Normally interest rates are set to maintain price stability, i.e. low inflation. Inflation in Ireland since 2008 has been low and negative on occasions. So I don't see how you can say Ireland's economic situation at present requires higher interest rates.Interest rates are set by the ECB for the Eurozone as a whole and are therefore lower than they would be if set based on Irelands economic situation alone.
Correct. If the government wishes to reduce house price inflation it can either introduce a tax on mortgages or introduce quantitative restrictions. Quantitative restrictions as the CB has introduced are probably the better way.In recent years the CB has prevented a recurrence of the borrowing boom.
My own take on this is that it's not external circumstances that represent a threat but our own foolishness when it comes to money, i.e. the national finances. We have slightly more government expenditure now than in 2008, i.e. 7,600 million EUR today against 7,400 in 2008. https://tradingeconomics.com/ireland/government-spending. But Government debt is now 68% of GDP, in 2008 it was 42% https://tradingeconomics.com/ireland/government-debt-to-gdp. Government debt in 2008 was 50,000 million EUR; today it's 214,000 million EUR. https://tradingeconomics.com/ireland/government-debt. So we are spending more and we owe more both in absolute terms and as a % of our GDP/GNP/GNI*. While our GDP is higher today, if you strip out the effects of globalization, our GNI is about the same today as in 2008. https://www.indexmundi.com/facts/ireland/gni-per-capita. So I'd say we're screwed if interest rates increase which they most probably will if / when European inflation reaches the ECB's 2% limit.It seems to me that there are many similarities between the external circumstances facing Ireland today and those of the early 2000s.
I agree ,the only thing I would add is the banks and the Government pushed up house prices It was all for nothing because the Central Bank are still making the Banks sell off most of there loans no longer in negative equity once they had to be restructured , The people who kept paying there loan don't really care if they were in negative equity once the original loan was approved on there ability to pay from annual income ,Normally interest rates are set to maintain price stability, i.e. low inflation. Inflation in Ireland since 2008 has been low and negative on occasions. So I don't see how you can say Ireland's economic situation at present requires higher interest rates.
Correct. If the government wishes to reduce house price inflation it can either introduce a tax on mortgages or introduce quantitative restrictions. Quantitative restrictions as the CB has introduced are probably the better way.
My own take on this is that it's not external circumstances that represent a threat but our own foolishness when it comes to money, i.e. the national finances. We have slightly more government expenditure now than in 2008, i.e. 7,600 million EUR today against 7,400 in 2008. https://tradingeconomics.com/ireland/government-spending. But Government debt is now 68% of GDP, in 2008 it was 42% https://tradingeconomics.com/ireland/government-debt-to-gdp. Government debt in 2008 was 50,000 million EUR; today it's 214,000 million EUR. So we are spending more and we owe more both in absolute terms and as a % of our GDP/GNP/GNI*. While our GDP is higher today, if you strip out the effects of globalization, our GNI is about the same today as in 2008. https://www.indexmundi.com/facts/ireland/gni-per-capita. So I'd say we're screwed if interest rates increase which they most probably will if / when European inflation reaches the ECB's 2% limit.
Normally interest rates are set to maintain price stability, i.e. low inflation. Inflation in Ireland since 2008 has been low and negative on occasions. So I don't see how you can say Ireland's economic situation at present requires higher interest rates.
If the government wishes to reduce house price inflation it can either introduce a tax on mortgages or introduce quantitative restrictions. Quantitative restrictions as the CB has introduced are probably the better way.
The Irish government are going broke before our very own eyes, ... our last bastion of economic freedom will be gone, its on the way so get ready. I hope i am wrong.
I like this thread. I'm learning something new. But, when I listen to informed people in the media informing us that we are nearer to the next recession than the last, I get concerned. We've endured recessions since I was born (1950's); is there something I don't know about and recessions are necessary?
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