Austerity: Special Report

The Irish Examiner has been running a week-long series on austerity in Ireland – the various articles are available here.

My own contribution is here.

77 replies on “Austerity: Special Report”

Thanks Philip,will look up the other papers,enjoyed the one linked,this “1 BILLION” savings from the PN’s, has become a bit off an albatross around the govt.’s neck.
Regarding funding going forward,some hybrid ‘guarantee’ may be utilized,like training wheels.Good Red C poll numbers yesterday too,so the electorate appears on board.
But agreed going off ‘message’, will most likely result in a widening off yields.

The Economist had something on exiting and the possible options.But thanks for the link and enjoyed the article.

“Conscious of its vulnerability, Ireland wants its borrowing to be shielded from bond vigilantes by the European Central Bank (ECB) through its pledge to make potentially unlimited purchases of debt in secondary markets. But the country will be eligible only if it signs up for a precautionary programme with the euro zone’s rescue fund, which will provide a credit line. Although the conditions for this will be lighter than those for a full bail-out, Ireland will still have to be monitored. Moreover, the ECB has said that the IMF should be involved. In short, Ireland will exit from one bail-out programme and enter another.”

Also,as its Friday and the Dylan ref. is kinda funny,some nice praise from Ollie Rehn.

@ Phillip Lane,

There’s no doubt that from a figures point of view austerity is achieving its purpose.

If your article was to look at things from a ‘fit for purpose’ point of view would you conclude that austerity is working?

I would obviously go a step deeper and question if the current method by which money is created and destroyed in line with debt and debt repayments is what we should be questioning.

@BrianH just finished reading a piece by CS on robotics,no really!
But agreed,given the level of social unrest,rise of ‘nationalist’ parties,oh hold on…

“Robots also never ask for salary increases and can work efficiently for hours without a break. Wages are also rising in other emerging markets, analysts pointed out, which means that simply moving operations to a cheaper wage-cost locale is less of an option as well.”

The Budget process has become a circus and by the evening of Oct 14, the government will have leaked most of the content.

Lobby groups publish submissions for publicity purposes and most of them are likely binned in Merrion Street.

Attention of course is paid to the American Chamber and IFSC lobby groups. It helps of course when Richard Bruton rubberstamps the requests.

Last year a wise civil servant queried the value of changing the R&D tax credit scheme that would cost at least an additional €45m.

Michael Noonan, finance minister, went ahead with the request but set up a review and asked for submissions. I submitted one.

It costs about €300m annually and at official level, nobody knows if even one claim was rejected in the past 10 years. Hard to believe maybe, but the facts.

The Irish Independent has the contents of a leak today: “Hard-pressed families – the so-called ‘Coping Classes’ – struggling with mortgages and bills will be the focus in October’s Budget.

The Government is specifically examining a range of options to ease the pressure on families with education and medical costs.

Coalition sources say a series of low-cost measures is being weighed up for inclusion in Budget 2013.”

That should be Budget 2014.

The funny thing about the to and fro on what the adjustment should be is that Noonan wants to have one surprise stimulus announcement in the Budget funded from the pension fund cash –
new house grants to soften the property tax; energy conservation and lots of wind subsidies.

…and a quiz on the sixth anniversary of the start of the financial crisis. Who said this?

“I think you have to look at the asset. This is the question: if you are borrowing ‘x’, if you sell the asset, if there’s a bit of a downturn, will you get ‘x’ back in return? That’s the issue. At the moment, there doesn’t seem to be an indication [of difficulties].

“I mean quite frankly, if you had taken the advice a year ago you would have lost a lot of money. Everybody said we’re going to see a huge downturn in 2005 linking into 2006 – – they were entirely wrong.

Really we should have an examination into why so many people got it so wrong. My view is there’s not a great problem. Really, the bad advice of last year given by so many has maybe made some people make mistakes, that they should have bought last year.”

Is Austerity working? Yes indeed it is! Or is it?

“Ah, It depends on your perspective old son!”
“Here’s my Smartphone.”
“Now give that Delphic Lady a call. She has this amazing Crystal Ball – and all!”
“Careful though. Its one of those Premium Rate numbers”

Are the sheep folk really that stupid? I can attest to the rank thickness of many academicals. They can be mind-bendingly arrogant, obstinate and crass. But the public at large? Someones are in for a very nasty shock.

Austerity has (or will have) achieved: a significant loss of employments; a significant loss in waged-labour incomes; a significant loss in pensions; a significant increase in charges and taxes that have to be paid out of disposable incomes. And some idiots call that ‘success’! On that scale, I would not like to encounter ‘failure’.

Now being a tad dopey – ageism you understand, I have this quaint notion that it is not possible to ‘balance the national accounts’ absent a level of aggregate economic ‘growth’ which is in excess of any accumulation of outstanding debt (whether personal, corporate or public). You have to have a sufficient income to ‘live’ and then enough extra income to cover your debt payments (plus the interest). And state revenue comes from what sources?

So, ‘successful Austerity’ means we can get back onto that borrowing Carousel (never mind the cost – just look at the flow!). And on we go, around and around and around …. until the music stops – again? As it surely will. Its the math you see.

In the meantime? “Pass the single malt! – carpe diem!”

A brief precis of Philip’s piece.

We need to avoid the dangers of pro-cyclical fiscal policy in future by implementing pro-cyclical fiscal policy now.

There are significant downside risks to not reducing government spending quickly enough but not to shrinking the economy too quickly or increasing the time people spend unemployed. (There aint no such things as hysteresis you stinking hippies!)

The most significant factor in market funding rates is government commitment (not even success) in reducing the deficit, government commitment to growing the economy (or reducing debt/GDP) is not an important factor. This one could be true for some classes of investor but even so it is a controversial position and it avoids the real problem – EMU and the “foreignness” of the Euro as a currency for countries other than Germany.

A really brief summary: We have to shrink the state now before elections get in the way.

@ BL: Many thanks for that. I would have found some of those Qs somewhat challenging.

@ Brian Lucey;

We may not know much about economics,but we certainly know about property-world champions.

@Philip Lane

“… from a macroeconomic perspective, stimulus measures of €1bn (the projected savings from the promissory note deal) would simply be too small to have a noticeable impact on the overall growth performance of the economy; in contrast, securing €1bn in expenditure cuts or revenue increases would be a major achievement in the context of closing the remaining fiscal gap.

PLEASE may we drop this ILLUSION of “SAVINGS” on the Promissory Note deal – this is the equivalent of shortening the length of the noose on the hangman’s rope – it takes a little longer by one is still well hung!

On expediture raising let’s say we (i) introduce a once off three year levy of 3% on corporate profits (ii) a modest levy of €100 per acre on land and 50,000 per stallion (iii) an extra 4% tax on income over 90,000 (iv) a 50 euro raffle of Tull’s famous pink bellbottoms (v) a tuppeny reward for the size and origin of DOCM’s pension (vi) and as well as others on the HOW of fiscal adjustment (vii) a declaration of intent to the ECB to withdraw from honouring any deal on the promissory notes unless a referendum on same is put to the Citizenry.

Within all such abstractions one finds the lives of real people ….

@Brian Lucey

Will get to it. Meanwhile, purely off the cuff, I suspect that any Citizenry that allows its public reps to take on a financial system debt of 50-60% GNP must, quite simply must, be either economically and financially illiterate or abjectly supine or more probably both.

On the other hand, one suspects that a survey of the Irish Citizenry’s public reps would probably demonstrate a lower level of economic ignorance and a somewhat higher level of supine_ness. Get to it Brian – do the state some service!


Not too sure if I would look at the numbers as optimistically as your good self.

We are 6 years into the financial crisis… and Ireland is still spending 14 odd billion more per year than we take in.

That’s not very good is it????

Assuming cuts of 5.1 billion in the next 2 budgets……… and economic growth of 1.5 billion / year… that gives us 14 – 5.1 -3 = 6 billion odd per year spending too much.

My understanding is that if I spent more than I earned, racked up a huge debt, for things to improve… the situation would change only when I was earning 20 % more then I spent. The extra 20% would have to go on paying down my debt.

For Ireland now… that would mean an adjustment of 17 billion. 14 to balance the books and 3 billion to start paying down the debt.

Your point about making adjustments now rather than later as auction politics commence due to the next General Election are well made.

However auction politics is in FULL SWING right now with Ms Joan Burton who cannot find 400 odd million in a dept which spends 20 odd billion / year. It’s just inconceivable…either Joan is blind or she is unable to carry out basic addition and subtraction. What Joan does excel at is blaming others for the tough decisions which have to be made.

Joan requires to be replaced with immediate effect. More accountability has to be placed on people, the fact that the cost of child rearing is covered by the taxpayer and not by the parents responsible is an affront to democracy. We have encouraged irresponsible behavior which is now costing the taxpayer dearly. Needless to say there is no political plan to reverse bad social engineering policy. Auction politics comes first,,, saving my own skin for the next election.

As for your finale summation of the crisis, all very true… but not complete… you left out the bit where mortgage rules changed in the 80’s which allowed both partners to put their combined incomes into a mortgage application. Before that banks did not give mortgage, building societies did and only at 75 to 80% of the value of the property.

One only got a loan to buy a house after demonstrating a saving history for a number of years, only one breadwinner’s salary was considered. This did make getting onto the property ladder difficult, but it kept the price of property DOWN.

@ Brian Woods Snr

Economic change is seldom easy to manage.

The New York Times reported on Friday that Vladimir Putin is considering a stimulus after Russian growth dipped to zero in the first quarter. He has proposed an amnesty for some of the more than 110,000 small business owners he is holding in his gulags for ‘economic crimes.’

Raúl Castro in Cuba is making some progress and about 400,000 Cubans now work (possibly still scratching an existence but hope is essential in life) in the private sector of small business and self-employment, up from 150,000 three years ago. Farmers can sell almost half their output to the highest bidder, rather than handing all of it over to the state.

As for our own shebang, what’s the alternative to help from outsiders – be a theme park for Americans and Chinese? Some pine for the freedom of Iceland.

Opposition parties in Iceland swept to power in the spring on the promise of a writedown of as much as 20% of all its citizens’ mortgage debt (not just the poor but everyone). The OECD noted in June that according to Statistics Iceland, nearly half of Icelanders are having trouble making ends meet every month.

“There is little fiscal space for additional household debt relief,” the IMF said in a statement on Iceland, also in June.

In July, those repentant folk at Standard & Poor’s cut their outlook on Iceland to “negative from stable,” warning it could slash the country’s credit rating to junk status. It warned the debt writedown could top 10% of this year’s GDP, and potentially far more.

The coalition leaders have signalled that foreign creditors could suffer a “haircut” of up to 75% on the IKr447bn (€2.9bn) of their claims made up of Icelandic assets and stakes in the new lenders that replaced the country’s failed banks. Capital controls remain in place.

An Icelandic journalist who works for the state broadcaster in London points to large foreign debt maturities of big corporates in coming years and says in respect of the “haircut”:

“Fetching this money – never quite explained how (the estates are private companies, unrelated to the sovereign) – would be easy since the foreign creditors were in great hurry to get their money out of a country with capital controls.”

“There is no magic wand we can wave,” Vlad, the cuddly Russian bear, said in June.

@ Sporthog

There is over €400m currently being spent on rent allowance. I’m not saying that it shouldn’t be paid but what’s intriguing is that there were an estimated 350,000 empty housing units in 2008 (17% of housing stock) and there are currently 486,000 people getting some form of jobs benefit or back-to-work scheme payment from the State. Nevertheless, despite this depressed economy and net emigration, while inflation rose only 0.7% in the year to July, residential rents are the biggest risers.

Dermot O’Leary, Goodbody chief economist, said on Friday:

“While price inflation in the majority of the CPI basket continues to be muted, private rents continued to accelerate in July. Private rents grew by 0.5% in the month, with the annual rate of growth rising to 7.2%, the fastest pace since April 2008.

Private rents are still 17% below the 2008 peak, however they have bounced by over 10% since the early-2011 trough. Judging by recent trends in stock levels in the rental sector, it is likely that rents will continue to grow.

Based on our estimates, the average rental yield in residential property in Ireland is now c.6%, relative to a trough of c.3% in 2006. However, national averages hide significant divergences across the country. In reality there have been numerous examples of residential properties in the capital being sold at yields of 8%+. Indeed, these yields have attracted significant interest from international buyers.”

This is what Burton said in 2011 before moving into election mode:

“When I came in to the Department of Social Protection, the accountant in me was astonished at the scale of the growth in the social protection budget over the last ten years. In 2001 spending on social protection stood at €7.84 billion; by last year this had grown to almost €21 billion – an increase of 266%.

Inflation increased by around 30% during the same period.

So while some of the expenditure increase is clearly due to the dramatic rise in unemployment since 2007, the most significant factor is a surge in both rates and the number and size of schemes over a very long period of Fianna Fail government.

Frankly, the increases in social protection payments were often cynically timed to help Fianna Fail win elections. They were funded by tax revenues from the unsustainable property bubble.”

“There is over €400m currently being spent on rent allowance. I’m not saying that it shouldn’t be paid but what’s intriguing is that there were an estimated 350,000 empty housing units in 2008 (17% of housing stock) and there are currently 486,000 people getting some form of jobs benefit or back-to-work scheme payment from the State. Nevertheless, despite this depressed economy and net emigration, while inflation rose only 0.7% in the year to July, residential rents are the biggest risers.

the empties are not where the people are. They are in the upper shannon, the whest and the midlands. Thats not where the bulk of the unemployed are. I think a read of Ronan Lyons on the splintering of the monolithic national housing market might be useful. Shortages in certain areas = rises in costs.

@ MH-ff: ““There is no magic wand we can wave …”

I know Michael, I know. I have said so, insomuch as you cannot play ‘auction politics’ with the math. I am grimly aware of our predicament. We must rein in overspending. We must. And sooner, not later. Either way it would have the direst social (and political) consequences. Anyone who asserts otherwise is either comatose or a mendacious knave.

Fortunately we have an ample amount of arable land and a passable quantity of fresh water. Its back to rural life and manual labour on the farm. Low wages (hence lowered state revenues) and lowered standards of living. That’s the future for the majority of Irish citizens.

Some commentators on here witter on about the lack of change. Fine. But the sort of change I envisage is slow, deliberate and unstoppable. As I am too fond of saying: its the math. And by then, energy poverty will have kicked it. This generation of twenty and thirty somethings will eventually get to ‘enjoy’ the life and times of my parents – the 1930s.

Anyhows. Its a fine morning again. Going to get my Douwe-Egberts and butter croissants – with some delicious home-made blackcurrant jam! I’ll be fine!

@ MH,

Granted Ms Burton is not responsible for the EXPLOSIVE growth in spending during the FF years 2001 to 2011.

However she is the RESPONSIBLE person running the Dept. It is very clear that her priority is how to massage the blame onto the 4 member EMC for the cuts required. The priority is not “what is good for the nation” but how can I maximise my re-election chances and oust Mr Gilmore as leader of the party.

I believe what is required in Ireland is a new “Social Engineering Policy”.

“What type of society do we want in 30 years time?”… this is a very important question that nobody seems to be asking.

Is it one of “the lowest common demoninator” or where equal opportunity is encouraged and entrepreneurship, innovation and solutions meeting problems is desired.

I don’t understand why in ireland, some sections of society are actively engaged in Illegal activity,,,, and yet they are still in receipt of social welfare allowances. Is it the function of the state to reward criminal activity? Because that is the way it looks like it to me.

Why does it cost 70K to 100K per year per prisioner in Ireland. We are 6 years into this crisis and a cheaper method of reforming / retaining criminals has not been found!! Its almost like the financial crisis has never happened. The elephants are still carrying on regardless, in charge of their own fiefdoms.

As for RENT ALLOWANCE.. I have no problems with a private landlord who provides a service and in return makes a modest 6% yield for their efforts. I don’t believe any reasonable person would have a problem either, including your good self.

However bashing private rental landlords is not really plausible… as the various councils have given up providing rental units. Policy dictated that it was better to leave it to the private sector, Part V for planning, and just dole out the money instead. Now that the private sector stepped into the breach, the Marxist Socialist Mob howls in anger. “How dare public money be spent on private landlords”.

You could not make it up.

Years ago, there were 3000 unmarried mothers, and a case was made to give them an allowance. Now there are almost 100,000 of them. Where are the fathers???? Why has the burden of raising these children fallen to the taxpayer and not the responsible parents of the child?

Laws of unintended consequences??? No Irish politician has ever understood what it means… and I doubt there will ever be one.

You yourself have mentioned time and time again a very astute observation of ireland……………. Zero Accountability..

Well from my perspective………. Zero Accountability exists from the very bottom to the very top in Ireland. I am coming to the conclusion that this crisis is a wasted opportunity.

Is austerity working?
Wednesday, August 07, 2013

NO, says Dr Seán Healy

“AUSTERITY is not working. Since 2008, successive governments have cut spending, raised taxes, increased unemployment, lowered wages, decimated services, and let infrastructure deteriorate on the understanding that austerity would lead to recovery.

Austerity, however, doesn’t work in practice, doesn’t work in theory, and isn’t ethically fair.

In practice, austerity has produced structural unemployment, rising poverty levels, a sustained child poverty problem, ongoing adult literacy challenges, high emigration, lengthening social housing waiting lists, and declining physical and social infrastructure.

After five years of austerity and hitting all its goals on borrowing requirements, Ireland finds itself in recession. We were assured economic growth would follow the austerity approach set by the troika.

We now find that these assurances were not soundly based. Instead, after a period of very low growth, the economy has again got smaller in each of the past three quarters.

Further proof that austerity doesn’t work is supported by a little-publicised IMF study produced in June. The working paper, entitled The Distributional Effects of Fiscal Consolidation, shows that fiscal consolidation in many countries in recent decades has had significant negative effects by raising inequality, decreasing wage income shares, and increasing long-term unemployment. Yet, despite this evidence, Ireland is persisting with this failed formula.”

Yes – says Prof John Fitzgerald

… now where was John during the ‘boom’ – boom_boom

‘We are all living in fear in relation to where is the axe going to drop next’
Wednesday, August 07, 2013

MARY McDONNELL has been caring for her daughter Sinéad for 50 years, and it’s not getting any easier
Now aged 76, Mary has found that if anything, the last half dozen budgets have made life a lot more difficult.

Living in Douglas on the outskirts of Cork City, she tends to the needs of her daughter, who suffers from a very serious degree of cerebral palsy, on a daily basis, alongside her husband who himself suffers from bad health. “Life is a struggle now at 76,” she says. “It’s hard going.”

Blind Biddy say NO NO NO – it ain’t workin ….

Summary: Ivory Tower 2 Aye; Lifeworld 3 Nay

@ Sporthog

Zero accountability apart from, to quote Abraham Lincoln, the electorate having to “sit on its own blisters”.

Stephen Collins in today’s IT in full.

Vilifying State institutions well shy of informed debate

Far from being a failed State we are a highly successful modern country with a standard of living that would be envied by most people on the planet

The silly season is in full swing with “summer-school speak” and “wild rantings”, to use the colourful terminology of former Fianna Fáil deputy leader Mary O’Rourke, filling acres of newsprint and hours of air time.
Irish parliamentary democracy and its institutions have been dismissed by prominent pundits as representing nothing less than “a failed state”, “a perversion of the human rights ideals of 1916” dominated by “unaccountable elites”.

While exaggeration is allowable and even necessary to get attention in the lazy days of summer, the sense of national self-loathing that permeated some of the summer school contributions this year was a bit worrying.
Of course our democracy is far from perfect and needs reform on a number of fronts. But the unremitting denigration of every single institution of State can be corrosive and, ultimately, destructive of democracy itself.
A theme running through most of the criticism was a contempt for almost all elected representatives and thus for the electorate itself. If our TDs can be dismissed as “poltroons” then the voters who elect them are clearly no better or are, at best, in the grip of “false consciousness”.

There is a clear frustration among some intellectuals that in the face of the recent economic and financial storm the Irish electorate chose to stick with the old reliables, Fine Gael, the Labour Party and even Fianna Fáil rather than embracing some new form of politics.

‘Elections belong to the people’

In response it is worth quoting one of the most inspirational political leaders of the past 200 years, Abraham Lincoln, who remarked: “Elections belong to the people. It’s their decision. If they decide to turn their back on the fire and burn their behinds, then they will just have to sit on their blisters.”

At present the Irish electorate is still sitting on the blisters of the boom years which arose as a direct result of its weakness for populist politicians and their easy solutions. Hopefully, voters will have drawn some lessons from the experience but, ultimately, the choice is theirs.

One way of trying to minimise the danger of a return to irresponsibility would be a genuine programme of political reform. Despite all the promises made in opposition, the performance of the Coalition on this issue has to date been deeply disappointing.

Most of the issues referred to the constitutional convention are not central to a real reform agenda. And some of them, such as the reduction in the voting age, look like trivial publicity stunts.

The dilemma facing any government is that genuine reform will inevitably involve a diminution of its own power and make the decision-making process messier and more protracted. Given the range of serious problems facing the country, the temptation is to postpone reform while ploughing ahead with the task of getting the economy back in order.

However, failure to really reform the Dáil so that all TDs can participate in decision-making will simply foster the dominance of the clientelist-type politics that has got the country into a mess in the first place.

A really hard look at the electoral system and an open debate about the pros and cons of multiseat proportional representation is also required. The public would be wary about changing the system, as discussion at the constitutional convention showed. But a robust debate on the issue could focus minds on what people really expect of their politicians.

Informed debate about the kind of reforms required in the public service and the legal system – to make them more responsive to a changing society – would be more helpful than the simplistic denigration of these institutions that feature in much of current commentary.

The bottom line is that since its foundation, the State, far from having failed, has actually proved enormously resilient. We are one of the oldest continuous democracies in the world and, while that has a lot to do with geography, the commitment of ordinary people to basic decent values should not be underestimated.

In recent decades the State has withstood two potential threats that could have overwhelmed it. The first was the terrorist campaign of the IRA which attempted to harness national pride for an evil purpose. The vast majority of the Irish people and their politicians showed great maturity in turning their backs on emotional appeals to instinctive nationalism.
More recently, the financial crisis that marked the end of the boom could have led to a destructive cycle of protest and economic collapse that would have set the State back decades. Many of the most prominent critics of Irish society urged precisely that kind of response.

Sovereign debt default

However, the electorate and the political system resisted the temptation to go down the road of sovereign debt default – and the negative consequences that would inevitably have ensued.

The result is that the State has gradually pulled itself out of the mire. When viewed on an international scale Ireland is not doing too badly. The most recent United Nations human development index, which measures a range of economic and social indicators, rates Ireland as seventh out of 186 countries in the world.

Far from being a failed State we are a highly successful modern country with a standard of living that would be envied by most people on the planet. That doesn’t mean there are grounds from complacency. The close shave with disaster exposed the need for serious self-analysis, but that is very different from the kind of destructive criticism that displays contempt for democracy itself.


Philip Lane’s argument makes perfect sense from a macro-economic perspective and is persuasively argued. But the questions are (a) is the strategy for resolving the crisis in the EU peripherals ,on which his article is based, credible, and (b) for how long does it remain politically feasible for our government to ‘stick with it’?

This is so particularly when positive outcomes from this strategy, such as they may be, are not apparent in the daily lives of most people, their businesses, their communities or in respect of their own future prospects or those of their children.

This is six years on. How many years, or decades, do those in power or in the realms of expertise in predicting economic trajectories, expect this to go on? Bear in mind that this government was elected on a promise – from both parties – to renegotiate the terms of the bailout. They have failed in this objective. Instead, they demand compliance with the terms of the bailout; unfortunately, without any creative input from their own end and most regrettably, with successive demonstrations of impotence and incompetence in the execution of their ministerial portfolios.

The point has long been made (for example, by Aidan Regan on this site and elsewhere) that the fiscal/economic crisis in the eurozone has been latterly overtaken by a political crisis. That political crisis is showing up in Greece and Portugal, with rumblings in Spain, Cyprus and Italy. Right now, it appears that Irish public opinion – despite an almost near collapse in trust in our political institutions and politicians generally as measured in tracking opinion polls– is prepared to consent to sticking with the current government in the sort of ‘hold your nose’ way that applied to the Fiscal Treaty referendum.

But that doesn’t mean that representation is no longer important to the Irish electorate or that the hold your nose attitude can be sustained over the long term.

A large parliamentary majority is no guarantor of political stability. In last week’s Sunday Business Post, Pat Leahy points out that this government could not survive the resignation of Joan Burton. I believe he’s right.

From the extreme left, Joan is demonised as a ‘neoliberal. From the middle ground, and the right of the political spectrum, she is pilloried as having somehow ‘lost the plot’. From her own perspective, she might well deserve to think, in the wake of such a two pronged onslaught, that she is getting something right. That she has something of value to say beyond her own portfolio is reflected in her own standing in the tracking polls. Whether she is right or wrong – and as Michael H. has demonstrated she can get loads wrong in her analysis – she is perceived amongst the general public, and rightly so, as a political representative figure of genuine authenticity.

But this is not about any individual politician.

I go to a fish shop opposite the Capuchin Day Centre. I’ve been going there for years. Around 11.00am, on Saturdays, the queues start to build outside the Centre. Not so long ago they were mostly homeless people, who obviously all knew each other. There was a buzz in the crowd then, with people talking to one another. I kind’of felt I was getting to know them too.

It’s not like that anymore. Today the man at the front of the queue had a pushchair with a baby in it and a little boy of about three years old, who was gadding around and whom the frustrated father was trying to keep at the front of the line. Further back there was a man and his wife of my own vintage. They looked like us; and they looked really scared. Then there were the east Europeans, whom you can always tell by their aura of self confidence, whatever it means, though may God bless them for it! There were all sorts in the queue; from all backgrounds, racial and social. Not really talking with one another as the people there used to do once upon a time. Just lining up quietly, in the hope of a decent meal.

I think that’s the point where what Philip is saying, valid and all as it may be from the point of view of classical economics, begins to break down. Philip is right. But the decision about the social impact of what people can endure, or what it is acceptable that they should be expected to endure, is a political one.

Personally, if I believed for even half a minute that going for a major reduction in the deficit this year through the full €3.1bn cut in public spending, plus a couple of tax reductions for the middle income earners and so on, would actually deliver a boost to the domestic economy in 2014, I’d be all for it.

But that case has not been made.

Our state is “[a] highly successful modern country with a standard of living that would be envied by most people on the planet.”

True. But remove the credit card and things will fall asunder pretty damn quick. That’s the predicament. Living on credit. It will stop.

“… in the face of the recent economic and financial storm the Irish electorate chose to stick with the old reliables, Fine Gael, the Labour Party and even Fianna Fáil rather than embracing some new form of politics.”

What other choices were actually available? Like, none! Please do not ‘blame’ the voters. They are not homogenized individuals – they vote in clusters – constituencies. And please do not make the mistake of thinking that our modern political parties are representative of the people – they’re no such thing. They represent vested interests. Their next closest allies are in the senior ranks of the civil service. And if you want to be properly paranoid about it, the leaders of our trades union also. Surprise! Surprise!

These senior persona whilst they may appear to be partisan, are in fact attempting to protect what some call the ‘status quo’. These senior persona recognize that their status and positions of power are now under serious threat and they may (with considerable reluctance) have to effect some change – to protect themselves and their ‘status quo’, not to save the citizens. At the moment they are at sixes-and-sevens with each other. Just wait, and watch.

If the current financial and political crisis were unique to Ireland, the it might be solvable without wrenching political and social upheavals. Its not. The entire western developed economies are infected. We either decide (which we will not do) to act now, or pretend and hope that our situation will somehow or other improve. Hope is good. Lets hope!

@ Veronica: Re JB: “…she is perceived amongst the general public, and rightly so, as a political representative figure of genuine authenticity. ”

I knew JB for a long time. She is a bog-standard, self-serving, parish pump politician. She is completely devoid of authenticity. She’s useless. Period!

Think: If you live day-to-day by using your credit card. How long can you persist with this behaviour before your card is declined? Then what happens? That’s our predicament.

@ BW Snr,

Here I have a confession to make – I’ve known Joan for several decades; long before she was ever elected to any position in public life. On a personal level, I have to say I revere her completely.

Her career as a politician is, as I see it, her professional choice. I don’t agree with her in terms of a lot of her views – and well she knows that, believe me! – but I must respectfully disagree with you as regards her character. You are completely wrong.

Being in politics has increasingly become synonymous with public performance. That’s the game. But one of the more interesting aspects of it is that the public will always separate the charlatans, and their rhetoric and cant, from the voices of those who at the very least exhibit some sort of authenticity in terms of their social belief. That is where I locate the current Minister for Social Protection. I believe it would be helpful if she knew something about economics, as opposed to a daft reliance on some form of accountancy proficiency, but that’s not the issue.

If Minister Burton were to resign tomorrow, the government would fall. So says Pat Leahy of the SBP last week; but it doesn’t take much to work out the basic politics of it all.

That’s also the point about the fallacy of suggesting that a parliamentary majority confers democratic legitimacy, or political stability, as suggested in Philip’s article. Life doesn’t work like that.


It all depends on what colour glasses you are wearing old chap.

Many thanks for your posting of Mr Collins IT article.

What relevance it has to the points I have made in my posts above I have difficulty in understanding.

I never mentioned “failed state”, however I have mentioned a number of “failures of policy” which is now costing the tax payer dearly. Is that deniable?

If you believe that 5.1 billion of cuts will “pull us out of the mire” considering we are currently

1) Spending 14 billion / year more than we are taking in.
2) Accumulating a bigger debt pile with interest which has to be serviced, slowly reduced but perhaps never paid down in full.
3) Still awaiting the “Growth Fairy” to do the rest of the adjustment for us.

Then I would recommend that you “change your glasses”.

I never believed in the growth fairy, even if it was a “reasonable assumption” back in 2011. Granted some growth has occurred, but looking across the globe it would be more accurate to assume that Global growth will remain anemic for some more time to come.

Realistically I see budget cuts / adjustments of at least 10 billion more, not to mention the cost of servicing the debt pile… and of course the retirement cost of those civil servants who have retired and have yet to retire.

Personally, I see several warning signs in various sectors in Irish society / Irish economy, but I’m not going to list them here… however they all share a common feature. That feature is a failure to see the many flashing red lights / warning signs before any crisis fully manifests itself. Whether that crisis is in the health service, Economy in General, the Pan National Drug Problem of Garda Corruption, Army Deafness Cases, it does not matter. They all display the same feature.

There is very little forward thinking… only reactionary crisis response. This “modus operandi” cannot be financially tolerated any more.

I have read your many articles on this site with interest. You have mentioned many valued points, and you seem to have a good grasp at external political factors in Europe.

However I would advise caution when reading ANY article written in the Irish Times.

To confuse constructive criticism of “policy failures” which destructive criticism of the entire state is unbecoming of Mr Collins and anybody else for that matter.

Oh by the way the only reason why Ireland continues to enjoy the standard it currently has is because of the financial funds which are given to Ireland from external sources, and not because we are a clever well deserving nation.

@ Sporthog

If you read the opening sentence of my comment, you will see that I was referring solely to the issue of “zero accountability” in your contribution. I made no comment on any other aspect of it. Or on the article by Stephen Collins except, implicitly, in respect of the quotation from Abraham Lincoln which I thought was rather good. I regret any misunderstanding that this may have given rise to.

@ All

The nation wakes up this morning to another shock-horror series of headlines in the Sindo.

The ghost of Ernest Blythe is clearly not feared by at least one party in government!

@ Veronica: Thanks for that update. I’m targeting the politician, not the persona. If, and it would have been a big if, JB had ‘refused’ to go into the coalition with FG at the very beginning – then I would have gladly changed my opinion of the politician. That would have been a heroic display of political principle. Something which is in very short supply at the moment. Gilmore would have barely ‘blinked’.

If she were to resign now, her resignation would be ‘unfortunate’ – a three-day wonder and all. But that would be about it. What is Pat Leahy on about? Has he any conception about contemporary Irish parliamentary party politics? They are no longer ‘mass’ parties. The memberships are a damn nuisance – a democratic veneer. That Galway tent has not gone away you know. Its a virtual one now. And they (our parliamentary party leaders, civil service elites and trades union leaders) are all ‘inside’ together. That is the completely rational behaviour of folk who want to avoid giving away any significant privilege. A sop here and there is acceptable. But that’s it.

I analyzed all the Irish coalition governments from 1948 – 2007 to see whether they were Office seeking or Policy enacting – using Election Manifesto metrics. There were only two that fitted the Policy enactment mode, the rest were Office seeking. Surprised?

The current one is a super-majoritarian – rare in coalition formations. The Reynolds-Spring administration was our next nearest. Now, coalition formation theory suggests that a super-majoritarian coalition should be a policy enacting one. How would you classify this one? They sure are enacting some policies! But whose? And for whose benefit?

What I missed in my analysis was the personal nature of the party leaderships themselves. You can only anaylze that with hindsight. Gilmore is not a Spring. Would that explain anything? I believe it might. The guff spewing from senior ILP folk shortly after the conclusion of the last parliamentary election was all about justifying their final abandonment of any pretense of being a slightly socialist party. They’re all right-of-centre now.

Since 1977 all Irish governments have lied, and lied and lied, about how the state has to be funded. It did not take long for the first crow to come home – the 1980s and early 1990s were not exactly a ball of laughs for the citizens. And here we are – again. Only this time its a couple of orders of magnitude worse.

Would a knowledge of economics be of help? No. But that’s a personal opinion. Mind you, some knowledge of basic math and a sound understanding of the behaviour of exponential functions (growth of debt!) might be useful. Not to mention an understanding of the embedding of the economy is a finite, physical system. The only math our politicians are interested in, is that first preference percentage and the transfer tallies. And of course, their pecuniary ‘entitlements’.

Its hang together time. Until pension time!

Thanks again. Cheers.

@ docm

It would appear we are getting closer to the fork in the road…… Labours way or Frankfurts way!!

Keep your glasses on old Chap, for they serve you well.

‘From an overall perspective, it is terrible that fiscal austerity is necessary at a time when unemployment is so high and many households are under massive financial strain’

It is worse that there are so few ideas on how to manage the economic crisis in Ireland and in Europe. As @ veronica says, accounting is fair enough but where is the economics ? There was a time when we had economists of world stature, but the elite US economics schools have long ago taken the shilling. The profession has been muzzled, with MMT and other genuinely creative notions shoved to the margins.

I think it is obvious that Joan Burton is a hard worker, who tries to get on top of her brief. She is also, politically speaking, an old fox, who has made her way up successfully through what is still mostly a man’s world. Her 20 bio is one of the pins holding the domestic economy together, so she will be bloody careful about dismantling it. The rest of cabinet will be listening for ticking sounds too, because belief in the growth fairy is not very strong.

Stephen Collins’ analysis seems reasonable enough, with its emphasis on the need for reforms of the state. It’s a pity he spoils it with the usual Dublin misrepresentation of the Northern Ireland Troubles. The reality is that nearly 50 years after the founding of the Welfare State, people were batoned off the streets of Derry by British police for peacefully singing ‘We shall overcome’. UK citizens were later interned without trial by their own government, in some cases for the ‘crime’ of teaching the Irish language.

Given the division on this island, and the history of armed conflict, those British state actions were morally indefensible, and politically disastrous, but old supremacist attitudes died very hard, even within the British Labour Party. The current Belfast riots show how loyalist people have been led into a cul de sac. They need to be led back out of it, and hopefully they will be.

There is no such thing as a clean war. I note the same edition of the IT carries an obit for the British naval commander who ran the Falklands War. I recall the ‘Gotcha’ headline, after the Belgrano was sunk. The yellow press has a lot to answer for.

@ All

On Saturday morning I met (maybe encountered?) a family of monkeys on a road near where I live. They skedaddled up a big tree and even two young ones had a secure footing.

How would a cat fare?

Last April, the IMF hosted a conference of economists in Washington DC on rethinking economic policy.

Nobel Prize winner George Akerlof of the University of California said:

“It’s as if a cat has climbed this huge tree – the cat of course is this huge crisis. My view is ‘oh my God the cat’s going to fall and I don’t know what to do’.”

David Romer, also of the University of California said:

“The cat’s been up the tree for five years. It’s time to get the cat down from the tree and make sure it doesn’t go back up.”

Nobel Prize winner Joseph Stiglitz said:

“There is no good economic theory that explains why the cat is still up the tree.”

Olivier Blanchard, the IMF’s chief economist, ended the conference with a dose of Gallic gloom:

“We don’t have a sense of our final destination… Where we end I really don’t have much of a clue.”

Bertie Ahern said in 1997 that he himself “had looked up every tree in North Dublin.” He may have been in search of a fox rather than a cat.

What is striking is that beyond the financial fire-fighting in Dublin, not only is there not a clue how to move beyond the dependence on FDI, which has peaked.

Enda Kenny better start prying soon for some tooth fairy to help him meet aspirations he announced in February 2011:

“I firmly believe that by 2016, Ireland can become the best small country in the world in which to do business, the best country in which to raise a family and the best country in which to grow old with dignity and respect.”

Irish residential rents between Q3 2007 and Q4 2010 fell about 19% outside Dublin and 22% in Dublin. In July 2013, 76% of the Live Register lived outside Dublin.

According to Joan Bruton, about 40% of private lettings are subsidised.


The Sindo article is another installment of the Dance of the Seven Veils. I doubt that it’s going to happen but still it’s a good Sunday newspaper story to stoke up outrage.

As for Stephen Collins’ piece, there is a lot of outrage about and the opportunity for real change or radicalism is closing. Fintan O’Toole, one target of his criticism, appears to want minor changes despite the alarmist headlines.

In recent years, O’Toole has shared different public platforms with a Central Bank board member who called on hell’s fire for reckless bankers and the biggest public booster of the most reckless bankers of the bubble – somewhat confusing?

If the solutions for the financial and jobs crises depend on Dáil reform alone, then expect little because you will not be disappointed.

The conservatives in the elites fear change that would upend their apple carts.

@ MH

The political posturing being conducted through the media is rather transparent. It seems to me that what has changed is that the electorate is totally disabused and fully aware of it. The summer school crowd IMHO has also misinterpreted the zeitgeist. On this, I agree with Stephen Collins.

What is needed, of course, is an open costing of a series of unpalatable budgetary alternatives; exactly what we will not get.

On the subject of economic education, Colm McCarthy has a suitable primer on mortgage lending.

@ CMcC: I am somewhat reluctant to cross keyboards with you on this one. But a few comments.

“Lending money to private individuals in amounts constituting large multiples of their annual incomes, and for terms of 30 years and more, is an inherently risky business.”

Its bloody catastrophic! Inability to service a significant proportion of the loans has a probability of 1.01! Now, I will opine that the deregulated financial entities did not deliberately set themselves on that path knowing that the state would, in effect, give a personal guarantee. But when things started to go ‘pear shaped’ heroic efforts were made to shift the losses. And these efforts succeeded. So far, anyways.

“Even in normal times, there is always an element of default.”

Indeed there was – it was estimated to be 1%. Its now what? 20%? 30%?

“This is a measure of the atrocious lending decisions that were made and which were mirrored in commercial property and business lending.”

What did Moore Mc tell us in lecture about ‘lemons’? About markets where the participants had very different informations? And other interesting ECON 10001 stuff? And folk now wonder about the ‘bad outcomes’!

“The universal sympathy for distressed borrowers and universal antipathy for the banks should not, however, be allowed to result in the unintended destruction of the mortgage finance model.”

Eh, Colm that new mortgage model must be ‘bashed, burned and buried’ – along with those financial entities who adopted it. I cannot assert that it was a ‘fraudulent’ lending model – but it came pretty close. Re-introduce the pre-1980s mortgage lending model.

“There are thousands of genuine cases of mortgage distress, which can only be met realistically with some form of debt forgiveness.”

Yes. Triage the mortgages based on disclosed (and verified by affidavit) levels of disposable incomes. The banks carry any (and all) losses. The taxpayers are excused. If the banks internalized their losses and had to file for bankruptcy – then so be it. But that would not be how Monopoly Capitalism is meant to work – you externalize your losses. And the taxpayers are an easy mark.

How long would it take for the government to charter a new set of financial entities – very tightly regulated ones? Weeks? Months? It can be done. Though you have to be willing to do it.

This state is insolvent. The government needs to rein-in public spending. This would be a grim exercise in ‘favourable times’ – but with the millstone of socialized private debt anchoring the taxpayer to the bottom and their nostrils barely above the high-water mark – a ripple will drown us!

@ MH,

Absolutely hilarious your take on “cats”. I would have laughed a lot more except for its truth.

Are you sure you came across a family of monkeys.. and not a troop?

No matter……… it’s rainy season… every body deserves a leg up.

As for your comment about “conservative elites” there are two golden rules a bloodsucker must obey.

1) Find host and suck blood.
2) Don’t suck too much blood otherwise host will die.

WRT a credible alternative to Ireland’s political establishment… I don’t believe the rabble howling outside offer a better alternative. Try 28,000 punt Nuas = 1 Euro for starters.

However the “Conservative elite” must realize that change is required, more accountability, a clear plan of social engineering, opportunities, growth strategies etc is required to give hope for the masses.

Otherwise change will come like in Libya Tunisia, Syria, Egypt, and possibly Brazil.

Can someone explain the relentless focus (here as elsewhere) on cutting expenditure rather than on raising revenue? Is it just the ordinary bias in favour of the wealthy?

Today while driving my 13-year-old Renault around the sumptuous homes of South County Dublin, I saw 3 Maseratis, 2 Bentleys, a Ferrari, countless Mercs, Jags, and high-end Audis, all recent models. It occurs to me that the drivers of these cars (virtually all of whom are in the private sector) have been asked to contribute close to nothing to the nation’s fiscal plight.

In this context, to hear people here railing about “elites” in the public service “rigging the game” in their favour, well, it is to laugh, really

Steady now Ernie, steady now…

The couple of swallows you saw do not make a bonanza summer to be taxed to death.

You should be ashamed of yourself driving around a 13 year old car, where is your sense of loyalty to the country? Get out and buy one of those AMG Mercs , pay the super high VRT, pay the super high VAT on the Super high VRT, pay the super high tax rate annually, and the enormous cost of servicing one of those beasts then add on 13.5% Vat and only then can you proclaim “I’m wearing the green Jersey”.

Did you know to do a break pad on some of those AMG’s cost 2K a corner! Yes that’s 8 K to do 4 corners, and with a 100 liter tank it takes 161 euro to fill up. And sure don’t ya know a big merc never likes to pass a garage.

So go on Ernie, do the right thing and carry the country, your shoulders are broad enough for it.

The sumptuous homes of South Dublin are where the university professors, consultants, barristers and bankers live. Quite a lot sucking at the teet of the taxpayer.
The sudden explosion of commentary on the Sindo kite tells me that the same is true for lots of posters on here.


Colm McCarthy dispenses unpalatable medicine that members of the Dáil or Seanad wouldn’t, whether because of cowardice or lack of interest.

However, what muddies the message for a general audience, is news elsewhere in the newspaper which reports that Kelly Martin, Elan’s CEO, is due to get a golden parachute bonanza of over €55m tax-free, with Elan paying his taxes, after the sale of the shrunken former biotechnology firm to a US company.

Martin who had worked for 20 years at Merrill Lynch, a now defunct Wall Street firm, was recruited in 2003 to return the once 20th most valuable drugs company, to profitability.

More than 10 years later, he succeeded in Q2 2013 in posting a profit – through selling the main asset of the firm – weeks before the full sale of the firm.

Wonder if there’s someone in Enterprise Ireland calculating what refunds are due from a large amount of public grant payments over the years? I guess not.

There hasn’t been a whimper from Bruton or Sherlock about the demise of the biggest indigenous biotech firm; nor from any Oireachtas member, nor university staff, nor science editors nor cheerleading tech journalists.

The failure to meet a 2013 traget has been replacesd with an equally delusional one: “in which Ireland in 2020 is the best country in the world for scientific research excellence and impact.

@ Ernie Ball

The ESRI published research in June which showed that Ireland takes a smaller share of national income in tax than most EU-15 countries, according to new ESRI research. This is true even when taking account of recent Irish tax increases and of how precisely multinational profits affect the Irish tax base.

The share of tax in national income in Ireland remains well below that in countries such as Germany, Austria and the Scandinavian countries. Much of the gap arises because these Northern European countries have higher taxes on income – whether in the form of income tax, employee social insurance contributions, or employer contributions.

However, this is not because of higher tax rates on the top slice of income. The extra tax revenue in these countries comes from applying higher income tax rates lower down the income range, so that they are paid by low, middle and high income earners alike.

Ireland should aim to have a just society not one where rights and privileges dependson collective power such as the IFA’s or public sector trade unions.

Finland’s tradition goes back a long way: women first got the vote in 1893 and in 1906, Finland became the first country to give women unrestricted voting rights including the right to stand for parliament.

It took until 1945 for French women to get the vote and 1971 in Switzerland.

It is hardly a surprise that workers in Sweden and Finland have equal rights.

I doubt many profs drive those cars. Iv a 2000 saab. I think your thinking of the old days. Most now live in 《gasp》 middle class homes in middle class suburbs and drive middle class cars. Barristers ditto.

@Michael Hennigan

Appreciate the feline theory of the now! Sad ol’ state for a budding discipline to find itself in.

@ Brian Woods Snr

Thanks for all the truth telling above and totally agree with your assessment of Burton best thing she could do for the country is to leave politics.

Several of you are missing my point, which is this: we have been repeatedly told that “we all must share the pain” (usually just before instituting another cut in public spending). Yet the one sector that hasn’t “shared the pain” is that made up of those most able to endure any such pain: the wealthy. Why is that? And why are so many of you apparently in favour of this state of affairs?

Any comments about how much or little increased taxes on the wealthy would raise are non sequiturs.

This is well worth a read:

While we agonise over who suffers most we are losing site of the fact that the plan just doesn’t work.

The reason it hasn’t been abandoned is because it seems to work ok for a few but that’s always the way in crises. Even during the famine sectors of this country did very well. I’m not saying that this is a famine just that anyone waiting for a national response to something that is so inherently divisive will be disappointed

@ Ernie,

There is always going to be somebody with a bigger car, bigger house, bigger garden, bigger salary, bigger wristwatch etc etc

One cannot legislate for this, except in Marxist / Socialist Communist countries.

It’s a known fact that the number of these big cars you referred to have fallen since 2007. That means LESS money for the exchequer, as I mentioned in my post above… many of those big cars cost a small fortune to run every year.

With less of these big cars on the road, the revenue intake falls… that means the cost of motoring for those with smaller cars INCREASES. The 2Lt car today is what the old 3lt was costing to tax 7 years ago etc etc. Other smaller engine cars are moving up the tax bands. In 5 years time the population will be brainwashed to the extent that we will all believe any car over 1.2 Lt is enormous and should be punished with massive annual tax levies.

The same might be said about houses… 315 euro for a 200K house is only the tip of the iceberg. Within 10 years it will be closer to 1K annual property tax.
I hope I am wrong…….. but I doubt I will be… unfortunately.

Eventually Ernie… everybody in Ireland will be driving a v.small car and living in a v. small house, that’s the way taxation is going here. Revenue are like a shark in the pond……….. now that all the big fish are eaten…….. the smaller fish are up to be devoured next.

But I tell you what really gets my goat Ernie……..

I know of mentally handicapped people……….. who obtain a “Rent Allowance” for living in private rented accommodation. It’s not much, about 450 euro / month. These people through no fault of their own….. are mentally disabled, but they are still able to function up to certain level independently.

On the other hand… I also know single parent people……. who are both non Irish and Irish nationals…….. who obtain a house, furniture and living allowances… due to the fact that they have children, and yet one of the parents of the children make NO FINANCIAL CONTRIBUTION at all. Many of them have absconded, shirking their responsibility to their offspring.

The taxpayer is expected to pick up the cost for the latter. That’s NOT FAIR.

Having children, raising children is an enormous responsibility, taking 20 to 30 years, you know that… but why should you as a taxpayer…. pay for my responsibility?

This is what I mean about “Bad Social Engineering Policy”… Decisions taken 20 years ago have incurred an enormous financial burden on taxpayers today, and will continue to burden taxpayers well into the future.

When the lone parent allowance was debated in the Dail… it was meant as a compassionate measure… as there were ONLY 3000 of them. There are now over 100,000 lone parents in the state. That’s at least 200,000 people who have to be funded to be kept out of poverty. Laws of unintended consequences etc.

I agree that social welfare is there as a safety net…. to keep people out of extreme poverty, but poverty is a subjective word……….. for example if you earned 100K annual salary, but you lived in Monaco…….. it could be argued that you are below the poverty line statistically. If you looked at poverty in Somalia…….. and then looked at poverty in Ireland……… there would be NO COMPARISON.

I suspect, Ms Burton will go for the easier targets… those disabled people receiving rent allowance, they are at the margins of society, she has already done this in the last budget… and no doubt will be back again.

But as for getting a system in place to ensure those who shirk their responsibility to their children are made do so………………. I would not hold your breath, the taxpayer is going to be paying for this for a very long time.

@ Tull

I found myself in Stillorgan SC the other day thinking about you. For all of the sumptuousness of South Dublin, the water pressure is very weak. And a lot of those houses have poor insulation.

@ Ernie Ball

For all you know that Ferrari driver may have paid twice as much taxes in 2012 than they did in 2007.

Not that this will make one iota of difference to your begrudgery, but capital gains and inheritance taxes are up from 20% in 2007 to 33% in 2013 which does make a difference to your typical Maserati driver. In fact, the 450 wealthiest have seen their tax bills almost double in two years While I won’t be crying into my cornflakes for their plight, it is pure nonsense to state that the wealthy in the private sector haven’t contributed through their 55% marginal tax rate and the €2,350 annual road tax on their Maseratis.

If you want to make a difference to the Irish debt burden, then quit your insulated public sector job and go start a business that gets people off the dole. I’ll wish you the best and hope you make a stack of money – then you can pay all the taxes you want instead of driving around wagging your finger at what other people have and looking for somebody else to blame/pay.

The middle class will end up being flattened. The wealthy will leave as they will no longer be protected without paying taxes for that protection. The politicians will disappear and mob representatives will take over. State spending will be halved. The poor will always be asking for more and many will become feral. They have nothing to lose as liberty is meaningless if they have nowhere to live and cannot eat as well as prisoners. Eventually, all will level out.

This will take years and be miserable for all those fine contributors who are sensitive.

I tried to predict the timing of the final bubble collapse and got it wrong. But from now on, it is more likely than ever. This is a DEPRESSION! Failing to take action is not an option.

It is very funny in a very twisted way, to be relatively happy in Brisbane, where jobs unexpectedly increased last month, while I can have an almost intimate view of what the intelligentsia in Ireland are thinking, while the band plays on.

This is all due to a misunderstanding of money and a worship of banking, a sophisticated circular letter! Norway has escaped and Australia is still the lucky country … Ireland has yet to make a sensible public strategic assessment. A Republic requires public discussion of policy. A “secret” banking policy is so incredibly subversive! It really is a Comedy!

The average age of the national car fleet is probably increasing by 10 months every year. And things aren’t going to get better in this decade, I imagine. One of the things I noticed reading articles on the subject of austerity recently, both pro (John Mc Hale) and anti (various lefties) , is that there is no monopoly on reason and that overall nobody really can say anything with much authority. With the banks still FUBR it is very hard to see where the growth is going to come from.

This is from April but will be valid for the foreseeable, I bet

@ seafoid,

That’s pretty much it… in a nutshell. It does not matter how much we argue over the cuts, or their justification… it’s the Troika making the decisions, they call the shots etc.

Ireland is approaching the end of it’s bailout……… and we are still spending 14 billion / year more than what we are taking in. Down to perhaps 10 – 11 billion next year.

Some months ago there was talk of a certain kind of “Hand holding” by the Troika for Ireland as we learn to walk in the bond markets again. In other words due to the Growth Fairy having consistently missed the bus… the original bailout plan has only partially worked.

The pace of austerity is going to have to increase… or else a large amount of Irelands debt is going to have to be “parked” with the ECB in a special “Zero interest Account”, as long as we continue to toe the line / follow Troika instructions this might be possible.

However looking at BBC world recently……….. the Chinese have been steadily beavering away in various countries on the African continent. Building airports, sea ports all to get the raw material out for processing on mainland China. This has been going on for well over 10 years now.

While the Irish and EU periphery flounder the “New Frontier” of Africa is being taken over by the Chinese.

The Growth Fairy is not going to turn up if everything is shipped to the east to be manufactured, and then shipped west to be sold.

“The Growth Fairy is not going to turn up if everything is shipped to the east to be manufactured, and then shipped west to be sold.”

Indeed, Sporthog. One of the most noticeable things about mid sized towns in Ireland is the size of the local Penneys where everything is sourced from the Dork’s long imperial supply chain which ultimately ends in China.

@ Fungus: That’s a bit Hobbsian. Society was always layered. Big guy with hatchet, and all. That’s humans for ye!

@ Sporthog: Them Middle Kingdom folk need energy – like lots, and lots of it, as in Liquid Fossil Fuel. I wish them all the luck they do not deserve! Methinks we Western, Educated, Industrialized, Democratized folk will not be big buyers from Chindia. We will be too ‘poor’. 😎

Our Growth Fairy is in rehab at the moment. Undergoing intensive therapy. Prognosis: not good.

When a country’s (or region’s) economy regresses to that of some time back, it is exceedingly difficult to: – a) halt this regression, and b) attempt to grind your way back toward where you were. We have not achieved (a) yet.


Vacancy rates are less than 2% in England

Vanacancy rates in Dublin are 9.5%

Yet rents are rising at quite a tick, there are estates all over Dublin with built vacant units that are being held back by bust developers assisted by NAMA in the desperate hope of a house price rebound – Bon chance!

We are a parochial little village us islanders, moving across the Liffey even daily, is a form of emigration. Surely the state could save some money by only agreeing to pay rent supplement at a fixed rate across Ireland and leaving welfare recipient to source a location, if that’s in Leitrim so be it, why can’t these lower rent houses be used for those requesting social transfers? Overnight it would greatly reduce the social housing bill and perhaps eliminate elements of the welfare trap

“It’s all ok probably” works well for the NTMA when it’s flogging bonds.
But there is no sign of an end to the crisis. Maybe the people buying the bonds just want the yield and don’t care about the context. As long as it’s grand-ish.

From the link provided by eureka above…
“At the end of June, the outstanding amount of debt issued by Irish financial and non-financial firms and by Government was €905.7bn, a drop of almost 3pc since June of last year.”

Irish Independent

Close to a trillion?”????????

@ Fiat

that includes all entities resident in Ireland, regardless of whether we should view them as actually being “Irish”, or whether their balance sheet interacts all that much with the Irish economy. I’m thinking Google Ireland, Microsoft Ireland, Pfizer Ireland, Dexia Bank Ireland etc blah blah blah.

The real liabilities numbers u need to look at are household (172bn), govt (228bn) and what the domestic NFC sector amounts to. This is estimated to be around 100% of GDP, so lets say 170bn. These three together = 570bn. While the banks have large balance sheets and thus large liabilities, they also have large assets, so simply looking at gross debts is somewhat meaningless, hence why we have that NFC figure.

@Bond Eoin Bond
Thanks for that.

Question. If government = 228b why are papers quoting 138b. Indo today I think.

@John Gallagher.

Dunno. His receipe for cutting losses seems a bit daft. Ie, obscure corporate bonds in some obscure country. See he is losing a few more bob on us treasuries today…back at 2.7% 10yrs. The yield seems to be on an upward trajectory.

@ Fiat

I think Bill called on the UK and Frankfurt to start spending money a while ago.

@ Fiat

its poor reporting. the 115bn refers to long term bonds. We obviously have another 65bn in loans from the EU/IMF (soon to be 67.5bn), and then another 15bn in the national savings schemes (An Post, NTMA). Think NAMA bonds make up the difference, but obviously they arent included in EU/IMF/NTMA type figures, and obviously have assets of some value going against them.

Dont the savings schemes net out as they are all invested into gilts? ITIR?

Fintan O’Toole in the IT

“In 1971, testifying before a US Senate hearing on the Vietnam war, John Kerry famously asked: “How do you ask a man to be the last man to die for a mistake?” We must ask a version of the same question: how do you ask a child or an elderly person to be the last one to suffer for a mistake?

First, the mistake. The Europe-wide obsession with so-called austerity is based on an admitted error. Our masters got their sums wrong. They believed the negative economic effects of cutting public spending would be very limited. They had faith in a magical notion called “expansionary fiscal contraction”, which is just as absurdly self-contradictory as it sounds. This faith-based approach is a construction of economic “reality” no less ideologically-driven, and no more based on evidence, than the glorious triumphs of five-year plans in the old Soviet Union.

@ Brian Lucey

the savings scheme is invested in Irish govvies? Genuinely unaware of that, and do not believe it to be true – if u look at the CBI reporting on the holders of Irish govt bonds, im not sure where that would fit in:

Total Resident: 52.3bn

Of that…

MFI & Central Bank: 49.8bn
Gen Govt & Financial Intermediaries: 2.2bn
Household & NFC: 0.2bn

Of the MFI & Central Bank we can guess the following:

– CBI holds 28bn (PN note and 3bn or so of the 25s owned by IBRC as PN settlement)
– Irish banks hold 22bn or so (tallies with half year accounts)

So I dont think they are invested in govvies. I think they represent most of the cash holdings of the NTMA (which is around 25bn at last count).

@Bond Eoin Bond.
Yes…some of our media seem a bit cavalier with numbers. Donal Donovan is reporting a figure of 229b today in the Indo.
I think we owe a few bob to the Brits and someone else..the bilaterals. Donal must have included them.
With all the good news today…recession over…. Market reaction seems a bit muted?????

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