I realise that at this stage it is probably academic over here, since the government seems to have decided to do whatever it is that it is going to do. But: what did people think of this suggestion, again (a) in general and (b) in the Irish context?
John Fitzgerald concludes the series here. He shares ICTU’s recommendation of a top rate of 48 percent (levies etc included in that?)
A rumour is circulating that people are hoarding euro notes whose serial number begins with X and using those whose numbers begin with T, M, Y, and V.
No prize for matching the letters to the issuing countries!
This is very worrying.
Jim O’Leary had a piece yesterday in the Irish Times which was worth reading for a couple of reasons. First, he has a nice account of the incentives facing economic forecasters. Second, he draws attention to a truly astonishing forecast, or assumption, in the Central Bank’s recent Quarterly Bulletin: that, while domestic demand will collapse in 2009 (which makes sense: the Central Bank assumes that gross domestic expenditure will fall by 7.6%), our exports will only decline in volume by 0.7%. If true, this would obviously mute the overall fall in Irish GDP, and the Central Bank is forecasting a decline of just 4%.
Jim convincingly shows why the assumption regarding exports is implausible. Here are a few more facts. According to the CPB Netherlands Bureau for Economic Policy Analysis, the volume of world trade fell by 6% last November. That’s right: by 6%, in one month. US imports fell by 7.8%; Japanese exports fell by 10.8%.
The CPB cautions that monthly world trade figures are volatile, and that one should focus on moving averages. Of course, that becomes a less useful strategy when one has just passed the peak! More evidence of the extraordinarily rapid collapse in world trade comes from IATA, which reports that the volume of international cargo shipped by air was 22.6% lower in December 2008 than in December 2007 (HT Calculated Risk).
By way of comparison, the volume of world trade fell by a little more than a quarter over the 3 years 1929-1932.
As Jim says, it seems safe to assume that exports will contract by a lot more than the Central Bank is currently forecasting, and that the same will therefore be true of GDP and employment as well.