once everyone gets invovled in something it bursts. Theres no substance behind their speculation only that everyone is doing it and its going up. Average Joe started trading shares in late 90s especially tech and it burst no correlation behind the price of share and the performance of the company. Average joe became property speculators and now gold traders.
Yo are absolutely right, but average Joe has not started buying gold yet. What you see around the place are companies offering to buy people's gold, which is a big difference.
That's a funny way of looking at things. If you want to talk economics then you should go into utility theory.
You are only economically better off accumulating wealth if the utility you get from spending is more than offset by the negative utility you get from earning it in the first place!
You're absolutely right, but I think a discussion of this would be way off topic. It might come up in another thread. I was specifically referring to Ireland, and quite a few other western countries, where levels of public and private debt have mushroomed out of control. I believe the utility of paying down this debt is undeniably positive.
I see your point though about advocating spending only as a way to get us out of the mess. If through all our spending we leave no capital for investment then we have a problem. But at the same time we do have plenty of production in this country being met with very little domestic demand.
Yes indeed Ireland does still export quite a bit, but I think the problem is that production (even excluding construction) is severely on the way down, as even now Ireland is not competitive enough.
I don't think you can say produce first and then spend or vice versa. The bigger problem as I see it at the moment is that there are no buyers, ask any retailer.
My comment on production comes first then consumption was more in general terms, but I see your point. The problem is that a lot of businesses were created during the phony boom that unfortunately will have to be liquidated. I think it was JB Say that first said "markets clear". Everything will sell for a price; if retailers are struggling to sell, then it is because the price is still too high.
Also I saw an interesting article before, questioning why we cheer financial improvements in the balance of payments. Right now I think it's only right we export as much as possible because of our level of external debt. But for countries with manageable external debts exporting your resources is not necessarily a good thing.
I fully agree. I can't remember who I heard saying that the ultimate goal of an economy is to not have to produce. If you look at it from the smallest economic entity's point of view, i.e. an individual, most of us work hard and save in order to one day retire and live without having to work. Unfortunately Ireland is so far away from a reasonable debt level that it cannot even see the line anymore.
We need to keep in the back of our minds that the accumulation of wealth is not a means in itself, the only purpose of it is to enable us to have a decent standard of living.
Only thing I can add to that is " decent standard of living within our means".
Going back to the original topic, I agree with posters who feel there's a big difference between people who felt paniced and pressured into buying their first house on a big mortgage and people who just went mad and got themselves into huge debt because they felt they were worth it and wanted to brag about their big car, new sun room, fifth holiday this year etc. Fine, if you can afford these things, but buying them on credit and then moaning when you realise you can't actually afford to pay back what you've borrowed... well tough! I was on a reasonable salary during the tiger years but I still only went on holidays I could afford, bought a car that was within my means etc. I remember a friend asking me to go to a luxury spa with her one winter and when I said I couldn't afford it she said 'what do you think credit unions are for'. If these people are bailed out now they will have learnt nothing. If the economy ever recovers and we have a bit of money again they will be back like greedy kids in a sweetshop, stuffing their faces until their cheeks bulge, and assuming someone else will pick up the tab.
I fully agree with you. If people are bailed out of their debts then they will only make the same mistakes again. Just like banks have never learned from their mistakes because the taxpayer has always covered them.