paw print

paw print

Sunday, November 24, 2013

Baaahhhhhhhhhhh said the sheep

In 2012 I have the opportunity to spend several weeks in Ireland.  The beautiful scenery, abundant and humbling history and the chatty and welcoming people made this trip better than I could have ever imagined.  Of all the places I explored, one of my absolute favorites was the Kissane Sheep Farm.  This farm has been in the family of John Kissane for over 150 years and is home to over 1,000 sheep.  I fell in love with the farm and upon talking more with John, I found myself captivated by his story.  


Ireland’s sheep farms are heavily subsidized by the European Union.  The income of average sheep farmer in Ireland is approximately €12,000 annually and for most farms, subsidies account for more than 50% of that income.  Due to changing European regulations, increasing food and medical costs, and declining prices of lambs and wool, it is less economically viable to raise sheep in the traditional way – but why? 

The globalization of Ireland’s economy has played a major role in the deviation from traditional farming.  Sheep farming was once a highly honored tradition and occupation but is now viewed as a risky and unprofitable endeavor. Sweaters, socks and blankets were the most commonly produced woolen goods and since locals were only able to make enough for themselves, an export industry was virtually non-existent at one time. However, in the 1890s, the British government pushed to improve local industries in Ireland by encouraging large scale textile production.  Because of this the wool industry grew dramatically but deteriorated in the first half of the 19th century when the linen industry outpaced its growth and demand for exports dramatically decreased. 

Today a majority of the wool from John’s flock is shipping off to France where it isn’t used to make clothing, rugs or other household goods.  The wool is actually worth more to many other countries for its lanolin that is used in many cosmetic and skin care products.  What was remarkable to me about my conversation with John is that I had been in the market for a handmade Irish wool sweater.  As he was telling me about how his wool is exported, all I could picture were the dozens of sweaters I had pondered purchasing over the last few days that had tags detailing that the wool came from some other place besides Ireland.  


Ireland is one of the most globalized economies in the world and was once referred to as the Celtic Tiger.  During this Celtic Tiger boom, Ireland went from being one of the poorest countries in the EU to one of the richest.  As Ireland offers one of the world’s lowest corporate tax rates, it has attracted many large multinational corporations such as Google, Amazon, and Pfizer to set up shop and helped to create many jobs.  That led to prosperity and caused a housing boom similar to the U.S. that eventually blew up, taking down the housing market and the banking system.

In 2008, it became apparent that the Celtic Tiger was dead and recession was setting in.   GDP was falling, unemployment was increasing and real estate prices were falling at an alarming rate.  In 2010, Ireland was forced to seek multi-billion dollar loans from the IMF and EU and in 2011, Ireland’s bonds were downgraded by Moody’s and labeled as junk bonds.  Ack!




The story of the Celtic Tiger is complicated but fascinating.  Whenever I walked into a pub or restaurant, the locals were always quick to discover that I was a tourist and not just any tourist but an American tourist.  The Irish have such a profound history and when you couple that with their gift for gab, you find yourself in deep conversations with a community that accepts your presence with open arms.  Just like in the U.S., banks and politicians were blamed for the Irish recession but one key learning emerged for me – the Irish were dealing with the economic turmoil in it a much different way than we were.  Community and culture preservation are a daily focus for the Irish and because of that, they are a phenomenally resilient group of people.  For hundreds of years, Ireland has been plagued with war, family and disease and at one time, Ireland’s largest export was its people.  These key events have made the Irish who they are and after my trip, I had a whole new outlook on the global economy and the importance of local living economies.  





John is diversifying his business to keep it alive. At Kissane Sheep Farm, you can Adopt-A-Sheep and help preserve the more classic Irish heritage of family farming or you can simply stop by for a tour that includes a sheep herding demonstration and shearing demonstration.  If you’re ever in the Ring of Kerry, I highly suggest making the stop and having a conversation that will be deep and meaningful with John and his family.  You won’t regret it!  

Saturday, November 2, 2013

The Economics Behind a Painting Bulldog

Merriam-Webster defines economics as "a social science concerned chiefly with the description and analysis of the production, distribution, and consumption of goods and services." This flat and one-dimensional definition does not touch on the personal side of economics. Economics pervasively affects systems and people at all levels and because of that, human emotions play a large role in the economy. You can throw a bunch of graphs at me and tell me what today’s GDP totals are but don’t expect me to draw my conclusions of what's happening based solely on that. As emotional beings, we’re largely affected by what’s going on around us and directly in front of us. You can tell me things are getting better and today’s recession has ended but until I see it, I won’t change my current habits and behaviors. 

Our country has been shaped through strong capitalist leaders such as the Cornelius Vanderbilt, Henry Ford, John D. Rockefeller and Andrew Carnegie. Our quality of life has grown exponentially over the last two centuries and growth within the economy has enabled that to take place and because of that, we've been taught that economic growth = good. 


Towards the end of my undergraduate years, where I got the bulk knowledge of economics, our economy was growing fast. I had just taken my first big job and was excited for the possibilities the future would hold. Many of my friends were buying $350,000+ homes in anticipation of continuing to “make it big.” Our emotions tied us to building our futures on the assumption that there was no end to this bright side. We were too young to remember the prior recessions that our parents were more than willing to quickly forget. Then in early 2007, a different reality started to hit…

Right now I can’t think of one person I've come across who hasn't been affected negatively by the current recession. It’s hard to think about the “good economic times” when you see an abundance of unemployment, foreclosures, closing businesses and increasing debt all around you. Since people are emotional beings we can often feel a form of resentment when we think about the exponential growth that got us here. How could <insert name, company, government entity here> have allowed these events to unfold? How could we have been so blind to not have seen these bursting bubbles? How? Why? 

As a banker, I've seen my fair share of despicable behavior over the few years. I’ve worked on several projects involving failed banks and the things I’ve seen and heard have struck me to my core. Don’t get me wrong, there are definitely more good guys out there than bad guys; but again, our emotions come into play and make it easy to forget there is good out there! (If you think the concept of a good banker is an oxymoron, let’s talk!) 

This recession has been rough but there’s still an upside to a growing economy. Economic growth provides a strong base for research and development. Without research and development, we wouldn't have things such as new medications and breakthroughs in technology. Economic growth can also provide for higher employment and can entice employers to pay greater wages and/or pay for benefits such as 401k contribution matching or disability insurance. This growth also allows for opportunities and confidence for new players to enter the market. Take for instance Piper, the one-eyed painting bulldog. Piper has her own business selling custom artwork. Piper is capitalizing off of her cuteness and talents. She has found a niche in the market. The income she's producing is perhaps paying for her vet bills, food, and toys. It also may be paying back the initial capital supplied by her human parents and therefore allowing them to invest in other arenas (perhaps a new home for the cat? ha). Economic prosperity (as well an economic downturn) is an interconnected cycle that acts like a tornado in swooping up many of us along its way.







So what does this all mean? If I were to write this blog in another week, I’d most likely have a completely different story to write up. As I continue to process and reflect (I’m a “go, go, go” type of person and because of that, I don’t stop and reflect as much as I should) my thoughts and patterns are ever changing. I will say for sure that I do believe a new wave of economic thought is forming. Maybe it’s more apparent to me because of the core values my generation owns but I don’t think that’s all of it. I believe we are entering a “new” normal. The many assumptions held in economic models is mind boggling enough to make one feel like they are reading an ancient Latin text on Mars. With the internet and concept of instant knowledge at our finger tips, our world is forever changed. Knowledge is power and it’s that knowledge that gives us the ability to affect change. Let's go out there and make history C12s!




-Emily

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