Labour's austerity plans: bite the marshmallow,not the bullet?

patslatt

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The government's consultation with the opposition parties on austerity should expose the Labour Party's lack of specific austerity plans. Given its "permanent,pensionable" public sector constituency,Labour will find it impossible to bite the austerity bullet which will require further large cuts in public sector pay or employee numbers or both. Instead,it probably will bite the marshmallow by proposing further tax increases on high incomes,restoration of rates and water charges and a frenzy of stealth taxes.

Such taxes are unrealistic. Further taxes on high incomes would prove a major deterrent to work as well as to multinational investment by making it difficult to retain and recruit international managers and executives. Applying the other taxes in a depression is the economic equivalent of kicking a man when he is down and might well reduce the tax take by tipping the economy into a double dip depression. As for the argument that Irish taxes are low by the standards of EU advanced welfare states,should we pay Scandinavian taxes for the shoddy Irish welfare state with its poor provision of day care,public transport,social housing and lack of free doctor medical care etc?

By far the major challenge that has to be faced is cutting public sector wages,which are still way out of line with the Irish economy's depressionary drop back to levels of output prevailing around 2001.
 


Roll_On

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Labour seems to be fond of saying that the government is doing things wrong on almost every issue, what they are not fond of saying is what alternative options there are.
 

eoinod

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Labour seems to be fond of saying that the government is doing things wrong on almost every issue, what they are not fond of saying is what alternative options there are.
[ame=http://www.youtube.com/watch?v=WHTNTptUEe8]YouTube - Aprés Match: Tonight with Brian Lenihan and Joan Burton[/ame]

Contains more than a grain of truth!
 

Roll_On

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that's amazing, Joan is so funny at grassroots level. Maybe she should pay attention to her own roots, 'cos her ends are totally split *zing*
 

ocoonassa

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tipping the economy into a double dip depression.
That's what austerity measures are going to do, it doesn't matter which set of sockpuppets are used to do it. It's useless to squabble over the relative merits of which set of self serving party politicians are to implement them. People already have no money to spend. Put more of them on the dole and take money out of the pockets of those who have jobs and the double dip is on us. But this will benefit some people I'm sure. I'd even guess they're banking on it.
 

patslatt

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Interest rates key

That's what austerity measures are going to do, it doesn't matter which set of sockpuppets are used to do it. It's useless to squabble over the relative merits of which set of self serving party politicians are to implement them. People already have no money to spend. Put more of them on the dole and take money out of the pockets of those who have jobs and the double dip is on us. But this will benefit some people I'm sure. I'd even guess they're banking on it.
Austerity could drive down interest rates by several percentage points,reducing the government's massive interest bill and boosting the private sector.
 
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GDPR

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That's what austerity measures are going to do, it doesn't matter which set of sockpuppets are used to do it. It's useless to squabble over the relative merits of which set of self serving party politicians are to implement them. People already have no money to spend. Put more of them on the dole and take money out of the pockets of those who have jobs and the double dip is on us. But this will benefit some people I'm sure. I'd even guess they're banking on it.
We are saving nearly 12% of our income, having no money to spend is not the problem.
 

ocoonassa

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Austerity could drive down interest rates by several percentage points,saving money and boosting the private sector.
All I know as a sole trader is that people aren't buying like they used to. I think if they have any less money it won't be long before I'm on the social.

Tonic says money shortage isn't the problem though but then why aren't people spending? I'm not spending because I'm more short of money than I was previously. I've been saving nothing. Seems good sense to me that a good many other people are in the same boat. Take more money away? I really don't see it working.

I've been trying to get my head around economic theory but I confess I can't get much past the part where the whole monetary system turns out to be a type of embezzlement scam perpetrated on me. It seems to be a lunatic house of cards based on this. I can't help but feel that there must be some way of improving it. I don't understand why everybody is cool with it.
 

FutureTaoiseach

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That's what austerity measures are going to do, it doesn't matter which set of sockpuppets are used to do it. It's useless to squabble over the relative merits of which set of self serving party politicians are to implement them. People already have no money to spend. Put more of them on the dole and take money out of the pockets of those who have jobs and the double dip is on us. But this will benefit some people I'm sure. I'd even guess they're banking on it.
That thesis doesn't apply to an economy that exports 80% of what it produces. We could take billions out of the economy but some of that will return during the eventual global upturn. Also, your analysis fails to recognise that we are borrowing €20 billion per annum (not including promissary-notes to bail out the banks - if those were included then the deficit reaches a jaw-dropping 40% of GDP), and that having to repay it at interest-rates upwards of 6% will in the long-term cost the economy more than reducing the deficit to 3% of GDP as required by the Maastricht criteria. Also, with a €20 billion deficit, and €20 billion going each on the social-welfare budget and public-sector pay (including 70% of health-spending thanks to the greed of IMPACT, SIPTU, the INO, IMO etc. whose gains are protected by the Croke Park sellout), we are at the mercy of the bond-markets to buy our debt. If you don't make these cuts, they will refuse to lend to us, and then you'll have to make far more drastic-cuts. So we don't have freedom of action in this context.
 

Kevin Parlon

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Austerity could drive down interest rates by several percentage points,saving money and boosting the private sector.
Interest rates are set by the ECB and would remain as unaffected by the degree of severity of Irish austerity measures as they were by our runaway housing market that led to their being required in the first place.
 
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firefly123

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Mmmmm.... Marshmallow! Hey pat you have not been on in a while? On holliers?
 

ocoonassa

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That thesis doesn't apply to an economy that exports 80% of what it produces. We could take billions out of the economy but some of that will return during the eventual global upturn. Also, your analysis fails to recognise that we are borrowing €20 billion per annum (not including promissary-notes to bail out the banks - if those were included then the deficit reaches a jaw-dropping 40% of GDP), and that having to repay it at interest-rates upwards of 6% will in the long-term cost the economy more than reducing the deficit to 3% of GDP as required by the Maastricht criteria. Also, with a €20 billion deficit, and €20 billion going each on the social-welfare budget and public-sector pay (including 70% of health-spending thanks to the greed of IMPACT, SIPTU, the INO, IMO etc. whose gains are protected by the Croke Park sellout), we are at the mercy of the bond-markets to buy our debt. If you don't make these cuts, they will refuse to lend to us, and then you'll have to make far more drastic-cuts. So we don't have freedom of action in this context.
I see and understand that what you are saying is correct in our current circumstance with our current obligations. In thinking about myself I forgot about our export market. However I am not yet convinced that these circumstances you outline are set in stone or the reasons as to why they should be. What would happen, for instance, if we left the euro and went back to the punt pegged to sterling? Also, if you forgive my ignorance on matters economic, I would like to understand why, when we can buy the debts of banks, can we not buy our own debts? Being at the mercy of bond markets seems an awful situation to be in. Is there really no way to escape from it?
 

FutureTaoiseach

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I see and understand that what you are saying is correct in our current circumstance with our current obligations. In thinking about myself I forgot about our export market. However I am not yet convinced that these circumstances you outline are set in stone or the reasons as to why they should be. What would happen, for instance, if we left the euro and went back to the punt pegged to sterling? Also, if you forgive my ignorance on matters economic, I would like to understand why, when we can buy the debts of banks, can we not buy our own debts? Being at the mercy of bond markets seems an awful situation to be in. Is there really no way to escape from it?
And where would we get the money to buy our debt? Exactly - the bond-markets. There is no escape I'm afraid.
 

patslatt

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Interest rates are set by the ECB and would remain as unaffected by the degree of severity of Irish austerity measures as they were by our runaway housing market that led to their being required in the first place.
The government is borrowing by selling bonds with interest rates 4 percentage points higher than 10 year German bonds.
 

TODevastated

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We are saving nearly 12% of our income, having no money to spend is not the problem.
and why do you think we are saving so much??

lack of confidence is the simple answer-in both our futures and that in the current shower running the country into the ground
 

Kevin Parlon

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The government is borrowing by selling bonds with interest rates 4 percentage points higher than 10 year German bonds.
Sorry, when you said Interest rates I presumed you mean central bank interest rates, not credit spread.
 


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