Is Ireland going to go bankrupt?

Hasschu

The bottom line is already playing out in California where the state is issuing scrip (iou) in lieu of legal currency. Something similar happened in Argentina in the state (province) of Jujuy (pronounced hoo hooey) where the business community and the state government jointly issued scrip usable only within the state. In the Canadian province of Alberta in the 1930s they had a party in power called Social Credit who issued scrip usable within the province. In Ireland's case the Euro is sound and the ECB is acting responsibly, bending over backwards to keep the show on the road. In cases where scrip is issued neither the Central Bank or Central Governments are operating efficiently.
The point will come in Ireland where the gov't will simply not have the money and at that point the problems will be dealt with. The most likely outcome is the gov't will step down and the incoming gov't will have the unenviable task of getting the ship of state back on course. The Swedish prescription was to spread the pain evenly across the whole society. In Ireland so far we are doing the exact opposite. A new gov't not shackled to its supporters by golden chains might be capable of managing its way out of this debacle in an orderly manner. As for the Public Service there are numerous ways of dealing with the crisis, none of them palatable. One or more unpaid days off per month, a freeze on all pay including increment payments, a freeze on all hiring, a cut in benefits, a cut in pay, or a combination of the foregoing. The last option should be throwing people out on the street and that includes the long term "temporary employees" who are the sacrificial lambs of our aqe.

Donegalguy2

Our tax take this year will be approximately 30 billion before this recession started we paid under 2 billion in interest repayments. After 2011 we will be paying 9.1 billion per year. This gives us 20.9 billion per year. We are currently spending 50 billion. Sound like fun right? it gets exponentially worse after 2011.

I have a few things I think we should do!! hell it is never going to be enough in itself but anyone have any thoughts? I think it is fair.
Public Sector
1 people can get sacked (especially if there useless!!)
2 10% deduction up to 45K
3 20% reduction between 45 - 99k obviously only between the bands.
4 over 100,000 - 50% reduction

Reduce minimum to a moving average of the uk equivalent - generally employers will probably stick to yearly for handiness anyway

nationalise the banks - all of them. this will give us the oppurtunity to nationalise them and make a billions on them when times become better. I dont call it nationalisation really just pre privatisation haha.

I would bring back treason and anyone that is seeing as robbing the state would fall into this category.

Any thoughts

Rickie

Time Magazine

Donegalguy2 wrote: »

Our tax take this year will be approximately 30 billion

Off by about 100%. Tax take will be a little shy of €60bn.

Public Sector
1 people can get sacked (especially if there useless!!)

The problem here is the definition of "can". Nobody argues that public sector workers shouldn't be able to be sacked, and thankfully they can. The problem is that it's not very easy to do so.

2 10% deduction up to 45K

Unfair on those on less than €24k.

3 20% reduction between 45 - 99k obviously only between the bands.

A little heavy tbh, especially since they've already had a 7% cut via the pension levy.

4 over 100,000 - 50% reduction

Insane. You think that's fair? Seriously?

Reduce minimum to a moving average of the uk equivalent - generally employers will probably stick to yearly for handiness anyway

Why should we peg it to the UK equivalent?

nationalise the banks - all of them. this will give us the oppurtunity to nationalise them and make a billions on them when times become better. I dont call it nationalisation really just pre privatisation haha.

Agreed that the banks should be nationalised, but it's extremely naive to think it could be done profitably.

I would bring back treason and anyone that is seeing as robbing the state would fall into this category.

Robbing the state is not treason. Treason is an attempt to overthrow the state. I wouldn't put theft in the same league.

Flamed Diving

Donegalguy2 wrote: »

I dont call it nationalisation really just pre privatisation haha.

No, you don't call it that. Been watching Primetime, much?

hobochris

Donegalguy2 wrote: »

Our tax take this year will be approximately 30 billion before this recession started we paid under 2 billion in interest repayments. After 2011 we will be paying 9.1 billion per year. This gives us 20.9 billion per year. We are currently spending 50 billion. Sound like fun right? it gets exponentially worse after 2011.

I have a few things I think we should do!! hell it is never going to be enough in itself but anyone have any thoughts? I think it is fair.
Public Sector
1 people can get sacked (especially if there useless!!)
2 10% deduction up to 45K
3 20% reduction between 45 - 99k obviously only between the bands.
4 over 100,000 - 50% reduction

Reduce minimum to a moving average of the uk equivalent - generally employers will probably stick to yearly for handiness anyway

nationalise the banks - all of them. this will give us the oppurtunity to nationalise them and make a billions on them when times become better. I dont call it nationalisation really just pre privatisation haha.

I would bring back treason and anyone that is seeing as robbing the state would fall into this category.

Any thoughts

Rickie

I like the idea but the cuts need some revision, if someone is earning around 90k they will fair better then someone earning 100k after cuts..
90k before cut -20% = 72k after cuts.
101k before cut -50% = 50.5k after cuts.

Sandvich

Flamed Diving wrote: »

Unless of course they both increase rates and lower welfare allowances.

That would be bad. The real issue in Ireland is with the private sector and personal debt. Cutting welfare and raising taxes even further will add to this problem, and local businesses will end up shutting because once people have to take a cut they can't afford more than the essentials. The government can keep borrowing and will eventually lose the deficit when the global economy picks up. The reason they're down is that they're basically not taking enough in - even with their wasteful spending, they could stay afloat if the economy was much better. Every cut they make that makes us "Share the pain" is a blow to the economy, and eventually a blow against themselves.

As much as people like to moan about welfare and high minimum wage, that money is pumped back into the economy. Cut that, and you're loosing a mechanism that's already helping a lot of mainland EU states get back on their feet. Our economy won't be able to recover if we just deal with the short term budget deficit. There's already been an increase in tax/levies and small cuts to welfare(loss of Xmas bonus, big nerf to Rent Allowance), that's enough for now. They need to focus on reform and controlling wasteful expenditure. That will save a lot more than making sure "wasters" on the Dole can't go out for a drink now and again.

If people don't have extra cash lying around, again, a lot of local businesses selling "Luxury" goods will go under. That won't do us any good. If the government assured there would be no more cuts to welfare/levies and instead focused on reform it would increase consumer confidence greatly, people would start spending again, and they wouldn't have to make cuts. At the moment people, especially on lower income brackets and on welfare, don't know how much money they have. It's all speculative, it's ridiculous. We're all afraid some ridiculous levy is going to come around the corner and because of that, people can't make long term plans with their personal finances. It's probably the same for small businesses.

If they're going to make serious further cutbacks, they should at least have gotten them over with by now instead of leaving people dangling in fear.

Économiste Monétaire

Sandvich wrote: »

The government can keep borrowing and will eventually lose the deficit when the global economy picks up.

You think our deficit is purely cyclical in nature?

Sandvich

Économiste Monétaire wrote: »

You think our deficit is purely cyclical in nature?

Well, most other countries in the EU don't seem to be getting out of the economy by threatening huge cutbacks. As far as I know, we have borrowing secured for the next few years, confidence in Ireland hasn't been lost yet. It's true it's a fairly dire position to be in, but the alternative is dealing further blows to economy meaning it'll take longer for things to pick back up anyway. Some people seem to forget the point of a loan to begin. If it's true that our economy isn't going to pick back up in the next few years then we're in deeper **** than a few cutbacks will help.

Économiste Monétaire

Sandvich wrote: »

Well, most other countries in the EU don't seem to be getting out of the economy by threatening huge cutbacks. As far as I know, we have borrowing secured for the next few years, confidence in Ireland hasn't been lost yet. It's true it's a fairly dire position to be in, but the alternative is dealing further blows to economy meaning it'll take longer for things to pick back up anyway. Some people seem to forget the point of a loan to begin. If it's true that our economy isn't going to pick back up in the next few years then we're in deeper **** than a few cutbacks will help.

We've started borrowing for next year, we're not covered for 'a few years'; we've raised about €30bn in long-term funding this year. I really don't think anyone can state that our €22-25bn (depending on whom you listen to) deficit is based on cyclical factors, that's approx. 14-15% of GDP this year. I know of no other country borrowing to that extent, there are clearly structural problems in our government's finances.

silverharp

David Begg doesnt seem to worried, he reckons ease up when the debt to GDP hits 90%. :eek:

Donegalguy2

Thanks a million for your answers exactly the kind of input I was after. I will clarify a few issues.

Yes the tax take was in total was closer to 60 billion but I was really refering to income tax sorry my bad! but I do think that income tax is the only alternative for finding the money ie increase vat, petrol, excise duty we all go north even more so. We cant tax business more due to the fact there all going bust and the thought of whacking money on stamp duty wouldnt strike me as a good idea either. hmmm that leave inheritance tax I will be dealing with that in my treason bit at the end haha. I am sure I am missing a few others but you get the drift. even after all of that I still agree that 30 billion may have been a little disingenous.

Yes I agree maybe a cut off of 24k would be a good idea. I have been misunderstood on this big time.

What I meant was between lets say now 24 - 49,999 would take 10% on that so lets say 45 thousand would get paid 40.5 pay ( I am not going to go that far to work the none 10 % on the first 24 because I would have to do it 3 times lol). If you earned 80k you would lose 10% up to 50K and then 20% on the next 30k.

So my favourite lets do consultants or I think O'Donoghue before expenses off course. I know its not gross but you get the picture add on a few private jobs!!
250,000
10% -> 50 = 45 Additional take (5)
20% -> 100 = 85 addional take (10)
50% -> >100 = 75,000 additional take (75)

So from 250,000 it goes down too 160,000 this is still a good wage and could you used on worthier causes. Like job creation!! Lets not even look at the heads of ESB etc etc

As your closest neighbour and largest trading partner to think that the cost off getting labour isnt a factor is I think a little naive see the way I did that!! but seriously this may not be that noticeable to most people but is having a crippling effect on small companies, start ups and even more worryingly larger companies.

I am being hopeful that it could be done profitably (the banks) I am not convinced but I think at least you should have something for your money rather then nothing but the risk!! Worst comes to the worst we could use the swanky town centre buildings as workhouses!!!

lol and yes I was watching prime time I agree I should have quoted but hey I didnt remember the show or the person and hell this is internet have you never seen infowars.com haha.

Death by a thousand cuts is still death and who do you blame. I blame them all!! Befehl ist Befehl or worse. We need long jail terms, a complete new political establishment (civil service also). I think we need 5 elections were you can only stand in one election (5 year terms maximum) at a time like the greeks to freshen it up.

The idea behind my post wasnt really to look back but forward but find that hard to do! especially with the misery that alot of people are feeling due to unbelievable incompetence which amazingly is going hand in hand with such arrogance!!!

Anyone have any ideas how to shake things up a little?

Time Magazine wrote: »

Off by about 100%. Tax take will be a little shy of €60bn.

The problem here is the definition of "can". Nobody argues that public sector workers shouldn't be able to be sacked, and thankfully they can. The problem is that it's not very easy to do so.

Unfair on those on less than €24k.

A little heavy tbh, especially since they've already had a 7% cut via the pension levy.

Insane. You think that's fair? Seriously?

Why should we peg it to the UK equivalent?

Agreed that the banks should be nationalised, but it's extremely naive to think it could be done profitably.

Robbing the state is not treason. Treason is an attempt to overthrow the state. I wouldn't put theft in the same league.

Donegalguy2

wow I am a dumb ass I assumed I knew the figures I didnt. This is the figure for 2007 and 2008

Current: Tax Revenue
2007 2008
€000 €000
Income Tax 13,572,410 13,176,857
Value Added Tax 14,496,588 13,429,602
Excise 5,837,878 5,443,338
Corporation Tax 6,390,625 5,065,894
Stamps 3,185,602 1,650,792
Customs 265,904 248,001
Training and Employment Levy 2,501 1,032
Capital Acquisitions Tax [Note 3] 392,349 331,600
Capital Gains Tax 3,105,495 1,430,080
Total 47,249,352 40,777,196

So there you go guys straight from the horses mouth!! and kind of shows me as a mouth! http://www.finance.gov.ie/documents/publications/reports/2009/finacct2008.pdf

Lots of interesting reading go to page 50 Short Term Debt **
Commercial Paper 21,783 they changed the value from €000 to €million haha they must think we are all stupid!!!

So what it boils down to is that we are borrowing 20 billion a year (12b last year) with an income of 40 billion.

Sorry guys regarding my lack of fact checking! only learning!!

Donegalguy2 wrote: »

Thanks a million for your answers exactly the kind of input I was after. I will clarify a few issues.

Yes the tax take was in total was closer to 60 billion but I was really refering to income tax sorry my bad! but I do think that income tax is the only alternative for finding the money ie increase vat, petrol, excise duty we all go north even more so. We cant tax business more due to the fact there all going bust and the thought of whacking money on stamp duty wouldnt strike me as a good idea either. hmmm that leave inheritance tax I will be dealing with that in my treason bit at the end haha. I am sure I am missing a few others but you get the drift. even after all of that I still agree that 30 billion may have been a little disingenous.

CDfm

hobochris wrote: »

I like the idea but the cuts need some revision, if someone is earning around 90k they will fair better then someone earning 100k after cuts..
90k before cut -20% = 72k after cuts.
101k before cut -50% = 50.5k after cuts.

It works for me - the person earning 101k was more senior in the civil service and bears more responsibilty for the mess.

AntiPropertyTax

The PFG deal done with the Greens brings Ireland a lot closer to bankruptcy. The PFG shows that the government are not serious about any meaningful spending cuts (indeed under pressure they will actually sign up to something that increases public spending).
This will send a signal to the Unions, and every other group that the government don't have the strength to implement spending cuts, and the only alternatives are more borrowing and tax rises.
Higher taxes will mean less consumer spending, leading to shops and small businesses closing down or laying off staff. So more unemployment and the country will slide further into economic stagnation.
The international banks who we are trying to borrow from aren't daft - they know a weakened government that can't reduce public spending will soon not be able to pay back what it owes already.

thebman

On the plus side, the government may fall this evening showing the members of the green party aren't that stupid to believe that there are funds for these things.

I think FF are just trying to get the greens through the vote and then will go back on it all afterwards anyway.

Flamed Diving

AntiPropertyTax wrote: »

The PFG deal done with the Greens brings Ireland a lot closer to bankruptcy. The PFG shows that the government are not serious about any meaningful spending cuts (indeed under pressure they will actually sign up to something that increases public spending).
This will send a signal to the Unions, and every other group that the government don't have the strength to implement spending cuts, and the only alternatives are more borrowing and tax rises.
Higher taxes will mean less consumer spending, leading to shops and small businesses closing down or laying off staff. So more unemployment and the country will slide further into economic stagnation.
The international banks who we are trying to borrow from aren't daft - they know a weakened government that can't reduce public spending will soon not be able to pay back what it owes already.

If I knew what PFG stood for, I might be able to comment.

Économiste Monétaire

'Programme for Government,' I think.

http://www.rte.ie/news/2009/1010/programme.pdf

Flamed Diving

Just one thing from the preamble.

Page six:

Credit to Irish business will be guaranteed.

So, the government is guaranteeing some of the riskiest assets in financial markets? To quote Stiglitz, privatising the gains while socialising the losses?

Am I wrong?



P.S.

Page nine:

Sort out the banks and get them lending again.

FFS, was this copy & pasted from After Hours?

thebman

Well nothing is actually guaranteed in that anyway. Just yeah sure if we around to it from FF to keep the greens happy.

Flamed Diving

thebman wrote: »

Well nothing is actually guaranteed in that anyway. Just yeah sure if we around to it from FF to keep the greens happy.

Come again?

thebman

Flamed Diving wrote: »

Come again?

The actual new program for government is all ifs and buts.

They will agree to consider the possibility of spending money.

There won't be new teachers because there isn't money for new teachers which is what the leaders will say to the green party when they don't get new teachers. If you actually read it there are no certainties in that program for government. Its all stuff they can go back on whenever they want saying there wasn't money same as the election promises.

I imagine the same is true for credit guaranteed to Irish businesses, what does that really mean anyway? Its open to interpretation really.

Flamed Diving

thebman wrote: »

The actual new program for government is all ifs and buts.

They will agree to consider the possibility of spending money.

There won't be new teachers because there isn't money for new teachers which is what the leaders will say to the green party when they don't get new teachers. If you actually read it there are no certainties in that program for government. Its all stuff they can go back on whenever they want saying there wasn't money same as the election promises.

I imagine the same is true for credit guaranteed to Irish businesses, what does that really mean anyway? Its open to interpretation really.

All true, but sure this is no different to any manifesto.

Hasschu

I see enough contradictions within the agreement to make the whole paper useless. I cannot make up my mind as to who looks more pathetic the Greens or FF. Unemployment headed over 15% and Climate Change is a major issue in the paper. NAMA putting taxpayers on the hook for billions and Forestry is another major issue in the paper. I could go on but I will spare you. The only conclusion to arrive at is that we are dealing with drunks, clowns or fools or a combination of all three together.

Nonoperational

CDfm wrote: »

It works for me - the person earning 101k was more senior in the civil service and bears more responsibilty for the mess.

Ya sur thats fantastic reasoning. So we say to all out best people, consultants university researchers etc (who in fact bring in many times their income in research grants etc) that they are being cut by 50%. What do you think will happen then? Anyone that is worth anything will not work for it and go into the private sector or leave the country. We will be left absolutely destroyed. This attitude that anyone that earns over 100K is some kind of villian and should be hit very hard is gone beyond a joke. Most people that earn this money work dam hard and worked many years doing 60 hours a week for crap money with huge responsibility on their heads. You dont wake up one morning and suddenly get offered 100K a year. A lot of these people are the people we need in the country.

drunken_munky52

Regardless of the possibility of monetary depletion i.e. bankruptcy, people should pursue whatever constructive endeavor they choose without the economic pressures, restraints, and taxation that are and always have been inherent in the failed monetary system.

Idbatterim

In effect the current huge borrowing the Government is doing just to keep things afloat is almost like a huge stimulus package! Come December there is going to be €4 billion less in peoples pockets! this is absolutely essential in my opinion, but that is going to seriously clobber spending, especially luxury / waste spending. When things get worse next year, what are we going to do? wait for Decembers budget while the house falls down around us? I think the current correction we are undergoing is absolutely necessary and desirable! Far to many here have become accustomed to a lifestlye that is way beyond any normal expectation. I thought a good place to start saving money would be by taxing PS retirement lumpsums and their pensions? that way you dont have to go after their pay as much. Realistically anyone in the PS at retirement age at this stage should own their own home and should not be looking after dependants, they do not need to be on a huge pensions, which will likely be just be put into a savings account etc and left to their kids or beneficiaries etc in their will...

Flamed Diving

Idbatterim wrote: »

In effect the current huge borrowing the Government is doing just to keep things afloat is almost like a huge stimulus package! Come December there is going to be €4 billion less in peoples pockets! this is absolutely essential in my opinion, but that is going to seriously clobber spending, especially luxury / waste spending. When things get worse next year, what are we going to do? wait for Decembers budget while the house falls down around us?

I'm a Keynesian!

Idbatterim wrote: »

I think the current correction we are undergoing is absolutely necessary and desirable! Far to many here have become accustomed to a lifestlye that is way beyond any normal expectation.

I'm a classicalist!

Idbatterim wrote: »

I thought a good place to start saving money would be by taxing PS retirement lumpsums and their pensions? that way you dont have to go after their pay as much. Realistically anyone in the PS at retirement age at this stage should own their own home and should not be looking after dependants, they do not need to be on a huge pensions, which will likely be just be put into a savings account etc and left to their kids or beneficiaries etc in their will...

I deny Ricardian Equivalence!

spoutwell

I started reading the comments here and had to stop when I saw one saying that the banks are going to need to get money flowing again to keep good businesses going. This would appear to be a common idea shared or at least pontificated by all politicians who have spoken so far on the subject.
Yet the same idea is nonsensical.
'GOOD' businesses don't need credit to keep going -especially if they've just come through 10 or 12 years of boom times like the Celtic Tiger years.
The Irish economy is shrinking. As it shrinks, it shrinks faster. 2 years ago, before the **** hit the fan, 80% of bank loans were construction related.
So none of those loans are now performing or sustainable.
The politicians want to keep loaning and morgaging future generations to the same collapsing construction industry.
The other 'industries' which are crying out for more credit are car dealers and such non-essential distribution outlets as tile warehouses, furniture sellers and other good-time luxury merchants.
All this good-time distribution network is non-productive. Every euro spent propping it up is two euros to pay further down the line. If the same euro was put towards low-cost manufacturing for export we have some chance of a return. Workers standing behind a distribution outlet counter without taking in their days wages are in the wrong place. They should be working in a sustainable productive low cost industry which will add value to the economy instead of increasing the false credit-based bubble which is bursting all around us.
Nobody else is saying this. So yes - of course the country is going to go bankrupt.

PaddyThai

spoutwell wrote: »

I started reading the comments here and had to stop when I saw one saying that the banks are going to need to get money flowing again to keep good businesses going. This would appear to be a common idea shared or at least pontificated by all politicians who have spoken so far on the subject.
Yet the same idea is nonsensical.
'GOOD' businesses don't need credit to keep going -especially if they've just come through 10 or 12 years of boom times like the Celtic Tiger years.
The Irish economy is shrinking. As it shrinks, it shrinks faster. 2 years ago, before the **** hit the fan, 80% of bank loans were construction related.
So none of those loans are now performing or sustainable.
The politicians want to keep loaning and morgaging future generations to the same collapsing construction industry.
The other 'industries' which are crying out for more credit are car dealers and such non-essential distribution outlets as tile warehouses, furniture sellers and other good-time luxury merchants.
All this good-time distribution network is non-productive. Every euro spent propping it up is two euros to pay further down the line. If the same euro was put towards low-cost manufacturing for export we have some chance of a return. Workers standing behind a distribution outlet counter without taking in their days wages are in the wrong place. They should be working in a sustainable productive low cost industry which will add value to the economy instead of increasing the false credit-based bubble which is bursting all around us.
Nobody else is saying this. So yes - of course the country is going to go bankrupt.

Well said.
Ireland had an oppurtunity and still has the oppurtunity to develop green energy but this was never done.

recedite

SkepticOne wrote: »

The plan is to raise taxes not cut them.

Confusing isn't it? That's because our government always does the opposite to what is necessary.Remember what Champagne Charlie Mc Creevy used to say when he was pouring petrol on the flames of our rapidly overheating economy; "Spend it when you have it cos you can't spend it when you haven' got it".