# The next recession



## cremeegg (13 Jul 2019)

David McWilliams, the man who made his name forecasting the last recession, is saying that the next one is not happening.



I think he is right, now while I am naturally an optimist, there are no real indicators of a recession on its way. Sure interest rates will rise, brexit all be a disaster and barriers to trade are the new fashion. However none of these things will derail us, none of then undermine our fundamental success as an economy.

We need to build infrastructure to match our success.


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## noproblem (13 Jul 2019)

David covers his rear end with so many "ifs" and "buts",  "could" etc, that he may never be called wrong.  A great living can be made out of having the ability to schmooze with his line of banter. Ross O Carroll Kelly just happens to be better at it in my opinion.


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## Protocol (13 Jul 2019)

The inverted bond yield term spread in the USA is a sign of an upcoming recession.


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## NoRegretsCoyote (14 Jul 2019)

What are your criteria for what constitutes a recession in Ireland?


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## Andrew365 (14 Jul 2019)

Data is the biggest commodity of our generation. Google and Facebook are making huge sums of money from it and in the past 24 months this has been noticed. There is pretty much everyday a new story about Google / Facebooks use of data or them being called in front of x committee or x politician calling for regulation. 

I firmly believe that facebook / google will not be the same entities in 10/20 years and with that all those jobs may disappear from Dublin and that is my concern for the next recession. 

I am sure in the 70's central England never thought cars would stop getting made there.


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## Bronte (14 Jul 2019)

As regards interest rates I heard last week they are on the way down. Not up.


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## noproblem (14 Jul 2019)

When a Goverment is allowed to pick and choose  particular commodities and base the inflation rate on that product going up or down in price it doesn't sit right with me. In fact it's ridiculous in my opinion. Then again, i'm not one of those exalted economists who know everything,  but in reality wouldn't know the tail end of a bullock from its rear end.


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## elacsaplau (14 Jul 2019)

I'm an economist by trade and subscribe to the approach, wherever possible, of not making predictions - especially about the future.


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## Bronte (14 Jul 2019)

elacsaplau said:


> I'm an economist by trade and subscribe to the approach, wherever possible, of not making predictions - especially about the future.


My view of economists like Williams is that his “guess” has a 50 50 chance of being correct. And that my non professional economist view us equally as valid as his guess.


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## NoRegretsCoyote (14 Jul 2019)

Bronte said:


> My view of economists like Williams is that his “guess” has a 50 50 chance of being correct. And that my non professional economist view us equally as valid as his guess.



The chance of a recession is indeed 100% if you wait long enough.


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## joe sod (14 Jul 2019)

David McWilliams made his name in the 2000s by being anti establishment and by telling everyone years beforehand that the property boom was a bubble that was inflated by cheap money from the banks, in this he was absolutely correct. Guess what because he made his name then he makes big bucks now, but you don't make big bucks by being always anti establishment, that does not get you on tv shows or sells you books. He was a maverick then now he is "inside the tent pissing out".
The big danger this time comes from the multi nationals and Ireland's dependence on them. The eu is going to get heavy with Ireland on taxation, the British after brexit are reducing their corporation tax to 12.5 percent. Oh and we are talking down our only big indigenous industry, agriculture.


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## cremeegg (14 Jul 2019)

joe sod said:


> The big danger this time comes from the multi nationals and Ireland's dependence on them.



True, but this misses the point, that the multinationals are the best game in the world and Ireland has played that game well. Yes things may change but there is no point in not attracting FDI now on the basis that it may not be available in the future. And the FDI thing has gone well for Ireland for a long time, through two boom and recession cycles.


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## cremeegg (14 Jul 2019)

joe sod said:


> The eu is going to get heavy with Ireland on taxation


True again, but this is problem of success. If the multinationals all left we wouldn't have to worry about the tax issue.



joe sod said:


> he British after brexit are reducing their corporation tax to 12.5 percent.


After Brexit, Britain is likely to be poorer, a large trading partner with less money to buy our goods and services. Whatever tinkering they do with their tax rates will be irrelevant.



joe sod said:


> Oh and we are talking down our only big indigenous industry, agriculture.



Oh and we are talking down our only big indigenous industry,* heavily subsidised and still loss making, *agriculture.


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## noproblem (14 Jul 2019)

cremeegg said:


> True, but this misses the point, that the multinationals are the best game in the world and Ireland has played that game well. Yes things may change but there is no point in not attracting FDI now on the basis that it may not be available in the future. And the FDI thing has gone well for Ireland for a long time, through two boom and recession cycles.




I think we're the only game in town for the foreign companies. As an entry to Europe and being the only English speaking country in the EU and we have the graduates they require. Don't fool yourselves, we're smart old buggers and half smart when the need arises.


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## joe sod (14 Jul 2019)

cremeegg said:


> Oh and we are talking down our only big indigenous industry,* heavily subsidised and still loss making, *agriculture.



It may be loss making to some farmers, but its still our biggest indigenous industry, the likes of kerry group and glanbia and goodman international make loads of money and are irelands biggest companies. since the banking collapse they replaced the banks as the biggest stocks on the irish stock exchange. The agriculture industry employs alot more people than just farmers


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## NoRegretsCoyote (14 Jul 2019)

joe sod said:


> It may be loss making to some farmers, but its still our biggest indigenous industry, the likes of kerry group and glanbia and goodman international make loads of money and are irelands biggest companies. since the banking collapse they replaced the banks as the biggest stocks on the irish stock exchange. The agriculture industry employs alot more people than just farmers



But this is *industry*, not agriculture.

It's like saying that making furniture is the same as growing trees.


The CSO statistics repeatedly show that all the value produced by Irish farmers (as it leaves farm gate) is offset by the subsidies they receive.


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## rob oyle (14 Jul 2019)

Farm lobby groups regularly overstate the importance and virility of the Irish agri industry.


joe sod said:


> It may be loss making to some farmers, but its still our biggest indigenous industry, the likes of kerry group and glanbia and goodman international make loads of money and are irelands biggest companies. since the banking collapse they replaced the banks as the biggest stocks on the irish stock exchange. The agriculture industry employs alot more people than just farmers


The reason these companies make loads of money is because taxpayers, via CAP, are bailing out farmers annually to produce cheap food that the processors sell on for the fat profit margins. Taxpayer are paying so we can undercut Asian farmers in their regional/domestic markets.

By value, Ireland imports twice as much food as it does oil (In 2016, Ireland had €13.2 billion of exports and €9 billion of imports of agri-food products. By comparison our total fuel imports amounted to €4.7 billion).

And according to the CSO, Agriculture, forestry and fishing employed 89k in 2016, behind retail (267k), health and social services (223k), manufacturing (201k), Real estate, renting and business activities (193k), education 177k... I'm sure the IFA will say the industry 'supports' thousands of jobs but everyone does that - if every industry counted their employment in the same way there would be millions of jobs supported in Ireland.


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## joe sod (15 Jul 2019)

rob oyle said:


> And according to the CSO, Agriculture, forestry and fishing employed 89k in 2016, behind retail (267k), health and social services (223k), manufacturing (201k), Real estate, renting and business activities (193k), education 177k... I'm sure the IFA will say the industry 'supports' thousands of jobs but everyone does that - if every industry counted their employment in the same way there would be millions of jobs supported in Ireland.



im not sure about those statistics, for example if a guy is employed manufacturing butter for kerrygold his job is included in category "manufacturing" not "forestry and fishing". All of the other categories are basically public service and non traded sectors, they are not wealth creators. The multi nationals are wealth creators and are our most important wealth creators but behind them is the agriculture industry. Raw materials grown in ireland are processed here , wealth creation, and by and large sold on the international markets. We dont have a comparable indigenous industry, we dont have pharma, we dont have tech, we do but they are foereign owned and the intellectual capital is developed abroad .


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## Protocol (15 Jul 2019)

NoRegretsCoyote said:


> What are your criteria for what constitutes a recession in Ireland?



The same criteria as usual, two consecutive quarters of declining real GDP.


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## Protocol (15 Jul 2019)

noproblem said:


> When a Goverment is allowed to pick and choose  particular commodities and base the inflation rate on that product going up or down in price it doesn't sit right with me. In fact it's ridiculous in my opinion. Then again, i'm not one of those exalted economists who know everything,  but in reality wouldn't know the tail end of a bullock from its rear end.



The Govt does not do this, they do not "pick and choose commodities".

The CSO construct the CPI, and the CPI basket is carefully constructed to reflect consumers spending patterns.


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## NoRegretsCoyote (15 Jul 2019)

Protocol said:


> The same criteria as usual, two consecutive quarters of declining real GDP.



Completely meaningless in Ireland. A big firm can close down a production line and this will happen.

In the 96 quarters since 1995 I calculate 10 instances of two quarters of declining quarter-on-quarter GDP.

Do you remember the recession over the winter of 2015, or the summer of 2007?

Of course not, because they are just statistical artefacts.


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## Leo (15 Jul 2019)

noproblem said:


> and we have the graduates they require.



You might be surprised how many roles in these firms are currently being filled by graduates from across the EU and even beyond. We're a long way short of producing enough graduates here.


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## cremeegg (15 Jul 2019)

Protocol said:


> The Govt does not do this, they do not "pick and choose commodities".
> 
> The CSO construct the CPI, and the CPI basket is carefully constructed to reflect consumers spending patterns.



And do so in alignment with the rest of the EU.


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## noproblem (15 Jul 2019)

Leo said:


> You might be surprised how many roles in these firms are currently being filled by graduates from across the EU and even beyond. We're a long way short of producing enough graduates here.



Indeed, but you should have taken what I said in its full context and not nitty pick. An awful lot of graduate programmes in our Uni's and colleges are there because of collaboration between firms, Govt and educationalists on what's needed for their needs. In any case, it's not in FDI firms interests to abandon Ireland in the near future, it's their future too.


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## cremeegg (15 Jul 2019)

joe sod said:


> All of the other categories are basically public service and non traded sectors, they are not wealth creators. The multi nationals are wealth creators and are our most important wealth creators but behind them is the agriculture industry. Raw materials grown in ireland are processed here , wealth creation, and by and large sold on the international markets.



Irish agriculture does not create wealth.

Taking subsidies and using that to grow raw materials which sell for the price of the subsidies is not wealth creation.

Doing this so that Irish, and other European, farmers can continue to live on the land is wealth destructive, and it undermines the ability of third country farmers to make a living, which is deeply immoral.


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## Leo (15 Jul 2019)

noproblem said:


> Indeed, but you should have taken what I said in its full context and not nitty pick. An awful lot of graduate programmes in our Uni's and colleges are there because of collaboration between firms, Govt and educationalists on what's needed for their needs.



OK, so in full context, we are clearly not as you claimed 'the only game in town for foreign companies'. In 2018 we were in 4th place in Europe for US FDI attracting about half the investment the Netherlands did. 

I work in a US multinational, we partner with a number of Uni's, sponsoring a couple of post grad and internship programs. More than half our recruits still come from overseas.


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## cremeegg (15 Jul 2019)

Leo said:


> I work in a US multinational, we partner with a number of Uni's, sponsoring a couple of post grad and internship programs. More than half our recruits still come from overseas.



I hope you will forgive me for digressing, but with a clutch hoping to graduate in the next few years, I am very interested in this point.

Half your recruits come from overseas, what sort of opportunities are these, post grad internships ?, why are Irish graduates not taking up more of them.


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## Leo (15 Jul 2019)

cremeegg said:


> I hope you will forgive me for digressing, but with a clutch hoping to graduate in the next few years, I am very interested in this point.
> 
> Half your recruits come from overseas, what sort of opportunities are these, post grad internships ?, why are Irish graduates not taking up more of them.



It's not that Irish graduates aren't taking them up, it's more that Irish uni's aren't producing nearly enough graduates to satisfy demand across the sector.

We're typically looking at 20-30 IT graduate level roles each year, our activities in sponsoring programs with the colleges is to get ahead of other companies in attracting graduates from these programs.


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## BilliamD75 (15 Jul 2019)

Bronte said:


> As regards interest rates I heard last week they are on the way down. Not up.


Interest rates are on the way down short term as Draghi says more stimulus may be required. That has been his position from the start. He leaves in a few weeks then things will change. 
The next recession could be looking straight at us. On a macro level the economy is at full tilt, the nama liquidity (in construction) is coming to an end, interest rates will rise putting pressure on government revenue. Taxation will increase both direct and indirectly to cover the interest costs on the debt, the government are maxed out and will not have the liquidity to put into the economy when needed. 
On a micro level house price inflation is cooling, with rising interest rates and taxation household budgets will be squeezed,those who have some savings will manage. broad strokes here but we are a resilient bunch and will get through it, the lower the low in interest rates the higher the high in the cycle when it turns, this is what will cause the next recession in my opinion


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## joe sod (15 Jul 2019)

@BilliamD75 

are you sure about this !!, I think you are wrong there is no way the ECB can raise interest rates, the european economy has stagnated, german manufacturing output has gone down, the european stock markets have barely moved snice 2015, hardly the conditions for raising interest rates.
Look at what the Fed has just done , even with booming US economy and record employment levels they have stopped raising interest rates and are about to reduce them again.
As for construction, they dont have the capacity to build what is demanded, they dont have the workers, they can only build 15,000 units a year when the demand is for 35,000. In the boom they built 80,000 a year, they will never build that number again yet the population is rising exponentially.


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## BilliamD75 (15 Jul 2019)

The elephant in the room is the government bonds held by the ecb. The interest rate is lower than inflation, that is just crazy stuff, they will have to offload back to the private sector at some stage, in order to get bids rates have to rise, look at it this way if inflation is 1% and interest rates are 2% I would be borrowing up to the hilt as its a sure fire way of making money, in the construction sector all the low hanging fruits are gone (nama) ask any developer, he will tell you site costs are top dollar, wage inflation has gone through the roof, house price inflation is cooling so the risk is to great to take a chance to build housing, they won't put there capital at risk if they have any, should mention the high taxation in the sector.


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## demoivre (16 Jul 2019)

cremeegg said:


> David McWilliams, the man who made his name forecasting the last recession, is saying that the next one is not happening.
> 
> Sure interest rates will rise, brexit all be a disaster and barriers to trade are the new fashion.


 Your second and third points, along with a few other factors, will ensure your first point doesn't materialize.


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## odyssey06 (16 Jul 2019)

demoivre said:


> Your second and third points, along with a few other factors, will ensure your first point doesn't materialize.



Qualifier - Brexit could be a disaster for UK and Ireland, but that wouldn't necessarily shift ECB's position.


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## noproblem (16 Jul 2019)

Can anybody say with total authority that Brexit will be a disaster for Britain and Ireland? I really don't think so, there's a new parliament in formation within the EU, a new British PM, new ideas, new thinking and no one's going to let a fellow member of the EU flounder, ie Ireland. It's just not going to happen. Situation this morning where we see the Lady elect saying she's going to change the goalposts again. The whole lot of them don't seem to know what to do next, nor do we. We do know the Britt's want the backstop moved and know something? Would it be so terrible?


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## odyssey06 (16 Jul 2019)

noproblem said:


> Can anybody say with total authority that Brexit will be a disaster for Britain and Ireland? I really don't think so, there's a new parliament in formation within the EU, a new British PM, new ideas, new thinking and no one's going to let a fellow member of the EU flounder, ie Ireland. It's just not going to happen. Situation this morning where we see the Lady elect saying she's going to change the goalposts again. The whole lot of them don't seem to know what to do next, nor do we. We do know the Britt's want the backstop moved and know something? Would it be so terrible?



Well there's Brexit and disorderly Brexit. I think most people are thinking of the latter in terms of worse case scenarios and I would expect a short term hit to both economies if that occurs. What happens after a disorderly Brexit is anyone's guess... UK rebounds into boom but Ireland doesn't, vice versa, neither rebounds, both rebound...


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## noproblem (16 Jul 2019)

Exactly, up and down like a hooxrrs knickers and NO i'm not trying to be smart. Let what happens happen and just let's get on with it.


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## WolfeTone (16 Jul 2019)

noproblem said:


> The whole lot of them don't seem to know what to do next, nor do we. We do know the Britt's want the backstop moved and know something? Would it be so terrible?



If the backstop is removed, or not accepted by the British, then it is tantamount to accepting the implementation of border controls - on both sides of the border. This is not politically desirable for any party. Let alone the fact that any installation of border checks will effectively attract the attention of militant republicans intent on going back to war. Certainly I cannot envisage any Irish Taoiseach assigning the role of permanent border duties to anybody without being conscious that that persons life is likely to be put at risk at some point in the future. 

The irony of the Brexit shambles is that the Unionists, who have openly stated that they are opposed to border controls between UK/EU in Ireland, demand to be treated the same as the rest of the Britain, which is intent on imposing border controls between UK/EU in Britain. 
In other words, they want to be treated differently without having to say they are being treated differently. 
The obvious solution is take all the parties to task with their publicly stated positions ie, no return to border controls. In doing so, the backstop could be removed if the Unionists accept that NI will be treated differently to rest of UK. And do you know what? Would it be so terrible?


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## WolfeTone (16 Jul 2019)

odyssey06 said:


> I would expect a short term hit to both economies if that occurs.



I would think differently. I think the impact will be slow deterioration between UK and Ireland as far as trade is concerned. 
There is a sense of sky falling in on Nov 1. I dont think so, it will be slow, manifesting itself in insurance claims, contract breaches, human rights, tariffs etc over time. The impact will take time without a trade deal.


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## odyssey06 (16 Jul 2019)

WolfeTone said:


> I would think differently. I think the impact will be slow deterioration between UK and Ireland as far as trade is concerned.
> There is a sense of sky falling in on Nov 1. I dont think so, it will be slow, manifesting itself in insurance claims, contract breaches, human rights, tariffs etc over time. The impact will take time without a trade deal.



Yes, well I suppose it depends on how long we think of short term, I didn't mean in days but in months or do you have a longer horizon in mind?


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## WolfeTone (16 Jul 2019)

odyssey06 said:


> Yes, well I suppose it depends on how long we think of short term, I didn't mean in days but in months or do you have a longer horizon in mind?



Of course, and i didn't mean to imply that you did.
 In the absence of a withdrawal agreement, and/or subsequent trade deal, I would expect the hit to UK and Irish economies to be felt over the long-term (+2yrs and counting) as opposed to a short-term hit (within 2yrs). 
I would be impossible to give a timeframe other than to say that without a deal, or deals in place, the impact will continue to manifest itself and deteriorate over the long-term rather than any significant impact im the first 12 to 24 months.
I could of course be wrong, but that is just my take on matters.


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## joe sod (16 Jul 2019)

WolfeTone said:


> The irony of the Brexit shambles is that the Unionists, who have openly stated that they are opposed to border controls between UK/EU in Ireland, demand to be treated the same as the rest of the Britain


 The backstop is deeply political on all sides, The EU, ireland , the unionists and britain. We want it because it ties northern ireland and consequently britain in the customs union. The EU want it not because of us but because it ties britains hands. The unionist dont want it because it distinguishes between northern ireland and britain which is an anathema to them. Britain does not want it because it ties their hands in negotiations and keeps them in the customs union, and they need the unionist votes .
The backstop is only good if there is a deal, it is looking like there will be no deal with the backstop in place. Its also the case that the backstop prevented theresa may getting her deal through the house of commons. It looks like boris johnson is going to crash out of the EU on 31 October with disastrous consequences, we need to get real , sticking by the backstop seemed to work with a weak and drained theresa may leadership, its not going to work with a fresh boris johnson leadership, whatever we may think of him.


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## Sophrosyne (17 Jul 2019)

joe sod said:


> sticking by the backstop seemed to work with a weak and drained theresa may leadership, its not going to work with a fresh boris johnson leadership, whatever we may think of him.



But can he afford to get shirty? 

Subsequently, he will have to negotiate a trade deal with the EU.


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## WolfeTone (17 Jul 2019)

joe sod said:


> We want it because it ties northern ireland and consequently britain in the customs union.



It was the British government that proposed in the WA that remaing in CU would apply to whole of UK and not just NI. Only to placate Unionist demands of "not being treated differently", a card Unionists held by virtue of political numbers and a PM that campaigned (and presumably voted) to Remain.
Irelands interest was solely on NI.

But listen to what Unionists are saying. They are saying that they want the border between UK/EU in Ireland to be open, frictionless.
But they want borders between UK/EU in Britain to be taken control of and subject to  British customs and Immigration rules, not EU ones.
Talking out both sides of their mouth on this one.

The sooner Unionists get real the better, because all it will take is a set of parliamentary numbers in the house of commons that sidelines them in terms of government support and they, and their "not being treated differently" hoax, will be dropped like a tonne of bricks.
I have no doubt that underlying recent votes in the HoC on same sex marriage and abortion for NI was bow fired across their mantra of "not being treated differently".
And the simple fact of the matter is that communities on both sides of the border, nationalist and unionist, don't want to see any border infrastructure return.


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## qwerty5 (17 Jul 2019)

joe sod said:


> The backstop is deeply political on all sides, The EU, ireland , the unionists and britain. We want it because it ties northern ireland and consequently britain in the customs union. . .



I don't agree with this bit.
We want the backstop because its the insurance plan against a border in Ireland. Which is what the UK said they wanted to avoid also.

Having no border and being out of the single market are very incompatible. But if the UK can come up with a solution I think Ireland would be happy with it. The fact is they haven't so it looks like the backstop is required.

It's almost as if it wasn't really thought through very much when May came up with her red lines. But it's the UK that's leaving and the UK that have conflicting red lines so unless they come up with a magic solution they're stuck with the withdrawal agreement.

We'd prefer they stay in the single market but that's not our call. Before the referendum that wasn't a series option. Now apparently they all voted for no deal


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## odyssey06 (17 Jul 2019)

qwerty5 said:


> I don't agree with this bit.
> We want the backstop because its the insurance plan against a border in Ireland. Which is what the UK said they wanted to avoid also.



At the moment though the backstop in its current form and duration appears to be holding up a deal which would preclude a border ... so the backstop is bringing about the very scenario it was intended to prevent, should UK event with no deal.
We don't really want the backstop, we want a deal and no border. The backstop is a means to an end that is failing to achieve its goal and should be ditched \ fudged \ modified.


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## WolfeTone (17 Jul 2019)

odyssey06 said:


> At the moment though the backstop in its current form and duration appears to be holding up a deal which would preclude a border ... so the backstop is bringing about the very scenario it was intended to prevent, should UK event with no deal.



But its not really. It is only there until such time as a something better is agreed, ie a free trade deal. 
So rather than crash out, with all the implications of no deal, the WA paves the path for an orderly exit until such time a free trade deal is agreed. 
In the absence of a free trade deal, the backstop insures against border controls returning to Ireland - which all parties across the political spectrum have advocated for. 
It really is up to the British to propose alternative arrangements. They haven't, other than ditch the backstop. In which case, no Irish government could plausibly agree to, in turn vetoing a WA between EU and UK. Back to square one, a no deal Brexit. 
So compromise has to be found. The obvious compromise is for the Unionists to accept that what they want in practical terms (a frictionless open trade border in Ireland) is not compatible with their idealistic terms "not to be treated differently", when in realistic terms, they are different from rest of UK in many, many ways already, eg same sex marriage, abortion, dysfunctional parliament, d'hondt system of parliament (when functioning) etc


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## cremeegg (17 Jul 2019)

odyssey06 said:


> The backstop is a means to an end that is failing to achieve its goal and should be ditched \ fudged \ modified.



I agree that the backstop is a means to an end, no return to a hard border.

If it is ditched/fuged/modified London will see that this is no longer a priority for us

If there is a no deal Brexit, Britain will still have to negotiate some basis for future trading with the EU. The first item on that agenda will be how to avoid a hard border. Unless of course we signal that this is no longer our priority.


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## joe sod (17 Jul 2019)

WolfeTone said:


> The obvious compromise is for the Unionists to accept that what they want in practical terms (a frictionless open trade border in Ireland) is not compatible with their idealistic terms "not to be treated differently"


 
the unionists are the most uncompromising of all the parties to this deal, if your strategy is to get the unionists to compromise well it fails, its not a realistic strategy at all. In fairness to theresa may she did her best to try and get movement on this, she travelled to leo varadker and to the eu and european leaders, but everywhere she got a blank no. Even Donald trump fudges , changes tact and yes backs down, he does not stick blindly to the same failed strategy.


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## odyssey06 (17 Jul 2019)

joe sod said:


> the unionists are the most uncompromising of all the parties to this deal, if your strategy is to get the unionists to compromise well it fails, its not a realistic strategy at all. In fairness to theresa may she did her best to try and get movement on this, she travelled to leo varadker and to the eu and european leaders, but everywhere she got a blank no. Even Donald trump fudges , changes tact and yes backs down, he does not stick blindly to the same failed strategy.



What did we (as in Dublin government) compromise on in the backstop?


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## WolfeTone (17 Jul 2019)

joe sod said:


> the unionists are the most uncompromising of all the parties to this deal, if your strategy is to get the unionists to compromise well it fails, its not a realistic strategy at all.



One, its not my strategy, im simply pointing out what I think is the most reasonable and realistic solution. 
Two, just because the Unionists are "the most uncompromising" therefore the Irish government should cede ground to them? That is the strategy of failure. 

My own guess is that the British parliament, under a new leader like Johnson, will end up dumping on the DUP. His strategy will be to garner enough votes between Conservatives and Brexit Party to leave on 31st Oct with the small price of treating NI "differently". 
The recent votes in HoC for same sex marriage and abortion for NI were a shot across the bow towards Ulster Unionism.


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## joe sod (17 Jul 2019)

WolfeTone said:


> My own guess is that the British parliament, under a new leader like Johnson, will end up dumping on the DUP. His strategy will be to garner enough votes between Conservatives and Brexit Party to leave on 31st Oct with the small price of treating NI "differently".



The brexit party are not in the house of commons only the european parliament therefore they have no say in the house of commons vote if there is one. Boris johnson  has already said that the house of commons will be in recess on october 31 so he is not planning on any theresa may style last minute votes and extensions. They will run the clock down to october 31 unless there is some change. It would be better for ireland to compromise a little now rather than waiting until then when the pressure will be intense when we could be bounced by the EU anyway. It is better that we take control now and focus on irelands interests not the EUs for now.


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## nest egg (17 Jul 2019)

It's bluff. A no deal isn't on the cards, as the 31st of March "deadline" has already proven. Despite the talk, it'll be an election/second ref.

If they leave, the backstop will go back to its original NI only incarnation, which the English will be more than happy with, and the focus will shift towards convincing the Scots to "remain".

May we live in interesting times.


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## WolfeTone (18 Jul 2019)

joe sod said:


> The brexit party are not in the house of commons



Very true, but the political game for Johnson and Tories is to avoid a GE, if not, get savaged by the Brexit Party.
So how, between now and Oct 31 can Johnson lead the Tories into power with Brexit under their belt?
Here is an idea;



joe sod said:


> Boris johnson has already said that the house of commons will be in recess on october 31



Hardline, hardball, tough and uncompromising. What else could a Tory, come prospective Brexit Party voter, want in a leader?
One small snag, on what grounds can the PM of the Mother of Parliaments bring the House into recess?
On a personal whim? Or with a majority of the house?
Im not sure, but outside of declarations of war, I think Johnson may be over-egging his his penchant for Churchillian dramatics.

I could of course be totally wrong, but in my opinion Johnson will be the most untrustworthy British PM since Thatcher, particularly when it comes to Irish interests.
Thankfully, he is no Thatcher, nor Churchill. He is intelligent, amenable to many, witty, and a bit of craic...but his diplomatic skills dont go much further than beyond the gallery that he is appealing to right now with his rabble-rousing mantra of bringing the HoC into recess.
If, or when, he gets into power, the real politik will quickly smack him across the face like a wet fish making him pine for his Telegraph gig.
The real politik being - shouting from the sidelines doesn't cut it anymore.

That is my take, im open to been proven totally wrong.


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## WolfeTone (18 Jul 2019)

Leo playing the 'NI only' backstop option.









						Varadkar: NI only backstop could avoid hard border
					

Leo Varadkar says there are ways to avoid a hard border, but that he is still preparing for no-deal.



					www.bbc.com
				




The most practical solution in my opinion. The people of Ireland and Britain, and Europe, should not be held back because one political party in the North, representing a viewpoint of a minority of people in NI in relation to Brexit, cannot fathom practical realities over idealistic fantasies.


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## noproblem (18 Jul 2019)

I love the way this topic goes around in circles, just like every single topic in every single piece of media/news on Brexit. Lets now agree that none of us know what length that piece of string is although some smart eejit will try to convince us he/she has it solved.


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## joe sod (18 Jul 2019)

"NI only backstop still an option -Varadker"
I heard the interview with leo varadker on Sean O Rourke this morning. Sean O Rourke rightly pointed out that this was the original position an NI only backstop and that was rejected by the unionists. But Sean O Rourke did put Varadker under  pressure, he was actually unable to respond on one occasion. The position seems to be that he cant talk about changes to the backstop until he talks to boris johnson, he didnt put it like that but sean o rourke did put him under pressure.


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## WolfeTone (23 Jul 2019)

Excellent talk here by economist Stephanie Kelton. Albeit it is from the perspective of US national debt, it goes a long way to challenge the views that suggest we must pay down our debt. 









						Presidential Lecture Series: Stephanie Kelton
					

"But How Will We Pay for It? Making Public Money Work for Us" - Oct. 15, 2018Our nation’s finances are a blistering topic. Democrats blame Republicans for "b...




					www.youtube.com
				





Stephanie Kelton is a professor of public policy and economics at Stony Brook University. Before joining Stony Brook, she chaired the Economics Department at the University of Missouri—Kansas City, where she taught for seventeen years. She served as chief economist on the U.S. Senate Budget Committee (Democratic staff) in 2015 and as a senior economic adviser to Bernie Sanders’s 2016 presidential campaign. She is a former editor-in-chief of the top-ranked blog New Economic Perspectives and member of the TopWonks network of the nation’s best thinkers.


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## NiallSparky (23 Jul 2019)

WolfeTone said:


> Excellent talk here by economist Stephanie Kelton. Albeit it is from the perspective of US national debt, it goes a long way to challenge the views that suggest we must pay down our debt.



There's a massive difference when you're in a monetary union, and when you're not the sole issuer of what is essentially the World's reserve currency.

That's before you even get into the criticisms of the MMT policies that Kelton espouses. It's not really a viable path for Ireland whatsoever.


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## WolfeTone (23 Jul 2019)

NiallSparky said:


> There's a massive difference when you're in a monetary union, and when you're not the sole issuer of what is essentially the World's reserve currency.
> 
> That's before you even get into the criticisms of the MMT policies that Kelton espouses. It's not really a viable path for Ireland whatsoever.



I agree insofar as that we are in a monetary union and cannot issue our own currency. But the central point I got from it was Keltons view that national debt is not necessarily a bad thing. Increasing national debt means money being pumped into the economy in creating employment, utilizing resources, increasing capacity for the future. 
The important thing for me is that the rate of increasing debt is less than the rate of growth. Once this is occurring, then it can be plausibly said that that debt is being put to productive use overall (notwithstanding obvious controversies in the media with regard to some public spending items).


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## BilliamD75 (23 Jul 2019)

33 billion spent on interest in the last five years, the multiplying effect of that money in the ecomony cannot be overstated instead leaving by the back door. That's with negative interest rates on the debt. Now with the economy at full capacity do you believe the growth rates will continue as we have seen over the last five years. The answer is simply no way. Interest rates are going to rise costing more money to service the roll over debt.its simple economics the interest rate is going to exceed the growth rate of the economy. The debt created in Ireland was used to pay wages/pensions and welfare payments from 2009 to 2014 (excluding bailout) and nothing remotely to do with expanding the economy. I love economists they all have different points of view


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## WolfeTone (23 Jul 2019)

BilliamD75 said:


> Interest rates are going to rise costing more money to service the roll over debt.its simple economics the interest rate is going to exceed the growth rate of the economy.



I have been hearing this talk of interest rates rising, for well over a decade now. Instead of rates rising, they went the other way into negative territory. So I'm not so sure anymore. The Eurozone is in a debt trap. Raising interest rates may occur at some point, but likely to be at slow and small incremental levels, rather than anything fast and significant. 




BilliamD75 said:


> I love economists they all have different points of view



Yes, me too. I tend to listen to the ones that, from my perspective anyway, are making sense.


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## Firefly (23 Jul 2019)

BilliamD75 said:


> 33 billion spent on interest in the last five years, the multiplying effect of that money in the ecomony cannot be overstated instead leaving by the back door.



Such uproar that the Children's Hospital could end up costing 2bn. We could build one _every 4 months_ with the interest we are paying. But hey, let's keep borrowing money cos that's what governments do!


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## WolfeTone (23 Jul 2019)

Here is some data from the excellent trading economics website

The interest rate since 2008 has collapsed to zero, or effectively zero.






						Ireland Interest Rate - 2022 Data - 1998-2021 Historical - 2023 Forecast - Calendar
					

The benchmark interest rate in Ireland is set by the European Central Bank. Interest Rate in Ireland averaged 1.70 percent from 1998 until 2022, reaching an all time high of 4.75 percent in October of 2000 and a record low of 0.00 percent in March of 2016. This page provides - Ireland Interest...




					tradingeconomics.com
				




The government 10yr bond, peaking at 12% in 2011, sending us into the bailout program. Obviously we couldn't borrow then. But its at next to zero now, some consider we shouldn't borrow at 0%? When do we borrow?
We could build schools, hospitals, roads, broadband, houses, all the good stuff. Instead, there is this persistent mantra that as a nation we shouldn't borrow anymore? This makes no economic sense.






						Ireland Government Bond 10Y - 2022 Data - 1985-2021 Historical - 2023 Forecast - Quote
					

Ireland 10Y Bond Yield was 2.59 percent on Thursday December 15, according to over-the-counter interbank yield quotes for this government bond maturity. Historically, the Ireland Government Bond 10Y reached an all time high of 14.76 in January of 1985.




					tradingeconomics.com
				




Government debt spiraled out of control during the crash, but that is why it was called a crash! The increase in the debt level since 2013 has been relatively benign.





						Ireland General Government Gross Debt - 2022 Data - 2023 Forecast
					

Government Debt in Ireland increased to 236595 EUR Million in the second quarter of 2022 from 235130 EUR Million in the first quarter of 2022. Government Debt in Ireland averaged 127468.96 EUR Million from 1991 until 2022, reaching an all time high of 236595.00 EUR Million in the second quarter...




					tradingeconomics.com
				




Meaning that all growth since then has reduced the debt level to within shooting distance of the requirements of the fiscal pact. And government spending as a % of GDP is reducing all the time!






						Ireland Government Spending to GDP - 2022 Data - 2023 Forecast - 1995-2021 Historical
					

Government spending in Ireland was last recorded at 24.9 percent of GDP in 2021 . Government Spending to GDP in Ireland averaged 35.25 percent of GDP from 1995 until 2021, reaching an all time high of 64.90 percent of GDP in 2010 and a record low of 24.20 percent of GDP in 2019. This page...




					tradingeconomics.com
				




And yet, the focus of the economic performance is limited to media outrage and uproar over incidental issues. The childrens hospital for instance. The outrage is over the spiraling costs, and so should be. But I think it is fair to accept that if we want a childrens hospital, then we have to pay for it. So where does the €2bn go? Down a hole? Or does it go into the hands of private contractors operating in the country, who employ people?
The €2bn, or whatever it costs, is simply a transfer from taxes collected back into the economy from where it came from in the first place.
It may be a misallocation of capital spending (bearing in mind only a portion of the €2bn is misallocated, not the full amount), and that in itself is a cause for concern, but it is not a reason not to borrow.


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## Protocol (23 Jul 2019)

With one of the largest public debts in the world, we should not be borrowing more.

Given the strengths of our economy, we should be running a fiscal surplus and repaying debt.

If we need more infrastructure, then raise more taxes.


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## WolfeTone (23 Jul 2019)

Protocol said:


> With one of the largest public debts in the world, we should not be borrowing more.



On the face of it, absolutely correct.



Protocol said:


> Given the strengths of our economy, we should be running a fiscal surplus and repaying debt.



The strength of our economy is, in no small part due to borrowing cheap money.
Im not advocating borrowing for the sake of borrowing, im advocating it to boost economic growth and develop an infrastructure that suited to future requirements. That is what is occurring now. On paper, the figures are impressive, but there are structural deficits. Housing is a serious issue, particularly in centres like Dublin. The private sector is not adequately responsive to the needs of society, the State needs to step in. 
The green/carbon reduction era is truly upon us. There is huge scope for infrastructural improvements needed. 
5G, healthcare, growing population, etc, etc...
We cannot expect the private sector to deliver the long-term needs of society by itself. It needs State intervention, and money is cheap. 
Obviously, it needs to be managed and controversies surrounding the children's hospital etc dont help. But we need clean energy efficiency and universal internet connection if we are to maximize on the potential for economic growth in the future decades.


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## Protocol (23 Jul 2019)

Why not use taxes, instead of borrowing?


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## WolfeTone (23 Jul 2019)

Protocol said:


> Why not use taxes, instead of borrowing?



Use taxes for what? This years capital expenditure is €5bn? (correct me if im wrong) of which around €2-3bn is borrowed.
Where are you going to tax that much out of the economy without sending it into recession?


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## demoivre (24 Jul 2019)

WolfeTone said:


> I have been hearing this talk of interest rates rising, for well over a decade now. Instead of rates rising, they went the other way into negative territory. So I'm not so sure anymore. The Eurozone is in a debt trap. Raising interest rates may occur at some point, but likely to be at slow and small incremental levels, rather than anything fast and significant.



I'm expecting a further easing in rates, possibly as early as next Thursday.


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## cremeegg (24 Jul 2019)

WolfeTone said:


> But the central point I got from it was Keltons view that national debt is not necessarily a bad thing.




Thats true, but debt is like fire very powerful and can be difficult to control.



WolfeTone said:


> Increasing national debt means money being pumped into the economy in creating employment, utilizing resources, increasing capacity for the future.



Ideally, but it can also mean money being pumped in to political projects, remember the Bertie Bowl, or the Boris bridge in London.

And its not just political vanity projects. Industrial and or investment projects with less commercial logic get financed because they carry political support. These may fail in themselves and perhaps worse they may squeeze out more valuable projects which lack he political support.

Strictly speaking that is not an issue of debt but of the control of public spending, however the two are linked when we are talking about state debt.

There was much complaint when the public i.e. the taxpayer bailed out the private debt of the banks. That was a decision (rightly or wrongly, rightly in my view) taken after the fact. State borrowing for industrial investment has the bail out pre-baked in. Thats much worse than deciding to bail out after a failure.




WolfeTone said:


> The important thing for me is that the rate of increasing debt is less than the rate of growth. Once this is occurring, then it can be plausibly said that that debt is being put to productive use overall (notwithstanding obvious controversies in the media with regard to some public spending items).



This is a fair point, for measuring success or failure on the upside, but I think you set the bar too low. The question is not is the economy growing faster than the debt, rather is the economy growing faster than it would without the borrowing.

On the downside, is the debt causing the economy to overheat.

In Ireland today we have high public borrowing, being used in the main for current expenditure rather than capital investment, and an economy on the verge of overheating.

The borrowing we are doing is not being used to finance the obvious infrastructural deficits we have. Housing, water, transport.


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## cremeegg (24 Jul 2019)

WolfeTone said:


> The private sector is not adequately responsive to the needs of society, the State needs to step in.



Many of us would think that the reason the private sector is not adequately responsive to the needs of society is because the state is continually stepping in. And that it does so in a ham fisted fashion.

As a simple example the difficulties around Apples efforts to secure planning permission for a date centre in Athenry.


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## WolfeTone (24 Jul 2019)

cremeegg said:


> Many of us would think that the reason the private sector is not adequately responsive to the needs of society is because the state is continually stepping in. And that it does so in a ham fisted fashion.



No doubt. It works both ways. Equally many would think that the States defence for a €15bn tax advantage for Apple is the State stepping in a way that promotes foreign direct investment.
I agree with your points about political projects. This is often capital misallocated, unless of course you are the beneficiary you might think otherwise.
So the Bertie Bowl never came to pass, but the Abbotstown Sport Campus did. Is it needed? I would argue yes, I think sport is a critical element of our social fabric and the campus provides facilities to elite athletes to train and develop that they would otherwise have to go abroad to use in order to remain competitive (remember the fuss over the 50m swimming pool?).
We pay for that. It is unlikely that private organizations could provide such an extent of facilities as a viable commercial entity.


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