IFAC: Fiscal Assessment Report

The first report from the Irish Fiscal Advisory Council is available here.

47 replies on “IFAC: Fiscal Assessment Report”

Pity the IFAC Report and the Mortgage Arrears Report weren’t swaged together. Would have made an interesting task. Cut spending, cut public sector wages while mortgage arrears are increasing, and do nothing significant ly radical about this – leave it to the banks to sort out – ‘where appropriate’. Anymore cutting and many small businesses in the service sector will disappear forever. Also I wonder if Greece is on the threshold of default, won’t that trigger likely demands for default from other nations in trouble? Ireland haas been playing the good European come what may and I am not sure other Eurozone countries are as gung-ho – or as naive.

I am convinced that people wedded to these positions are completely sheltered from a reality that hangs like deep gloom over most of the country. Naturally, the government must be wetting itself to have such convenient policy recommendations dumped in its lap. The cost of wiping out mortgage defaults would seem to be less than half the cost of bailing out Anglo, with its few dozen clients.

You’ve hit the nail on the head. 14 b potential cost of mortgage debacle versus 28b to sort out a handful of developers who now look forward to the largest debt discount ever. Only in Ireland.

@ CP

is there any way to recoup a significant portion of that 28bn in comm/dev?

is there any way to recoup a significant portion of that 14bn in resi’s?

Ignore moral arguments on this. Its a ‘No’ to question 1 most likely, and a ‘Yes’ to question 2 most likely.

A deeply depressing report.
One must wonder what goes through the minds of the Continental & British elite when they think of Ireland.
I am sure they are deeply grateful for the transfer of our wealth surplus directly into the financial sectors hands but secretly they must be highly disdainful of the one half of the population that is retarded enough to accept this dogma and the other bunch of low level spivs that farm the retarded hoards.
The corporate tax thingy is safe as houses me thinks ………. maybe that was a bad choice of words.
But if you believed in the social contract thingy which I no longer do – its been smashed both during the crazy inflation and mad deflation phase.

We are a very interesting experiment really – the lack of response must be deeply puzzling to those who have no deep knowledge of Ireland – I am not so sure they can replicate the results where our strange gene pool has not yet spread.

Opposition to NAMA was strongest among those who were not in significant debt. And NAMA was tolerated, even supported by a lot of the public. At the time I wondered why, not least because I had to question what made me so livid when I read the draft legislation for it… Was I mad?

My theory is some people just trusted their government… But that a lot of people knew instinctively what was going to happen with the big boys, but hoped there would be a NAMA for them coming down the tracks, just keep the head down and don’t object. There’ll be a fiddle for everyone in the audience.

The question is whether the recommendations of the Fiscal Council – which has yet to be established on a statutory basis – will be taken seriously by the government. They assume an added significance against the developing background in Europe where there is a sea change in German political debate, if the interview today with the chairman of the CDU in the FAZ is any guide.


The interview reveals two rather conflicting developments. The first, the positive one, is the return of the CDU to a traditional view of European policy which lays a strong emphasis on the federal principles underpinning the construction of the Union while insisting on the fact that states retain their individual sovereign characteristics (i.e. dropping the idiosyncratic and dubious thesis set out by Merkel in her speech in Bruges on the development of a new “Union method”). The second, much less positive, is the clear decision to pursue, as early as next year, some major changes in the EU treaties – a paper is to be tabled – to ensure budgetary discipline. The new measures would include the introduction of compulsory debt brakes in national constitutions and a power of coercion to bring erring countries before the European Court of Justice (a point made already publicly by Merkel).

How the two developments are to be reconciled is not explained. The second is based on the demonstrably erroneous view that the crisis in the euro is attributable solely to irresponsible budgetary policies. This may be the case with regard to Greece but is hardly true of any other country and, if it is, Germany must also be included (despite the effort by the CDU to assign sole responsibility for breaches of the SGP to the Red-Green coalition under Schroeder).

The coherence of the underlying political calculation is also difficult to see. The Left now controls the Senate in France and it has clearly indicated that it will not help make up the necessary majority to allow such a constitutional brake to be introduced in France, despite the support of Sarkozy for it. The reaction of the UK is, of course, entirely negative although its recently adopted legislation on “sovereignty” allows it to go along with changes as long as these do not impact on the UK. But there is insistence by Merkel that solutions must be found at the level of the 27!

The one thing that can be said with some certainty is that hese latest developments are clearly dictated by electoral considerations to (i) win back the reputation of the CDU and FDP for their “friendliness” towards the European ideal – a principle which is actually mentioned in the Basic German Law (Constitution) and (ii) saddle other countries in the eyes of the German electorate with the responsibility for the mess in which the euro now finds itself.

Any clear indications of where exactly Germany is heading have yet to see the light of day.

Read the document with great interest.

A couple of bitty points:

“The Irish Fiscal Advisory Council was established in June 2011. The role of the Council is to independently assess, and comment publicly on, whether the Government is meeting its own stated budgetary targets and objectives.”

The ‘comment publicly’ on suggests that IFAC will need to find a way to get through to the public in a clear and authoritiative way – not, of course that everyone will agree with it, but by what avenue will it speak ex cathedra? The ECB has made a mess of who is speaking to whom when and has been generally destabilising as a consequence. I’m thinking here of how John McHale (and other committe members) could be able to freely debate in this forum and/or others, whilst the IFAC speaks clearly and regularly elsewhere.

In terms of public debate the up-front glossary is welcome, but perhaps could be split or annotated as factual versus conceptual propositions.

From the Introduction:

“Core elements of the Council’s mandate are to provide an assessment of the appropriateness of the fiscal stance set out by the Government in the Budget and the Stability Programme Update (SPU) and to provide an assessment of the economic and budgetary projections.”

It’s a shame, and perhaps could be looked at, as to whether the IFAC could comment on whether what is required of by the government in the budget and Stability Programme Update makes sense at all. In other words, to comment on not just the narrative but the meta-narrative.

Overall I get the following.

As per grumpy’s post a while back, short term forecasts are rather accurate, but as we go farther in the future, growth projections in a downturn tend to be excessive (not optimistic, just wrong on the upside).

Whilst for now growth figures for Ireland are rather pleasant, the gloom over the world and Ireland’s heavy reliance on exports means that this growth can’t be relied upon.

This is important because the key figure for budgetry adjustment isn’t an absolute number – though it will translate into one, eg cut rent allowance – but a percentage one. The problem for Ireland for a percentage adjustment is that it would be theoretically possible ultimately to get to a balanced budget by having a GDP of zero – Ireland takes in nothing and spends nothing: budget balanced.

I’ve noted from comments in previous threads that poor old Greece has had to ‘do more’, because GDP has turned out ‘worse than expected’. Worse than expected by whom? The IMF/EU/ECB: not the many who said, that of course Greece’s GDP will collapse if they implement the plan.

This is the problem I find in this report. There is no accountibity for the organisations that have laid out the programme for the consequences of said programme. The IFAC is a way of showing publicly who has got forecasts right and wrong, but there is no, AFIAK feedback loop of consequences.

Put another way, if the Troika says ‘do this and this will happen’, when when the state does that, and it doesn’t happen, why should the state pay out for the difference in the outcome?

To get off my high horse for a moment. In theatre, every play we do has a prediction of how many tickets we might sell for it and at what price. If we don’t hit that target it has consequences and it will effect our future viability productions and there’ll be a very serious investagation as to why we were off.

I find it frustrating that economic forecasts can be well off from very powerful bodies, and yet the consequences are not felt by them.

In the document, I also find it a bit frustrating that ‘what is good for the economy’ is tangled with ‘market creditworthiness’.The issue of ‘market creditworthiness’ is speculative. Stick to what is good for the economy.

Sorry, finally, on a bit of a rant. This from the ECB July 2010:

“23 July 2010 – ECB welcomes the publication of the EU-wide stress-testing exercise

“The European Central Bank (ECB) welcomes the publication of the results of the EU-wide stress-testing exercise, which was prepared and conducted by the Committee of European Banking Supervisors (CEBS) and national supervisory authorities, in close cooperation with the ECB. The stress-testing exercise is comprehensive and rigorous. It confirms the resilience of EU and euro area banking systems to major economic and financial shocks. The exercise, therefore, represents an important step forward in supporting the stability of the EU and euro area banking sectors.”

This – the second set of comprehensive tests – was rubbish and was pointed out to be rubbish on this site at the time. The fact that it was rubbish has caused untold damage to confidence in the ECB and Euro Financial Institutions.

Consequences? Consequences?

As the chair of the

@Eoin Bond

I think you are wrong in relation to (1).
Many of the known developer/debtors have performing assets which could be sold to pay off loans incurred with the banks. The VB article in the times demonstrated this.

Likewise assets have been hives off to china and such places which could be repatriated if the will existed. It seems it does not exist in NAMA in contrast to the administrators of a certain insurance company as demonstrated by the news reports recently.

Whoops, posted by accident.


As the chair of the Irish Fiscal Advisory Council, John McHale, is one of the founders and main contributors to this site, I think this thread would be well worth some serious thought and contribution from contributors much more knowledgable in this area than I. Whew.


@ Alchemist and Mr Bond

“is there any way to recoup a significant portion of that 14bn in resi’s?”

Isn’t the point that people freed of negative equity will be much more active and spend a lot more of their money in the local economy. Don’t know how to quantify this.

@ CP

the VB article in the Time (assuming its the one im thinking of) was based purely on the comments from Harry Crosbie on the Late Late. As previously discussed on another thread, you’d have to be nuts to read them literally (that NAMA would not chase any proceeds of an asset sold above the original transfer price).

Also, you got any examples of assets being hived off to China? I know of cases where some assets have been transferred into wives names, and NAMA has already and is continuing to seek those transfers to be reversed. Where NAMA can legally get their hands on performing assets, i fully expect them to. I think what may be in question is whether NAMA will seek to enact bankruptcy or receivership proceedings on all developers if they cooperate and manage to add value to existing assets, especially if the developers remaing assets are relatively small compared to the outstanding debt.

As i said before, Liam Carroll aint ever, no matter whether God himself was the prosecuting party, gonna be able to pay back the vast majority of his c.2bn+ in debts. You could liquidate it all down to the ground and there’ll still be a lot left over – surely that remaining debt write-off would not constitute a bailout or a debt-forgiveness, and would infact simply reflect reality?

Destroying the elements of life that is productive so that the real world can fit into the financial sectors construct is deeply flawed to say the least.

One must ask what exactly are they saving when they reduce the goverment defecit ?
They are forcing people to save in the financial sectors credit instruments again , even if it kills them – which forces the survivors into private debt if they are unlucky enough to survive the initial nuclear blast.
The malinvestments have already happened – you cannot get back that malinvestment by reducing the production of money !!! – this will further destroy the real economy – feeding into each other in a negative feedback loop.
Much of the above anylasis comes from a false understanding of money – I hope !!

@ Mr Bond

Just for the sake of accuracy, it was with Brendan O’Connor on The Saturday Night Show.

Don’t you think it odd though, that Harry Crosbie could believe this?


“As i said before, Liam Carroll aint ever, no matter whether God himself was the prosecuting party, gonna be able to pay back the vast majority of his c.2bn+ in debts.”

Fair enough, so then he goes bankrupt?

@ Gavin

i don’t have a particular issue about whether NAMA bankrupts him or not. I want them to be pracitical and not ideological. If bankrupting him gets the State, via NAMA, the most money, then fine. If not bankrupting him, in return for co-opting him into finishing off and adding value to existing projects is what generates the best return, then they should go down that route. Can someone suggest another reason that NAMA would willingly write-off outstanding debts, other than because it thought it was in the overall best interests of the assets its managing or because it didn’t think it was worth the effort? Does it think its Santa Claus? Is NAMA the ghost off FF past? Seriously, if you think its some sort of corrupt entity, please nail your colours to the mast and explain how this could be so.

Re Crosbie – i think he’s a tad eccentric and has always had a large ego (i speak from previous family experience). He probably thinks he knows best and is shouting his mouth off cos he can. I think he either misspoke or has it wrong in terms of the literal meaning of what he said – “NAMA will only get back what it paid for a loan”. This implies that if a loan transferred in for 60m, but the property sells for 70m, then Crosbie gets to keep the 10m. Sorry folks, but thats boll*x.

“The IMF study does find, however, that expenditure-based adjustments are less contractionary. One important caveat introduced in the IMF study is that much of the superiority of expenditure-based adjustment is explained by the response of the Central Bank to the fiscal adjustment. Possibly believing that revenue-based adjustments are more sustainable, central banks are more likely to offset any direct contractionary effects with lower interest rates. Once the response of the Central Bank is controlled for, a large part of the difference between the two types of adjustment disappears.”

That caveat would appear, under current circumstances, to be rather relevant since the CB is somewhat constrained in its opportunities to reduce interest rates.

@Bond Eoin Bond
“You could liquidate it all down to the ground and there’ll still be a lot left over – surely that remaining debt write-off would not constitute a bailout or a debt-forgiveness, and would infact simply reflect reality?”

You have answered your own question…of course any subsequent debt write off would constitute debt-forgiveness.

I was thinking in terms of NAMA’s landlord.

The ironic thing about this ‘independent council’, and I spare myself remarks on the appointment of the members and in particular the chair, is the fact that it is paid by the people of Ireland.

“You could liquidate it all down to the ground and there’ll still be a lot left over – surely that remaining debt write-off would not constitute a bailout or a debt-forgiveness, and would infact simply reflect reality?”
While it would not be a bailout, it would, as ceterisparibus points out, be debt forgiveness. Until it has been liquidated down to the ground, though, it is a bailout. A personal guarantee doesn’t just mean “the bits I am prepared to give or the bits you can find”.


‘Can someone suggest another reason that NAMA would willingly write-off outstanding debts, other than because it thought it was in the overall best interests of the assets its managing or because it didn’t think it was worth the effort ?’

Gotta hand it to you for sheer chutzpah, Bond.

Some of the senior folk involved in NAMA will have to make discretionary personal decsions about exactly the sorts of issues you mention. And some of them will have interests and ambitions beyond their current employment. As you can see from Carswell’s Anglo Republic, cooking the books is is almost a national sport. It’s not a case of ‘Is it worth it ?’, it’s more a case of ‘worth it to whom ?’ And that often depends on how the case, or the asset, is presented. Shuffling the deck is the name of the game.

It’s common, for example, for senior public servants to be head hunted by interested private sector entitities. Retired public servants are sometimes hired in consultancy capacities, and off the record soundings are conducted all the time. Subverting the state kinda happens by accident, but hey what the hell.

As I understand it, many of the persons involved with NAMA will be hired on a part-time or contract basis, even I suspect, from firms which were at least indiredctly implicated in the bubble and bust.

It is diffficult to believe that conflicts of interest will simply evaporate, or that our pervasisve networks of information sharing will not persist. The secrecy which surrounds the whole NAMA exercise provides the perfect cover for private wealth extraction.

We had a total failure to hold anyone accoountable for the banking collapse. We have no legislation preventing public servants from carrying their insider knowledge into a private sector sinecure. If we have chosen, as we have, to carry on in the same old ‘don’t ask, just trust me’ way, why would one expect NAMA assets to be handled at all times in the interest of the taxpayer ?

@Paul Quigley
“It is diffficult to believe that conflicts of interest will simply evaporate, or that our pervasisve networks of information sharing will not persist. The secrecy which surrounds the whole NAMA exercise provides the perfect cover for private wealth extraction.”

Indeed. If Enda is serious he will honor his commitment to transparency and subject NAMA to FOI. Otherwise, this organization will always be suspect. The power concentrated in a few hands is a receipe for corruption particularly when they are required to extract money from some of the most devious in the country.

Back on the main topic of the Irish Fiscal Advisory Council.

I half heard the headlines on Newstalk which said something to the effect that the IFAC recommended a budgetary adjustment of €4bn this year, and I note on the RTE website: “€4bn budget adjustment needed – Fiscal Council””. I assume there must be some sort of press release behind this summary. If this is what IFAC wished to communicate for its key take-away point from a substantial report then fair enough, if not, then IFAC needs to make sure that its role to “comment publicly” is not already being manipulated.

Just for the record, once again, I do not agree the the government should go for anything other than the €3.6bn.

The arguments, as far as I can see, for cutting more rapidly are:

(1) To reduce the final total GGD
(2) To improve the government’s creditworthiness
(3) To hit the % targets as laid out in the MOU.

To this I say:

(1) Thankfully the GGD and the interest thereon, looks to be substantially lower than predicted even three to six months ago. If anything, if things work out, this could go lower again.

(2) The government’s creditworthiness is only partly dependent on the country’s decisions. Within the confines of the MOU, growth is more imortant than proving points. The markets want austerity and growth simultaneously. On balance, give them growth as far as possible. ‘Ireland is growing’ (sorry BW Snr) is a better headline than ‘Austerity destroys green shoots’.

(3) I note in the RTE report: “In its first report, the council says lower than expected growth means the Government needs another €400m of cuts or tax rises to stay on track next year.” Lower than expected growth by whom, by whom? Not by the people who said national and international austerity would damage growth. If the % target is missed even though the government makes the agreed adjustment somehow this needs to go back to the troika as their problem. Otherwise, and I put this back to the IFAC, if we’re back here in a year and hey, the €4bn wasn’t enough, and growth was more dissapointing than we thought, and now we have to do more again, how will you take responsibility for this? The state has been frontloading for 3 years – will the state be doing again next year?

@ Mr Bond and paul quigley

“I want them to be pracitical and not ideological”

Yes, and if the government agrees with the Keane report where it says says that people who can pay their mortgages must pay, then I agree that people and companies who have loans in NAMA who can pay must pay. I still find it odd that Harry Crosbie – who by all accounts is a very nice man – could think otherwise. I hope he’s being set straight.

If you watch the VB show, Mick Wallace (also a very nice man), make some interesting remarks about the kind of people he has met in NAMA which would fit with paul quigley’s remarks, and Brendan Howlin pretty much says he doesn’t know what is going on in there. The government is intending to make NAMA subject to FOI requests and maybe that will help.

@ Paul Quigley

Fair enough, you gave an honest answer. You think NAMA will end up writing off billions of taxpayers money in return for some corrupt backhander or later reward. You claim that NAMA will end up being inherently corrupt at certain levels. That’s a hell of a claim.

It’s not a hell of a claim, it is, as Harry Crosbie said, the only way it can work. Just because you think he’s a nutter doesn’t mean he’s wrong.

This is an astonishing article. They talked to….ntma, esri and the Dept of finance.
Wow….lots of rich complex and nuanced differences of opinions there…
No Karl Whelan, no Gurdgiv, no Morgan kelly, no Lucy, no Ronan Lyons, no chance whatsoever that the party line would by disturbed.

Eoin, people share incentives somewhere along the line, off the pitch. Get to know each other a bit better. Things can happen in the dark.

In Ireland, things do happen in the dark.

Disinfectant, sunshine etc…

After a quick read through, this paper is well worth a reread in more detail. Professionally produced, with good analysis (and it took some effort to produce). A political response, one way or another, will be forthcoming soon.
On the website, it is interesting to note the links on “Websites of other Fiscal Councils”. They are fairly thin on the ground. The German “wise men” report tomorrow (Thursday) I believe.

I now believe that this debate should viewed viewed in the light of the reports on both news programs on RTE tonight which documented the draconian cutbacks being implemented by State officials.

It was particularly harrowing to watch a carer describe how she has to account to HSE officials for incontinence pads for her mother who is in an advanced stage of dementia by measuring her intake and expulsion of fluids.

How can it be the a civil servant of the State would subject another citizen to such degradation.

Contrast this treatment with the treatment of NAMA developers and their allowances.

We have reached a sorry place when the State allows such a deprivation of human dignity.


Carers generally cannot go on strike or demonstrate much. Why else do you think they were pushed to the front of the adjustment queue by, lets face facts, just about everyone else?

Anyone writing a paper on the moral aspects of of intra Euro devaluation in the real world?

@ J Mc H

The IMF argue against increasing austerity beyond the current programme (according to Noonan). This article is a good overview of the IMF’s general position. I think the case made by the Fiscal Advisory Council report to justify further austerity measures is quite weak as discussed below.

In its past projections, the Department of Finance has found that a multiplier of around 0.5 has worked reasonably well, which is broadly consistent with the international evidence given current conditions.

The most salient factor about previous DoF projections is that thay have all been wrong. Every single annual projection for growth, GGD etc, made by the DoF since the crisis began that can be verified at this time (through 2010) has been wrong. They have all been overly optimistic. This should be a signal that their multiplier is highly suspect.

Now look at what the IMF say – while it is true that in very rough terms a multiplier of about 0.5 has been observed (the article referenced above puts it higher at 0.6) there are a number of important characteristics of Ireland’s situation that all increase this multiplier. In particular (the first three are explicitly discussed by the IMF as part of their general analysis)

(1) there is no cushioning effect of a currency devaluation. In practice Ireland has a fixed exchange rate w.r.t. to the EU, and one impervious to domestic policy for UK, USA etc.
(2) the central bank cannot/will not reduce interest rates to drive domestic growth
(3) GDP contraction is worse when every country is consolidating (and banks/households are all deleveraging) at the same time
(4) the Irish export sector is more of an enclave than an indigenous part of the economy

Even for a country without these characteristics the IMF estimate that the multiplier for domestic elements of GDP is greater than 1 (with net exports bringing it back down), so add in the first three factors, and then adjusting for the somewhat unusual nature of Ireland’s export sector and the GDP/GNP gap, then the multiplier will be significantly more than 0.5.

So to eventually get to my question (!) – If the multiplier assumed was 1.0, or greater, would you still recommend an additional 10% austerity?

More generally I think that the model used needs to take a number of factors into account that are not currently being taken into account. Some recognition of the fact that the government does not control growth, and that the level of austerity measures should be a function of actual growth (in Ireland, EU and global) should be reflected in the model used. The more growth there is in the EU, for example, the more austerity Ireland signs up to (making a linkage with surplus countries stimulating demand for example – imbalances by definition are not all one way). The adoption of overly simplistic models by the EU authorities is one of the direct causes of the EU’s loss of credibility (since in July the EC stated in writing that Greece was solvent). Rather than just adopting the current EU model and extending it by 10%, I’d like to see something that took more real-world characteristics into account. I think the feedback model is a good start (though I don’t claim to understand it fully yet), however it needs to go much further than that to include the realities of Ireland’s situation (e.g. member of currency union), and one based on historical evidence (not on DoF past practice). The IMF also recommend that austerity measures be considered within the context of growth levels:

Accordingly, fiscal measures that are approved now but kick in to reduce deficits only in the future—when the recovery is more robust—would be particularly helpful.

Beyond the linkage with external growth are other aspects such as the linkage with long-term unemployment, also identified by the IMF. More and explicit linkages with alleviating this huge problem need to be made e.g. when austerity measures exceed a certain level there should be explicit support from EU funds to tackle long-term unemployment. The Germans have recently managed to use some EU funds for their own auto workers due to the global slowdown – where is Ireland’s equivalent?

The CBI forecasts, which the IFAC has relied on, don’t make much sense.

To take an example, in 2012 consumption, investment and government spending are all forecast by the CBI to fall, yet real GNP rises. Likewise the SPU forecasts reasonably strong real GNP growth, up 0.2% despite zero consumption growth in 2012 and declining govt expenditure. Investment is projected to rise, by 1%. But since that accounts now for less than 15% of GNP, it cannot by itself produce 2% real GNP growth.

For the record, plenty of coverage for this in the ‘Irish Times’ for this today. EG ‘Intensifying of austerity measures advised’, with photo of John McHale.

The caption of the photo rather vaguely says the publication was launched “in Dublin”. Perhaps in the interest of communications, this could be an event open to the actual public to attend?

@ Bryan G

“e.g. when austerity measures exceed a certain level there should be explicit support from EU funds to tackle long-term unemployment. The Germans have recently managed to use some EU funds for their own auto workers due to the global slowdown – where is Ireland’s equivalent?”

Don’t know, but just to remind ourselves that the 21st July, ‘Statement by Heads of State’, etc, included:

“We will implement the recommendations adopted in June for reforms that will enhance our growth. We invite the Commission and the EIB to enhance the synergies between loan programmes and EU funds in all countries under EU/IMF assistance. We support all efforts to improve their capacity to absorb EU funds in order to stimulate growth and employment, including through a temporary increase in co-financing rates.”



It seems the current Irish government is simply replaying the old record of the previous government, Whenever unpopular measures are required, cite some expert group or review group or other. This confers the magical status of ‘objective’ rationality on the experts’ views. Talk about cementing in counter-radical thinking.

Yes. The protected sector demonstrating a complete lack of regard for disadvantaged citizens.
In the case cited it is obvious that a State employee, be it the HSE or otherwise, consciously choose to subject a fellow citizen to degrading and inhuman treatment for very little potential saving.
Meanwhile, Enda is over with Barrosso lauding the austerity he is imposing while Barrosso continues to blow smoke up Enda’s a**e.
I might mention in passing that other than yourself nobody on here seems remotely interested. Perhaps the only forum the person affected might get some recognition is on Joe Duffy.

@ Bryain G

‘The IMF also recommend that austerity measures be considered within the context of growth levels:

Accordingly, fiscal measures that are approved now but kick in to reduce deficits only in the future—when the recovery is more robust—would be particularly helpful.

GDP in Ireland is a bag of snakes, but Edward Harrison thinks that, even in places like the US, GDP is the wrong measure for assessing the potential for austerity efforts.


@Paul Quigley
Thanks. From the link I noted “human affairs are not about dollars and cents”

All that bond buying by the ECB seems to be for nought with rates back at 5.81% and Bunga himself calling a confidence vote.

It seems you can either make the equity markets happy or the bond markets happy. You cannot do both. Central Bankers need to decide if they want to make (bank) shareholders happy or keep countries from going bust.


“All that bond buying by the ECB seems to be for nought with rates back at 5.81% and Bunga himself calling a confidence vote.”

I thought that was just the MO of ‘the markets’ now that they’ve discovered public institutions/governments think the only answer to an issue is to throw money at it: find a weak area, cause a big problem, get money thrown at you, trouser it, go off and find another weak area, retire rich!

@PR Guy/Hogan

Our esteemed leader has raised the white flag and surrendered what little sovereignty we have left. No bondholder left behind.

“Taoiseach Enda Kenny said today he was opposed to bondholder writedowns for for countries other than Greece.” …I Times.

And the carers be damned.

One more crack at this.

From the report:

“Uncertainty about the future of the economy and fiscal burdens can lead to high levels of precautionary saving. This points to the need to provide as much certainty as possible in regard to the details of the planned adjustments.”

And the suggestion is to shift to an adjustment of e4.4bn this year rather than e3.6 followed by a similar shift next year.

This morning I read in the Irish Times:

“Rift in Coalition over cutbacks”

With “Minister for Energy Pat Rabbitte maintaining that the adjustment should not be more than €3.6 billion.”

Whilst the OECD weighs in with:

“OECD expected to recommend cuts in social welfare”

“The OECD will release its report on the Irish economy this afternoon and it is expected to urge the Government to reduce the budget deficit more quickly than laid out under the terms of the EU/IMF bailout deal.”

So yet again, as in 2008 and 2010, an initial figure is laid out, a case is made for ‘front-loading’ so as to provide certainty in the future and yet when we get to the future, the cycle repeats itself and there is no certainty.

Yet again, the public have been planning for one figure as part of the beginning of a three year cycle, and yet hey presto, find themselves at the start of another three year cycle.

As I work in a world that does a lot of its business in the autumn, through to Christmas (Absolut Fringe, Ulster Bank Theatre Festival, etc.), – including a big chunk of free to work to get people out and about on Culture Night – I can say first hand that whilst we in the theatre are frankly doing a top job at providing excellent new Irish and international work at highly competetive prices, the fact that every year for four years now the wrangling that begins in August and isn’t resolved until December simply encourages the public to shut down discretionary spend and hole up until Christmas. I would imagine the The Alchemist and his butchers are feeling this too: though I’m glad to report the butchers in the Cabra/Phibsboro area are still banging away.

If the IFAC – who after all are having a first pop at this – could explain that this time is different, and this time the figures will stay the same, I might listen. But I don’t think they can – the situation is too uncertain. In effect, all I really know is that the cuts will be at least what were planned and probably bigger. Same or worse. And the evidence of the last four budgetry processes, in spite of all good intentions, is that the chances are the same thing will happen next year.

It remains the case, and I exclude IFAC here, that institutions from the IMF to the OECD to the ECB to the ESRI, can airily weigh in with their opinions as to what should be done this year without beginning with: “In spite of the fact that our forecasts were off the mark last time we think…”



Still going!

As the IFAC is the body charged with giving budgetry advice to the governemnt, maybe it could flex a few muscles and tell some other bodies to get off its turf. I note in this context the commitment to keep an overview of other bodies’ figures, maybe over time this would be of some use.

IFAC may think this year that all ducks are lining up in a row, or indeed that the hymn sheet is being passed round, but there are years where this won’t be the case.

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