Ireland no longer Junk

The credit rating of the Irish Government has been raised to investment grade by Moody’s the most influential of the international credit rating agencies.

Moody's the rating agency

In a statement tonight, Moody’s said that it was upgrading Ireland’s credit rating by one notch to Baa3, the lowest investment grade.

The Federal Reserve's January Beige Book is out.

The survey, covering the end of November and December, showed hiring in most areas was "muted", backing Labour Department data that showed a slowdown in job creation last month

Nine Districts indicated the local economy was expanding at a moderate pace; among these, the Atlanta and Chicago 

Real estate markets generally continued to improve, according to District reports. Although a few Districts indicated home sales or residential construction in some areas had slowed or declined in recent months, most cited increased residential sales activity and construction as well as rising home prices.

Read the full report at http://www.federalreserve.gov/monetarypolicy/beigebook/files/Beigebook_20140115.pdf

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Entrepreneur want Flat rate of tax to avoid evasion

A radical report by an expert group on entrepreneurship going around the Irish media, has recommended a flat tax on all income of 15pc to 20pc in a long-term strategy to attract corporations, immigrant business people and keep wealthy Irish in the country.

The low flat rate of tax would be on all income and would also be aimed at eliminating evasion.

"High income tax rates results in fewer jobs, results in more people on social welfare, and results in a dying economy," the report by the Entrepreneurship Forum says.

Sean O'Sullivan

Chaired by entrepreneur and venture capitalist Sean O'Sullivan, the forum makes 69 recommendations about improving the number of jobs created by entrepreneurs in the country, including:

• Capping USC at €100,000 for self-employed just as it is for employees.
• Let women share maternity leave with partners.
•  Tax breaks for company-to-company lending to bypass banks.
•  Tight rules on banks using personal guarantees in lending.
•  Remove any barriers to bringing in international banks to the gaps in Irish business lending.
• Attract foreign direct investment from start-ups, rather than just established multinationals.
•  Make Ireland the European trade hub for China.
• Speed up grants for people coming off the dole to start up their own company.

The forum was set up by Jobs Minister Richard Bruton, who will bring the report to Cabinet in the coming weeks and is expected to act on many of the recommendations.

Industry up in Europe but who is buying?

Eurozone seasonally adjusted industrial production rose 1.8% in the month of November 2013 and by 1.5% in the EU28, according to estimates from Eurostat, 

 In October, industrial production fell by 0.8% and 0.5% respectively.

The highest increases were registered in

•  Ireland(+11.7%)
• Sweden (+6.4%)
• Malta (+3.8%)
• Croatia (+3.0%)
• the Netherlands (+2.5%) 
•  Germany (+2.4%)

the largest decreases in

•  Lithuania (-3.5%)
• Denmark (-3%) 
• Greece (-2.2%).

In November 2013, compared with November 2012, industrial production increased by 3% in both the eurozone and the EU28.

However Eurostat also released figures for retail sales in October. They showed a 0.2% drop in volumes from September, itself a month during which sales fell by 0.6%.

On the brighter side the trade surplus for the Eurozone, unadjusted for seasonal swings, was 13.1 billion euros ($17.65 billion) in September, compared with 8.6 billion euro surplus in the same period last year.

ECB get ready to turn on the tap as deflation looms

The European Central Bank last week indicated that it is leaning toward more quantitative easing if the euro-zone recovery shows signs of faltering.

In language that was unusually blunt, ECB President Mario Draghi said at a press conference following a regular monthly meeting that the central bank would maintain its loose monetary policies, in contrast to the Federal Reserve, and was ready to "take further decisive action if required." Although the European Central Bank kept its key lending rate at 0.25%, Draghi's remarks were widely construed as loud verbal intervention.

The euro responded by dipping below $1.36. It traded at $1.359 at midday Friday, down 1.1% since the beginning of 2014. Most currency strategists expect the common currency to lose value against the dollar in 2014.

Observers expect some sort of modest policy easing around the end of the first quarter, triggered by tightening in financial markets or fears of inflation. Any move could come sooner rather than later, as the ECB attempts to decouple euro-area rates from a prospective rally in the U.S., where the Fed announced in December that it would begin tapering its bond-buying in January.

Falling inflation is a huge worry for the ECB. If weak prices begin to tumble further, deflation could become self-fulfilling. What measures the central bank might use remain to be seen, but more long-term refinancing operations or negative interest rates might not be the weapons of choice. Instead, it could opt for some sort of asset purchases that would rekindle bank lending, such as buying securities backed by loans to small businesses. But the central bank is keen to stress that all options are open.

Investors snapped up Irish 10-year bonds last week, sparking a flurry of issues from other countries at the periphery of the euro zone. But the enthusiastic response masks worries about member governments' long-term financial health. In part, the warm welcome reflects the progress made by some troubled euro-zone nations in repairing their economies from the devastating effects of the sovereign-debt crisis. More telling, though, is the volume of investment sloshing around Europe's fixed-income markets and the elusive search for compelling yields.