The new issue of The Economist has a long analysis piece on Ireland: you can read it here.

19 replies on “Threadbare”

As bad as things are, Ireland is not on the brink of default. The treasury has around €20 billion of spare cash, enough to bridge the gap between spending and taxes well into next year.

JTO,…. is that you?

There is lots of money on the sidelines in terms of high consumer saving and stalled investments,” says Philip Lane, an economist at Trinity College Dublin.

What’s ‘lots’?

It would be foolish to understate Ireland’s difficulties. Depressed wages and higher taxes mean there will be little improvement in average living standards for a while. The fiscal crisis will take time to resolve, even with help from other European countries to ease the burden of the banks. But painful decisions now will lay the groundwork for an eventual return to growth—with luck, at a sprightly pace rather than a giddy one.

The almost inevitable happy ending of any Economist article. All they forgot to include was the mantra that ‘the fundamentals are good’. J.C. wept.

It’s the end of Ireland as we know it and they’re still genuflecting to the Pollyanna principle. Like the Trapp family in overgear.

And why do they start the last sentence of 90% of their articles with the word ‘but’?

I don’t buy the consumer savings bit at all. if the savings were that significant why are the banks finding it impossible to raise external interest in their deposit books.

For savers, deposit rates are mickey mouse compared to bond yields. Surely the measure of real savings must take into account household debt. The value then lies in the balance.

With almost 500K unemployed and another 100K at least in 3rd level, who are these savers? I’d dearly like to see this cohort broken down by age and occupation.

@The Alchemist

Nor do I buy it. ‘Consumer savings’ is a nice way of saying ‘consumer credit crunch’. The ‘savers’ are people who don’t have an option.

The basic math is something like this:

Year 1:
aggregate consumer savings = minus 10%

Then the shyte hits the proverbial and half the consumers are refused further credit.

Year 2:
aggregate consumer savings = minus 5%
Hence, ‘consumer saving’ has ‘rocketed’.

When we’re all bankrupt we’ll all be saving 100% of our zero income.

@ Carolus
Haha. You should have been on stage at Kilkenomics. As the Russians like to say, the situation is hopeless but not serious.

@Alchemist and CG.
re: Savings
I don’t understand it either. On the one hand we are being told that savings are being run down, which I tend to believe and others are saying that the savings ratio is going up.
Which is it or is it different for different age groups.

Also the economist peddles the Mary Hanafin 14 billion cuts and tax increases that have been imposed already. Simpleton says it is a total of 1.5billion in cuts.

@Joseph Ryan
The savings ratio includes paying of debt and debt writedowns. It does not refer to saving, as such, just the gap between income and spending.

We are bad, bad people for paying the principal back on our debts. We should cease henceforth, put the whole country on interest only and start buying imported bling and tat. Oh and start buying houses again. If we started to borrow to do this, so much the better.

Jeepers, we’d have the Bertie Boom back in no time.

What an utterly depressing thought that this is the height of economic theory.

God this is beyond depressing – listening to the crocodile tears of John Bruton and the babblings of Garret Fitzgerald on the radio.

FG constantly has to harp on about its retarded younger brothers failings yet provides no solutions.
The money men are merely keeping the patient alive to bleed the patient as Constantin G. has alluded to.

For God sake Brian Cowen do one good thing in our life and default on these vampires and stuff their greedy mouths with worthless punts.


“We should cease henceforth, put the whole country on interest only and start buying imported bling and tat.”

Spot on there, we’ll soon be giving you the Keynes award:

“Therefore, oh patriotic housewives, sally out to-morrow early into the streets and go the wonderful sales which are everywhere advertised. You will do yourself good — for never were things so cheap, cheap beyond your dreams. Lay in a stock of household linen, of sheets and of blankets to satisfy all your needs. And have the added joy that you are increasing employment, adding to the wealth of the country because you are setting on foot useful activities, bring a chance and hope to Lancashire, Yorkshire and Belfast.”

– Essays in Persuasion, 1931, page 152 [BBC Radio Broadcast, 1931] — J. M. Keynes

Yep, special offer des res in Dublin South, was 3 million euro, down now to 1,5 million — so cheap, cheap beyond your dreams

The Debtor of the Western World — Irish author John Banville writes in The New York Times that the magnitude of what the Irish owe makes them fall silent.

There used to be a nice acronym that neatly expressed how the Irish people conceive of themselves: MOPE, that is, Most Oppressed People Ever. For a decade or so, when the Tiger was at its fiercest, we threw off the mantle of oppression, as once we had thrown off what used to be called “the yoke of British rule.” On Wednesday, the British chancellor of the Exchequer, George Osborne, announced in Brussels that his government stood ready to help Ireland in its hour of need. Oh, bitter day.

@Micheal Hennigan
Debt is not some pure virgin that cannot be touched – its the whore of Babylon itself.
There is nothing wrong with defaulting on debt with interest in such circumstances.
The interest payments will destroy all productive activities on this island creating a massive disequilibrium.
Indeed if this situation continues for many years they will starve the population to get a yield on their investments.
The dynamics of our predicament are malthusian in nature unless we can use capital to build capital.
Overvalued debt money destroyed the US in the 1980s under Volcker – it will leave nothing here if you accept these Shylock’s bona fides.

I see that the Irish banks have agreed a code of conduct for debtors in trouble involving debt rescheduling so that customers can reduce interest payments by up to one one third and defer repayment of capital for up to 5 years and thus avoid repossession .

Surely this is the kind of structure that will eventually be applied to Irish sovereign and banking debt. “We still have your money .” as they say in German.

A chart showing how the 14.5bn in cuts/new taxes has helped so far would be welcome and interesting. Do they largely boil down to avoided growth in expenditure against a celtic tiger baseline or are they the real deal?


To quote Dermot Ahern, methinks the 14.5 bn is a “fiction” OR perhaps to quote Dick Roche, the govenment won it “playing poker” OR maybe Bertie won it “on a horse”?


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