companies figure out where to drill.
While the ion engine was able to keep the spacecraft aloft, its thrust was far too weak — “More or less equal to what you normally exert on a piece of paper when you exhale,” Dr. Floberghagen said — to push the spacecraft to a trajectory that would assure it of ending up in an empty stretch of ocean.
With its propellant tank empty, it is now guided by gravity and air friction. “Quite literally GOCE is now nearly flying like an airplane without an engine, with the upper layer of the atmosphere providing aerodynamic stabilization,” Dr. Floberghagen said.
As it descends into thicker air, the atmospheric drag will increase sharply, and its fall is expected to accelerate in a final plunge sometime between Saturday and Monday.
A day before re-entry, mission managers will be able to narrow the time of the crash within three orbits, Dr. Floberghagen said. GOCE’s instruments continue to operate, providing scientists with detailed data about its final plunge.
In 2008, the United Nations adopted guidelines to reduce the dangers caused by space debris. By then, GOCE had already been designed, but a future mission like it might have additional thrusters for a safer ending.
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