Is Ireland ruined, or is there a way out?

[shnaek]

It would be interesting to have a poll on people's opinions on this. We are borrowing 20bn a year to keep the show on the road, and 20bn (or more) on top of that to bail out the banks. Unemployment is at 14% and still rising. Taxes (and levies) are growing more and more burdensome. Irish companies are going to the wall every week, and mortgages are becoming harder and harder to service.

And yet there seems to be some sort of international recovery. The big European economies are going reasonably well. Irish companies with business abroad appear to be doing well.

Like a man who watches the stock market, I can't decide whether Ireland is a buy or sell. The heart says hold, the head says sell. Where is 20bn+ a year going to come from?

 

[tiger]

Where is 20bn+ a year going to come from?

From you and me, Joe "Shmuck" Taxpayer

 

[shnaek]

From you and me, Joe "Shmuck" Taxpayer

I don't think we, the taxpayers, have that money.

 

[BK0001]

Everybody in this country has an extremely difficult job and deserves every cent they get, so the government will borrow it and our kids can pick up the tab down the line.

 

[cork]

Get compansation from the EU for harmonising tax rates.

The media seem to be ok with the country borrowing €20 billion a year.

Every cut the media jump on the bandwagon of opposing cuts.

 

[shnaek]

Everybody in this country has an extremely difficult job and deserves every cent they get, so the government will borrow it and our kids can pick up the tab down the line.

The government won't be able to borrow it, just like a person with an income of 30k can't keep spending 60K every year without being called to account.

 

[Chocks away]

A look at the international money pages gives the thumbs up to Ireland's management of this economic hole. The WSJ has OK'd it, The Herald Tribune has wafted to and fro. But the overriding comments overseas is that Ireland's media and opposition parties keeps crucifying and regurgitating the bad news like a pernicious mother-in-law. Stephen Stanley says that USA's figures do not herald a double-dip ......... but that doesn't stop the homegrown soothsayers in the opposition from flinging this cliche around (like snuff at a wedding ). Ireland (and the world) will get over this ........ much to the chagrin of the Jeremiahs.

 

[Markjbloggs]

A look at the international money pages gives the thumbs up to Ireland's management of this economic hole. The WSJ has OK'd it, The Herald Tribune has wafted to and fro. But the overriding comments overseas is that Ireland's media and opposition parties keeps crucifying and regurgitating the bad news like a pernicious mother-in-law. Stephen Stanley says that USA's figures do not herald a double-dip ......... but that doesn't stop the homegrown soothsayers in the opposition from flinging this cliche around (like snuff at a wedding ). Ireland (and the world) will get over this ........ much to the chagrin of the Jeremiahs.

I take it you are not including yestedays' NY Times article in your "analysis". The thing is FF fooled us for long enough with their mismanagement, they are merely repeating the trick with the international media. Bond rates would tend to be more indicative of what people who matter in international circles think of us....

 

[RMCF]

Although the situation is dire, there is an element of bad news selling papers and making TV programmes more interesting.

Most countries are going to struggle for many many years to pay off this mess, not just us. The UK is on its knees too, although it could always devalue its currency as a get out. We can't.

I think this country really needs to try to get some people working again, and try to make ourselves more competitive. We are a very expensive place to do business with. Wages were allowed to spiral out of control during the boom.

 

[Howitzer]

Deadly, a thread where all the economic truisms and cliches can be regurgitated.

The UK did devalue last year. They also tried the money helicopter. Now they have to make genuine structural changes. There are no silver bullets. If your economy's broken it eventually has to be fixed. The problem is nobody, anywhere - this isn't an Irish thing - nobody likes taking the hard decisions.

Personally I'm more optimistic now. Not because we're sorted anything, but because there's a greater acceptance of how deep we are.

None of this is just a figment of some news editor's imagination.

 

[Chocks away]

As usual, Ginger McMillions explains all with his rambling historical analogy (Anne Frank, Versailles, drinkey-poos canalside in Old Amsterdam, American civil servants and, er, he forgor Arfur Daley at al). This keeps up his profile and makes HIM money.

 

[Purple]

The American example is interesting. When they declared independence in 1776 there was no national constitution and a very weak federal structure. While there was a sort of economic boom in the individual 13 states it was really a bubble brought on by an inflow of emigrants and their money. The elephant in the room was the massive debt that the states had accrued to finance their war of independence (mainly with France). By the mid 1780’s the honeymoon was over and the creditors were knocking on the door. It was clear to the founding fathers that the union would not survive in its current form; Britain and France would eventually seek to influence individual states and inevitably the union would fail.
In 1786 the Second Constitutional Convention was called and representatives from 11 of the 13 states spent nearly 6 months ensconced in Philadelphia trashing out how a cohesive functioning federal state should work. Twelve of the 13 states adopted the new constitution by 1789, Rhode Island holding out ‘till 1790, and the United States of America as we know it was born.

What’s interesting is that it was, primarily, in response to debt and how it should be handles (should it be shouldered collectively at a federal level of should each state deal with its own) and improving trade between the states (there were massive tariffs for many products between many of the states) that led to the birth of the modern democratic state. It was unprecedented that such matters be solved using politics alone and those involved had no template to work from; they were forging a new path.

This is a small Island nation with nowhere near the problems financially, politically culturally or militarily that the Americans faced back then. There is no reason why we can’t (but lots of reasons why we won’t) not just overcome our difficulties but create a more mature and balanced country from our current adversities.

 

[csirl]

Not as bad as people make out. Ireland still has very low personal taxation with nearly half of all earners paying no net tax. So we have scope to raise a lot of money with some tax system reform and a more even spread of tax collection. We also had a very low debt when this crisis started.

Countries like Germany, which have very high personal & corporate taxation, and a high national debt, have no means of raising extra money - not a good position to be in.

 

[Teatime]

"I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."

Thomas Jefferson

 

[Howitzer]

Not as bad as people make out. Ireland still has very low personal taxation with nearly half of all earners paying no net tax. So we have scope to raise a lot of money with some tax system reform and a more even spread of tax collection. We also had a very low debt when this crisis started.

Countries like Germany, which have very high personal & corporate taxation, and a high national debt, have no means of raising extra money - not a good position to be in.

True but the issue here is the speed at which our national debt has increased. Not surprising given the black hole it's going into, but alarming.

The IMF reckons we won't default, but this is somewhat predicated on getting the national debt under control. This is being addressed, IMO, but it's taken that doomsday scenario for decision makers to get the finger out.

Too much spending, not enough taxation isn't the primary cause of this, the banking crisis - and our Govts handling of it - is. We won't tax or cut our way out of this, not in the short term anyway.

 

[Purple]

"I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."

Thomas Jefferson

This was one of the major stumbling blocks to the creation of a strong federal government in the fledgling United States. The second constitutional congress was made up of two major philosophical blocks; those who wanted a loose confederation of agrarian based states, sort of a utopian puritan land owning model, and those who wanted to embrace a more capitalist system that acknowledges the power of the money men in places like Boston and Philadelphia and wanted a stronger central government. The former was generally favoured by the southern states and the latter by the northern states. In the end those at the convention with international experience and a more worldly view won the day. They realised that a relatively strong central government with taxation powers was necessary to defend the cohesiveness of the Union.
In the lines quoted above Jefferson was arguing in favour of the establishment of a central bank (or more specifically the establishment of governmental mechanisms to control the state’s finances). Interestingly Jefferson was US ambassador (or Minister) to France while the second constitutional convention was taking place though he did strongly influence James Madison (known as the father of the US constitution) by sending him many letters and hundreds of books during the nearly six month convention he did not actually attend. Jefferson was heavily influenced by the French Philosopher Rousseau who first articulated the notion that governments derive their power from the people, not a divinely anointed monarch. Rousseau was very suspicious of banks and money men (he dies penniless and was an abject failure in every other aspect of his life).

 

[lightswitch]

"Rousseau was very suspicious of banks and money men (he dies penniless and was an abject failure in every other aspect of his life)."

Big judgement there Purple, can you provide some links please as I have never heard Roysseau discribed in such terms before. God knows what one has to do to be successful in your realm. Accumulating great amounts of money one has no practical use for does not constitute success for everyone you know.

 

[Purple]

"Rousseau was very suspicious of banks and money men (he dies penniless and was an abject failure in every other aspect of his life)."

Big judgement there Purple, can you provide some links please as I have never heard Rousseau described in such terms before. God knows what one has to do to be successful in your realm. Accumulating great amounts of money one has no practical use for does not constitute success for everyone you know.

That's a bit harsh; money is just a tool, a means to an end. Anyone who judges success in the basis of monitory value is a pretty shallow person.

Rousseau, despite his fame, was frustrated artistically and struggled to maintain the lifestyle he desired for most of his life. His books were banned, his house was stoned and he was banned from living in France (he was born in Geneva but lived almost all his life in France). In his later years he was famous but his mental health deteriorated and he dies a reclusive paranoid.

For me he is possible the greatest philosopher since the Greek Classical era.

 

[Chris]

The UK did devalue last year. They also tried the money helicopter. Now they have to make genuine structural changes. There are no silver bullets. If your economy's broken it eventually has to be fixed. The problem is nobody, anywhere - this isn't an Irish thing - nobody likes taking the hard decisions.

Personally I'm more optimistic now. Not because we're sorted anything, but because there's a greater acceptance of how deep we are.

I wouldn't go as far as acceptance, but there is certainly less denial. And you are right, the reason the hard and right decisions are not being made is because they are politically unpopular and involve a lot of sacrifice.

Countries like Germany, which have very high personal & corporate taxation, and a high national debt, have no means of raising extra money - not a good position to be in.

But Germany is not trying to increase its taxation it is doing the opposite, and at the same time reducing the size of government. The reason Germany is and will continue to do well is because they are focusing on production while at the same time spending less, at private and public level.
While Ireland has the right idea that spending has to be reduced it is making the fatal mistake of increasing taxation and levels of debt. Taxation is a burden to productivity, which is the only thing that will bring this country out of this mess.

This was one of the major stumbling blocks to the creation of a strong federal government in the fledgling United States. The second constitutional congress was made up of two major philosophical blocks; those who wanted a loose confederation of agrarian based states, sort of a utopian puritan land owning model, and those who wanted to embrace a more capitalist system that acknowledges the power of the money men in places like Boston and Philadelphia and wanted a stronger central government. The former was generally favoured by the southern states and the latter by the northern states. In the end those at the convention with international experience and a more worldly view won the day. They realised that a relatively strong central government with taxation powers was necessary to defend the cohesiveness of the Union.
In the lines quoted above Jefferson was arguing in favour of the establishment of a central bank (or more specifically the establishment of governmental mechanisms to control the state’s finances). Interestingly Jefferson was US ambassador (or Minister) to France while the second constitutional convention was taking place though he did strongly influence James Madison (known as the father of the US constitution) by sending him many letters and hundreds of books during the nearly six month convention he did not actually attend. Jefferson was heavily influenced by the French Philosopher Rousseau who first articulated the notion that governments derive their power from the people, not a divinely anointed monarch. Rousseau was very suspicious of banks and money men (he dies penniless and was an abject failure in every other aspect of his life).

You have some great knowledge of early US history, it's a fascinating topic. What I like most about the process that lead to the constitution is that it was written with the intent to limit the power of government while specifying what it should do.
But in regards to Jefferson being in favour of central banking I believe you are very mistaken. Jefferson was very opposed to a central control of the coinage, and believed it to not be constitutional. The US constitution specifically states that only gold and silver should be money, and in such a case there is no need to have it centrally controlled. Here is a more accurate version of the quote:
"The central bank is an institution of the most deadly hostility existing against the Principles and form of our Constitution. I am an Enemy to all banks discounting bills or notes for anything but Coin. If the American People allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the People of all their Property until their Children will wake up homeless on the continent their Fathers conquered."
I've only read parts of Nock's book "Jefferson"(http://mises.org/books/jefferson.pdf), but it focuses a lot on the fact that Jefferson was very opposed to centralized government and control.

That's a bit harsh; money is just a tool, a means to an end. Anyone who judges success in the basis of monitory value is a pretty shallow person.

This is a very good point that is generally misunderstood or misrepresented. Money is not wealth, it is only a means of making transactions easier. Wealth is what we are able to buy with money. If our money buys a lot of products and services, i.e. the currency is strong, then we have more wealth. Higher prices are loss of wealth, lower prices are increased wealth.

 

[Purple]

You have some great knowledge of early US history, it's a fascinating topic. What I like most about the process that lead to the constitution is that it was written with the intent to limit the power of government while specifying what it should do.
But in regards to Jefferson being in favour of central banking I believe you are very mistaken. Jefferson was very opposed to a central control of the coinage, and believed it to not be constitutional. The US constitution specifically states that only gold and silver should be money, and in such a case there is no need to have it centrally controlled. Here is a more accurate version of the quote:
"The central bank is an institution of the most deadly hostility existing against the Principles and form of our Constitution. I am an Enemy to all banks discounting bills or notes for anything but Coin. If the American People allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the People of all their Property until their Children will wake up homeless on the continent their Fathers conquered."
I've only read parts of Nock's book "Jefferson"(http://mises.org/books/jefferson.pdf), but it focuses a lot on the fact that Jefferson was very opposed to centralized government and control.

I’m no expert on Jefferson, of indeed on anything much, but I do find that period from 1780 to 1800 very interesting (France, UK, USA and Russia).
From my limited knowledge of Jefferson he was strongly opposed to, and very suspicious of, the Philadelphia and Boston capitalists. The idea that Capitalists could be pro-democracy was an alien concept in the 1780’s (or the 1760’s) but Jefferson, from what I understand, while being a strong advocate of states’ rights did realise that without a strong central government the union would not hold. Jefferson’s heart was in the camp that supported a loose confederation of states which were based on an agrarian smallholding model but his head knew it wouldn’t work. In the end pragmatism won the day and the dislike of central banks was trumped by the dislike of private capitalists that could hold undue influence over the economic affairs of the state. The Federal Reserve is not called the Federal Central Bank for a reason.

This is a very good point that is generally misunderstood or misrepresented. Money is not wealth, it is only a means of making transactions easier. Wealth is what we are able to buy with money. If our money buys a lot of products and services, i.e. the currency is strong, then we have more wealth. Higher prices are loss of wealth, lower prices are increased wealth.

My point was that success should not be measured by the accumulation of material goods but by the development of the person, their relationships with others and their level of personal achievement.