Economist : Ireland's economy Threadbare

Dreaded_Estate

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Ireland's economy: Threadbare | The Economist

Ireland is in deep trouble. Its economy is yet truly to emerge from a recession that began in early 2007 (see chart 1). Since then GDP has risen in only one quarter. GNP (a better guide to Irish living standards, because it excludes the net flows of income to parents of the country’s many foreign-owned firms) has fallen for nine quarters in a row. Consumer spending has fallen even harder than income: households saved 12% of their disposable income last year, up from 3.9% two years ago. House prices, which had risen faster than in any other rich country, are 36% below their 2006 peak and still falling. Job prospects are bleak. The unemployment rate is close to 14%, up from 4% or so in the mid-2000s.

The public finances are in a dreadful mess. The government is on track to spend 12% of GDP more than it takes in taxes this year, even after spending cuts and tax rises worth €14.5 billion ($19.6 billion). The deficit will be a staggering 32% of GDP once injections of capital into broken banks are taken into account (see chart 2). The total cost to the state could rise to €50 billion, or 30% of GDP. Anglo Irish Bank, a reckless property lender taken over by the government in January 2009, would account for two-thirds of that





 


Gadfly

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"The total cost to the state could rise to €50 billion, or 30% of GDP. Anglo Irish Bank, a reckless property lender taken over by the government in January 2009, would account for two-thirds of that."
- Economist
To restate a challenge I made on an earlier thread:
Measured by percentage of the host country's GDP, has there ever, anywhere, been a bailout of a single bank, or any private enterprise, as expensive as the Irish government's bailout of Anglo?
Has there ever been a bank bailout that was even half as expensive by this measure?
I think not. Who can prove otherwise?
 

slx

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It's an extremely depressing, but sadly accurate, analysis of the situation.

Looking at how Anglo Irish Bank operated, it is difficult to even describe it as a bank.

Other small speculative banks e.g. Baring's Bank, were let go, so I don't really see why the hell the Irish Government clung onto Anglo as if it were an important institution.

AIB, Bank of Ireland and PTSB are pretty much the only financial organisations of any systemic importance, the rest are small fry and Anglo's a property speculation fund rather than a bank.

The level of competence from this Government reminds me of General Melchett in Blackadder !



A man of incredible arrogance, self importance, who has no grip on reality, no comprehension of real life for normal people and to top it all is an absolute idiot.

These guys even managed to have failing public services (e.g. health, aspects of education etc) when the country was genuinely awash with money. God help us if the same dumbasses are trying to run the country on a shoe string!
 

Cael

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Anglo's a property speculation fund rather than a bank.
There you have the kernal of the situation. The Irish oligarchy is a landowning, land speculating oligarchy, ergo, Anglo-Irish was\is of the most vital systematic importance to it. You always have to realise, that when Fianna Fáil talk about "we" or "the Irish people" or "the system" that they are only refering to this landed oligarchy - not to the landless workers, i.e. the vast majority. Indeed, the plan for "recovery" involves sending hundreds of thousands of these landless workers into forced exile.
 

He3

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We are lucky Lehman Bros blew up in 2008

"The total cost to the state could rise to €50 billion, or 30% of GDP. Anglo Irish Bank, a reckless property lender taken over by the government in January 2009, would account for two-thirds of that."
- Economist
To restate a challenge I made on an earlier thread:
Measured by percentage of the host country's GDP, has there ever, anywhere, been a bailout of a single bank, or any private enterprise, as expensive as the Irish government's bailout of Anglo?
Has there ever been a bank bailout that was even half as expensive by this measure?
I think not. Who can prove otherwise?

I think it is the most costly bank bailout in history. (Pace Lenihan let's add: so far).

We are also hearing reports of a second run on Irish banks in two years. Has that rapid repeat run ever happened anywhere?

Imagine if Lehman Bros had not collapsed in 2008. Here, Lenihan Bros and the rest of the government would have continued to cheer on Anglo until the inevitable but even worse bust occurred.

We are lucky Lehman blew up when it did.
 

MPB

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"The total cost to the state could rise to €50 billion, or 30% of GDP. Anglo Irish Bank, a reckless property lender taken over by the government in January 2009, would account for two-thirds of that."
- Economist
To restate a challenge I made on an earlier thread:
Measured by percentage of the host country's GDP, has there ever, anywhere, been a bailout of a single bank, or any private enterprise, as expensive as the Irish government's bailout of Anglo?
Has there ever been a bank bailout that was even half as expensive by this measure?
I think not. Who can prove otherwise?
And they more or less sacked David Doyle, the head of the Dept of Finance for warning them of this.
 

hammer

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Yes, but if you ignore all the bad news, the 429,000 on the live register, the debt, the depression etc........according to Lendahand our

Exports are up 8%
 

Mitsui2

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A man of incredible arrogance, self importance, who has no grip on reality, no comprehension of real life for normal people and to top it all is an absolute idiot.
Are you talking about Melchett or the government? Hard to tell.
 

seanmacc

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Yes, but if you ignore all the bad news, the 429,000 on the live register, the debt, the depression etc........according to Lendahand our

Exports are up 8%
Also on a positive note, it can't really get that much worse.

Hindsight is a great thing but would we really of been worse off had we let the banks all collapse one by one? At least then we wouldn't have as much of the crippling debt we have now.
 

Neil040

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Jim Rogers on Al Jazeera

One of the best, Jim Rogers on Al Jazeera in debate with one of the usual suspects. He cannot see why competent taxpayers should be forced to give endless cash to save incompetent banks. Plus lots more sense.

Pretty gloomy outlook from him re any hope of future investment in Ireland, why would anyone invest he says?

How is Ireland going to earn its way out of this? The numbers just don't add up he says.
 

john_galt

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And they more or less sacked David Doyle, the head of the Dept of Finance for warning them of this.
Sorry MPB, that is just not correct.

David Doyle is probably as complicit as Lenihan, Cowen, Bertie and McCreevy. He was head of the DoF during the good times, he signed off on the guarantee, benchmarking, the DDDDA's purchase of everything and then when he had served as many years as he was allowed in the DoF, retired on a fat pension.

He never said anything, and then had the nerve to try and get what he seen as his retirement post as Central Bank Governor. Doyle, Neary and Hurley, 3 civil servants with a lot to answer for.
 

anewbeginning

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I for one don't think increased Exports will help us grow our way out of the state we are in now.

Simply because the vast majority of revenue from exports go to the multinationals in the form of profits and we get so little due to our relatively low corporation tax.

FF are clinging to the hope exports will save the economy. I think it's another fallacy from them.

We also need a strong domestic economy with strong consumer demand. That would be a better area for getting people back to work.
 

revolution

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on the up side,at least some proper accountants are looking at the books now
plus fianna fail wont recover from this for a generation
 

EUrJokingMeRight

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FF don't and never did know what they were doing. Just like their gombeen supporters. All they knew was that the greasy till was left open.
 
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What the hell is wrong with you guys? Anglo was of systemic importance!! I can't believe what I'm reading here, it's like you're all crazy.
 

Bismarck

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It certainly seems to have been of systemic importance to Fianna Fail.
How do you know this? Evidence - not supposition. The only person I know who actually understands what is going on says that it was systemic in 2008 but it is not today.
Frankly I am sick of all the uninformed comment that passes for fact on politics ie

The article in the Economist is well-written and is not as damning of the gvernment as most of you think.
 


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