Will austerity budgets push the Irish economy into double dip depression?

patslatt

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Pay Scandinavian taxes for Ireland's shoddty welfare state?

They seem to manage it in Sweden, Denmark & most other progressive countries. And they are not fleecing their public services to Kowtow to greedy gamblers like Abramovitch. Of course I'm envious that I'm helping to fund John Terry & Ashley Cole's off-side antics.
 


bananarepublic.ie

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Taxing way out of recession or cutting mindlessly will not ever ever going to out this mess. Irish personal mortgage debt alone whooping 100bn+ its like entire nation of mortgage slaves.

Sustainable economy
1) manufacturing: (most of p.ie posters dismissive saying factories are battery farms) We need to make things our own industry. Look at Germany still power house of manufacturing they are selling trains to great China. What Chinese market needs from us? Need to beat them their own game.

2) Savings: whether a bank or personal, savings are crucial. Why don't govt. stop buying credit out side, instead decrease DIRT thus making savings attractive again replenishes banks balance sheet. You still get DIRT, launch SSIA like scheme make people save regularly.

So many economists are looked down manufacturing again and again. Look at Germany it certainly weathered the storm so far.
 

SirCharles

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According to the logic above,we can spend ourselves rich with the positive multiplier from government spending.But at some point,the burden of government spending becomes too great and has definitely reached that level at 55% of the economy in Ireland. That means higher taxes and higher interest rates,which together kill growth. Irish government interest rates are so punitive that the top strategic goal should be reducing them.
That would be the same argumentum e contrario as if you push a piece of sh1t in the @rse of a cow and expect grass coming out of the mouth.

Government interest rates are three times as high as these of Germany because we're burning up to 90 billion in rotten banks. That's about as much as Germany. Only they have 20 times the population. They didn't have a property bubble. And the Germans wouldn't sell out their resources for discount or almost free (public forestry, Corrib gas... ).

You seemingly still believe what the government are talking:

Before NAMA the Irish people were told that if we did not accept NAMA we would have massive unemployment. We now have NAMA and massive unemployment.

Before NAMA the Irish people were told that if we did not accept NAMA we would see massive emigration. We have NAMA and massive emigration.

Before NAMA the Irish people were told that if we did not accept NAMA we would have to pay massive interest on loans to sustain the economy. We now have NAMA and we pay an interest rate three times higher than Germany… on loans to sustain our economy.

Before NAMA we were told that if we did not accept NAMA we would have no international credibility. With a repeatedly downgraded credit rating, and images of our former Taoiseach crouched in a wardrobe drinking tea in an advertisement for the News of The World…, or the spectacle of a drunk or hung-over Brian Cowen speaking on national radio… We have little international credibility to boast of.
Our Present NAMA Republic
 

king5494

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You must note that our clueless ministers are being advised by Goldmans , Rothschild and their cohorts ,so it must go without saying that they are convincing them that austerity is the best Capitalist medicine for the Citizens and socialism is the best recourse to save the bondholders of the private banks.

Our idiotic ministers are easily fooled as to not loose face with their real masters as it is quite easy to deal with Joe Public , We havent done much to stop them.
 

SirCharles

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The Center for Economic and Policy Research (CEPR) publishes an article to the latest 'World Economic Outlook' (WEO) which is being published by the International Monetary Fund (IMF) twice a year.

The IMF and Economic Recovery: Is Fund Policy Contributing to Downside Risks?

In view of the report and its findings, one might expect a strong bias towards continuing fiscal stimulus in weak economies, and a bias against fiscal consolidation. However, this paper finds that the IMF continues to support pro-cyclical policies in some countries, fiscal consolidation in many others, and clearly does not support central bank financing of fiscal stimulus - even in countries such as the United States - where the threat of high inflation is very remote.


The report of the CEPR concludes:

Financing Fiscal Stimulus in the World’s Largest Economies

As noted above in the example of Spain, it would be possible to finance a fiscal stimulus without adding to net debt, if the European Central Bank were to agree to such a program. This is true for the entire Eurozone, and for the United States – which together with the Eurozone and Japan, makes up more than half of the global economy. And it is these largest economies, and the highincome countries as a group, that the IMF’s World Economic Outlook finds most vulnerable to downside risks in the near future.

In the United States, the Federal Reserve has already created reserves of more than $1.4 trillion since August 2007 and used these to purchase debt. Although most of this debt consists of mortgagebacked securities from Fannie Mae and Freddie Mac, some consisted of U.S. Treasury securities, and there is no reason that the Fed could not create reserves to purchase more of these. In fact, the Fed is currently considering another round of “quantitative easing” that is expected to involve such purchases. But such quantitative easing would have little effect by itself, since U.S. 10-year treasury yields are already very low – about 2.5 percent – and a reduction of, e.g., another 0.1 or even 0.2 percent would not have much impact on the economy. However, if the Fed were to create reserves to purchase bonds, with this borrowing used to finance a new fiscal stimulus, that would have much more effect on economic growth. Although the financing of a fiscal stimulus in this manner is, for political reasons, not currently under consideration, it makes economic sense.

Under current conditions, there is little or no risk of unwanted inflation resulting from such policy. Consumer price inflation in the United States is currently at 1.4 percent, below the Federal Reserve’s implicit target of 2 percent. This is despite the Fed’s prior addition of $1.4 trillion to its balance sheet over the last three years (inflation was negative in 2009). The experience of Japan over the last two decades shows that it is possible, under certain conditions, to finance large amounts of deficit spending through the creation of reserves by the Central Bank. Japan’s gross public debt is 226 percent of GDP, more than 100 percent of GDP higher than its net debt of 121 percent of GDP. This is the result of this type of central bank financing for trillions of dollars worth of borrowing over the last two decades. Since 1990, cumulative inflation in Japan has totaled only about 5 percent – that is the total over 20 years, not annually.

Public debt created in this manner does not add to the debt burden of the government, since interest collected by the Federal Reserve from this debt is refunded to the Treasury. The net debt of the government, which is what matters with regard to the burden of the debt, does not increase.

IMF economists must understand the basic economics and accounting of these policies. Yet the Fund has so far not given any consideration to central bank financing of additional stimulus, in spite of the WEO’s assessment of the fragility of the current recovery in the high-income economies. Instead, it has emphasized the need for fiscal consolidation in the high income countries– if not immediately as in the pro-cyclical policies described above, then beginning very soon: “fiscal adjustment needs to start in earnest in 2011. Specific plans to cut future budget deficits are urgently needed now to create new room for fiscal policy maneuver.” The Fund allows that “If global growth threatens to slow appreciably more than expected, countries with fiscal room could postpone some of the planned consolidation.” But that may be easier said than done, if the slowdown in the highincome countries gains momentum. It would be better to err on the side of caution. And since inflation is below target in the U.S., Eurozone, and Japan, the side of caution is the side of fiscal stimulus – even if it involves central bank financing. The IMF should be exploring the best possible options, rather than opting for premature and risky fiscal consolidation.
This goes conform with the widely believed view that the austerity plan of our government will hardly save any spendings. This plan causes a further depression in our economy, with less tax intakes and more expenditures for unemployment. Cuts on the one hand can cause multiple times the expenditures on the other hand. For example cuts in the homecare sector causes more expenditures for the residential service of hospitals. Cuts in the voluntary sector causes more costs due to an increase of the usage of professional services.

The austerity plan of our government will not work and will hit the most vulnerable of our society the most. This austerity plan will create more unemployment and will screw our economy further downward.
 


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