Brian cowen still facing hostility over large pension, unfair

TheBigShort said:
I really don't know what you are talking about. I'll ask again,
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You are blaming the conditions that led to us over borrowing. I am pointing out that people in other countries had the same opportunity but didn't over indulge. Blaming the system doesn't cut it. Nobody forced us to live beyond our means..we made our own mess.

TheBigShort said:
I don't really don't know what you are talking about here either other than you appear to believe that we are better off in the euro? I don't believe we are for the reasons of economic instability that we have experienced.
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I remember the time before we joined and strongly believe we are much better of in the euro. We are a tiny, open economy. Look at all the angst facing the UK at the moment and they're a lot bigger than us.
 
https://tradingeconomics.com/ireland/government-debt-to-gdp

Here is our historic debt to GDP ratio. Clearly in 2002 (at the time of benchmarking) our national debt was relatively low compared to most countries.

Some would say that having such low levels of debt is a good thing. Certainly it allows flexibility for governments to invest infrastructure and to borrow to invest in public services where there is a deficit of such services.

It also allows for a low(er)-tax environment, for workers and for business. Meaning the cost of doing business is competitive, inducing foreign investment and creating employment.

Circa 2007 something happened that changed all that, dramatically.

Was it the public sector benchmarking of 2002? Or did something else, more profound, occur? Here is a link to perhaps indicate that it was indeed something else.

https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%932008

Is it odd that all of these countries experienced rapidly increasing debt to GDP ratios from around 2006-2008? Even the ‘prudent’ ones? Did our benchmarking cause of all of this?

Iceland
https://tradingeconomics.com/iceland/government-debt-to-gdp

Italy
https://tradingeconomics.com/italy/government-debt-to-gdp

US
https://tradingeconomics.com/united-states/government-debt-to-gdp

UK
https://tradingeconomics.com/united-kingdom/government-debt-to-gdp

Germany
https://tradingeconomics.com/germany/government-debt-to-gdp

Netherlands
https://tradingeconomics.com/netherlands/government-debt-to-gdp

France
https://tradingeconomics.com/france/government-debt-to-gdp

The reality is the economic system that we have bought into. Monetary policy is dictated by the ECB. It is independent of State interference. The State has ceded monetary control to the ECB whose objective is to maintain price stability in the eurozone. It uses private institutions, namely banks, to compete with each other as tools to achieve this. It has its benefits, fluidity, liquidity, of capital invokes economic activity. It has its drawbacks, one-glove does not fit all economies.

Credit expansion was allowed to go unchecked for too long in a low interest rate environment - across the globe.

Here is our historic government budget

https://tradingeconomics.com/ireland/government-budget

Clearly, up to 2007 we were experiencing a series of budget surpluses, with national debt levels at all time lows as per above.
The economic crisis exposed the failings in the credit expansion/perpetual debt based system across the globe.
For Ireland and countries over reliant on construction and property, the effects were magnified greatly over countries that also suffered deficits but were not reliant on construction like Germany and Netherlands

https://tradingeconomics.com/germany/government-budget

https://tradingeconomics.com/netherlands/government-budget

In no way shape or form, can social partnership in Ireland be considered anyway near the primary cause of our economic collapse. To do so, and being consistent in your views, you would then have to credit public sector pay cuts since the crash as the primary cause of our economic recovery and public finances - somehow I dont think I should hold my breath in that regard?

Firefly said:
I remember the time before we joined and strongly believe we are much better of in the euro. We are a tiny, open economy. Look at all the angst facing the UK at the moment and they're a lot bigger than us.
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Here is the history of the UK and the euro

https://en.wikipedia.org/wiki/United_Kingdom_and_the_euro

"The United Kingdom entered the European Exchange Rate Mechanism, a prerequisite for adopting the euro, in October 1990. The UK spent over £6 billion trying to keep its currency, the pound sterling, within the narrow limits prescribed by ERM, but was forced to exit the programme within two years after the pound sterling came under major pressure from currency speculators. The ensuing crash of 16 September 1992 was subsequently dubbed "Black Wednesday". During the negotiations of the Maastricht Treaty of 1992 the UK secured an opt-out from adopting the euro.[2]"

You will note that the UK debt to gdp ratio rose rapidly in 1992 from the graph above.
And in the immediate years from the time it joined the ERM in 1990, its budget deficit went to nearly -7%.
Around the same time unemployment in the UK from 7% to 11%
https://tradingeconomics.com/united-kingdom/unemployment-rate

The euro did nothing for the UK but bring instability.
 
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Why do you keep talking about Benchmarking as if it was the only outcome of social partnership?

Why do you ignore the tax breaks and subsidies for the construction sector, agree in social partnership talks, for the construction bubble?
Why do you ignore the fact that the Irish Central Bank could, at any time, have introduced the rules on lending which are in place now?
The annual cost of public services increased from €8 billion in 2002 to €17 billion in 2008. Are you seriously suggesting that pumping an extra €9 billion a year into the economy through wages had no impact on the crash?

Oh and yes, Public Sector pay moderation has been a big factor in our economic recovery.
 

No doubt about it, public sector pay cuts have certainly helped us balance the books.
 
TheBigShort said:
Instead it is the policies that engineered an over reliance on construction and taxes from stamp duty that should be abhorred.
Policies that continue today that tell us our net wealth is at record highs, boosted by property prices once again.
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Purple said:
Why do you keep talking about Benchmarking as if it was the only outcome of social partnership?
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Fair point, I just use as an example of what it is regularly identified as a prime example of over-spending. I don't disagree, but it was not the cause of the crash, but did, as you correctly point out, feed into the impact of the crash as all public sector spending would. But on its own, considering the sums involved its impact was was on lower end of scale


I'm not ignoring it. Clearly I referred to that in earlier comments above?

Wages were not pumped up by €9bn a year. They increased by €8bn over 6yrs, or €1.5bn a year. Not insignificant, but a lot different to €9bn a year.
Of course, our debt to gdp ratio fell from 30% to 20% over the same period, while sustaining budget surplus for all but one year during that period.

On the other hand, private sector lending effectively quadrupled in the same period. The period in which our monetary sovereignty was ceded to the ECB. An institution that is independent of government interference.

https://tradingeconomics.com/ireland/loans-to-private-sector

Is it any wonder employment figures went through the roof in the same period? And of course, such employment prospects attracts immigrants and increases populations. Should the increase in population expect to have somewhere to live? To be able to use public services such as schools and hospitals? What about extra demands on water infrastructure, libraries, immigration controls, public parks, pollution, transport, etc..etc...Would extra personnel in public sector need to be hired to deal with increased demands on services by any chance? In turn increasing public sector wage bill through wages increases and more personnel. Or should public sector workers work extra, for free?

The economic crash has it roots in economic policy of credit expansion and the perpetual debt system. Everything else after that is a consequence of that policy. Despite apparent new lending rules from the central bank, house prices have increased by 69% since 2012. The same policies are still in place because the ECB is what dictates our monetary policy and the ECB is controlled by credit expansion/perpetual debt bankers.
 
TheBigShort said:
Wages were not pumped up by €9bn a year. They increased by €8bn over 6yrs, or €1.5bn a year. Not insignificant, but a lot different to €9bn a year.
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Yea, I stand corrected. The main point is that the exchequer had to come up with an €9 billion more to pay wages in 2008 than it did in 2000.
This is a good report on the period. By 2013 we had reduced that back down to €6.5 billion but it was still a massive increase.
During that period the rate in increase in the number of people working in the Public Service was twice the rate of population increase.
So, the banking collapse accounts for €40-€60 billion of our current (and increasing) national debt but I would suggest that a net €6.5 a year extra in Public Sector wages to 2013 (and increasing rapidly now)has been a significant contributor to our national debt.
 
Purple said:
The main point is that the exchequer had to come up with an €9 billion more to pay wages in 2008 than it did in 2000
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Yes, but it didn't borrow for that. Or more accurately the debt to GDP ratio fell significantly in that period, and for the most part the government ran budget surpluses.
Thanks to credit expansion, money was on tap.

Purple said:
During that period the rate in increase in the number of people working in the Public Service was twice the rate of population increase.
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Perhaps, but that is only an issue if there was no deficit in public services in the first place? As far as I recall classroom over-crowding was issue, numbers of gardai was also an issue. So, for the first time ever, given the state of the national accounts, we had money to spend to finally bring our public services up to international standards (whether we would achieve that is another matter).


I don't think you can compare the two. What did we get in return for the €40-€60bn bailout? At least with wages, somebody is actually providing a service in return. Whether that service is affordable or provides good value, again, is another matter for debate, but at least there is something being provided in return.
And it's not just €40-€60bn that needs to be costed, it is the opportunity lost where that money could have provided essential services for a lot of people for a very long time.
 
TheBigShort said:
Yes, but it didn't borrow for that. Or more accurately the debt to GDP ratio fell significantly in that period, and for the most part the government ran budget surpluses.
Thanks to credit expansion, money was on tap.
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Thanks to receipts from capital taxes (Stamp Duty and VAT on construction). We made long term current expenditure commitments based on short term windfall tax receipts. The only politician who spoke out against it was Richard Bruton. Everyone else, from all parties, only complained that the government weren't spending enough.

We were already spending about average amounts on Public Services per capita so maybe the solution to finally bring our public services up to international standards wasn't just pay increases and more people in grossly inefficient organisations.
I agree but it was still unsustainable and grossly wasteful and it still added to out debt and the impact of the crisis.
TheBigShort said:
And it's not just €40-€60bn that needs to be costed, it is the opportunity lost where that money could have provided essential services for a lot of people for a very long time.
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The same can be said for pay increases which didn't yield improvements in outcomes.
 
Purple said:
Thanks to receipts from capital taxes (Stamp Duty and VAT on construction)
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Exposing the nature of the credit expansion monetary policy.

Purple said:
We made long term current expenditure commitments based on short term windfall tax receipts.
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I don't disagree. And, regrettably, if it all started again today the same thing would happen I'm sure. This is the concept of the 'trickle-down' effect. Create wealth effect (credit based property boom in our case), private investment spurred on by obtaining profits will seep into every crevice of the economy raising standards for all.
If anyone gets left behind government taxes can intervene.

It works, but only to a point. It is unsustainable long-term.

Purple said:
We were already spending about average amounts on Public Services
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Average amounts lead to average results. Perhaps we should aim higher?

Purple said:
it was still unsustainable and grossly wasteful and it still added to out debt and the impact of the crisis.
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I agree it was unsustainable and that there was/is waste. I would disagree that it was grossly wasteful. There are a lot of good things in this country, they may not make the headlines but I can think of a lot worse places to live.

Purple said:
The same can be said for pay increases which didn't yield improvements in outcomes.
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Of course, but the inferred point here is that public services haven't yielded any improvements?
Public services are a broad brush and measuring improvements can be complex. I don't think it is reasonable to infer that public services did not yield improvements.
Whether those improvements provide value for money is another thing altogether.
 
TheBigShort said:
That would suggest that you feel public services in this country are poorly delivered?
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Mismanagement of our social housing stock resulting in homeless families.

Third highest spend per head in the world on health services but massive waiting lists and relatively poor outcomes.

High spend on education but poor outcomes at third level and high levels of functional illiteracy and numeracy.

Endemic corruption, incompetence, financial malpractice and waste in out police force.

Byzantine levels of bureaucracy in many departments.

Massive duplication of processes.

Far too many different contract and wage structures which makes HR and Payroll costs far higher than they need to be.


We could all add to that list.
 
[QUOTE="Purple, post: 1567986, member:

We could all add to that list.[/QUOTE]

Yes of course we could, but that reads like a collection of newspaper headlines typically devoid of a full and accurate picture of quite often complex issues.
.
Im sure you have a simplified solution for all these matters, lots of people do - including those that still blame Brian Cowen!
 
TheBigShort said:
Im sure you have a simplified solution for all these matters, lots of people do - including those that still blame Brian Cowen!
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Sadly I think the problem is a cultural one. Even with massive increases in spending on public services during the Celtic Tiger, we've seen shambolic services like those listed by purple above. It doesn't seem to matter how many public sector workers we employ or how much they are paid, so I guess we shouldn't entertain any increases in numbers or pay without concrete cost/benefit analysis and we should also take a much closer look at privatising where feasible.
 
TheBigShort said:
Yes of course we could, but that reads like a collection of newspaper headlines typically devoid of a full and accurate picture of quite often complex issues.
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It is usual for headlines to be devoid of full and accurate picture of issues.

That's why they are called headlines.




You don't have to be so defensive; you asked for examples and I gave them. Are you of the view that people should only be entitled to voice their opinion about a problem if they can also offer a detailed solution to that problem. If so then should we all keep quiet about Syria, Climate change, Inequality, the Global Financial Crisis and just about everything else?
Should the citizens of this country just stay quite and stop questioning their betters?


TheBigShort said:
Im sure you have a simplified solution for all these matters, lots of people do - including those that still blame Brian Cowen!
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I won't justify that comment with an answer.
 
Firefly said:
Sadly I think the problem is a cultural one
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Thinking it is a cultural problem, and knowing it is a cultural problem are two different things. The problems listed above are not a million miles away from the problems being experienced in other countries.
Take the increase in homelessness for instance, is it just a coincidence that most countries in the EU are experiencing increasing levels of homelessness now in their capital cities, at the same time?

https://www.theguardian.com/housing...-crisis-point-all-eu-countries-except-finland

To be clear, if the policy is to outsource the housing stock to the private sector, and that is what has happened, then that is effective management, not mismanagement. If the consequences are 200,000 empty homes, with underoccupancy in 40% in occupied homes, and we have no money to build houses for homeless families - then that is just bad policy, not bad management.

You also have to consider that the headlines listed above need to be taken with a pinch of salt - using terms like "massive duplication", when the reality is probably "some duplication", ditto for corruption etc....
 

I'm not sure what you are talking about here?
The public service is a broad church, of course there are problems as you have outlined, and need to be rectified. But you have a tendency to exaggerate somewhat the cause and effects. For instance, you have stated that homeless families is as a result of mismanagement of our housing stock...this is clearly an absurd statement.
That there is a homeless crisis - true - that the cause is simplified into a mismanagement of social housing - false.

That is all, I totally accept everyone has the right to voice their opinions, but in doing so it would help if there was a modicum of factual evidence to substantiate it.
As much as everyone is entitled to their opinion, the entitlement to scrutinize that opinion is fair game also.
 
We have 107000 social houses and another 30,000 or so private homes rented by the State. We have 1700 homeless families. If we improved the utilisation of our existing social housing stock by 1.25% we would solve the problem of homeless families. Is that a policy issue or a management issue or both?
 
TheBigShort said:
That there is a homeless crisis - true - that the cause is simplified into a mismanagement of social housing - false.
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Where did I say that mismanagement was the cause?

TheBigShort said:
That is all, I totally accept everyone has the right to voice their opinions, but in doing so it would help if there was a modicum of factual evidence to substantiate it.
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It does help, but don't let that stop you.

TheBigShort said:
As much as everyone is entitled to their opinion, the entitlement to scrutinize that opinion is fair game also.
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Agreed.
 
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