Celtic tiger burned too brightly

Ireland has agreed to a bail-out by the EU/IMF. The Irish initially resisted the support partly because it rings historical alarm bells about its sovereignty after years of subjugation by the British. But no amount of emotional policital baggage can hide the fact that Ireland lost the plot. At first the Irish economic miracle was a marvel to behold. Eventually, though, things just went too far. House prices doubled and doubled again and greed took over from common sense. The state simply spent too much. This is surprising given the loads of common sense that the Irish appear to have. It is by no means certain that this deal will do the trick. Irish banks are bust and the state is carrying the can. At some point holders of Irish bank debt will have to face reality. A swap of discounted Irish debt for equity is needed. A voluntary exchange would be far preferable to an involuntary default. Of course, finessing this is very tricky. In the meantime, the massive bail-0ut deal will bide the country time. The QSL is from RTE Radio 1. This long-wave transmitter is easily audible in London. I often used to listen to it driving around town. It offers high quality programming. The letter is signed by the legendary Bernie Pope. She has signed many a QSL for our DXing community over the years.

Helicopter Ben storms Frankfurt

Fed. Reserve chairman Ben Bernanke stood up in Frankfurt yesterday and gave it right back to his critics. He was under fire from various sources for the latest round of Fed money creation, known as QE2, not to be confused with the cruise liner! At the heart of the Fed's strategy is the intention to boost asset prices. As long ago as March last year, former Fed chairman Alan Greenspan clearly stated that rising equity prices were key to a global recovery. Critics of the Fed are missing the point - QE2 is not about weakening the dollar. It's about restoring assets to value levels, after the shock overreaction down during the crash. Although it's not on anyone's radar screen right now, house prices are also likely to turn the corner. Currently the US is building far to few homes for the growth in the adult population. Sometime next year perception of this is likely to dawn which will add a further boost to asset prices in the US and abroad. The QSL is from the Hessischer Rundfunk in Frankfurt, home of the European Central Bank. I heard it on 594 kHz AM when living in Johannesburg in 1990.

Seoul in the dead of night

A million words, a thousand sherpas, hundreds of business executives, scores of ministers. One communiqué. Any news? Last week’s G20 summit in Seoul, Korea marked another grand gathering of economic policy-makers, charged this time with spiking the ‘currency wars’, alleged to have broken out in recent months.One could be forgiven for not being too overwhelmed with worry. If the IMF’s October economic growth update is any guide, we ought not to fret. It puts global growth at 4.8% this year and 4.2% next. Putting that in context, the average since 1970 is 3.7%. Usually it is when growth pushes up to 5% that we need to get worried. At that speed things start to break– we run out of capacity, or labour - prices take off. The IMF also has world trade volume up 11.4% and 7% in 2010 and 2011, against the 40-year average of 6.9%. Of course, we should always be sceptical about the IMF’s forecasts. But if these estimates are in the ballpark, they would be of the ‘not too hot, not too cold’ variety i.e. just right. As for currency wars, it is hard to know who is fighting whom. The US is pushing more liquidity into its banking system while China is keeping currency appreciation to a minimum. To do that China must absorb forex inflows into its economy, tantamount to boosting domestic liquidity. The QSL is from JOIF Fukuoka in Japan on 1413 kHz heard from Seoul in 1999. After the Asian debt crisis I had several trips to South Korea. I would often be jet-lagged flying in from London and would sit in the dead of the night in the Westin Chosun Hotel in Seould listening to Japanese AM stations. This was one of them.

Fed fired up in frenzy

Just as the US Fed embarks on QE2 - another bout of liquidity infusion into the banking sector - US jobs data pick up steam. Jobs are the hottest political/ economic potato in the US and the Fed has a dual mandate - keep inflation under control and keep the economy moving. Because jobs are so sensitive, any delay in recovery in the labour market puts a gun to the Fed's head. And yet, a look at 60 years of data will show you that what's happening in the labour market right now is typical of any post-recession. Jobs are usually slow to recover, and this shock was the worst in (most people's) living memory. It always takes time and the time taken this time is not different from other times. But the Fed feels obliged to act. It has also staked its reputation on avoiding Japan's experience of a 'lost decade' (or two). Japan has made several infusions of liquidity over the years, to little avail. But it started too late and in any case the dynamics of the Japanese economy are different from the USA's. So the Fed will probably do too much for too long. Whatever you say about Japan, the radio stations have a great QSL record. They just about always reply, to me at any rate. This QSL is from JOLF in Tokyo on 1242 kHz AM, heard in 1999. It still come in here in Cape Town from time to time.