Cowen rejects double-dip claims

[boaber]

Despite unemployment soaring to 462,000, the Taoiseach singled out the big decline in consumer spending and claimed that people will have to get out and shop to help resurrect the country's fortunes. "We have to continue to encourage people - those who have disposable income - to spend in the domestic economy," he said.

http://www.belfasttelegraph.co.uk/n...-doubledip-claims-14956637.html#ixzz10OCRYTyz

Is this guy for real? Hasn't he heard of all the job losses, pay cuts, levies etc.

I would love to get out there and spend more, if only my (and thousands of others) take home pay wasn't less now that it was a couple of years ago

 

[Chris]

http://www.belfasttelegraph.co.uk/n...-doubledip-claims-14956637.html#ixzz10OCRYTyz

Is this guy for real? Hasn't he heard of all the job losses, pay cuts, levies etc.

I would love to get out there and spend more, if only my (and thousands of others) take home pay wasn't less now that it was a couple of years ago

You have a point about people's actual ability to spend. In order to spend, i.e. consume, you first have to produce, and that is one thing that this country is not doing enough of.
However, what I found more disturbing about this is that this imbecile, among many, believes that the solution to a credit fueled consumption binge is more consumption. What this country needs is for people to save more and pay down as much debt as possible.

 

[RMCF]

Its a vicious circle for the country, and the Gov with this one.

Of course everyone is tightening their belts and saving more/paying off more debts, as they are not sure what is around the corner.

It will be hard to encourage people to spend money for the next few years in this country, which in turn will see any chance of future growth and a way out of this mess fade.

The only thing which might be a light at the end of the tunnel is Xmas. People might start spending for a few months, but it will dry up dramatically at the start of 2011 as a result.

 

[Ceist Beag]

However, what I found more disturbing about this is that this imbecile, among many, believes that the solution to a credit fueled consumption binge is more consumption. What this country needs is for people to save more and pay down as much debt as possible.

It's hardly as simple as that Chris! There are a lot of businesses that rely on consumer spending so if everyone hunkers down to save then these businesses will go to the wall, only adding to our problems. That said it's a bit rich for Cowen to turn around and point the finger at us when he and his cohorts have lumbered each and every one of us with additional debt!

 

[Shawady]

How do they expect people to spend their money when the government have given no idea where the cuts are coming from in the next few budgets.
They float ideas like property taxes, increase income taxes, pension tax relief etc without actually commiting to much, which leaves so much uncertainty it is no wonder spending is down.

 

[Chris]

Its a vicious circle for the country, and the Gov with this one.

Of course everyone is tightening their belts and saving more/paying off more debts, as they are not sure what is around the corner.

Or maybe they do know what's round the corner and it is not nice.

It will be hard to encourage people to spend money for the next few years in this country, which in turn will see any chance of future growth and a way out of this mess fade.

The only thing which might be a light at the end of the tunnel is Xmas. People might start spending for a few months, but it will dry up dramatically at the start of 2011 as a result.

Economic wealth does not come out of spending, this is what got us into this mess. Ireland is about as bad as the US when it comes to spending on credit. Look at Germany. Germans at government and individual level are spending less (and they always were savers) and producing more, creating huge benefits to the economy.

It's hardly as simple as that Chris! There are a lot of businesses that rely on consumer spending so if everyone hunkers down to save then these businesses will go to the wall, only adding to our problems. That said it's a bit rich for Cowen to turn around and point the finger at us when he and his cohorts have lumbered each and every one of us with additional debt!

Actually it is as simple as that. The reason there are so many businesses that are so reliant on consumer spending is because of the artificial boom of the last 10-15 years. Unfortunately for the businesses this was and is not sustainable and many of them will have to fold. But this will release capital that is currently tied up in unproductive enterprises to be invested in more productive ones. This along with real savings is what is needed for this country to become more productive.
You need to look at the recession as the solution to the problem that was the artificial boom, not as the problem itself. An analogy would be a cancer patient undergoing chemo therapy; the patient first gets sicker before getting better, but this is not a reason to stop therapy.

 

[RMCF]

Chris,

You said

Economic wealth does not come out of spending, this is what got us into this mess. Ireland is about as bad as the US when it comes to spending on credit

But you still need the population of a country to go out and spend some money, otherwise there will be a shortage of cash in the system. I would say that there is still plenty of money in Ireland, but its all being saved rather than spent (I think I heard a stat recently about savings levels increasingly dramatically over the last couple of years).

How are shops and services going to survive if no-one is buying anything from them? These businesses in turn employ people and give them spending power. If one folds then the chain reaction starts.

I appreciate that Ireland needs to produce more things to sell to get out of this mess too, but at the basic level of all of us spending to put money into the system, then I think this plays a big part too.

 

[Firefly]

But you still need the population of a country to go out and spend some money, otherwise there will be a shortage of cash in the system.

Getting people with savings to spend is OK in the short term, but when the savings have been depleted what then??? The country needs to focus on exports. This will bring money into the country which will allow people to spend. We need to make it cheaper for companies to export - the government can play a big role here by reducing rates & energy prices for the small scale businesses (as welll as the multinationals)

 

[fobs]

How do they expect people to spend their money when the government have given no idea where the cuts are coming from in the next few budgets.
They float ideas like property taxes, increase income taxes, pension tax relief etc without actually commiting to much, which leaves so much uncertainty it is no wonder spending is down.

Nail on head. I get so fearful of what the next budget is going to contain that I am not willing to spend. I Would have to seriously reconsider my pension planning if they change the tax relief on pensions and so am only spending on absolute essentials at the moment.

 

[cork]

The TV3 openion poll shows that people want to axe public spending before raising extra tax.


But on the other hand - are people willing to accept lower levels of services?

Are they willing to accept the closure of their local hospital?

 

[TarfHead]

The TV3 openion poll shows that people want to axe public spending before raising extra tax.


But on the other hand - are people willing to accept lower levels of services?

Are they willing to accept the closure of their local hospital?

I think people would be willing to accept a lower level of service, for other people, i.e. close a hospital, but not the one I use.

 

[fobs]

The TV3 openion poll shows that people want to axe public spending before raising extra tax.


But on the other hand - are people willing to accept lower levels of services?

Are they willing to accept the closure of their local hospital?

I would yes. Our nearest Hospital is Mallow but would much prefer to spend the money on Cork/Limerick Regional hospitals than Mallow. Also if they ever start delivering on the Croke Park Agreement is not part of the agreement "more for less".

 

[csirl]

The TV3 openion poll shows that people want to axe public spending before raising extra tax.


But on the other hand - are people willing to accept lower levels of services?

Are they willing to accept the closure of their local hospital?

Some people, including Government TDs, are not willing to accept lower levels of services. So looks like its tax rises?

http://www.rte.ie/news/2010/0924/politics.html

 

[cork]

I would yes. Our nearest Hospital is Mallow but would much prefer to spend the money on Cork/Limerick Regional hospitals than Mallow. Also if they ever start delivering on the Croke Park Agreement is not part of the agreement "more for less".

But politicians & unions oppose hospital closures.

No political party is out there selling reform.

 

[shnaek]

Some people, including Government TDs, are not willing to accept lower levels of services. So looks like its tax rises?

http://www.rte.ie/news/2010/0924/politics.html

How much lower can we go? A good deal of our services are rubbish - and it's not about money, just about incompetence. The HSE is an utterly useless organisation, as are a good deal of the government quangos such as the equality authority. If a body isn't doing a job, then those responsible should be put to the sword, end of. This culture of taxing the responsible to pay for the irresponsible is never going to deliver the type of country we all want to live in.
And raising taxes has been shown the world over to be counter productive - essentially the wrong thing to do. Continuing to tax the workers to pay for those who aren't working is just not workable.

 

[Complainer]

as are a good deal of the government quangos such as the equality authority. If a body isn't doing a job, then those responsible should be put to the sword, end of.

Let me guess - you're white, male, Irish-born, between 25 and 60, with no permanent disability - right? Many of those who don't tick off all these boxes have benefited from the work of the Equality Authority.

 

[Chris]

But you still need the population of a country to go out and spend some money, otherwise there will be a shortage of cash in the system. I would say that there is still plenty of money in Ireland, but its all being saved rather than spent (I think I heard a stat recently about savings levels increasingly dramatically over the last couple of years).

This is a very common misunderstanding and fallacy of political economics. Look at what savings means. When someone saves money, they don't put it under the matrass, they mainly put it in a savings account or they may directly invest it. Money put into a savings account is loaned by a bank to either an individual or a company, who use the funds to purchase something. So it is not correct to say that savings leads to less spending. What savings means is that the saver allows someone else to do the spending for them.

How are shops and services going to survive if no-one is buying anything from them? These businesses in turn employ people and give them spending power. If one folds then the chain reaction starts.

Many shops and businesses will have to fold, this is going to be inevitable. Too many businesses were set up during the artificial boom, i.e. there was too much investment into businesses that would not be able to be sustainable beyond the boom. This is the unfortunate side effect of the artificially created boom bust cycle. There is no escape from it.
Many businesses only came into existence because too many people spent too much money that they hadn't yet earned. Once businesses fold then the resources and capital tied up in them will be made available for new businesses that are better set up to deal with current conditions. This is a good thing for the economy, as wasteful and inefficient operations are wound down and make room for new entrants.

I appreciate that Ireland needs to produce more things to sell to get out of this mess too, but at the basic level of all of us spending to put money into the system, then I think this plays a big part too.

This is key. Ireland needs others to do the spending so that debt within the country can be reduced and investments in new businesses increased. As I said before, wealth comes from producing more than you spend, and the more money is saved, the more capital is available for investment in production which increases income and wealth.

The TV3 openion poll shows that people want to axe public spending before raising extra tax.


But on the other hand - are people willing to accept lower levels of services?

Are they willing to accept the closure of their local hospital?

How about cutting back on all non-frontline services? When people mention cut backs they always assume this means a hospital closing. How about closing down 20 of the 28 (maybe more) motor tax offices? Or getting rid of some of the totally useless government departments and their budgets, e.g. heritage and local government, enterprise, culture, sport. None of these are crucial to the running of the country and while the imbeciles in government cannot even get the basics right (education, law enforcement, health) they should not be wasting resources on them.

 

[Firefly]

Let me guess - you're white, male, Irish-born, between 25 and 60, with no permanent disability - right? Many of those who don't tick off all these boxes have benefited from the work of the Equality Authority.

Does it need its own quango though?

 

[Firefly]

This is a very common misunderstanding and fallacy of political economics. Look at what savings means. When someone saves money, they don't put it under the matrass, they mainly put it in a savings account or they may directly invest it. Money put into a savings account is loaned by a bank to either an individual or a company, who use the funds to purchase something. So it is not correct to say that savings leads to less spending. What savings means is that the saver allows someone else to do the spending for them.


Many shops and businesses will have to fold, this is going to be inevitable. Too many businesses were set up during the artificial boom, i.e. there was too much investment into businesses that would not be able to be sustainable beyond the boom. This is the unfortunate side effect of the artificially created boom bust cycle. There is no escape from it.
Many businesses only came into existence because too many people spent too much money that they hadn't yet earned. Once businesses fold then the resources and capital tied up in them will be made available for new businesses that are better set up to deal with current conditions. This is a good thing for the economy, as wasteful and inefficient operations are wound down and make room for new entrants.


This is key. Ireland needs others to do the spending so that debt within the country can be reduced and investments in new businesses increased. As I said before, wealth comes from producing more than you spend, and the more money is saved, the more capital is available for investment in production which increases income and wealth.



How about cutting back on all non-frontline services? When people mention cut backs they always assume this means a hospital closing. How about closing down 20 of the 28 (maybe more) motor tax offices? Or getting rid of some of the totally useless government departments and their budgets, e.g. heritage and local government, enterprise, culture, sport. None of these are crucial to the running of the country and while the imbeciles in government cannot even get the basics right (education, law enforcement, health) they should not be wasting resources on them.

I know we're not meant to quote entire posts, but +1 to that

 

[RMCF]

That might be an idea.

Perhaps it really is time for the Gov (and us) to sit back and ask "what public services are really critical and crucial".

Likes of heritage, sport etc - how essential are they until we get the country back in shape?