Categories Uncategorized IMF on Ireland; IMF on euro area Post author By Philip Lane Post date July 18, 2012 12 Comments on IMF on Ireland; IMF on euro area The IMF’s concluding statement on its recent mission to Ireland is here. The staff report for its recent euro area mission is here, while the ‘selected issues’ paper is here. Related ← Macroeconomics Job(s) at ESRI → Fiscal Responsibility Bill 12 replies on “IMF on Ireland; IMF on euro area” @IMF Hi! Off topic but the Fiscal Responsibility Bill has been published http://finance.gov.ie/documents/pressreleases/2012/mn109append.pdf Seems the Fiscal Council is relegated to giving a thumbs up or down to the annual budget, and providing a “for what it’s worth” commentary on official forecasts. Seriously. It’s too awfully polite for my liking and is an endorsement of the slow-motion crew, with fingers crossed that something will turn up. A strategic approach focused on the efficiency and fairness of measures, that keeps all high-quality expenditure and revenue options on the table, is needed to complete the consolidation in a durable manner. The Croke Park Agreement has facilitated personnel reductions and efficiency savings, and has helped maintain the industrial peace needed to achieve broader reform goals. Essentially the IMF are saying cut social welfare and tax the hell out of us… “The planned introduction of a value-based property tax in 2013 will provide a progressive and stable source of revenue. A suitably high level for this tax would maximize these benefits, while care is needed regarding collection modalities and lead times.” What’s a suitably high level? They seem to like Croke park. As the Irish times notes the European Commission has turned ultra-Austrian and is at loggerheads with the IMF’s new report and, some might say, with reason, recent history and reality itself. http://www.irishtimes.com/newspaper/breaking/2012/0718/breaking38.html In an assessment that essentially put it The European Commission at odds with the IMF, the report notes while economic growth across the EU was a concern and posed a challenge, plans for consolidation based on spending cuts would be more durable “The need to restore the credibility in the public finances and the danger posed by large deficits and debts are obvious and even more so now that growth prospects are looking weak again,” the report said. Europe is just one big crazy cocktail of Zombie Economics. Sweet Reason how did this happen? How do you solve a debt crisis when you want to……. “Revive Sound Lending” Translation Revive Sound debt production Mortgage production was “sound” until it was not……input cost increased as the waste /debt increased – it was no longer sound. All Bank Credit production is a expression of waste. Don’t we have a leverage crisis or what ? I see the British goverment now guarrenting Bank Loans with Fiat !!!!! This is extremely Orwellian to say the least. Whats so complicated about issuing debt free Fiat and then taxing it ,spending it. ? Anybody who takes these Mens views seriously needs their head examined Nothing but Debt Merchants , hit men for the banks They started by stripping the UK of its boffin culture in the 60s to save a metaphysical concept and increased the tempo of waste ever since. Please please no more bank credit in the so called real economy. We can’t afford its tremendous wastage of physical resourses and its socialisation when the waste becomes manifest. Its bad enough having free 19th century like banks destroying centuries of wealth withen a few decades but free banks with monopoly control of Goverment Fiat is something to behold. These men are a Pox. Speaking at the press conference, deputy director of the IMF’s European department Ajai Chopra described the euro group summit statement of June 29, which committed to a reduction of Ireland’s debt burden, as “a welcome path forward”. http://www.irishtimes.com/newspaper/breaking/2012/0718/breaking55.html @David “which committed to a reduction of Ireland’s debt burden, as “a welcome path forward”. Is the IT overstating the position? @David This is what the IMF say in their press release… ” Against that backdrop, euro area leaders have recently made welcome commitments to break the vicious circle between banks and sovereigns by enabling the ESM to recapitalize banks directly, to treat similar cases equally, and to examine the situation of the Irish financial sector with the view of further improving the sustainability of the well-performing adjustment program. These commitments represent key stepping stones towards the mutually beneficial goals of ensuring Ireland’s economic recovery and its durable return to the bond market, thereby avoiding continuing dependence on official financing.” With a view to further improving the sustainability….. Is a long way from debt reduction. Thee are many howler in these documents, not least the tag that private sector agents are acting myopically if they cut spending or investment when government cuts its spending- don’t they understand that interest rates will be lower as a result? Except that interest rates have risen in the Euro Area when ‘austerity’ has been applied. But this notion deserves a special mention of its own: “Government investment shrinks potential output,” ‘selected issues’, p.41. Clearly, what is needed is to close the roads, the rail, and the schools, rip up the telecoms connectivity and mine Dublin harbour to prevent cargo vessels so that potential output will surge, creating an investment boom and eliminating the structural deficit at a stroke. This is a key component of the IMF model. @All Given the length of time the IMF discusses the Euro as a currency area like the US, worth reading Karl W’s latest: http://www.forbes.com/sites/karlwhelan/2012/07/19/are-ireland-and-spain-just-europes-nevada-and-california/ http://www.voxeu.org/article/tradable-sectors-eurozone-periphery “Tradable sectors in Eurozone periphery countries did not underperform in the 2000s Some view uncompetitiveness in the Eurozone’s periphery as the fundamental cause of the region’s crisis. This column presents evidence that rising unit labour costs in the periphery were not a cause but rather a symptom of the local demand shocks triggered by large capital inflows in the 2000s.” Comments are closed.