Budget 2013 Post author By Philip Lane Post date December 5, 2012 files here. Categories In Uncategorized 148 Comments on Budget 2013 ← Misrepresenting ‘at-risk-of-poverty’ statistics → Value-added exchange rates 148 replies on “Budget 2013” I see that ELG is being allowed to expire. A give-away to the banks of at least €591 million. Everybody else to pay for it. ref Page C14. [Current non tax revenue white paper 2259 , now 2360. I take it that ELG is as per white paper.] @Joseph Ryan — We own the covered banks (except not all of BoI) so it is effectively a giveaway from the taxpayer to the taxpayer, except for BoI. For the private shareholders at BoI it is a thank-you gift for being courageous/foolish enough to buy into an Irish bank. Ponzi Austerity A mirror image of the credit hyperinflation. The country will just not deal with the real problem. Its using a Hard but brittle currency that only functions by eating capital, both human & mechanical. Ireland badly needs a Greenback party. Sinn Fein is more of the same – seize wealth from somebody .anybody to pay the interest on the ultimate expression of the commons. The money supply. @ Dork “Ponzi Austerity.” +1 @Paul W I think Yanis Varoufakis coined the phrase although I do not agree with much of his analysis. Anyhow he is right on that point. There is obviously a deep political rather then economic reason for this carnage as it makes no economic sense. Much like what happened in the mid 1980s deflation so that we could join the post single European act stage of debt slavery. Those very sick people who truly run this society want to push us into the jaws of this demonic construct. The Banks will eventually have formal control over European rather then nation state fiat and then God knows what destruction they have planned for us. Everybody should fear the European construct. It will restart the final decent of man. A dark age of entropy. Seamus Coffey gives a good analysis of the budgetary fudging and wishful thinking: http://www.independent.ie/national-news/budget/analysis-overview/seamus-coffey-its-clear-the-government-has-no-overall-vision-for-where-it-wants-to-take-the-country-3317137.html The point too though is that the deficit is still running at an incredible €19bnpa type level (unadjusted) as we have recently seen in the DoF’s medium term plan. That together with the continuing decimation of the domestic economy /demand and capital expenditure, increasing unemployment /emigration, etc., with no addressing of current expenditure or the bloated public sector (relative to the size of the domestic economy). No PN or overall bank debt deal either. The downward spiral continues…guided (administered) by our esteemed ‘experts’ and politicians. So Bailout II programme is well on track, with a new Ponzi Austerity scheme to be attached. Can’t wait to see what the Fiscal Council and individuals such as John McHale have to say as we ‘move forward’ into the abyss. I can’t wait to see their updated ‘professional analysis’. Guess which one got an 19% austerity coefficient applied and which one escaped austerity altogether: a) TDs salaries b) Carers’ respite grant Its a difficult one, if you haven’t cheated and already read the budget measures, so take your time trying to work it out. Meanwhile … back in Der Bundestag http://www.spiegel.de/fotostrecke/photo-gallery-the-changing-faces-of-angela-merkel-fotostrecke-90530.html Angela likes it … http://www.spiegel.de/fotostrecke/photo-gallery-the-changing-faces-of-angela-merkel-fotostrecke-90530-3.html Cartoon of the day has been … (like the PNs) … postponed. The Romans had a saying, “mundus vult decipi ergo decipiatur: the world wants to be deceived, therefore let it be deceived. Noonan and Howlin’s approach is similar. The Irish people want to be deceived let them be deceived and to that effect they marshall thousand of public servants to create false impressions of recovery, spin yarns about growth sometime, somewhere in the future. Gurdgiev’s take on it… startling rises on the interest being paid on our government debt. http://trueeconomics.blogspot.ie/ ‘Ready? Here goes: Between 2007 and 2010, the median net worth of [U.S.] households fell by 47 percent, reaching its lowest level in more than forty years, adjusted for inflation. In other words, middle class wealth virtually evaporated in this country. A good chunk of the population got sucked through a financial wormhole back to the sixties. http://www.theatlantic.com/business/archive/2012/12/the-recessions-toll-how-middle-class-wealth-collapsed-to-a-40-year-low/265743/ Whither Ireland? The VRT tax would make some sense in a functioning economy that did not experience a credit boom but it is not functioning. We have a huge stock of private cars after the biggest credit inflation per capita in the world We must also realize that the car manufacturers are gaming the co2 thingy now. Motor tax is a no no…… In a national economy with a absurd 1.887 million private cars the goal should be to get it down to the 1990 level of 800,000 ~ as the best way to not burn oil is to not drive a car. According to SEAI stats private car oil consumption was 926 KTOe in 1990 and 1990 was a private car boom year (3 years into the credit EMU hyperinflation) with Mercs and Volvos all over Glandore that summer. But we do not live in a national economy so we must continue to waste resources to pay sov interest as that is how the system works…. It feeds off of waste PS home heating oil burn was only 389 KToe that year………….. The 1970s car boom was a disaster for the country. The post 1987 car boom was a disaster for the real wealth of the country with our capital going up in smoke. We will never learn. Our political masters like working us as conduits for external capital as that is why they get payed the big bobs. Is this meant to remind us of who those privileged to work in the Irish SME sector (me) are really trying to keep happy today? A potential strong-performing SME sector to aspire to is the German Mittelstand – the German SME sector which is said to form the backbone of the German economy and is widely credited with ensuring its resilience. Somewhat ironic quote from today’s publication on Revnue.ie? http://budget.gov.ie/budgets/2013/2013.aspx I know I am working to keep the GERMAN economy happy, but do I need a reminder? Regressive and further pain for the lower echelons and disability and carers http://www.irishtimes.com/newspaper/breaking/2012/1205/breaking47.html I would have preferred a ‘site value’ property tax I would like to have heard a statement of intent to postpone payment on those odious promissory notes until such time as agreement can be reached between Ireland, her EU partners and the IMF on Ireland’s debt sustainability. @The Lorax Yes, you do. We all do. We are simply a cash cow for the EU financial system .. to be milked dry. Very soft budget for most. Yes, lower earners were kicked rather savagely, but not to worry; all the others who got off lightly are screeching loudly enough for everyone. @David Its part of a much deeper project………. They wish to sustain this absurd currency union so that the guys on top can continue to earn a wage arbitrage from their eastern plantations , if they have to destroy workers in the plantations house then so be it. The Euro is a gigantic capital export machine on a scale few people can imagine. Its a Euro Soviet………….dummies. http://www.youtube.com/watch?v=a6RM8v76hlg&list=UUjb8LRickrsucqwdGPRRm_g&index=1 Many of the more naive Euro liberals only now are understanding that they were working for a Soviet system of control. Noonan could always try a short sell on Deutsche Bank tonight. Mini budget by June – I betya – the figures done add up here June Minister comes up with amazing groundbreaking idea…….. We shall print the punt and then tax it – “I have a 2 year old working on the plan right now……” He is positive he can make the books balance if all our debt becomes Punts again……….. Who knows in a free floating world without final settlement we might get to eat all of the remaining ice cream. the UK is looking at austerity until at least 2018- why would Ireland be any different ? @All In relation to the property tax can we please stop pretending that this is anything other than another regressive income tax dressed up as a property tax. Its a complete lie to suggest that this tax ‘widens the tax base’ as it does nothing of the sort. A widening of the tax base means taxing an economic activity that is currently not being tax. Owning a house is not an economic activity. The basic test fails because with any tax there is a flow of cash from one party to another be it the payment of deposit interest, payment of wages for the provision of workers’ labour etc etc on which cash is taxed in the hands of the final receipient. That’s the way taxes normally work. We constanatly hear this nonsense about the need to move away from ‘transaction taxes’ to a more stable tax flow. The reality is all economic activity happens by way of transactions so this is simply spin for the masses to believe a past transaction as in the case of the purchase of a house is still ongoing and in some economic form always on. Wrong. The transaction in a housing transfer happens once and thereafter no economic activity happens because ownership is not an activity. There is no logic to this tax because thousands will claim relief for precisely the reasons I suggest namely past earnings have been used to purchase the property but current earnings are insufficent to pay becuase there is no economic activity taking place on which a charge can be correctly levied, there is no disputing this argument. Whilst this tax may indeed force people to perhaps sell houses which they can no longer afford the missing link here is that many thousands will not be allowed to so do as the banks will deny thousands in negative equity the ability to move so thousands of folks will be forced to pay a tax on a property the state (insofar as its mortgaged with a covered bank) refuses them to sell so we’ll end up with the following bizzare situation: a tax based on a arbitary valuation with thousands unable to afford to pay it, unable to move to avoid paying it and unable to support the loan on the property generating the charge in the first instance. Almost on every level this is a really stupid form of taxation and suggestions that every other country does it so why not us is a lame argument because not many countries in the world had people paying 9% stamp duty on inflated land prices during the craziest housing bubble ever sceen in a developed economy with really dire services to show for it. In this regards we are indeed ‘special’. @ Yields I agree 100% but would like you to comment on that other old canard that we are one of the only countries in Europe not to have a property tax. Not that I care. I will be up there with Sean Quinn playing cards in Mountjoy rather than pay this tax which as far as I am concerned is totally unjust. @seafoid If they stop the flow for another 6 years the modern world will cease to exist. & Yields Well said , but rationality is obviously not the point now. The fat controller is eating all the pies. March 2010………. “The euro becomes ironic: too hard within Europe itself but always second fiddle to the dollar for the Middle Eastern energy producers will always prefer the dollar as it represents ‘security’” “The alternative is deflation and what is portended by the nonsense taking place in Athens and Berlin is the European embrace of a Greater Depression; of the pursuit of money value that can only be had at the expense of commerce” http://www.economic-undertow.com/2010/03/18/the-end-of-the-euro/ Dork – what the hell are we doing in the Euro ? We cannot import capital goods now ? What is the advantage of being in this vice ? We most probally won’t be able to import much capital goods outside the euro but we can at least restart the internal flow. Its a absurd situation. Default & default BIG 1. A €70m fuel tax rebate was announced for road hauliers If we have to subsidise business supply chains, would it not be better to subsidise the movement of data through broadband or even human capital through public transport? And if we have to offer a new subsidy for road freight, could we not choose an environmentally friendly way like cutting the tax on low emission trucks? 2. Road Haulage is already subsidised as the damage to our new motorway network caused by laden trucks is not reflected in commercial road tax rates. Trucks damage roads so badly that the damage from cars is negligible in comparison. 3. The road capital budget is now mostly maintenance. It is planned to be twice the level of public transport capital investment. The roads need maintenance due to the trucks so the bulk of the capital transport project is a subsidy to the haulage industry. 4. There was no move to switch commercial motor tax to an emissions based system (rates are still based on engine capacity) and therefore less motivation for emissions cuts in this sector. 5. VRT and Motor tax will rise so that the incentive to buy low emission vehicles is reduced. eg The rate of motor tax on a 111g/km car will rise by 25%. If your vehicle emits 226g/km then the rise will be just 4% VRT rises are similarly skewed to punish low pollution vehicles and reward high emitters. 6. The report includes a climate change section which warns * that Ireland will not achieve its binding emissions reductions according to the EPA. * that here will be a consequent financial cost * that something should we done such as a report with some analysis So, from an environmental point of view I thought the budget was disappointing as it reveals a belief system that reducing emissions does not matter, that public transport has little value and that truck freight and pollution ought to be encouraged through subsidy. Carbon tax is to be extended (over a two year period) to solid fuels – which is something. 1. A €70m fuel tax rebate was announced for road hauliers If we have to subsidise business supply chains, would it not be better to subsidise the movement of data through broadband or even human capital through public transport? And if we have to offer a new subsidy for road freight, could we not choose an environmentally friendly way like cutting the tax on low emission trucks? 2. Road Haulage is already subsidised as the damage to our new motorway network caused by laden trucks is not reflected in commercial road tax rates. Trucks damage roads so badly that the damage from cars is negligible in comparison. 3. The road capital budget is now mostly maintenance. It is planned to be twice the level of public transport capital investment. The roads need maintenance due to the trucks so the bulk of the capital transport project is a subsidy to the haulage industry. 4. There was no move to switch commercial motor tax to an emissions based system (rates are still based on engine capacity) and therefore less motivation for emissions cuts in this sector. 5. VRT and Motor tax will rise so that the incentive to buy low emission vehicles is reduced. eg The rate of motor tax on a 111g/km car will rise by 25%. If your vehicle emits 226g/km then the rise will be just 4% VRT rises are similarly skewed to punish low pollution vehicles and reward high emitters. 6. The report includes a climate change section which warns * that Ireland will not achieve its binding emissions reductions according to the EPA. * that here will be a consequent financial cost * that something should we done such as a report with some analysis So, from an environmental point of view I thought the budget was disappointing as it reveals a belief system that reducing emissions does not matter, that public transport has little value and that truck freight and pollution ought to be encouraged through subsidy. Carbon tax is to be extended (over a two year period) to solid fuels – which is something. @ YoB “Owning a house is not an economic activity.” Surely living in a house in an economic activity? I presume by your rationale that renting a house is a economic activity as there is “a flow of cash from one party to another”. By this logic we could pair up households living in similar houses in estates all over the country and get them to swap houses. If we then got each of them to pay the same rent to each other there would be huge increase in economic activity because of the increase in cash flow. Would a levy on this cash flow be allowed? Of course, there would be no increase in economic activity because we would have the same number of households living in (almost) the same houses (bar having to move a few yards). I presume you are familiar with the concept of imputed rent. According to the CSO imputed rent made up €10 billion of the €159 billion GDP for 2011. Should this be taken out of the GDP figure? @Ossian I don’t think you get it. We have simply too many private cars on the road. Just as we have too many houses & in the wrong areas. There was 559 + thousand diesel private cars on the road in dec 2011 ! For the first time we have over 1 million diesel vehicles……. ENOUGH. That is more then enough vehicles that are needed for long distance duty. From a holistic point of view private diesel cars are sucking the life force from stuff that can do work. If there was a 2005 era demand for keg beer I am sure rail beer freight would be back in business. All of the taxes should have been directed towards VRT to discourage the purchase of new private vehicles. We need to get our oil balance back to 1990 levels. With a sov currency this could be done………. But I fear its not possible with the Euro. It needs to express itself through waste in some fashion. @Seamus It is not a productive economic activity……….. Houses are consumption sinks……houses don’t do work ……they just are. Rent is well………….rent – its not work. The government should not care for houses. It only cares for houses because the banks care for house value (to maintain the fiction) The government should be in the business of creating a positive money supply and preventing capital / oil / interest outflow using various mechanisms as the credit hyperinflation has created a very leaky boat. How can the Labour party get away with hitting one of the most vulnerable and important segments of society..the carers. Surely this is an all time low for Gilmore and Co. BTW, We blew 64,000,000 on the banks and not a chance in Hades of getting any of it back..despite the bull**it we are being fed by our Finance Minister. How much did the carers reduction contribute to the payback on banking debt. Sorry, remind me how much interest we are going to pay next year? By how much is capital investment down since 2008? I think this austerity lark is going to run and run but that the can is going to run out of decent road. Will they still mention the poster children for austerity in 2018? Irish times report today: ‘Minister for Finance Michael Noonan expressed the hope this was the last austerity budget, and he predicted the adjustments in 2014 and 2015 would be much smaller. He also said this was the last December budget and he hoped to publish the 2014 budget next October.’ Wildly optimistic? Disingenuous? http://www.irishtimes.com/newspaper/breaking/2012/1206/breaking1.html The man who said last March 16 in Paris that growth would take off like a rocket if there was an international recovery, may well have believed that. He stuck to spinning on GDP performance yesterday while also on Wednesday, Michael Noonan’s UK counterpart had to explain to MPs, the reasons given by the independent official forecaster, the Office for Budget Responsibility, for downgrades in forecasts. Where is John McHale these days? The general government deficit target of 7.5% of nominal GDP in 2013, is forecast to be followed by 5.1% in 2014 and 2.9% in 2015. This means the public debt will peak at 121% of GDP in 2013 before falling gradually to 117% by 2015. However, according to Conall Mac Coille of Davy, this entire fall is accounted for by reductions in the state’s cash balances. Nominal GDP growth is now not expected to be sufficiently strong to stabilise the debt/GDP ratio until 2015. There obviously isn’t any Plan B and Howlin’s plan for more public service job cuts again raises more questions than answers. A few months ago he was asked how many of the early 2012 retirees had joined the ‘hire a crony’ consultancy scheme? He didn’t know. Richard Bruton was likely lobbied by the US Chamber to add some sweeteners to the R&D credit tax scheme which gives companies a total tax allowance of 37.5%. He doesn’t know if this scheme actually works or how much of the claimed R&D is real. Fred Logue of New Morning IP, the intellectual capital consultancy, said this week: Our analysis does not show any link between the introduction of the R&D tax credit and increased patenting activity by indigenous Irish companies. In fact in our experience this tax credit has been used as a way of getting “free money” without any real attempt to protect the R&D results through patenting or other IP strategies. In fact the R&D tax credit scheme is widely promoted by tax advisers and is primarily seen as part of a tax reduction strategy rather than as a foundation to build an IP strategy. So if some of you are annoyed about the €1 tax on your favourite bottle of plonk, just remember, there is one area that is a reminder of the halcyon days: complete with gullible politicians; powerful vested interests and journalists afflicted with Stockholm Syndrome. Professor at an Irish university halfway up the scale. Net effect of budget = 200 euro increase in take home pay per month. Thank you Ireland! Or should that be Germany? “The Irish financial crisis can be summed up in one word: Debt, says Noonan.” Business Post Online Noonan does not understand the problem, how can he provide a solution. The problem is NOT DEBT, the problem is the ENFORCED REDUCTION of debt. AIB from Jan to June reduced it customer loans by 4.5B. It paid back 5.0B to the Central Banks (read ECB). That is the kind of deleveraging that is destroying the country. Noonan does what he is told by the PS. He always did. Regrettably though he is a good debater, he does not have the intellectual ambition (or perhaps capacity) to question the fundamentals of the advice being proffered. PRSI increases in 2013, but pension tax breaks for the better off remain until 2014. A bankrupt State tax subsidising individual pensions of €60,000 pa. Maybe the better off always deserve a leg-up, they make life so much better for everybody else! I have been thinking about the confidence fairy. Perhaps she was kidnapped by the slua sidhe. Or did she assume human form and become a vested interest ? People are not asking why is it better to burn energy rather then employ people in labour intensive industry……when we have a unemployment crisis Its the Euro dummies , its monetary distortion and the deregulation of old nation state type contracts because of EC neo liberal dogma. http://www.irishexaminer.com/archives/2006/0322/ireland/guinness-calls-time-on-irish-rail-link-573831579.html To save energy they want us to buy their new diesel cars rather then employ people at home , even when we have a dramatic surplus of labour & cars…. They are force feeding us stuff we don’t need. @ Dorky Chorcaigh Inflation is more dangerous than unemployment. Inflation eats bonds. Unemployment grows them. I expect some sort of deal to be done on the PN by March. Even if the only measure is to postpone interest payments for another three years, the impact on short term budget arithmetic is significant as that is worth around 1% of GDP per annum. I believe that is plan A for the government. If we are still behind the deficit target after that, or if the ECB does not agree to such measures, then I think plan B would be to shake down the public service more. i.e. revisit the Croke Park agreement. Low hanging fruit would be things like freezing increments for a couple of years. The capital budget would also be squeezed in such an eventuality. I think between plan A and plan B, there is enough scope for the government that it can be reasonably confident of getting to the 3% deficit target by 2016 unless nominal GDP growth is substantively behind expectations. Anyone know if ESRI is going to run the numbers and publish the impact on groups in society. The claim is this Budget 2013 is fair. Most people would assume fair=progressive=richer paying more Last year ESRI said top 10% saw income drop 0.8% and bottom 10% saw income drop 2.5% which resulted in the correct claims that it was a regressive budget and “unfair” My back of the envelope calculations suggest this Budget is even more unfair. @Seafoid We have undergone massive real inflation within the eurozone. Its called wage deflation & unemployment……….it just affects different people. The CBs use a false metric of inflation – a 1 euro vs basket of goods metric. But wages are not static euros. Wage deflation was used to disguise the real malinvestment especially within the high energy industrial sector. That is why for example we had the biggest drop in air passengers in Europe – the airlines eventually ran out of customers as everybody else started working for similar low wage companies. The Euro was and is a all out attack on Labour so that it can produce more goods that can be wasted. It therefore needs credit rather then money down to sustain this malinvestment. See above video – the externalties of such long car supply chains to suppress wages is not even considered. Henry Ford knew how the system worked. The government cannot employ people now because it treats money tokens as real goods. (it is non sov) Meanwhile in the real physical economy real goods get burned mindlessly. With this absurd monetary system – capital through the mechanism of government must crush all labour & welfare and find ever more distant markets for its goods as people at home don’t have the money tokens to buy domestic goods anymore. Its a truly absurd system that does not look at the economy from a holistic level as if it did it would expose the biggest executive crime wave in the history of economics. @ Jag PRSI allowance is obviously regressive (though only kicks in above 18k, so leaves out the very lowest income earners) PRSI broadening to all income is in effect very progressive as it will impact on higher earners much more than low earners Household tax is obviously progressive (if you assume a fairly high correlation between house values and wealth/income) Increase in over 70s USC is highly progressive in that it will only impact on very top few % of people. Capping of pension reliefs is in effect highly progressive, in that it will only impact on very top few % of people. Changes to medical card for over 70s is progressive. Wine tax is regressive if you assume wealthier people buy more expensive wine, but you could also argue wealthier people buy more wine so will in effect end up paying much more tax overall (the “social class” argument). DIRT, CGT and CAT changes are progressive if you again assume higher wealth/income are more impacted by these Prescription charges and child benefit are regressive as they are flat charge against everyone Motor tax mildly progressive if you again assume correlation between motor tax costs with car values and income/wealth, though impact of this is small in any case. Overall – i reckon it will be regressive for very low earners with big familes, due to the child benefit cuts & PRSI, but reasonably progressive for low earners with no families. It will be extremely progressive for young single people who don’t own a house/own a modestly valued house (and aren’t alcoholics). @ MH “Where is John McHale these days?” Keeping his head down. It will be interesting to revisit some of his writings and predictions when we get to 2H13. Of course, the problem with this grinding austerity is that it is slow from a here-and-no debating perspective….allows for fudging over time. Read through Morgan Kelly’s 2011 piece again. His analysis is more or less on track, unfortunately. Pity he wouldn’t give an update, although I suspect he was firmly ordered by the powers that be to stay in his box after that article. @ Eoin Bond That’s a good summary. It will be hard to do an analysis of the impact of this budget on each income decile as a lot of assumptions will have to be used. e.g. what is the average value of a property and car owned by someone in the 2nd income decile versus someone in the 7th? Also, I imagine its not so easy to work out the impact of paying PRSI on dividends or increases in DIRT, CGT and CAT. All those should impact more on higher earners. @SC You say: “Surely living in a house in an economic activity? I presume by your rationale that renting a house is a economic activity as there is “a flow of cash from one party to another”. By this logic we could pair up households living in similar houses in estates all over the country and get them to swap houses. If we then got each of them to pay the same rent to each other there would be huge increase in economic activity because of the increase in cash flow. Would a levy on this cash flow be allowed? Of course, there would be no increase in economic activity because we would have the same number of households living in (almost) the same houses (bar having to move a few yards). I presume you are familiar with the concept of imputed rent. According to the CSO imputed rent made up €10 billion of the €159 billion GDP for 2011. Should this be taken out of the GDP figure.” In a capitalist society margins and profit matter – your concept of inputed rent is exactly that , its an estimate of rent that homeowners would be paying were they to rent. The issue here for homeowners is that they are not paying rent to a landlord they are paying it (ordinarily) to a bank through a mortgage and ergo that is the activity that is happpening and the rent is in the form of the interest on the loan and that interest is taxed in the hands of the receipient being the bank. So no need for anyone to move as per your scenario as the ‘rental’ activity is already happening in the pure tennant to landlord sense and the homeowner to bank alternative. Ownership of itself is not an activity, the road to ownership has costs be it rent or mortgage interest and the gains or profits made in this activity is already taxed. Case V in the case of the landlord and Corporation Tax in the case of the lender. What’s your point? So inputed rent is valid for the calculation of GDP but the idea that houses bought through cash or by way of a loan somehow therefore leads to ongoing activity is simply stupid. Yes economists like your goodself may indeed have the time and energy to calculate the what ifs were those owning to start renting but that’s not the real world, and you know this. That’s the world of assumptions and excel spreadsheets, but no cash ever moves on any of my spreadsheets. In the real world purchasing a house is a one off – thereafter the costs of ownership are already taxed or are paid for as used i.e. water (for me anyway as I’m metered), electricity, gas, waste disposal, television, telephone etc. This is fair as these are the normal costs of ongoing ownership but I dare say if the house was unoccupied none of the above would be charged as the economic activity would not be there to levy the charge on any of the services. Therefore without life within the house there is no services and certainly no activity as Dork suggests houses just sit and stare they are not economic in any sense of the word and as a result levying a tax against their owners is silly. Why not when we’re at it start to tax people with red hair at a higher rate than those with brown. Indeed this would be equally stupid so why the sudden interest in taxing peoples houses when there is no logically economic rationale for doing so. http://www.cso.ie/en/media/csoie/releasespublications/documents/economy/2011/csfa2011.pdf & Transport Stuff that made some sense. http://www.geograph.ie/photo/1722939 Why ? Therefore More oil for other stuff such as fixed capital formation……more rail lines…….. Dork continues to make a strong point about capital /wealth extraction being ingrained in the system. Even food production is being impacted: http://www.irishexaminer.com/ireland/ireland-stuffed-with-italian-turkeys-216057.html @ BEB The budget “will be extremely progressive for young single people who don’t own a house/own a modestly valued house (and aren’t alcoholics).” The young professionals around me this morning are all noting the minimal impact of the budget on them. Mr. Finlay (Barnardos) on TV 3 this morning noted how packed the pubs and restaurants are these days with this particular group….could well afford moe, to alleviate the hardship on those with less. Meeting with US private equity invstors recently in centre Dublin, they were astonished at the almost party atmosphere in the pubs & restaurants….not something I see in the US these days. Our foreign tourists from Germany and Europe no doubt are carrying this message home….. This budget was a big let off for most of the ‘haves’ in the country as OMF says above. In social terms, the regressive aspects are a disgrace. In economic terms, it’s simply more on the way to a much worse place. Poll tax…. sorry, I mean property tax. If a group of people live in a terrace of identical houses, could one of them get a professional valuation done (obviously, all sharing the cost) and then be able to turn around to the revenue and say, “no. 6 had a professional valuation of 150k so how can you tell me my identical house next door is valued at 210k?” ?? Please let me know your thoughts. @ YoB 35% of Irish households are owner-occupiers with no mortgage. How is mortgage interest “axed in the hands of the receipient being the bank”. People live in houses and also use roads, footpaths, street lighting, etc. but I presume you don’t think of them as an economic activity. There was economic activity long before there was cash. If a decorator paints a house and in return an electrician rewires his house does that mean there has been no economic activity because no cash changes hands? People get a service from houses. At its most basic its called shelter. Some people pay rent to obtain it. Other people pay interest to a bank to obtain the money to buy the house. Other people pay nothing at all because they own the house outright. But they all get the same service from the house. Fair or not, by the time you tot all the different things up it is still another blow to those on low/lowish incomes with a family, car, modest house, etc. More money that will be removed from the local economy in 2013. I just can’t imagine the value of goods sold in retail in Q1 2013 being much to write home about. Retail sales probably won’t be helped much either by the petrol price hikes we are going to get when Israel strikes Iran over the Christmas holiday. Watch out for moonless nights. You can just picture the scene: Christmas Eve on a cold night in the desert. Three wise Arabs on their camels, pointing up to the sky…. WA1: Is that the star of wonder? WA2: Is that the star of light? WA3: No. It’s an Israeli bomber @PR Guy Yes in theory once your valuation is not soft. We don’t have the details yet but bear in mind that Revenue have experience challenging market valuations in the CGT/ CAT/ SD sphere going back to time immemorial. If you can stand over the methodology used and the ultimate valuation you should be fine, but if your valuation is 50% off what a comparable house down the road just sold for, and you can’t justify the difference then no. @Paul W Guys on top (the banks and their executive helpers) make money from wage arbitrage which is worse then pointless in the great scheme of things as so much oil is burned to transport these goods. This is why the Euro is so anti national credit It wants only transnational bank credit & trade. Subtract labour from the equation and we can produce turkeys for the home market cheaper. Gobble gobble But its not so much Turkeys that are the problem in Ireland…….its cuckoos who appear to be numerically challenged @ Dork The counter-argument of course is that Ireland is on a journey to a fed Europe where there will be one currency, banking union, supra-national guarantees, common bond issuance, etc but, importantly, transfers from have jurisdictions to the have nots. The future big picture as proposed by supporters of this (including Official Ireland which wants to be part of the bigger club) envisages one country – Europe. The price for being part of the bigger club is that Ireland will be a net taker i.e. will have lost much and will need to be compensated. The Irish beal bocht (cute hoor) mentality underpins this….Of course, Ireland no doubt reckons it can be a taker while also benefitting from tax, MNC, etc. ‘gravy’….living in the cracks, below Europe’s ‘sensitivity’ radar on such things (that’s not going in the right direction, is it!). This definition of the future can only work in my view if it benefits most /the majority of the Irish people….However, again, that isn’t going so well either. Notwithstanding, those in power are intent on their path, which appears self-interested in the absence of benefit to most of the people. At what point will ‘enough be enough’ I often wonder. It’s difficult to see that inflection point happening soon given emigration for instance and the unlimited liquidity (as opposed to transfers) being made available to Ireland. http://www.irishexaminer.com/opinion/columnists/guest-columnist/lets-hope-we-can-get-to-a-better-place-and-that-its-in-europebrby-victoria-white-216048.html “Like all dependants of the social services, I need control, not freefall.” Ireland’s dependency on EU ‘Social Welfare’ will therefore continue I suspect until something external changes to deny that ‘comnfort’. In the interim, there is little incentive therefore for the EU welfare Ireland recipient to reform anything fundamental. So much will be lost, socially, culturally, economically, etc. In the meantime, the slide continues, with no real lleadership ensuring at least some self-determination of the (uncertain, dangerous) outcome. The ninth circle of hell. The lesson learned from our EU experience is that when you have lost all redundancy in your physical & monetary systems they will without question cut the legs from under you. The best years for the Irish economy will be seen as the 1970s when we got fiscal transfers the Brits would not dream of giving us but we were in a more integrated monetary system……… I.e. the Dagenham yank came back to spend his money……. (Poland is just too far physically & culturally at these high oil prices so as to recycle labour & welfare remittances) A major study should be done on this but it is unlikely I guess as it is not politically correct. After 1979 things really started to go pear shaped for the domestic , non multinational sector of the economy. We are now clearly not a closed loop economy now and are bleeding all over the dance floor. PS there was inflation in the 1970s………..but the inflation had a wage focus. We blew our capital on cars however. We were benefiting from the first wage deflation / capital export in the core also – with the likes of Verolme Shipyard in the 60s & 70s attracting this outward movement of capital before it went to Asia and beyond. We were much like Turkey today in that respect. Now there is no place on Earth capital can expand to as it has covered the planet. Its really a global wage theory of value crisis now. @ Dork “We are now clearly not a closed loop economy now and are bleeding all over the dance floor.” That’s certainly true and visible in the domestic economy. On the MNC side, it’s less clear and those employed there don’t generally like to see themselves as EU Social Welfare dependents. However, as someone who has worked much of my career in that part of the Irish economy (but living elsewhere now), I beg to differ….the dependency is more indirect, but it is dependency all the same. That will be demonstrated if the current international tax anti-avoidance sentiment translates into reform action for instance. Then, like Dell moving to Poland, etc, the dependency aspct will be exposed. Many of the highly skilled MNC employees are betting on being able to jump ship to gainful employment if they need to. But what then for Ireland? Sure The UK is turning Poland coal into London consumer grot stuff Uk trade in Goods by area (Balance of payments, £ millions) Poland Y2002 : +50 Y2003 : – 84 Y2004 : -412 Y2005 : -664 Y2006 : -879 Y2007 : -1330 Y2008 : – 1307 Y2009 : -1870 Y2010 : -2309 Y2011 : -2768 IEAs “energy balances of the OECD nations Y2011 Self suff. coal Poland Y2000 : 1.26 Y2010e : 0.997 DB Schenker Rail launches second weekly rail freight service between UK and Poland Tuesday 09 October 2012 “DB Schenker Rail has strengthened trading links between the UK and Poland with the introduction of a second weekly rail freight service between the two countries http://www.youtube.com/watch?v=OooIxFg9xqQ Its the way the world works now (no final settlement) Re: Mythical Pension changes ? “In an overhaul of pension tax breaks, tax relief on pension contributions will apply only to schemes that deliver income less than €60,000 a year from January 2014. ” Ir Independent “pension schemes that deliver income of up to €60,000 a year” Mazars Budget Report. I had to read those a few times before I started to realize that there is no change to pensions. Either now or in 2014. Its the way you phrase the sentence. Its not a lie. But there is no change. It took a real genius to coin that phrase. “pension schemes that deliver income of up to €60,000 a year” @ Paul W “The young professionals around me this morning are all noting the minimal impact of the budget on them. Mr. Finlay (Barnardos) on TV 3 this morning noted how packed the pubs and restaurants are these days with this particular group….could well afford moe, to alleviate the hardship on those with less.” just so we remember, high paid singletons already pay, by quite some distance, the highest effective rate of tax in our economy (40% for 100k earner), especially once you account for net social transfers. Renters even more so vs mortgagees. @BEB Lets call a spade a spade. 41% tax + 4% PRSI + 7% USC = 52% for an employed worker, so a highest marginal tax rate of above 50%. Where we’re completely out of step with international norms is the sheer number of non-taxpayers we have at the lower income levels, but that’s not something generally discussed. As you noted, one of the most progressive tax systems in the OECD. @Aisling You miss the point……… We may or may not have a progressive tax system. But we have a negative money supply. You tax the money baby. @Dork You tax the money and the money reacts to that taxation and moves elsewhere. That improves matters how? @ YOB I can see that VAT is a tax on economic activity. €1 on a bottle of wine? Not so sure. Tax is also a means to transfer wealth and it seems the name of the game in our current predicament is to facilitate that transfer without penalising economic activity i.e by avoiding tax wedges. Property is the ideal candidate. Motor Tax also falls into that category. @ Robert Browne People who volunteer to lodge in Mountjoy should be forced to pay th eenormous costs to the State of providing that accommodation. No Aisling…………..you create national money………….then you tax the money. You cannot have nominal growth without a growth of the money supply. This means Activities will hopefully be directed toward areas with the least real resource burn…….and will find new niches. Which means less hard currency export. If you explain to me why NIR & IR are now on two different planets it would be greatly appreciated (given they both have the same vertical integration setup) The control up north is in our face despite the chronic lack of money production in the UK. just so we remember, high paid singletons already pay, by quite some distance, the highest effective rate of tax in our economy (40% for 100k earner), especially once you account for net social transfers. Renters even more so vs mortgagees. How many high paid (+100K) singletons are there even out there in the economy. I mean seriously, once you exclude the TDs sons and daughters in the IFSC and banks, etc, how many actual private sector under 40 year olds do you think earn more than €100,000 per annum? Bear in mind that there is a, what, 25% youth unemployment rate and that’s after emigration. Sure, tax them I suppose. It’s not like most of them earned their positions through anything other than nepotism and cronyism anyway. But they’re not going to net you a serious amount of money. P.S. I stand by my comments on the Budget being soft on most. Especially seeing the likes of IBEC come out clapping from the gallery. @ Aisling we have a weird system where very low income earners pay almost nothing, but then moderate income earners jump up to the high rate very quickly. We probably need a a 10-15% rate for all, a lower “middle rate” around 30-35%, and a third band above 100k of 55%. @ BEB What people must also remember is that people in Ireland once paid 65% marginal tax rate when there was a need to do so (my parents and their generation…now being hit as OAPs). If people have enough and are fortunate to have high disposable income after tax here, then it is still socially just that they should do without e.g. two or three pints /glasses of wine per month to alleviate a similar amount deduction off the poorest in society. I am a capitalist more than a socialist. However, I have no problem with that. Either this is a ‘society’ or not. At present, your implicit message is to hell with that. Shame on you if that is correct. However, that DOES reflect many of the haves in Ireland today, certainly FG is now the representative party for the me feinery (‘last rat’ on the boat). The ideas of community, society and duty are largely absent in this country today. Entitlement and self interest rule it seems to me. @BEB Have to agree with you there. If you compare Ireland with the UK for example at the lower end an Irish family is better off by paying no, or indeed negative tax where the UK family is taxpaying, but hits the 40% rate below the average industrial wage whereas the comparable UK family is still in the 20% bracket. Wasn’t the case 10 years ago but is now (more to do with UK tax brackets increasing than Irish brackets decreasing). I Feel only Tina Turner can knock some sense into yee Euro Babes. Whats tax got to do with it ? http://www.youtube.com/watch?v=YqWkFF-TbMU Bank credit is too wasteful of real resources………..as it always Endeavours to create more stuff. We do not have a lack of stuff problem so we don’t need more bank credit. Only national money production can reduce the real resource burn & non utilization of existing resources. Yee guys seem to have no idea how much waste the Euro criminals in each Euro central bank is creating. All to achieve a political goal. And a very dark political goal at that. @ Paul W “Shame on you if that is correct” FFS. Get a grip. Im arguing for a middle class tax cut above. If you wanna somehow paint that as immoral you can be my guest. Young people working hard and enjoying themselves seems to be some sort of abomination on here. Though apparently they all got their jobs through cronyism and nepotism according to OMF. Paul w, Bit nasty to attack poor EB as a Me feiner when he advocates higher taxes on the well off. He is right to point out that our system is crazy as only 20% of households pay more to the state in direct taxes than they receive in transfers. Pushing the marginal rate of tax on labour above 60% on middle income earners like we did in the 1980s will have diminishing returns like It did in the 1980s. Doing it to fund lavish salaries in the public service is not sensible either. You are overseas and entitled to your opinion of course. Perhaps you should return and pay some tax to the exchequer to get us out of the ditch. @ Tull As we have seen in earlier posts and on the last thread, Irieland struturally has a high percentage of low paid workers. That’s not their ‘fault’. As a result, many are also now unemployed and are struggling to keep homes, eat, heat and cloth themselves. My argument remains that those who can fill the pubs and restaurants on a regular basis, as nightly seen in Dublin certainly, should really take stock of where they are. Hopefully they won’t lose their job, have a special needs kid (like Veronica White says she has in her article), etc. As I say also above, the regressive elements of this budget that take food out of the mouths of relatively poor people (being debated on the other thread) is a matter of shame for the country, for the FG /Labour politicians and supporters of those items. @ Eoin. No personal offence meant. Interestingly, none of the young professionals around me would object to paying more if they could see that their contribution would alleviate the poorer of society….as opposed to going to servicing the increased interest bill on the national debt. That’s encouraging, but it’s not reality. Paul W, Next time you are out for dinner with Fergus or some of you hedgie buddies in one of Dublin’s finest troughs, take a walk on the wild side and you will see lots of empty pubs and no sign of partying youths. They are far too busy filling out application forms to go to lower cost/tax locations. Make no mistake, FG will take a bath on this budget not because they did not raise taxes on the well off but because they did. I agree with your scepticism towards govt policy. Absent debt service relief, we are headed for default. Then of course public service pay and transfers go to European or possibly Greek levels – both mean down. This budget tried to stave off the evil day by salami slicing all around. There is no ideology behind it. You really should get out more and read other than the Irish Times. @Tull Except Greek pay levels (in Euro) don’t work either so there is no point repeating that experiment. Its oil balance has not moved. @ Tull There is plenty of money in this country, but there is little community or mutuality left. I am old enough to remember a much sparser time in this country. We had less, had friends and were proud of our country. I was also one of the original ‘drivers’ of business in the IFSC for instance, so I know how precarious the foundation is for what has been built there. Bill Gross gives some pointers to the future in this interesting blog: http://dandillc.blogspot.ie/2012/12/bill-gross-presents-big-4-structural.html All I can say further on this particular subject is be thankful and respectful if you are on the right side of “Young people working hard and enjoying themselves”…..It may not last for ever (or even long) the way things are going. For the Dork: http://www.thelocal.se/44894/20121206/ “Sweden forced to shut down nuclear reactor” Privately run nuclear power plant shuts down during winter when energy needs are the highest in Sweden. The maintenance weren’t done during the times energy was cheap so that the shut down causes energy prices to spike even higher during high energy usage, again…. Ah well, I’m sure the person responsible for scheduling of the maintenance of the back-up diesel generators will be called in to senior management for some talks. Some things should never ever be sold out to private interests. @Jesper Its a simple scam Sell more expensive energy in the Winter. Without viable nation states with strong leaders we will be stripped of all wealth by these robber barons. http://www.zerohedge.com/contributed/2012-12-06/economic-imperialism-highest-stage-capitalism-or-simply-modus-operandi-coloni As Mario Draghi said today…….. “other then that there is plenty of good will” You little pixie heads you…………. @ Tull I think the SPD will take over from the CDU and austerity will get a makeover. It’s just not going anywhere. Car sales are down 10-20% for some manufacturers this year on an EU wide basis. Re the budget- maybe it is not as grand as an ideology but it is definitely a way of looking at the world and it hasn’t changed much since the 1930s . If anyone doesn’t like it they are free to go to England, more or less. Or watch the toy show. @Tull “absent debt relief we are heading for a default” We are saved. The bearded ones are taking up the battle! http://www.irishtimes.com/newspaper/breaking/2012/1206/breaking39.html @BEB “Overall – i reckon it will be regressive for very low earners with big familes, due to the child benefit cuts & PRSI, but reasonably progressive for low earners with no families. It will be extremely progressive for young single people who don’t own a house/own a modestly valued house (and aren’t alcoholics).” Yep I agree. Fair enough assessment. Id give a shout out to single mothers who will have gotten hammered for the second year in a row. Aisling Initially BEB was was talking effective rates not marginal rates. Big big difference. I suggest using the former if you want to have any credibility. Someone on 36k probably has an effective rate of tax of about 10-15% but their marginal rate on 1 Euro earned over that would be over 51% People need to stop talking in marginal tax rates. Its very misleading/ a clever way to lie. @BEB Oh on the Alcoholics thing. If they drink cans they have not been affected. @Eamonn on €36k you’d have a marginal rate of 21% ignoring social transfers and taxpayer specific deductions, the corresponding UK taxpayer would be on 24% odd. On €100k the effective rate is a little over 41% with the corresponding UK figure being 37%. Push the income up to €250k and the effective Irish rate is 48%, 49% in the UK. On €20k the Irish taxpayer has an effective rate of 11% when their UK comparable has an effective rate of 16%. Effective tax rates are messy, so sometimes it is easier to discuss marginal ones, but you’re right, effective tax rates give a better overall picture. Comparing Ireland and the UK is really apples and bananas. In the first place, they have £, Ireland has €. Importation costs, economies of scale, distribution chains, monopolies, competition, population, etc are so different. In general though, can one say that Ireland is a relatively expensive place to live? Therefore, €1 goes far less in Ireland than say the UK? Joan Burton made some vague reference to this recently to justify maintaining higher dole rates…..but there is a huge gap in services in Ireland for people generally but low earners /unemployed particularly. €60+ cost of GP visit, cost of medications, transport, power, etc are high. The recent 10-12% hike in public transport costs demonstrates the issue also. Can one say that this (primarily) traces back to a fixed cost public sector? On the property tax, my little home is just that a home. It costs me to keep my home. I do not make money off it and now with property tax I will not even be able to extract myself from it. A lot of houses and apartments in urban Ireland build since early 00’s have to pay a management charge. So they can now pay two amounts to two different providers for them not to provide the service that they are paying for. In my case it will be close to 1200 in a full year as long as the charges do not rise and what are the chances of that? @ eamonn moran, “Id give a shout out to single mothers who will have gotten hammered for the second year in a row. ” Fair enough point… but why is it the responsibility of the taxpayer to support children of unmarried mothers? Is it not the responsibility of the father? Don’t get me wrong… I believe in supporting children… but in some cases fathers (married / unmarried) can absolve themselves of their responsibility and the tax payer has to pick up the tab. That’s downright wrong, and is an abuse of the good will of the social welfare system. The state requires to send out a clear and unequivocal message about this. Ms Joan Burton and Ms Francis Fitzgerald require to knock heads and formulate a solution. Vic Duggan…. are you reading??? @Fiatluxjnr “Trade unions are planning to hold a series of demonstrations and rallies around the country in February to call for a restructuring of Ireland’s debt.” Who do they intend to rally? The temp and contract workers they threw under a bus, to save their own necks. Or the people with no pensions who pay the higher PS and politico bonanza pensions. If there is to be a rallying force in Ireland, it will not come from the unions. Big Jim knew whose side he was on. He would hardly have set the marker today at; “pension schemes that deliver income of up to €60,000 a year” or at unions that fight for such largesse. @Joseph Seems like a leisurely protest planned…next February. Here is a chilling story…note the professional pay rates.. http://www.bloomberg.com/news/2012-12-06/depression-deepens-greek-middle-class-despair-with-crime-rising.html @Dork, I believe most people in Sweden would agree with you, it does look like a scam. Maybe you’re interested in this? http://sverigesradio.se/sida/gruppsida.aspx?programid=2054&grupp=16951&artikel=5369268 “Deregulated railway system up for review” Bankers @Jesper I have a more nuanced opinion on the subject. For mainline operations a SNCF or IR like body is best……… However the history of these state corporate bodies in the running down of tertiary spur lines is a sad one. The UK has a great programme going with its so called community lines.. https://www.gov.uk/government/publications/community-rail-routes In the Irish case these organisations could receive second hand IR2700s to run on lets say the old New Ross to Waterford route. @Aisling, BeB Useful dialogue. @Sporthog . @all Our so-called ‘knowledge economy’ cannot figure out how to tax the childers’ allowance! Regressive onomalies on the lower echelons could surely have been sorted out – what does this admin have against carers and the disabled? @all at all Great Newz! The worst of the euro crisis has passed, says European Commissioner Olli Rehn, who points to the common currency area’s falling budget deficits in an interview on Thursday. Greek Prime Minister Samaras is also optimistic, saying that his country is now on the right track. http://www.spiegel.de/international/europe/euro-crisis-is-past-its-peak-eu-commissioner-says-a-871330.html @The Labour Party ? CARTOON OF THE DAY (for De Dork min Kork) http://www.presseurop.eu/en/content/cartoon/3124891-herman-jedi Child benefit cut by up to 20 euros per child, for a savings of 136 million. That implies there are more than 6.8 million children receiving this benefit (being conservative). In a country whose total population is less than 5 million. How does that work ? @David Their dastardly plan might just work. Lets hope not………. “Engage the Ludicrous Speed hyperdrive” Paul W “I am old enough to remember a much sparser time in this country. We had less, had friends and were proud of our country. I was also one of the original ‘drivers’ of business in the IFSC for instance, so I know how precarious the foundation is for what has been built there. ” http://www.youtube.com/watch?v=Xe1a1wHxTyo&feature=player_detailpage Ironically, the political champion of the IFSC-CJH-was the most corrupt ever to hold high office in this country. The generation that set up the IFSC contained people who dorve the country into the ditch post 1977 and made the same mistakes was we are making now by removing the incentive to work. They also contained thousands of people of avoided paying the statutory tax rates using offshor accounts. I don’t think they people of the current generation have anything to feel ashamed of. They work harder, pay their taxes and are professional in their approach. In contrast to Fergus Finley’s rather snide comment they do not spend their week on the tear. I have cancelled my direct debit to Barnardos and will be seeking another charity. @DOD Seconded on the taxing/ means testing, the mind boggles as to why this is not possible as there’s a huge difference between a family on €100k being cut €58 a month with 4 kids, and a family on €20k taking the same cut. The UK routes it through tax credits, the argument against is probably out of date in this day and age, but it always was that the Mammy’s got the children’s allowances when they didn’t have any income of their own, whereas the tax credits went into Daddy’s pocket along with all the money. This may have been true when I was growing up, not so much now. In reality the same (not means testing which already applies to carers allowance, but needs testing) should be possible for payments to carers to ensure that those who really need the payments receive them. There is a world of difference between minding an elderly relative who has all their marbles but has difficulty washing and cooking, and might take a fall so can’t be left alone for too long, and caring for a severely disabled person who needs help with everything and can’t be left alone for a moment, where respite care and a couple of weeks off every now and again are critical. Yet the system can’t distinguish between the two cases and while many families will, by not claiming benefits to which they might be entitled but view caring as just being part of being family, not all will. The system should be clever enough to distinguish between the cases and protect those who really need protection, yet it seems that it cannot and so risks hurting those who desperately need the State’s help. @Have a Heart €10 per child per month. Requires there to be 1.1m children impacted, not the 6 million you suggested in order to get to the €136m savings projected. @Have a heart The number of births over the past 17years is approx 900,000. A loss (saving) of 10pm = 120pa = 108million. Third child cut €18pm and fourth child cut €20pm cuts are higher than €10pm, but the information has been deliberately confused so as to avoid the headline figures of €18 and €20. The allowance is available as indicated below. Note that the second twin appears unworthy in the eyes of the State. [The numbers appear to stack up.] From Citizens info “Child Benefit (previously known as Children’s Allowance) is payable to the parents or guardians of children under 16 years of age, or under 18 years of age if the child is in full-time education, FÁS Youthreach training or has a disability. Child Benefit is not paid on behalf of 18-year olds. Child Benefit is paid at one and a half times the appropriate monthly rate for twins, and at double the appropriate monthly rate for triplets and other multiple births.” Meanwhile the French do their austerity thing as we are all in this together……………right ? http://www.sudouest.fr/2012/12/06/bordeaux-les-tests-du-pont-chaban-delmas-en-une-minute-901155-2780.php When they do finally release the flow we will have nothing…….NOTHING Meanwhile the French do their austerity thing as we are all in this together……………right ? http://www.sudouest.fr/2012/12/06/bordeaux-les-tests-du-pont-chaban-delmas-en-une-minute-901155-2780.php When they do finally release the flow we will have nothing…….NOTHING @ Eamonn Moran, you seem to be suggesting that cans of beer are not affected by the Budget. All beer is subject to excise duty at production stage, or in the bonded warehouse. How it is packaged and sold after that is not directly relevant. The Minister may say “increase excise duty by 10c per pint”, but that is just to make it easy for people to understand. If retail prices don’t actually change, then the supplier or shop are absorbing the extra duty. Thanks, and, u, “doh”. Per month! @SC You say: “35% of Irish households are owner-occupiers with no mortgage. How is mortgage interest “axed in the hands of the receipient being the bank”. People live in houses and also use roads, footpaths, street lighting, etc. but I presume you don’t think of them as an economic activity. There was economic activity long before there was cash. If a decorator paints a house and in return an electrician rewires his house does that mean there has been no economic activity because no cash changes hands? People get a service from houses. At its most basic its called shelter. Some people pay rent to obtain it. Other people pay interest to a bank to obtain the money to buy the house. Other people pay nothing at all because they own the house outright. But they all get the same service from the house.” You say 35% house holders own a house without a mortgage – so what? At some point many presumably did have a mortgage and loan interest was paid to a bank, upon which the bank paid tax in the form of Corporation tax, so the receipient of the interest being the bank, was taxed just as a landlord is taxed on their rental income profits. But these are the gains from their respective trades and fall under the badges of trades as outlined many moons ago as the basis of raising a tax. Thus far there is logic. Having made a purchase, the owner of a house, at least in the RoI pays a stamp duty tax(outside of reliefs), and thereafter the trade is complete in my view for taxing. Taxing him/her thereafter for the privliage of owning does not fall into a badge of trade of any description. If I buy a bicycle I should, using your theory, be taxed thereafter for the privalege of owning it and despite the fact that I may never in fact use it, sit on it lend it etc. Sure when we’re at it lets tax everything many times over because as an owner I’m now expected to take on a contingent tax liability every time I purchase an asset. You can quickly see how crazy this would become but for some strange reason we see logic in pursuing this line of thought as it pertains to property but not so for gold, bonds or equities. This is illogical and the public will see through it and in my estimation refuse to pay. When an economics professor has to resort to the argument that the owner of a house is in some way in receipt of services because there’s a footpath outside his house which his/her income tax (and previous owners of the house in the case of second hand houses) has paid for no doubt a thousand times over you know you’re on a loser. Look, this is terribly simple – ownership is not a taxing activity – no amount of guff about barter systems between electricians and plumbers will change that basic fact. In a cash based society tax is levied on economic activity where the activity is accounted for in a cash form, hence the reason why barter based systems weren’t such a great way to start financing wars many moons ago. If the people all get the same service from the house as you describe, being shelter, then why tax owners only? Surely its the users/beneficiaries of the services that should bear the cost? And paying for a tax on top of payment for the service itself makes sense why exactly? I’m sorry Seamus but this all comes back to the one issue – taxing ownership is silly because ownership starts and ends with the original purchasing transaction, its not (except up until yesterday) on ongoing contingent tax liability. Services provided by Govt are presumably for both renters and owners then why discriminate against owners? As suggested earlier we could start taxing people with red hair at a higher level than those with brown but we don’t for a couple of basic reasons; one its daft, and secondly the red haired fraternity are no likely than any other cohort to use a Govt service than other members of the population. So its not done. The exact same argument could be made for those that use services such as footpaths and lighting – owners are now expected, per your argument, to have a better quality footpath than a renter, as they are now paying for it. You and I both know this is stupid but its the only logical conclusion one can draw from a position where owners are required to pay more for services than renters and as a consequence they should demand a better quality service as a result. So those who rent walk down the right side and those that own walk on the left. Sorry to say this is the conclusion that taxing ownership over renting eventually follows. When the basis on which to raise a tax becomes so far removed from economic reality it will face massive resistence. You have been warned. Eversheds, the law firm, said in a comment on the Budget: On the new €60,000 limit, the Government clearly feels that there are issues that need to be teased out before it can be introduced. A key issue is what capital value is put on the maximum pension “pot” that can be accumulated prior to retirement. This is a function of what assumption is made regarding the amount of capital that is needed to buy a euro of pension income. For instance, if a ratio of 30:1 is used, the size of the pension pot which can be accumulated is €1.8 million, ignoring any tax free lump sum element. If however the current ratio of 20:1 in the computation rules for the current Standard Fund Threshold of €2.3 million is used, the size of the pension pot which can be accumulated reduces to €1.2 million. The higher ratio favours defined contribution savers, while the lower ratio favours defined benefit members in both the public and private sector, as it reduces their potential tax liability on any excess pension rights above the €60,000 annual limit. So, the insiders may well try to stack the system to benefit themselves and the big bosses in the private sector who have retained the ‘guaranteed’ payout defined benefit system and changed other workers to the cheaper defined contribution system. Grant Thornton, the accountants said: The government’s removal of the weekly PRSI exemption of €127 is politically challenging but, by taking €5 per week out of the pay packets of all employees earning over €18,000, the government will raise an estimated €265m. This is more than the €250m to be raised from the property tax next year, and means changes to taxes and levies on income were the biggest single contributor to the changes in Budget 2013, even though tax rates and bands were not changed. Grant Thornton expects that in the next budget the government will have to do more to broaden the tax base, given that almost 40% of workers pay no income tax other than the Universal Social Charge. This is a high figure on international comparisons, which is why the IMF has been pushing the government to make this change. Seán Sherlock, minister of research and innovation, appears to believe that the R&D tax credit spending limit was increased to €200k: http://www.finfacts.ie/irishfinancenews/article_1025304.shtml @ All FYI Dan O’Brien’s more strategic view of the budgetary approach of the government. http://www.irishtimes.com/newspaper/opinion/2012/1207/1224327610115.html In simple terms, too little too late in the – probably vain – expectation that the economic tide will come in and float it off the rocks. @ DOCM Slashing E15bn in one go to get back to Dan’s rather reasonable level of 55 bn is a total non runner. Ireland is on the equivalent of long term morphine treatment . The damage was done way earlier http://www.ft.com/cms/s/0/158ca33a-dd7e-11e1-aa7b-00144feab49a.html#ixzz2EMHF6wov “You have to ask, ‘What is the function of a central bank in a financial system?’ “Ultimately its role is to preserve the integrity of the deposit base by providing liquidity as necessary and preserving the real value of money . . . You don’t build sustainable economic growth by creating asset bubbles.” @ YoB: Nifty commentaries to the professoriate. If you dwell in a Spreadsheet World …. … !!! I’m going to print out your responses. The proposed Property tax is, pure and simply, a tax on income. Period and Full Stop. @ SC: Would you please (I have asked this many times) state what your economic Model-in-Use is before you venture to comment. What do you expect a ‘real’ – as opposed to a ‘spreadsheet’ economy to do? Do you ever explain to your undergrad students that the textbook versions of economic activity are statistical figments supported by diaphanous assumptions. They are just plain hocus-pocus. Mind you the dy/dxey bits do provide a catapillar-chewed Fig leaf of modesty. And as an aside: On the ‘other site’ someone is asserting that there are two versions of Statistics: Left and Right. The former being superior (more honest and truthful!) than the latter – you understand! Who are more hazardous to the health and welfare of the citizen; our politicians or their economic advisors? @ Seafoid “You don’t build sustainable economic growth by creating asset bubbles” Whats interesting about this is that Central Banks globally repeatedly claim they are unable/unwilling to try and pop an inflating asset bubble, and that their policies are only restricted to consumer inflation for the most part. @ BEB It’s a good point . But maybe this crisis will change the way asset bubbles are viewed. On the other hand, how about bond prices now? Are they sustainable? Ah YES. The expected [and as I predicted] Lecture on MONETARY FINANCING & ARTICLE 123 from Mario Draghi of ECBfame and those Promissory Notes http://www.irishtimes.com/newspaper/finance/2012/1207/1224327609919.html Time for that Declaration of Intent – let the courts sort it out over the next one hundred years or so ….. Capital AND Interest of course …. Dat’s a relief to the next few budgets, the carers, the disabled, and those unfortunate enough to be subject to a mathematically and morally challenged administration! Howzat Mister Draghi? Text from Blind Biddy to Sinn Féin: Have you considered The €uropean Central Bank? http://www.ft.com/cms/s/0/8e845114-4045-11e2-8f90-00144feabdc0.html “Germany, the engine of what little growth the eurozone can muster amid contraction in many countries, will see its economy barely expand next year, the country’s central bank said on Friday, as it became the latest heavyweight European public institution to revise down its forecasts.” Let’s see how the Germans fancy pointless austerity zuhause No need to take anything out. Just don’t put anything in! I am coming to the conclusion that the closer Ireland gets to balancing it’s books the more remote is the possibility of a deal with Ireland’s debt. The chances of getting a deal before 5th December 2012 were greater than after the date. So it will be before and after the next budget (2014) in October! Perhaps the Troika only throw lifelines to totally hopeless cases like Greece? No reward for good behavior then? I accept that in all political / management situations “talking things up” is part of the course. However those political financial advisers in the DOF should be outlining a contingency strategy, if the MAGIC GROWTH FAIRY misses the bus AGAIN, then perhaps the TROIKA should then throw us a lifeline, debt restructuring, reducing repayments, extending the term, reducing the rate etc etc. Despite all the SPIN over the last number of years… I never once believe that HOPE of GROWTH is a STRATEGY. From what I can see if growth remains feeble, we have at least another 4 to 5 years of budget cuts to come. Varadkar urges promissory note deferral The Government should seek to defer the payment of Ireland’s next €3 billion promissory note by issuing a long-term bond, according to Minister for Transport Leo Varadkar. http://www.irishtimes.com/newspaper/breaking/2012/1207/breaking31.html Not strong enogh Leo. Time to hit them for six – not another measly single! Have you considered joining Sinn Féin? Leo is right. Issue a 100 year Economic War Loan to IBRC at 1.5% and use it for collateral at the ECB or CBI. Call their bluff and if they don’t blink have an emergency budget on 1 on 1 June to get to primary surplus. @Tull If you go into Euro based primary surplus you will destroy the economy and hand over the surplus to other countries as that is how the world of zero sum consumption / trade works. The UK & Germany will have a mad laugh at our expense. Do you think real countries want to try to go into final settlement when you need at least 2 people to tango ? What sort of drugs are you taking man ? @ Sport “No reward for good behavior then.” The N European mentality just registers that you have a commitment to pay…and you shall pay what you agreed to pay. Good /bad behaviour or sentiment (or even morality) doesn’t come into it. Unless expedient for some other (political?) reason, Ireland will have to descend to Greek-like ‘horror’ before these creditors will offer any true write-off. PS Just look at UK inter Euro trade…………. The UK because of its sov nature can eat what remains of the surplus in non sov Europe It has overtaken French & earlier Italian car consumption for example. If the above dynamic continues and you do the above you will merely transfer consumption towards the UK…..as there is no final settlement between nations. Debt is only a record of the waste of the past…………it means nothing to a real sov country. What matters is present consumption. You wish to subtract symbolic tokens of exchange from the physical economy , destroying real commerce – all to save a metaphysical claim on what remains of the wealth……… Sweet Jesus. All non colonies should have a positive money supply. In a positive national money system the waste will sort itself out in time……. @Tull – why as extortionate a rate as 1.5%? 0.5% should suffice. @ seafóid I agree that the damage has been done but if it is not corrected now it will have to be corrected later. The FAC is justified in its recommendation for a faster pace of consolidation. The morphine treatment is self-chosen through the medium of our own self-imposed “troika” of conditions viz. (i) no increases in income tax (ii) no cuts in basic social welfare and (iii) no changes to the CPA. Unless the White Knight arrives (in the form of a general economic upturn or a generous agreement on banking debt between now and the end of March) an arrival which seems increasingly unlikely, the country will, finally, have to go cold turkey. There is nibbling already around the edges of the homegrown troika, evidence in itself of a hidden recognition of the realities even if this cannot be given expression politically. The question then will not be, for example, simply a question of paying increments but of whether pay can be maintained at all. Ditto, pensions and social welfare payments generally. @Tull. +1, though I’m not convinced it should be interest bearing. @ DOCM I think the CPA should get it first. It is hard to see how anyone can be justified an increment , really. It is ridiculous that some people in the health service are contacting charities asking them to stump up cash for medical supplies while their own salaries are the elephants in the metaphor. Pleading the ‘béal bocht’ while spinning fake headline data, confuses the Europeans. http://www.finfacts.ie/irishfinancenews/article_1025285.shtml I provided an example above of the false claim: ‘Ireland ranks in top 10 EU countries for R&D investment – EU Commission.’ These lies have consequences. As for the PNs, wonder what is the position of Patrick Honohan? I get the impression from the 50 to 60 pics each month from the Ecofin and Eurogroup meetings that Noonan does make an effort to have informal interactions with many colleagues. But the sale argument is difficult when your government brags about impressive export growth and the NTMA easily raises funds in the market. As regards a common argument about not having a local central bank with weapons at its disposal, when the poltroons last wrecked the economy in the late 1970s/ early 1980s, the fallout lasted a decade. Where is the evidence that the central bank was instrumental in countering a paralysis on the fiscal policy side? MH, Your vitriol is now approaching titanic levels. As my Granny used say when I threw a strop. Be careful or you could be left like that. As regards foreign buying of our debt, this is predicated on debt sustainability which in their opinion probably requires a reduction of debt service costs. As regards, the recovery from 1977-81, an ability to devalue in 1986 and 1992 undoubtedly helped cushion the fiscal adjustment from 1982 on. @Tull What are we going to devalue against even if we had a sov currency ? Its now a world of free floating currency pairs……….. The internal domestic economy simply needs a positive money supply like all economies…. Let the market do what it does as there is no final settlement anyway. We need to take care of the basic flow within the economy before all the skills and capital disappears. Everything else can wait as debt is but a metaphysical construct. @Tull/Aiman My suggestion (on another thread) was for Perpetual zero coupon bonds. 100 year bonds looks a bit long dated! Forever bonds on the other hand can be redeemed when inflation has taken care of them. I doesn’t really matter what they might notionally be worth as the nice Mr Draghi has said there is a lot of “goodwill” towards Ireland. We all know what happens to “goodwill” in company accounts. Maybe we could call them the Perpetual Goodwill Bonds. And if Mr Draghi won’t discount them simply let him trigger a default. His OMT wouldn’t be worth much in that event. @ seafóid As Martina Devlin put it, it is “a situation that defies parody”. Apart from the issue of pay, there is also the question of the gross inefficiencies that continue to exist within the public sector. http://www.independent.ie/opinion/columnists/martina-devlin/martina-devlin-begging-letters-fiasco-highlights-how-all-is-sacrificed-to-pay-huge-wage-bill-3312339.html @ Sporthog with oil well over the $100 mark EZ growth is going to be constrained anyway even without a bodacious debt overhang. @Michael Hennigan re: Eversheds on €60,000 ““pension schemes that deliver income of up to €60,000 a year”. Clear as mud. Of course it was meant to be a fudge. There is and will be no change, until they decide how to exempt themselves from it. But the Eversheds take on pensions is worth a read. http://www.eversheds.com/global/en/what/publications/shownews.page?News=en/ireland/ireland-budget-2013-pensions “The Minister for Finance, Michael Noonan, introduced a number of changes to the current system of tax relief for pensions in his Budget speech this afternoon. Many of the measures have been well flagged in the media in recent weeks, but there were some surprises. The Minister made a strong and positive statement as to the importance of encouraging those on lower and middle incomes to save for their retirement. He announced the following key measures: The introduction of a €60,000 limit on the amount of annual pension in retirement which will be tax incentivised. T This new lower limit on tax approved pension benefits will be introduced from 1 January 2014, not from 2013. Beneath this overall limit, tax relief will continue to be granted on pension contributions at the individual’s marginal rate of income tax. This is a very welcome confirmation by the Minister. The annual levy on pension scheme assets will not be renewed after its current legislative expiry date of 2014. This is an extremely welcome confirmation by the Minister, and means that the controversial pension levy will expire after four years, as originally announced. An option will be granted to holders of additional voluntary contribution funds within pension schemes to withdraw up to 30% of the aggregate value of those funds for a period of three years from 2013. This measure will be introduced in the 2013 Finance Act. It is an unexpected measure, and will enable those with cashflow needs to access some of their retirement savings on a once-off basis. The exact circumstances in which the withdrawal may be made were not specified by the Minster.” Perhaps not ecstatic but to use their own words “welcome”. So a bankrupt country will continue to provide up to 40 % tax relief on incomes up to €115000 at the marginal rate (41%). Possible cash benefit to a person over 60 is €18860pa. Welcome. Of course it was!. Eliminating that benefit for 1378 of those people would save the 26 million of cuts that were lumped onto Carers. Those 1378 people et al must be very important people. @ Seafoid, Indeed, recently European industry has expressed alarm at the energy costs in Europe. With energy much cheaper in the USA, Europe is at a serious disadvantage and is fighting a losing battle. Europe is not competitive. On another point.. I think the “Hard Core” of Europe is playing a game of divide and conquer, they are playing Ireland off the other peripheral nations. 1) The closer Ireland gets to balancing it’s books the less incentive there is for “the Core” to loosen the terms and conditions Ireland is in. 2) Secondly and probably most importantly as Ireland progresses to Austerity Budget N°7 (October 2014) it sets a precedent for the others. “The Core” can justifiably say to the other peripheral nations (Spain, Portugal, Italy etc etc) “Well Ireland is taking the pain, so should you”. “If Ireland can do it, so can you”. On another point… I doubt Irish politics has the pedigree to go against the politics which exist in Germany, France and central European nations. These European nations have been at the cross roads of history, entire armies have crisscrossed central Europe for nearly 2000 years or even more. The lineage or history of European politics has seen Marxism, Communism, Fascism, wars lasting 30 years, epicenter of global wars etc. I get the impression, that despite the very best efforts of Mr Michael Noonan and others, that we are way out of our league. Ireland holds weak cards, and we are up against a political class which is far more experienced. @Sporthog European industry is not moving east because of energy costs…….its moving to gain a wage arbitrage advantage which has no net gain , only net cost on a long enough time line. French electricity prices are for example lower then even coal rich Poland. They have socializing these mainly hidden costs on their customers…………eventually when the fat lady sings they run out of customers. Its Marx labour theory of value in action. These Corporate vassal countries need national currencies & policies again. When the Euro breaks up watch the $ oil prices fall………….although for how long I have no idea. CARTOON OF THE CELTIC DAY http://www.presseurop.eu/en/content/cartoon/3129801-salmond-s-blushes @Der Dork Marx’ labour theory of value!!! on an Irish Economics Blog??? Spose you’ll be on about Labour Process Theory next? @Tull We agree on the 100 yrs. Is this a first? Men from the West: 22 Biarritz: 14 Northampton: 6 Men from the North: 25 @David Great results. @David Yes we can’t have that……. http://www.youtube.com/watch?v=-e8rt8RGjCM It can be solved via the destruction of labour or destruction of capitals claims on labour. The Euro supply chain is finished either way……….. The best mechanism is…… http://en.wikipedia.org/wiki/United_States_Note as we can at least retain the skills of labour. Capital it seems has no skills other the ability to extract labour value. Here is an interesting interview with the Greek finance minister… http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_07/12/2012_473514 Maybe M.Noonan could learn something. Can anyone tell me if the debt servicing costs are factored into the budget? I see it will rise this year by 1.7 billion and another 1.9 billion next year. Wouldn’t that wipe out the budget altogether? How is that gap closed and also the deficit gap closed?? It is blatantly obvious that there are very few property tax lovers in the country. Property taxes have at least two benefits in their favour. 1) They are effectively a partial tax on wealth. 2) They are an extremely stable source of revenue. One could go on to say that they are difficult to game and as Martha said that is a good thing. I am 110% in favour of property taxes provided they are levied by local government and spent locally on town/county services and primary and secondary education. We would then have to pay attention to the quality of our councillors and school board members. @ DOCM Martina Devlin wrote in an earlier column: Bizarrely, we pay out pensions while recipients hold down lucrative posts elsewhere. Former Taoiseach John Bruton is chairman of the IFSC, while also in receipt of a pension in excess of €140,000 a year. And although we can put a face and name to most of the politicians on these indefensible incomes – a swathe of the last Cabinet, for starters – senior officials now retired should also bear responsibility for the greedfest. Ireland has been in the grip of an emergency for more than four years. Year after year, cut upon cut, the situation has deteriorated. Perhaps for some, hardship fatigue has set in. But nobody could be unmoved at hearing about those children at Our Lady of the Wayside national school, where principal Anne McCluskey said there was no money to pay for boiler repairs. I do recall being in a cold classroom where the teacher used a copy of the ‘Cork Examiner’ to create a draught to set the kindling alight. Leadership and hope: Franklin D. Roosevelt, March 4 1933: If I read the temper of our people correctly, we now realize as we have never realized before our interdependence on each other; that we can not merely take but we must give as well; that if we are to go forward, we must move as a trained and loyal army willing to sacrifice for the good of a common discipline, because without such discipline no progress is made, no leadership becomes effective… I am prepared under my constitutional duty to recommend the measures that a stricken nation in the midst of a stricken world may require. These measures, or such other measures as the Congress may build out of its experience and wisdom, I shall seek, within my constitutional authority, to bring to speedy adoption. But in the event that the Congress shall fail to take one of these two courses, and in the event that the national emergency is still critical, I shall not evade the clear course of duty that will then confront me. I shall ask the Congress for the one remaining instrument to meet the crisis—broad Executive power to wage a war against the emergency, as great as the power that would be given to me if we were in fact invaded by a foreign foe. http://www.c-spanvideo.org/program/FRoo @ Tullmcadoo Your vitriol is now approaching titanic levels…As regards, the recovery from 1977-81, an ability to devalue in 1986 and 1992 undoubtedly helped cushion the fiscal adjustment from 1982 on. “The lady doth protest too much, methinks!” So where would you put Martina Devlin on your scale? The truth is often bitter and when this type of charge comes from an anonymous source, it is inevitably difficult to put it in context but coupled with previous carpings, it does fit a particular pattern. This individual could be either in the upper part of the public sector or a private sector bastion such as a Big 4 accounting firm or law firm that endures through boom and bust. During the bubble, he/she went along with the narrative of permanent prosperity supported by demographic dividends and so on while dissenters were ‘talking down the economy’; now the desire to preserve the status quo is consistent with buying into the official narrative. So when an American firm changes its domicile from the island tax haven of Bermuda to Ireland and its global R&D spend becomes that of an ‘Irish’ firm, where’s the harm? Wonder about the market for smokescreens compared with inconvenient facts when billions in public spending largesse are at stake. This modern-day Mr Magoo has a self-interest in opting for fairytales. Challenging conventional wisdom in Ireland stokes up a lot of venom from vested interests. Please challenge the facts — not always easy is it? Google sometimes isn’t of much help unless you have some idea of where you’re heading. My point on the central bank was missed. The 1986 devaluation of 8% was triggered by a collapse in oil prices that sent sterling sharply down. Weeks before, in July of that year, the OPEC price fell to less than $10 per barrel from an average of $23 in Dec 2005. The average price in H1 1986 was $12 a barrel — back to 1974 levels and in real terms below the 1973 price that preceded the quadrupling of prices by OPEC. The Jan 1993 devaluation of close to 10% again was triggered by months of external turmoil, not by a visionary central bank. I recently wrote about current interest rates being at the lowest since Babylonian times. On Sept 16, 1992, the day sterling was withdrawn from the European Exchange Rate Mechanism, Sweden’s Riksbank raised its marginal lending rate to 500%! @ Fiatluxjnr.. Indeed a very interesting article…. thanks for that. Shocking though, 45% on income rising above 26k!!!! Whoaaaaaaaaaaaaa!! Now that really hurts!! Perhaps a sign of things to come here? @Micheal There is another way………….. Some call it financial repression……… The Anglo countries are engaging in the production of synthetic greenbacks sending interest on their books back to the Treasury. So government debt is really getting close to becoming base money in the US. The Irish CB can only return Seigniorage on cash and stuff. Government debt needs to become base money. This in conjunction with capital control like taxes. I would have put all the tax burden on private car VRT ALL OF IT The money otherwise spent on interest can be spent in the national economy on rational rail capital projects. Ireland is merely bailing out the core so that when the flow is increased they will have the mechanisms to capture it line 2 of Dijons tram system was opened today………. http://bourgogne.france3.fr/2012/12/07/dijon-j-1-avant-l-inauguration-de-la-ligne-2-du-tram-160445.html @Sporthog Noonan etc may not have the pedigree of the core political wallahs but the game is bigger than Europe now. Draghi bought time with his last whizz and the yanks and the chinese expect a bit of cop on. There is probably more sympathy for the periphery in the markets- not because they are lovely but because if Spain or Italy go then tail risk and how to price a catastrophe are back on the agenda. The core do.like their euro and that is also in the mix. I don’t believe the core has yet found a way to hedge its risk. It all has a touch of fawlty towers. Comments are closed.