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.”
http://www.economist.com/news/finance-and-economics/21583257-euro-zone-rescues-have-left-sovereign-debt-too-high-be-sustainable-what-angela

Also,as its Friday and the Dylan ref. is kinda funny,some nice praise from Ollie Rehn.
http://blogs.ec.europa.eu/rehn/spanish-sketches-a-d-2013-can-spain-achieve-what-ireland-and-latvia-did/

@ 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.

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.”

http://www.finfacts.ie/irishfinancenews/article_1026386.shtml

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!”

We as a nation done know a whole pile about economics it seems
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2307883

@ Brian Lucey;

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

@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!

Philip,

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.

MH
“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,

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.

@ 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.

All,

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!

@ 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.

@ 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.

http://www.independent.ie/irish-news/revealed-govt-plan-to-cut-old-age-pension-29489715.html

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

@ 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.

@ 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.

http://bit.ly/19W05f2

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

@ 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.

http://www.independent.ie/opinion/analysis/a-functioning-mortgage-market-needs-repossessions-29489545.html

@ 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.

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.

@ DOCM

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.

http://www.finfacts.ie/irishfinancenews/article_1026328.shtml

@ 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.

“Only 235 cars costing more than €80,000 sold last year. The figures are in sharp contrast to just six years ago, when the country was flush with cash.
The Revenue Commissioners said that in 2007, 3,373 BMWs, Mercedes, Lexus and Range Rovers and other luxury marques were sold.”
http://www.independent.ie/lifestyle/motoring/rich-feel-the-pinch-as-slump-puts-brakes-on-luxury-car-sales-29209263.html

@ 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.

This is well worth a read:
http://www.bloomberg.com/news/2013-08-11/greece-needs-a-21st-century-marshall-plan.html

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.

@ 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 http://www.independent.ie/business/irish/irelands-450-richest-people-hit-for-twice-the-tax-paid-in-2010-29453777.html. 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!

@ 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.

More proof financialism isn’t working

http://www.independent.ie/business/irelands-government-debt-jumps-39pc-in-twelve-months-29491850.html

@BL

Vacancy rates are less than 2% in England http://www.ons.gov.uk/ons/rel/social-trends-rd/social-trends/social-trends-41/housing-chapter.pdf

Vanacancy rates in Dublin are 9.5% http://irelandafternama.wordpress.com/2010/01/18/an-estimate-of-vacant-housing-in-ireland/

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.

@Seafoid
It’s all ok. Bill will sort it out….
http://www.telegraph.co.uk/finance/personalfinance/investing/10238282/Bonds-have-suffered-a-Somme-like-defeat.html

@ 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.

@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.

@Fiatluxjnr here ya go…….strap on your seat belt:)

@ 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.

Debt + debt = more debt. Simples.

Look back on this please:
http://www.independent.co.uk/news/irish-punt-joins-erm-casualties-1481861.html

From a time when there were real solutions. Now all that’s left is a grinding path to eventual default

@ 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).

Recession over and unemployment is over there under the carpet.