2006 OECD Report - Any warning Signals?

[DerKaiser]

There's a thread about Bertie in the depths where the arguement as to whether he should be held responsible for the economic meltdown.

I thought to myself, what would/should have shape Bertie's views on how to run the country.

By 2006, he was Taoiseach for just over 8 years, were there any severe warning signals to inform him that a change in economic direction was needed at that point?

I googled '2006 Economic Report Ireland', and this is what came up.

Try reading this without the benefit of hindsight from the last 3/4 years and ask youself whether you really believe the 2006 government acted in a grossly irresponsible manner in the context of what we knew at the time.

I'm sure there are other reports with more severe warnings. But my belief is that if you have a number of very credible international observers giving you the thumbs up on what you have achieved, how likely are you to question yourself?

[broken link removed]http://books.google.ie/books?id=l6U...age&q=economic report on ireland 2006&f=false

 

[Chris]

Politicians will always listen to those people or organisations that say exactly what they want to hear. The fact that organisations like the OECD or ESRI painted nice and rosy pictures and that they were/are given so much credibility is a very handy thing for politicians to use. When things go wrong, they can hide behind the advice given by "reputable" organisations.

Economists of the Austrian School were warning of and predicting the crisis way before it happened, but even to this day governments are not paying attention to them, because they are saying what politicians need to hear, not what they want to hear, which is that whether socialist or conservative, interventions by governments in the market will always lead to crisis. Their solution is smaller government, spend less, tax less, and do not go into debt; anyone know a politician who likes this idea?

I believe blaming Bertie is an easy option. The real issue is that no matter what side of the political spectrum the government had come from (FG, SF, SLFD, FF, Labour), the government would have interfered in one way or another, and all interference results in disaster. Unless I hear a politician say that during the boom the right thing to have done, would have been nothing at all, i.e. not to interfere with the housing or financial market, I will not believe that they would not have caused the same mess.

Take for example affordable housing, mortgage interest relief and stamp duty rules for first time buyers. I have no doubt that any other party in government would have introduced similar schemes "to help first time buyers who are priced out of the market". All this did was fuel the demand for houses, resulting in higher prices. This is not something you need the advantage of hindsight for, this is basic economics.

Bottom line, I believe all governments have and still are behaving in a grossly irresponsible manner.

 

[Latrade]

Stating up front: FF are to blame for the policies they put into place that were popularist, short-sighted, self-serving resulting in a much bigger problem than we ever needed to be in. But...


But, while there are some warnings in that report, is it really that condeming? The warnings are hidden between and underneath lots of compliments. Plus, look at the summary and the bullet points. The thing that strikes me is that the Government did (to a lesser or great extent) put in place measures to address them. Some, like the tution fees were opposed by the very same politicians criticising the government (while refering to the same report to criticise the government), others are in the early stages and others, like infrastructure, are will under way.

Not a defence, just perspective. It doesn't provide a defence for the exonomic policies and here's the bombshell though:

[FONT=ABODIX+Caecilia-Heavy]Macroeconomic risks are high. [/FONT][FONT=QBRFYR+Caecilia-Roman]As one of the OECD’s more open economies, Ireland is particularly exposed to external risks. But it also faces domestic risks. House prices may have overshot fundamentals to some extent, although this does not imply that they will fall significantly; and house-building will eventually ease. A soft landing is the most likely scenario but a sharper fall cannot be ruled out. Hence, the government needs to leave plenty of breathing space by balancing the budget or running a surplus, curtailing tax breaks and pushing ahead with public management reforms to get better value for money from public expenditure. [/FONT]

It's clear enough, and they didn't do any of that. In fact the went so far as to increase them. Fair cop. Guilty as charged.

Note though the OECD also predict a soft landing.

 

[Purple]

Has there ever (in the last 50 years) been a "soft landing" after a construction boom?

 

[Latrade]

Has there ever (in the last 50 years) been a "soft landing" after a construction boom?

But all gamblers know if it keeps landing on red, eventually you're due it landing on black. And when have gamblers ever been wrong?