Light At the End of the Tunnel Post author By Philip Lane Post date August 29, 2011 John Fitzgerald assesses the prospects for the Irish fiscal situation in this Sunday Business Post article. Categories In Uncategorized 8 Comments on Light At the End of the Tunnel ← Borrower Runs: Strategic Defaults on Mortgages → Mortgage Arrears: June 2011 8 replies on “Light At the End of the Tunnel” Another contribution to the Government spin machine’s debate management and propaganda efforts – Ireland is much better positioned than the Club Med (Greece, Italy, Portugal, Spain and CYprus). Sure the sunlight uplands are in sight and there’ll be no need to tackle the state-authorised profit gouging and inefficiencies that keep the cost of living nearly 15% above the EZ average. Keep it steady, lads, we might get the Germans and their neighbours to swallow the blarney and we’ll all be back in clover soon. Cue the chorus of GNP fetishists… Ernie do you not think that GNP is closer to the ‘real world’ that most Irish people live in? Its more easily taxable thats for sure. Genuinely curious as to what you mean there? Problem I have with this article is pretty much the same problem I have will all articles on the crisis. They totally fail to get across the wide spectrum of outcomes and the changing nature of the probailities attached to each. Basically John Fitzgerald is saying that the outlook for Ireland has improved recently – I would actually dispute that. My own opinion (worth very little) is that Irish outcome of the most likely result of the crisis (which is Eurozone muddles through) has improved (as described by JF) However, in the past couple of months, the probability of the Eurozone not muddling through has increased (significantly in my view – the language in Dan O’Briens IT article on saturday was very interesting in this regard) which will result in much worse outcomes overall for Ireland. Overall, I would view this as a worsening of the situation for the country, notwithstanding the fact that the most likely outcome is now more beneficial than it was before. Do we know if the interest rate cut will apply to EFSF and EFSM? and does it apply to all loans or future loans? I had the pleasure of reading the SBP over the summer holidays and the impression I came away with was that the elite are still traumatised and in shock. There was no sports section to give an air of normality. John Fitz’ optimism has become tempered since his recovery scenarios of 2009 and 2010. He should rejig his Hermes model as the open labour market suggests that earnings will remain depressed and therefore blunt the impact of a nascent recovery on demand. The taxi business provides a signal of what the future holds; interesting that the High Court ruled that restrictions in this sector were unconstitutional but ignored their own. I would like to be able to quote one significant achievement of this government or the past governmnet which significantly improved or reformed at least one of the many ailments of the Irish political system / economy. I would list several IMHO key ailments: – A vast system of state sponsored profit-gouging (as already mentioned) which results in market distortions and increased costs of doing business and indeed living. This includes the victorian system of collective bargaining, cosy professional cartels, etc. – Vastly overpaid public service which even after the pension levy pays way above EU average and feeds into largely intact budget deficit – Largely dysfunctional political system which results in TDs chasing passport and planning applications and results in cabintes loaded with teachers and solicitors – An entire universe of largely useless quangos still suck the money out of the system producing little in terms of return. – Grossly inefficient health system sucking vast amounts of money and producing sub-par output – Non-transparencies in property market which partly fed into the boom frenzy. Why haven’t we got a register of property sales? A crisis like this presents itself as a very rare opportunity to trim all the fat built up during the boom years and eliminate inefficiencies. This opportunity I fear has been missed and the parachute of EU/IMF funding plus the rising optimism suggest not much will get done in the medium term. Comments are closed.