Irish economy will have the biggest shrinkage what can we do?

johnnyc

The ESRI came out that ireland will have the biggest shrinkage of any industrialize country what can we do to avoid this any suggestions? I am seeing the days of mass immigration if we as a country don't change our path.


http://breakingnews.ie/ireland/irish-economy-fastest-shrinking-in-developed-world-408688.html

dresden8

Well obviously the solution is to return FF, as they're the one who know what they're doing.

zootroid

Given how the government ignored the ESRI over the last decade, I can't see them taking much notice of this. Sure these people only want to talk down the economy :rolleyes:

lmimmfn

i doubt 'we' can do anything, the out of control budgetary decisions of late have forced everyones hand of hibernating and spending as little as possible until this blows over. Every single person i have spoken to whether working or on the dole has seriously cut down on spending, including:
1. Shopping around for the cheapest of everything, banking, insurance, credit cards, etc.
2. most at work are now either eating sandwiches or bringing them into work rather than having hot meals at work and cooking hot meals at home
3. People are giving up smoking( not a bad thing that )
4. Giving up going out drinking or for meals
5. Cutting down on travel/cutting out holidays all together.
6. Shopping up north
7. Cutting down on luxuries e.g. faster broadband/higher cap broadband
8. Asking for reductions on rent.

Each of those things is directly affecting out economy, theres no faith or trust in the economy, people are saving every cent because we dont know if we will have jobs in 12 months or even 6 months time. The government hasnt done 1 single thing to curb job losses or incite spending, their long term plan consists of nothing more than taxing us more and more for the next few years possibly until its really not worth working.

This is further exacerbated by the fact we use the euro and Stg has fallen so much making the uk's hourly rate on anything much cheaper than we can compete with and we in Europe have this crappy unique position due to our proximity with our neighbor which has both a higher population( for available workforce ), better infrastructure, etc. etc. making it a no brainer for any multinational to relocate( of course our low corp. tax will help us there but for how long? )

SkepticOne

The economy needs to shrink and we should not stop it.

But this shrinkage needs to be managed so that the most vulnerable have a degree of protection and Ireland emerges more competitive afterwards.

But this involves standing up to the various parasitic vested interest groups that infest the country. I'm not sure the current government have the ability or even the desire to do this.

amacachi

SkepticOne wrote: »

The economy needs to shrink and we should not stop it.

But this shrinkage needs to be managed so that the most vulnerable have a degree of protection and Ireland emerges more competitive afterwards.

Unfortunately that's something very little people will accept.

Even now when there's a suggestion of some pay cuts etc. there's a massive reaction from workers and striking etc. isn't really the way to increase output.

FreeAnd..

Unfortunately that's something very little people will accept.

is that not generalizing about little people?? What does being little have to do with accepting the requirement for a recession??:)

dan719

lmimmfn wrote: »

3. People are giving up smoking( not a bad thing that )

Economically that is a disaster;

• The government collects huge levels of taxtion due to excise duty on cigarettes and alcohol, and in a time of reduced tax revenue is even more dependent on same.
• Smokers and heavy drinkers die younger, and that means the government does not have to provide provisions for pensions and medical expenses due to long drawn out illnesses.
• The high incidence of smoking amonst lower socioeconomic classes meant that until recently, a very high percentage of 'dole' money was recuperated through tax.

The main reason for so called pigovian taxes is revenue raising. (See O'Hagan 1982.)

Hoo-Haa

johnnyc wrote: »

what can we do to avoid this any suggestions?

As a people we could stop moaning and crying over how bad things are, and get on with it. Recession wont last forever, and considering how inflated everything had become here over the last few years its not surprising that the correction we are seeing is so severe.
We'd have gone through a crash anyways, its just the global recession has balls things up rightly. Bad luck with the timing.

As for our politicians - less bitching moaning and political scoring from the opposition - all the seem to do is criticise the govt, trying to bring them down. Which is the last thing this country needs, place is in a bad enough state besides having an unstable govt.
FF are hardly the most competent bunch but to be fair FG dont seem to have too many answers either, they're all as out of their league as each other, they should all quit sniping and work on solving the problems at hand.

zootroid

As someone pointed out, the recession won't last forever. But what the government should be doing now is putting in place the correct policies to ensure our competitiveness when the world starts to climb out of recession. I don't think this is happening.

For a start they could tackle the issue of power generation. For years people have been complaining about the high costs of enerygy. The ESB have a stranglehold on the market. I have read suggestions about breaking up the ESB into its power generation and power distribution units. Introducing competition into the market should lower costs which will be good for consumers and make businesses more competitive.

I don't really know enough about the banks to comment on the proposed NAMA plan, but the government should be ensuring that effective regulation takes place from now on in order to build cofidence. I don't think this has happened yet as the same people are more or less still in charge.

The money being spent on public services is not reaping the benefits it should, the HSE is an absolute disgrace. 45,000 managerial and admin positions is simply too many when there are 65,000 front line positions.

And the point about political point scoring - what do you expect the opposition to do, give the government a round of applause for getting us into this mess?

Just as a short analogy, suppose you hired a builder to build a house. You provide a lot of capital up front, but he makes a balls of it. He then assures you he can fix it but will need more money. Do you hire him again, or do you f*ck him out of it and get someone else in the hope they will do a better job? I know the option I'd go for......

Hoo-Haa

zootroid wrote: »

And the point about political point scoring - what do you expect the opposition to do, give the government a round of applause for getting us into this mess?

No, I understand how it works - but there's far too much scoring and not enough solution.

FG came up with the bad bank idea back in december, FF put it into place in the budget and FG stood up and made them out to be completely retarded for doing it.

You're bang on about the HSE tho.

gurramok

What can we do?

Let the housing bubble fully burst and do not throw anything at it that delays it.

Get the pain over now and then recover.

On the other hand the ESRI’s dismal forecasts for Ireland warn the economy will this year shrink twice as fast as initially thought and between 2008 and 2010 GDP will plummet by 11.6%.

Only Finland came close to this figure when it dropped by 11% between 1990 and 1993.

Notice the similarities?

Finland had a devastating housing bubble too which shrunk their economy by a similar margin back then.

They fully burst and recovered to be one of the bext economies within a decade after 1993.
What Ireland can do for the future is to invest most dosh in export led services/industry and NOT property.

Highsider

Three words. Call an election.

AARRRGH

lmimmfn wrote: »

Every single person i have spoken to whether working or on the dole has seriously cut down on spending

I haven't cut down on my spending. I know loads of people who are the same as me.

It depends on your wage really, and how secure you perceive your job to be.

Alcatel

At this point, we're all just along for the ride.

who_ru

gurramok wrote: »

What Ireland can do for the future is to invest most dosh in export led services/industry and NOT property.

hear hear!

but try getting the narrow minded irish investor to believe that property is a bad investment for the economic regeneration of this country and you have a whole new problem.

FF's total economic policy forthe last decade was pouring concrete basically. as long as this was happening everything was fine. but i agree with other posters - we do need a change in Govt - people have no confidence in them to do the right thing and correctly so. i think we may get a change before the year is out. cowan has no mandate from the people - wipe out in the euro & local elections & 2 by-elections is on the cards.

and while i'm at it - a plague on Micheal Martin's house for his disgusting refusal to give up his teaching pension until now. this guy has got 3 public sector pensions = 60,000 p.a. - what a disgraceful example he sets - Pah! public servive for the good of the people? he wouldn't know what it means ffs. sickening.

eoinbn

Highsider wrote: »

Three words. Call an election.

Good plan. That way we can vote in FG/Labour and have them call in the IMF instead of FF. FF will then be returned to power as the saviours of the country leaving the next generation of the FF dynasty to ruin the country all over again!

population

The country simply cannot move forward with FF in government.

1st step in any process to recovery is to banish the people who caused all the problems. That means completely new bank boards, and in the case of Ireland most importantly, completely new government.

FF are motivated entirely by self interest and greed. They have proved themselves to be the most morally bankrupt and economically clueless cabinet in modern western politics.

Niall Keane

What can we do?

Tax religion? Commercial rates on churches. benifit in kind on any donations of property. income tax and levy on collections. etc...

Legalise and tax drugs, none are more harmful than alcohol anyway.

Legalise and tax prostitution. It would result in safer envirnoments and conditions for those involved.

Offer the valueless empty office schemes siezed from failed developers rent free as bases for start-up businesses for a limited time.

serfboard

FF are simply out of touch - as happens with every government that's been in power too long. How long has it been since Brian Cowan put petrol in his car? (Or does he even have his own car?)

I think it was Jim Higgins that said that FG were "lucky" that they didn't win the last election - otherwise FF would be trying to blame it on them. "We left ye with an economy in a good state. Growth rates of blah, blah, blah ...".

I agree with the idea of an export-led economy. I disagree that Irish investors wouldn't invest in it. If they're given incentives, they'll invest in anything. They were given incentives to invest in property and they did massively. The problem is that the incentives continued for far longer than was necessary.

Of course, are we in a position to provide incentives now? Don't think so. Either economically or politically.

ionix5891

zootroid wrote: »

As someone pointed out, the recession won't last forever. But what the government should be doing now is putting in place the correct policies to ensure our competitiveness when the world starts to climb out of recession. I don't think this is happening.

For a start they could tackle the issue of power generation. For years people have been complaining about the high costs of enerygy. The ESB have a stranglehold on the market. I have read suggestions about breaking up the ESB into its power generation and power distribution units. Introducing competition into the market should lower costs which will be good for consumers and make businesses more competitive.
.

Erm ESB is broken up into 5 companies


ESB did try to put down the prices but weren't allowed by regulator as that would "hurt" the competition!

conlonbmw

Niall Keane wrote: »

What can we do?

Tax religion? Commercial rates on churches. benifit in kind on any donations of property. income tax and levy on collections. etc...

Legalise and tax drugs, none are more harmful than alcohol anyway.

Legalise and tax prostitution. It would result in safer envirnoments and conditions for those involved.

Offer the valueless empty office schemes siezed from failed developers rent free as bases for start-up businesses for a limited time.

Its about time society moved forward. We are all grownups now.

I Like the office idea.

We could start limiting public salaries to 80k, while streamlining public service. Get the German's in to assist.

We need to change so much.

eamonnm79

dan719 wrote: »

Economically that is a disaster;

• The government collects huge levels of taxtion due to excise duty on cigarettes and alcohol, and in a time of reduced tax revenue is even more dependent on same.
• Smokers and heavy drinkers die younger, and that means the government does not have to provide provisions for pensions and medical expenses due to long drawn out illnesses.
• The high incidence of smoking amonst lower socioeconomic classes meant that until recently, a very high percentage of 'dole' money was recuperated through tax.

The main reason for so called pigovian taxes is revenue raising. (See O'Hagan 1982.)

This should have been chapter one in that book freakanomics

zootroid

ionix5891 wrote: »

Erm ESB is broken up into 5 companies


ESB did try to put down the prices but weren't allowed by regulator as that would "hurt" the competition!

Apologies, I wasn't aware of this. Are the high energy prices (think it was something along the lines of 20% higher than the European average) simply down to the regulator then? Genuine question, not trying to sound sarcastic or anything

I also remember reading that the ESB has a market share of something like 90%. I think we all can agree that if that is the case it's an uncompetitive market.

dermo1990

Well actually after Bord Gáis entered the domestic electricity market, ESB domestic market share has been falling. I've also heard that ESB is not allowed to compete directly with Bord Gais at the moment. not sure if its true, but i'm fairly sure the regulator may be doing this to allow Bord Gais develop as a power in the electricity industry

ionix5891

zootroid wrote: »

Apologies, I wasn't aware of this. Are the high energy prices (think it was something along the lines of 20% higher than the European average) simply down to the regulator then? Genuine question, not trying to sound sarcastic or anything

I also remember reading that the ESB has a market share of something like 90%. I think we all can agree that if that is the case it's an uncompetitive market.

prices would be 20% lower (and are falling for all suppliers as energy costs are down since we had a huge fuel bubble last year)

but ESB price is being artificially kept up so Bord Gais and others can appear to magically be able to offer a 10-15% discount

so much for competition

ESBs share was 45-50% of electricity generated in 2007

this will fall to 27% by 2012 as they are closing plants left right and center
http://www.esb.ie/main/news_events/press_release321.jsp (other sources are available on googling)

dermo1990 wrote: »

Well actually after Bord Gáis entered the domestic electricity market, ESB domestic market share has been falling. I've also heard that ESB is not allowed to compete directly with Bord Gais at the moment. not sure if its true, but i'm fairly sure the regulator may be doing this to allow Bord Gais develop as a power in the electricity industry

You are right ESB are not allowed to compete at all, they cant enter wind power sector for example as Airtricity will scream murder, and the wont get planning permission to build anymore plants and are in process of retiring some old plants

disclaimer: i worked for ESB Power Generation ~3 years back so speaking from alot of experience here, if this was truly a free and open market and their hands weren't tied behind back ESB Group would close shop tomorrow in Ireland and move to the more lucrative EU markets

edit: ESB was broken into several "companies"; Power Generation, Customer Supply, Networks, Shared Services, ESB International each is fairly isolated from the rest and then we have Eirgrid as well

.

kippy

zootroid wrote: »

Apologies, I wasn't aware of this. Are the high energy prices (think it was something along the lines of 20% higher than the European average) simply down to the regulator then? Genuine question, not trying to sound sarcastic or anything

I also remember reading that the ESB has a market share of something like 90%. I think we all can agree that if that is the case it's an uncompetitive market.

ESB has been keeping prices artificially high due to regulation. That 90% was 100% up until relatively recently but that 90% will be reducing steadily as competition has entered the market. There is a very long thread with some great explanations of the ESB, how they operate,are regulated and their competition here (As well as very good comment on pricing):
http://www.boards.ie/vbulletin/showthread.php?t=2055491651
Energy costs do need to come down.

I like the office idea as well, stuff like this would be thinking outside the box without "causing pain" to anyone and may in fact help generate employment and industry, theres bound to be tonnes of things that could be beneficially done with sites such as this.

Public service pay seems to be in the firing line again. As a hardworking member of the PS, I would much prefer a complete review of it, coupled with changes to salary structure, increments, competency based pay, the need for certain sectors, merging of sectors. I realise however that that takes time and a brutal cut would be more beneficial at this time. Paycuts however take no account of the financial situation of the person taking the cut, the last thing the government want is more people adding to the oceans of loan defaulters, or people chosing to go on the dole rather than work. There will be a fine line that will cause this.
If you consider the cost of a person on the Dole, allegedly 20k per annum to the government, PS workers on less than 30K are being kept in their jobs for comparitivly little cost, but there are too many of them.
I reckon FF have at best 3 -6 months left, FG/LAB will get in and cut PS wages by another 10%, that SHOULD bring them into line but it alone wont be anywhere near enough.
The stimulus really has to be placed on private sector job creation, which none of the parties appear to have a coherent plan for.
Kippy

SkepticOne

ionix5891 wrote: »

ESB did try to put down the prices but weren't allowed by regulator as that would "hurt" the competition!

I've seen this repeated a few times that the regulator is keeping prices artificially high, however looking at the regulators website it seems that the last significant increase last year of 17.5% was at the request of the ESB.

Interim Electricity Price Increase - Decision Paper - 11/07/08

The recent reduction of 10% has come from Eamonn Ryan, not as a result of a proposal of the ESB.

Tech3

amacachi wrote: »

Unfortunately that's something very little people will accept.

Even now when there's a suggestion of some pay cuts etc. there's a massive reaction from workers and striking etc. isn't really the way to increase output.

Pay cuts are going to reduce the price of everyday expenses. It a cycle that unfortunately we are going to face.

The only problem though is for the government. If prices are going to drop we wont be generating as much money in the economy as we have been. The billions will be gone. Revenue versus expenditure will be brought in line but both wont be as expensive as the last decade.

thebman

SkepticOne wrote: »

I've seen this repeated a few times that the regulator is keeping prices artificially high, however looking at the regulators website it seems that the last significant increase last year of 17.5% was at the request of the ESB.

Interim Electricity Price Increase - Decision Paper - 11/07/08

The recent reduction of 10% has come from Eamonn Ryan, not as a result of a proposal of the ESB.

They are semi-state body though. The fact that they put in a proposal for a price increase could have been at the request of the state as they came out afterwards arguing on radio shows that the increase should not have happened and that they were against it as it promoted competition.

It would benefit the ESB a lot more to charge less and kill off the competition and have 100% market share. It is obvious they aren't allowed to do this and that external forces are acting on them to ensure it does not happen, namely regulation and government.

It is stupid anyway as artificially high prices don't encourage competition. The government pursued this policy with eircom too where we have the highest line rental in the world and look at our broadband market?

SkepticOne

thebman wrote: »

They are semi-state body though. The fact that they put in a proposal for a price increase could have been at the request of the state as they came out afterwards arguing on radio shows that the increase should not have happened and that they were against it as it promoted competition.

Hmmm. If they are against price increases they are free to request reductions but they don't appear to have done so. Why have they not done so? Those documents on the regulator's site reflect the official voice of the ESB.

I think the ESB are being a little tricky here with their PR on the radio. I doubt if what you were hearing was ESB's main group voice but rather some PR person in ESB's retail division who is not speaking on behalf of ESB as a whole.

There are problems with the electricity market in Ireland but I think the ESB is being entirely truthful with its PR here.