Irish economy - are there clouds ahead?

Persius said:
I still think that if things get really grim here, the government of the day might think about withdrawing from the Euro.
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Withdrawing to what? An IR£ thats 3:1 to the €? ... 4:1? Irish debt is denominated in €, and will get paid back in € whatever our new currency might be.
 
Sure, any debt in Euro will remain so, but "going forward", as the economists love to say, we can devalue our new currency to keep wages down, making us more competetive, boost exports etc. Or we could rejoin the Sterling area, if this was advantageous as much of our trade is with the UK.
 
I think withdrawal from the Euro would be seriously considered in the most desperate of scenarios only. There are significant penalties for withdrawing and i imagine if the situation were ever to become so bad that it could feasibly be worth withdrawing the EU would facilitate some form of inititatives to avoid that.
 
Persius said:
Sure, any debt in Euro will remain so, but "going forward", as the economists love to say, we can devalue our new currency to keep wages down, making us more competetive, boost exports etc. Or we could rejoin the Sterling area, if this was advantageous as much of our trade is with the UK.
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If we went back to the IR£ and deliberately devalued vs. the euro to boost our exports it would be very tough on those who bought houses in euro to repay them in IR£.

Already interests rates in this country are (and have been) far too low when compared to our growth rate and inflation rates. Opting out of the euro to enjoy even lower interest rates will almost certainly result in a crippling stagflation scenario. Not to mention any economic reprisals from the EU.
 
We're better in a strong Euro and take whatever medicine we have to than exit the Euro for what would just be a short-term benefit but in the long run would surely be worst mistake. I can only see Ireland ever leaving the Euro if the whole Euro project comes apart at the seams.
 
Persius said:
Sure, any debt in Euro will remain so, but "going forward", as the economists love to say, we can devalue our new currency to keep wages down, making us more competetive, boost exports etc. Or we could rejoin the Sterling area, if this was advantageous as much of our trade is with the UK.
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ya what???...

returning to the banana republic route 101.....

so our main benefical advantages of being the only native speaking euro currency country will be removed by ourselves...

do you honestly think that pegging ourselves to sterling is going to be any better, a country that is also in economic shamble with huge debt levels and a crazily over priced currency that they are paying for through their noses... expensive pride indeed....

we would be foolish to walk away from the euro,,,, the big boys would circle in on us like they are doing elsewhere...they would be bale to play games with our currency and cripple us even further, buying our debt in the international makts and swaping it around, making the country even more untoucable...
 
ya what???...

r
eturning to the banana republic route 101.....

so our main benefical advantages of being the only native speaking euro currency country will be removed by ourselves...

do you honestly think that pegging ourselves to sterling is going to be any better, a country that is also in economic shamble with huge debt levels and a crazily over priced currency that they are paying for through their noses... expensive pride indeed....

we would be foolish to walk away from the euro,,,, the big boys would circle in on us like they are doing elsewhere...they would be bale to play games with our currency and cripple us even further, buying our debt in the international makts and swaping it around, making the country even more untoucable... Today 01:18 PM
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Well Said Babytooth

- the fact that we are in the euro zone is probably the only thing that has kept export industry competitive the last few years as the rest of the country has gone completely bonkers - if we left we can kiss goodbye to the mulltinationals who are responsible for over 80% of everything we export. Our main problem is that we haven't figured out how to truly expoit a common market of over 450 million customers apart from reexporting German pension funds for property- our biggest export partners are still the UK and the USA .

As for re-vamping the punt - don't go there - if the nineties were anything to go by - be afraid - very afraid.
 
Yea the interest rates with the euro were way too low for this country and encouraged people to take on way too much debt. However I do not believe that the blame can be layed with the euro. The blame lies with Fianna Fail with the government and with ourselves for electing such incompetent people. The sirens have been flashing red for the last 5 years that borrowing and house prices were rising to dangerous levels. Yet the government refused to do anything about it for fear of upsetting all the vested interests making a killing from it. They could have introduced taxes to discourage speculation. They started implementing the bacon report in 2001 and then pulled back from it when they saw that it was working and had stalled house prices.
 
Post boom as private sector wages fall how do we get public sector wages and pensions back to pre boom levels.

Taxes will fall and massive govt borrowing not allowed by Euro rules.

I think Govt wage bill from 2001 of circa 10b euro up to over 16b currently. this is the elephant in the room.

in the past devaluation would have been the answer.
 
joe sod said:
Yea the interest rates with the euro were way too low for this country and encouraged people to take on way too much debt. However I do not believe that the blame can be layed with the euro. The blame lies with Fianna Fail with the government and with ourselves for electing such incompetent people. The sirens have been flashing red for the last 5 years that borrowing and house prices were rising to dangerous levels. Yet the government refused to do anything about it for fear of upsetting all the vested interests making a killing from it. They could have introduced taxes to discourage speculation. They started implementing the bacon report in 2001 and then pulled back from it when they saw that it was working and had stalled house prices.
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You're too kind to the people who took out the mortgage loans and did the equity releases. Responsibility for that lies with themselves first and foremost. Not with the government and not with the banks.

The people who took out way too high mortgages are the people who signed on the dotted line. Certainly they were enabled by lax lending policies - but they sure as hell wasn't forced.

One of the big problems we have in this country is a total inability to take responsibility for our own actions. Is it any wonder our politicians won't when we don't ourselves? We get the politicians we deserve. I'm sick to the teeth of people whinging that it's everyone else's fault that people have such high mortgages. A little cop on and clarity might be called for. People borrowed the money. They didn't have to and not all of us did.
 
its true we get the politicians we deserve
however i think its very irrespnsible of our political leaders not to implement the bacon report
i confess ive no idea what it is but would stop people getting huge mortgages and huge debt
thus we are heading for a housing bubble crash
is this a situation without precedent
maybe some small state in u.s. has had a similiar story_the individual states have no control over the fed rate
the short termism of our politicos is alarming especially as the gov and main opp tds _are very similiar i think
we may yet witness the unedifying sight of our finance ministers going begging to brussels for dosh along with their east europ and aspiring members counterparts in a very jostling queue
 
Maine said:
Post boom as private sector wages fall how do we get public sector wages and pensions back to pre boom levels.

Taxes will fall and massive govt borrowing not allowed by Euro rules.

I think Govt wage bill from 2001 of circa 10b euro up to over 16b currently. this is the elephant in the room.

in the past devaluation would have been the answer.
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http://www.rte.ie/business/2006/1010/construction.html

Interesting take on the tax fall.

Note I do not work for them but probably wouldnt mind the bonuses.

the ERSI seems to take sensible positions on some items and strange ones on others - are they generally consistent......in this case they say tax up next year by 11% which seems a trifle optimistic
 
Calina said:
One of the big problems we have in this country is a total inability to take responsibility for our own actions. Is it any wonder our politicians won't when we don't ourselves? We get the politicians we deserve. I'm sick to the teeth of people whinging that it's everyone else's fault that people have such high mortgages. A little cop on and clarity might be called for. People borrowed the money. They didn't have to and not all of us did.
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I was at a party on Saturday night, where most of the crowd were around 22-25. The attitude to debt was completely shocking. Not a single one of them seemed to have any understanding of the fact that the debt actually has to be paid back! Every single one of them was just out of college but had already racked up thousands, in some cases tens of thousands, of eurons in credit card, overdraft and car loans.

They all just seemed to assume that "sure it'll be grand", they'd never be out of work, the good times will roll forever, and sure "good old Bertie" wouldn't leave them in the lurch if things did go wrong. There really was no point in even trying to inject some realism, they just wouldn't understand.

It's sad, but that generation is in for a hell of a shock once the boom ends.
 
Sidewinder said:
I was at a party on Saturday night, where most of the crowd were around 22-25. The attitude to debt was completely shocking. Not a single one of them seemed to have any understanding of the fact that the debt actually has to be paid back! Every single one of them was just out of college but had already racked up thousands, in some cases tens of thousands, of eurons in credit card, overdraft and car loans.

They all just seemed to assume that "sure it'll be grand", they'd never be out of work, the good times will roll forever, and sure "good old Bertie" wouldn't leave them in the lurch if things did go wrong. There really was no point in even trying to inject some realism, they just wouldn't understand.

It's sad, but that generation is in for a hell of a shock once the boom ends.
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Whatever about the kind of debt the 22-25 yos are in, it's nothing compared to the debt that the 25-35 yos are in. You're right though about the debt culture that is creeping its way into Irish life - a new underclass is breeding.
 
CelloPoint said:
Whatever about the kind of debt the 22-25 yos are in, it's nothing compared to the debt that the 25-35 yos are in. You're right though about the debt culture that is creeping its way into Irish life - a new underclass is breeding.
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I'm in the upper end of that 25-35 group, and I'm looking to be completely debt-free within the next 6 weeks ;)

Saturday made me pause and think though: if attitudes like that really are common, then there's nothing to stop the banks coming up with all the pure toxic loan tricks in the book to keep the party going a bit longer: and that generation will cheerfully lap it all up. Negative-amortization IO intergenerational car loans anyone?
 
As long as nobody expects the tax payer to bail them out,then they can borrow as much as they like afaic !.Thank god for the germans otherwise us savers would be extinct in this country,joining the ecb was the best thing we ever did,it's not their fault the government didn't take prudent measures locally to head off a debt spiral/house price bubble senario.
 
thewatcher said:
As long as nobody expects the tax payer to bail them out,then they can borrow as much as they like afaic !.Thank god for the germans otherwise us savers would be extinct in this country,joining the ecb was the best thing we ever did,it's not their fault the government didn't take prudent measures locally to head off a debt spiral/house price bubble senario.
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i totaly agree with you, but unfortunately i don't have much confidence in this or any government having the ability to say tough luck.

did they do this when taxi drivers lost money.

or when aib take bets on the market back with ICI.

or.....or.....

I will not see my tax dollars subsidising someone elses folly, but unfortunately do see this coming, hence am attempting to make myself as transferable as possible, with regard to languages and skills.

any one else share this sentiment.
 
baby_tooth said:
I will not see my tax dollars subsidising someone elses folly, but unfortunately do see this coming, hence am attempting to make myself as transferable as possible, with regard to languages and skills.

any one else share this sentiment.
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Way ahead of you! :)

I definately share the sentiment and fear for the general future of the nation. With record surpluses for a number of years our infrastructure, health and education systems, policing etc are all appauling.

Having sold my ppr late last year and sitting on a tidy sum we've been generally exploring possibilities throughout Europe and considering further afield. We're in a good situation though with no dependents or other ties and reasonably transferable skills.

Just looking for quality of life at a reasonable cost and unfortunately i don't see that in Ireland any longer.

Plus, like you, if it ever came to pass i'd be damned if i'd allow my hard-earned tax euros to go towards subsidising what i consider to be utter recklessness with money.
 
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