Professor Alan Barrett:

Senator Barrett’s argument that the ECB’s policy on interest rates is wrong is extraordinary. What is needed is the combination of a low interest rate policy with sensible credit policies. What went crazy previously was that any sort of credit control was thrown away. There is a whole host of proposals such as loan-to-valuation limits and earnings limits in place now. There is a plethora of policy instruments that allow a low interest rate environment while at the same time capping crazy housing expenditure.

On the issue of growthless jobs, a nice new phrase, the employment numbers are spectacularly positive while the gross domestic product numbers have been spectacular neutral. Clearly, there is a conundrum. The patent cliff seems to be causing difficulty in trying to disentangle what precisely is going on in the growth numbers. We knew for some time that these were jobs with phenomenal rates of productivity attached to them which no one really believed. Obviously, there was something funny going on in the accounting.

The patent cliff is hitting so it seems to be biting into the gross domestic product numbers, yet there seems to be real activity. The nice point of the job numbers is that they are predominantly full time. I do not think they are predominantly in the self-employed sector. Some of the earlier upward trends in employment were related to part-time work. My guess is that the more recent employment trends will show up in the gross national product figures. They are real jobs and there is real growth underpinning them.

The great frustration over the past several years is that every time positive numbers for employment appeared on the horizon, they tailed off later. That is more a European phenomenon than an Irish one. It so good to welcome the good news but it is important not to lose the run of ourselves in thinking we are on a straightforward, linear upward trajectory.