Spain and Ireland in light of the MIP
So: let's quickly see what the MIP (Macroeconomic Imbalances Procedure) tells us about the situation of two countries idolized by the average Joe piddino: Spain (see previous post) and Ireland (I suggest desktop users click on the "Ireland" tag in the tagcloud at the bottom of the page, or mobile users type something like "Ireland site:goofynomics.blogspot.com" in their favorite search engine, where they don't like surprises).
The MIP scoreboard :
you can find it here and I would ask you to take a look at it not for anything else, but to understand how long it takes to make a speech based (on the data). However, it is not necessary to open the databases one by one because you can directly access the dashboard by clicking on the highlighted item at the bottom of the list:
or by opening this link .
By working a little on "Customise your dataset" and modifying the presentation of the data I organized the information like this:
placing the indicators in a row and the countries grouped by year in the column. Each indicator has a threshold, so once the data has been loaded into Excel, to obtain an immediately "expressive" dashboard, simply use "Conditional Formatting" to highlight the out-of-scale values, and of course you can do this year by year.
In this circumstance I would like to give the exercise two meanings: that of providing us with elements to understand whether the Spanish (and the Irish) are truly a miracle today , and that of helping us to understand if, let's say, in 2011, when both the blog and the MIP started, the indications provided by the dashboard on these countries were such as to justify an alarm. Put backwards, we could say it like this: in light of the greater or lesser ability of the dashboard to promptly signal those problems that we know have materialized, we could see if today the dashboard indicates the potential emergence of similar problems. The exercise could then be extended to all the countries of the Union, to see which are better off and which are worse off. If it is true, which the citizens are convinced of, that we are in the hands of a madman who will unleash a storm, it may be useful to check which tree has sufficiently deep roots, and which does not. But in the meantime I would start from our three countries: Ireland, Italy and Spain to refine the method.
Using the 2012 survey ( Statistical annex ), in 2008 the dashboard ( headline indicators ) was configured as follows:
Let's say that there were enough warning signs in the countries that went through more serious problems than ours. Ours essentially had a single problem, the one we know to be the least relevant from the point of view of economic theory: a public debt/GDP ratio above 60%. The others had it much lower but that didn't save them. Regarding the other indicators of our country which are off the scale in the table, the change in the real effective exchange rate is three decimals (threshold 3), private debt is however around half that of other countries, the only other worrying indicator was the loss of export market share. I will not dwell here on the economic sense or nonsense of these indicators and in particular therefore on the validity and asymmetry of their choice and their thresholds.
Let's see what the situation looks like today, considering the headline indicators of the 2025 Statistical Annex :
The two pictures are not directly comparable because three have been added to the 10 indicators reported for 2008: the change in ULC (Labour Cost per Unit of Product, reported in the last line as Unit labor cost: this was discussed this morning at the School of Political Training); the labor force participation rate; the unpacking of private debt between families and businesses.
The situation in our country has improved a lot: the only off-scale indicator is, notoriously, the public debt, which is now also a problem for Spain, which is also off-scale with foreign debt (Net International Investment Position), with unemployment and finally, strangely, also with the change in the cost of labour. I say strangely because in a country with high unemployment one would expect a certain wage moderation, which instead is not there and obviously puts the competitiveness indicator at risk (which is, however, also strangely positive, signaling a modest depreciation in real terms). The Irish situation denotes the usual financial fragility in the business sector, with foreign and private debt totally out of scale and a substantial increase in the cost of labour. In both cases (Spain and Ireland) we are four violations to one compared to our country, whose only violation however does not worry the markets :
perhaps because what we wrote here went from being a "heretical" opinion to becoming a common analytical heritage over time (not thanks to us but to the persuasive force of the facts: the famous "if it doesn't get into your head…" etc.).
Returning to the topic that worries you so much, the Easter holidays with the connected need to clash with the patient Piddino (but wasn't it "Christmas with your family, Easter with whoever you want"? But then perhaps you were looking for the Piddino relative yourself, in the throes of a sort of Stockholm syndrome), I would say that the question of "Eh, but Spain is growing!" can easily be resolved with: "Undoubtedly, but there must be something wrong, because it is a growth that does not generate jobs, given that the unemployment rate is in double figures, therefore out of scale according to the Commission, which also indicates worrying values of foreign debt and a worrying increase in the cost of labour. Easy to grow with other people's money, let's hope they don't have to pay it all back together like fifteen years ago. Can I have another egg?…", and to the question of "Eh, but micuggino in Ireland Work for Google and make a lot of money!" you can easily reply with: "I'm pleased for him! Yes, in fact in Ireland the cost of labor is growing above the alarm threshold of the Commission, which is obviously worried about the related loss of competitiveness. Perhaps this prosperity can be linked to the fact that Ireland has a foreign debt that is more than double the alarm threshold: many large international companies invest there to have a base in the Union and have English-speaking staff. It's a shame that the profits made in Ireland are then repatriated abroad and this already sent the country into crisis about fifteen years ago, but this time surely #everything will be fine. Can you pass me the coral?"
They don't understand anyway.
They're not bad.
If you hammer in a nail with serenity and agreeing with them, but affirming the statistical facts and their probable evolution, perhaps, if they remember, in a couple of years they will consider you a kind of Nouriel Roubini (i.e. a great economist, or a great jinx, depending on your point of view). The secret is to stay calm…
Then we calmly carry out a complete screening of all the countries, so we can see whose turn it will be next, because sooner or later there will have to be a financial crisis, regardless of Trump's real or presumed madness!
In the meantime, have a good evening!
(… tomorrow I'm in Genoa:
There won't be time to say anything sensible and complete, even if you try, so you can safely abstain. I am speaking to meet many friends, and naturally because it is an honour, a pleasure and a duty to be present at the Department's activities, but what we need to say to each other in substance can easily be said here, as we have just done, and considering that the speech will begin at the time when I usually have dinner – and I will have had lunch at the airport – it will be difficult to meet me in a good mood: if you want to keep a good memory of me, if you meet me you can easily ignore me. I tolerate the piddini in transmission with great ease: it is the violations of the biorhythm that alter my mood! The little Pascolian child in me can't stand having his feeding time changed: but we have to be flexible, Leuropa asks us to do so …)
This is a machine translation of a post (in Italian) written by Alberto Bagnai and published on Goofynomics at the URL https://goofynomics.blogspot.com/2025/04/spagna-e-irlanda-alla-luce-della-mip.html on Sun, 13 Apr 2025 18:15:00 +0000. Some rights reserved under CC BY-NC-ND 3.0 license.