Standard & Poor’s update rating for Ireland

Following  agreement to the 85 billions Euro bailout, Ireland is still “A” rated. I sincerely hope that the Eurozone crisis has been permanently averted and have no wish to see their cost of borrowing increase BUT surely “C” is a more credible rating!?

Lehman Bros was “AAA” rated just before their collapse.

Still, at least S&P are working to improve things stay relevant.

S&P Rating strata: Read more of this post

EU: Eurozone Structural Fragility Report – Q2 2010

Our complexity-based technology allows us to measure the fragility of the structure not only of corporations but also of the economies of single nations as well as of systems of nations. In an increasingly complex and turbulent world, taking a systems-centric approach is crucial if we are to develop a resilient and sustainable economy.


Based on publicly available macro-economic data Ontonix measures the fragility of the structure of the economy of each of the EU member states as well as of the entire system. A comprehensive report is published every quarter.


It is important to point out that an economy can possess a highly fragile structure and yet perform well from a financial standpoint. These two aspects are in fact uncoupled. A highly fragile system is obviously more exposed than a resilient one and exhibits lower chances of survival in a turbulent economy. A measure of fragility provides, therefore, new and crucial insight into the dynamics of a country’s economy.



Q4 2009 EU Structural Fragility Report. Download FREE sample copy here.


Q2 2010 EU Structural Fragility Report. NOW AVAILABLE for €199. Contact us to obtain a copy.

Enhanced by Zemanta

Will the Euro Survive? Will the EU Survive?

Following  the bailout of Greece earlier this year today (22/11/2010) it is Ireland’s turn. The Europeans are facing the bitter truth that certain lifestyles are not sustainable. While this is certainly the case, it is also true that the richer nations won’t be willing to subsidise the poorer nations for ever. This places not only the Euro under pressure, it also suggests that a couple of bailouts more will question seriously the European Union itself. The Daily Telegraph sustains in a recent article that the Euro will not survive five years (read here).


Along similar lines are the comments of Joseph Stiglitz (see his article).



Using Eurostat’s macroeconomic data – the same data which we use to analyse the entire EU economy, publishing our quarterly Structural Fragility Reports – we have conducted an analysis of the so-called PIGS (Portugal, Ireland, Greece and Spain) as well as that of the big four economies (Germany, France, Italy and the UK. The idea is to confront these two systems and to analyse their resilience. Here is what we found.


First of all the PIGS. Below the Complexity & Risk Map of the four economies is illustrated, indicating, first of all, an alarming one-star complexity rating. This points to very low resilience (robustness), hence very high fragility. This means the structure of the combined economies is close to  dissolving. The map has a density of 23% pointing to a fairly high risk of contagion. The system functions close to its critical complexity – the current complexity of this system of four countries is 48.4 while the critical complexity (maximum complexity sustainable with the current structure of the economy) is 53. This means there is very little margin for error. Moreover, for systems functioning so close to their critical complexity it is extremely difficult to make credible forecasts.


The Complexity Profile reported below illustrates in what measure each of the four countries contributes to the overall headache of the EU (and the BCE). Spain, being the biggest economy, has the largest footprint in the PIGS economy and contributes to 27% of the problem (complexity). Follows Greece (23%) while Ireland and Portugal contribute each around 19%. Based on the Complexity Profile, it is clearly Spain that will need to be bailed out (if at all necessary) because it can do the most damage in case of default. The problem is that the EU may not have enough resources to bail out such a large economy.

Read more of this post

Britain at the crossroads: 50 years of Austerity or a platform for dynamic change

Let’s face it we’re broke…and I don’t just mean financially. We don’t actually make much any more and, even if we did, the smart Entrepreneurs wouldn’t still be here to fund a Public Sector paralysed by its own complexity. A “dumbed down” nation that has grown useless, fat and lazy in the image of the Welfare State that sustains it.

“Clinically obese” was how one expert described the UK Public Sector. We are told that the choices were Quantitative Easing or Austerity. We weren’t really given a choice. It was made for us by a Coalition Government whose preference is to “play Politics” because: they are just happy to have power; are intent upon denying the scale, nature and sources of the problem; lack a vision for our future…or just dosn’t have the balls to do anything except keep on making the people who are softest targets pay!

Why else would a Government choose to appease “the markets” and rating agencies whose roles in the crisis STILL are unpunished – what happened to Corporate Governance, fiduciary responsibility, compliance, etc? – whilst the opinions of ordinary citizens – VOTERS – are disregarded!? There are people of every generation whose lack of informed opinion or inertia allowed successive Governments to spin their way through years of mismanagement and excess. Watch out!  These people have found their voices and now have a common cause.

Read more of this post

Eurozone & EU survival: If it keeps on rainin’ levee’s gonna break..

Robert Plant (left) and Jimmy Page (right) of ...

Image via Wikipedia


You may never have figured Robert Plant, Jimmy Page and Co. as financial analysts or students of economic theory. But why not? At the end of the day these guys – LEGENDS – have as much chance of accurately predicting the financial future as anyone else!!!

The truth is the levee is “shot”…

It’s been raining like hell for for too many years now. The “weathermen” [economists & bankers] manipulate the rainfall data and assure us that the long term outlook is good – their incentives depend upon a belief system that bestows such power upon them!

Whilst the “engineers” [politicians & Public Sector] prefer the “finger-in-the-dyke” approach to flood prevention. After all, if you believe the weathermen, the outlook is sunny and anyway, the levee is “too big to fail”. In the meantime taking as much money as possible from both weathermen and those [citizens] living on the flood plain. After all if you have gotten away without major repairs or reconstruction for this long [and been able to grow “fat” at the expense of others], with sovereign debt so easy to come by, probability is that no-one will ever know unless they get too close. Risk worth taking. Better to do that than own up to the years of neglect and mismanagement!

So long as there are enough digits to plug the holes, bodies to absorb or divert the leaks and “they” stay dry. So long as the pressure doesn’t get so great as to suddenly exploit any undetected cracks [hidden fragility]  “on our watch” they will hail us as the best damn levee-keepers in living history. Knighthood, memoirs, TV, column, lecture tours, universal adulation. It’s brilliant! Flawless!

Well the bad news is that the game is up.

This is an extract from my blog in August this year. Complex Systems and Ecology: Report by US National Academies/NRC & Fed. Reserve Bank of NY

Read more of this post