# "It's not as bad as the 1980s"



## Brendan Burgess (17 Jul 2011)

Dónal de Buitléir, an economist and former Chairman of the Commission on Taxation has an interesting article in today's [broken link removed]



|1980s|now
  Unemployment|17%|14.4%
  Employed|1.1 m|1.8m
  Workforce education|lower|much higher
  Debt/GDP ratio|119%|118% (in 2013)
  Interest cost/GDP|10.3%|6.3%
  Tax burden|34.6%|30.5%
  Balance of payments|in surplus|in  bigger surplus  However the following factors are worse now


We devalued the punt by 8% in 1986
The world economy was much better giving us more scope for growth
Private debt was lower in the 1980s. But it’s not as bad now as is reported
We are now unable to borrow on the international markets


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## Brendan Burgess (17 Jul 2011)

*No direct reference to the budget deficit*
One thing he does not directly refer to is the budget deficit. We are still borrowing one euro in three for public expenditure. This is providing a massive, artificial, economic stimulus at the moment. Or put it another way, if we cut public expenditure, pensions, and social welfare by 30%, there would be a very significiant deflationary effect. What was the comparable level of budget deficit back then? 

*Mortgage Debt in 2007
*I think he underestimates the problem



> 80% of of households own their own home.mortgage
> households represent 22% of all householdsonly
> 20% of mortgage households(<6% of total households)had mortgage repayment ratios of 22% or greater


Firstly, it is a lot worse in 2011 than in 2007, which he acknowledges. 

Secondly, I think that the 22% of all households having mortgages is incorrect.

There are 800,000 mortgages according to the Central Bank

I understand that there are around 1.9m houses. There are around 400,000 privately owned houses which are mortgage free, so around 66% of house owners have mortgages

*The banking system is frozen for businesses and potential house buyers
*He doesn't deal with this very serious issue. If I read  this article by Colm Fitzgerald correctly, the reduction in the money supply will have a serious negative economic effect.


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## Brendan Burgess (18 Jul 2011)

Dan O'Brien wrote an [broken link removed]about the debt burden back in April



> THOSE  WHO say Ireland’s public debt position is not so dire frequently point  out that the State was similarly burdened in the 1980s and it managed to  avoid default then. But this argument carries little weight, because  both domestic and external circumstances are utterly different now.
> ...
> 
> At  home, nominal GDP growth is much lower than it ever was in the 1980s,  and it may continue to stagnate given the existence of a number of  growth-inhibiting factors not present a quarter of a century ago. These  include battered household balance sheets and a shattered credit  provision mechanism.
> ...


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## Purple (18 Jul 2011)

Brendan, I don't know how personal debt figures compare between now and the 80’s but that's the big difference I see. If it really is not as bad as some say then I'll be a lot happier.


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## Brendan Burgess (18 Jul 2011)

[broken link removed]by Yvonne Mc Carthy and Kevin McQuinn of the Central Banks


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## onq (18 Jul 2011)

Let's see.

In the 1980's we had corrupt and incompetent administrations that couldn't balance the books and high taxes and high emigration and no real plan.

Now the whole world is in difficulty, reducing the immigration option, we have no market to sell houses on to fund the move and we are closer to Europe.

Hard call.

ONQ.


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