If the budget fails...

noodler

Personally I think the borrowing our way out of this argument is moot as to whether or not it would bring in enough revenue over debt to make it viable.

We need investment from the outside, IMF goodwill, EU goodwill etc and I think increased or even sustained borrowing (at current levels) will do little to for our reputation.

I'd love to know how qualified the people getting on their high horse are when it comes to half of this stuff. I am only educated in Economics to Masters level and even I have to admit a huge amount of the theory in the textbooks simply isn't as applicable in the real world without serious modifciations.

Well, it isn't really an admission - it is a human sciance after all.

masteroftherealm

woodseb wrote: »

how much temporary spending do you think is needed and how much could we conceivably borrow?

Ah come on, I am not a professional economist, I have a background but honestly I couldn't answer that question in a manner that would stand up to scrutiny.

musiknonstop

In a small open economy such as ours, any stimulus spending just result in increased imports, and shopping trips across the border. This is the difference between a stimulus package in a large economy such as Japan or Germany, and ours.

noodler

masteroftherealm wrote: »

Ah come on, I am not a professional economist, I have a background but honestly I couldn't answer that question in a manner that would stand up to scrutiny.

Aye, I reckon that coming up with such figures of our bat is pretty much pointless speculation. Hell, the population as a whole wouldn't have a clue what needed to come off the public sector in euro terms if it hadn't been for the amount of time the Bord Snip boys investigated it.

woodseb

masteroftherealm wrote: »

Ah come on, I am not a professional economist, I have a background but honestly I couldn't answer that question in a manner that would stand up to scrutiny.

It's pretty much central to the arguement though isn't it, any stimulus must be large enough to give the economy the biggest kick up the behind as possible without mortgaging the future - the current situation with what we are borrowing to pay the bills doesn't allow that balance to happen. A half hearted stimulus just pisses money up against the wall

nevertheless as another poster has said, our real way out of this is through piggybacking on upturns from the EU, UK and US - we can't really do much ourselves to cause this to happen except make sure we are in the best position fiscally when it comes

dvpower

eoinbn wrote: »

Yes it leads to automatic the collapse of the government.

I doubt thats true.

I can't imagine that a government could credibily continue after losing a budget vote (or a TD voting confidence in the Government after voting against the budget) but I doubt that theres anything to force an automatic collapse.

masteroftherealm

woodseb wrote: »

It's pretty much central to the arguement though isn't it, any stimulus must be large enough to give the economy the biggest kick up the behind as possible without mortgaging the future - the current situation with what we are borrowing to pay the bills doesn't allow that balance to happen. A half hearted stimulus just pisses money up against the wall

nevertheless as another poster has said, our real way out of this is through piggybacking on upturns from the EU, UK and US - we can't really do much ourselves to cause this to happen except make sure we are in the best position fiscally when it comes

Yes which is why it drives me so up the wall, if we are going to put ourselves into a position of large borrowing.. which is nessesary to run the county, we might as well borrow larger amounts of money and promote jobs and stimulus and actually have recovery sooner than later. Ireland has so much potential, but its being "pissed away" as you said. Piggybacking on other economies is all well and good, but we need to make at least some efforts for job creation, which we are not.

masteroftherealm

musiknonstop wrote: »

In a small open economy such as ours, any stimulus spending just result in increased imports, and shopping trips across the border. This is the difference between a stimulus package in a large economy such as Japan or Germany, and ours.

Erm thats not what stimulus is. Its directed funding for jobs growth and less imports and more sustainable businesses.

masteroftherealm

dvpower wrote: »

I doubt thats true.

I can't imagine that a government could credibily continue after losing a budget vote (or a TD voting confidence in the Government after voting against the budget) but I doubt that theres anything to force an automatic collapse.

The constituation says otherwise.

http://en.wikipedia.org/wiki/Loss_of_Supply

Is the basis for the sytem

masteroftherealm

masteroftherealm wrote: »

Eu rules which have been bent for most other countries and which most agree should be abolished.
Yes temporary spending in order to stimulate a jobs market, thus increasing future revenue is the tenents of Keynsian theory.......

Where should we apply this temporary spending?


In such an open economy I would be of the opinion that our money is wasted until we can start attracting FDI again - thats where all of our Celtic Tiger money came from. Now is the time to bring wages down so we can become competitive and actually attract some business.


If wages stay artificially high then so do prices and it will send the majority of money borrowed at government level out of the country as we buy imported cars/tv's/electronics etc.

K-9

masteroftherealm wrote: »

http://www.irishtimes.com/newspaper/finance/2009/0128/1232923370007.html

Irish borrowings to hit 60% of GDP in 2010 is the highest I can find, one of the lowest in the EU.

Your basic economics fail, public debt is measured as a percentage of GDP and due to our very low previous debt we are in a very good position to borrow at the moment even with S&P downrating us to AA, many commentators feel that the downrating was due to the lack of stimulus in the economy.

That's nearly a year old.

Circumstances are changing, especially with the ECB:
http://www.independent.ie/opinion/columnists/brendan-keenan/brendan-keenan-market-gets-the-jitters-at-first-sign-of-ecb-steps-to-regulate-support-1962412.html

We have EU rules to meet:
http://www.independent.ie/national-news/borrowing-will-top-eu-debt-limit-until-at-least-2017-1939217.html

Best I can get is this article on debt:
http://www.irishexaminer.com/opinion/columnists/fergus-finlay/look-we-have-to-pull-together-despite-our-grudging-government-105192.html

43% end of last year, €50 Billion and it's now €74 Billion and predicted to be 79% by 2012. I don't think it counts NAMA as the EU don't count it.

It will be 92% of GNP next year:
http://www.finfacts.ie/irishfinancenews/article_1018209.shtml

masteroftherealm

GNP and GDP are not the same thing.

Gross domestic product (GDP) is defined as the "value of all final goods and services produced in a country in 1 year".
Gross National Product (GNP) is defined as the market value of all goods and services produced in one year by labour and property supplied by the residents of a country.

http://www.irishexaminer.com/opinion/columnists/fergus-finlay/look-we-have-to-pull-together-despite-our-grudging-government-105192.html

Makes my case for me?

I quote

But it’s not actually the size of the national debt, important as it is, that’s crucial. The crucial figure, that really determines what you can afford, is the debt/GDP ratio – that is to say, the debt expressed as a proportion of our wealth.

And in looking at the debt/GDP ratio, the NTMA is very revealing. Their report says quite clearly that our total debt, as a proportion of our wealth, stood at 43.2% at the end of 2008. And that’s a rising figure. At the same time, however, the EU average was 69.3%. Germany, Holland, Britain, France – in fact 13 members of the EU – had higher debt/GDP ratios than we had.

The NTMA says that our debt/GDP ratio is expected to rise further, peaking at 79% in 2012. But it was 90% in 1990, and even higher than that in the 1980s.

According to EU Commission forecasts published in April this year, and again repeated by the NTMA, our borrowing over the next three years or so will keep us below the European average.

None of that is a reason for going mad. But it might be a reason for getting mad. We’re being told, day after day, that we’re borrowing far too much, that we’re driving the country into bankruptcy, that if we don’t slash and burn we’ll all be destroyed. And it’s certainly true that we’d be better off in the long term if we borrowed less now.

But none of these policymakers who keep urging us to tighten our belts until it really hurts is telling us that our borrowing is actually lower than the European average, and that our debt, as a proportion of our wealth, will be by no means impossible to manage.

K-9

masteroftherealm wrote: »

GNP and GDP are not the same thing.

Gross domestic product (GDP) is defined as the "value of all final goods and services produced in a country in 1 year".
Gross National Product (GNP) is defined as the market value of all goods and services produced in one year by labour and property supplied by the residents of a country.

http://www.irishexaminer.com/opinion/columnists/fergus-finlay/look-we-have-to-pull-together-despite-our-grudging-government-105192.html

Makes my case for me?

I quote

What's with the attitude?

I know that, that's why I posted both.

GDP is a bit unrealistic on Ireland though as most countries don't have the FDI we have.

At least we've moved on from the Wiki out dated data! I think you have to start reconsidering the position. You based it on old data and with circumstances changing, it may not be an option.

From the excerpt you posted, you really are not seeing anything that doesn't suit you. It will be 79% in 2 years and the way things are going, could be far worse.

musiknonstop

masteroftherealm wrote: »

Erm thats not what stimulus is. Its directed funding for jobs growth and less imports and more sustainable businesses.

Ultimately it's where the money spent on any stimulus ends up... in consumers pockets to be spent on imports.

masteroftherealm

K-9 wrote: »

What's with the attitude?

I know that, that's why I posted both.

GDP is a bit unrealistic on Ireland though as most countries don't have the FDI we have.

At least we've moved on from the Wiki out dated data! I think you have to start reconsidering the position. You based it on old data and with circumstances changing, it may not be an option.

Apologies if I have an attitude, just used to being attacked for my poistion as its anti government.

I agree that GDP doesnt tell the whole picture but the sentiment stands in my opinion, that we could borrow our way into recovery and use the future tax revenues to repay that debt. Its not a nice situation but I feel that its the only solutions, cuts and no stimulus is a bad bad plan. Cut must be evened out with job creation or its pointless.

K-9

masteroftherealm wrote: »

Apologies if I have an attitude, just used to being attacked for my poistion as its anti government.

I agree that GDP doesnt tell the whole picture but the sentiment stands in my opinion, that we could borrow our way into recovery and use the future tax revenues to repay that debt. Its not a nice situation but I feel that its the only solutions, cuts and no stimulus is a bad bad plan. Cut must be evened out with job creation or its pointless.

It isn't that anti Govt.! They still have plans for infrastructural projects like the LUAS, metro etc. I can see somethings like the Western Rail Corridor being cut but unless things get seriously worse, there will be money spent on things like that.

I can see your position and agree with it to an extent, except, we still have the problem of why we have low tax revenues and high PS pay and SW. A situation that 75% or so of current expenditure is pay or SW isn't sustainable.

Neither is our current tax base, or lack of. We have an over reliance on indirect taxes, basically, a dependency on people spending their higher wages because we have low direct taxes (on lower to middle incomes).

masteroftherealm

masteroftherealm wrote: »

Apologies if I have an attitude, just used to being attacked for my poistion as its anti government.

I agree that GDP doesnt tell the whole picture but the sentiment stands in my opinion, that we could borrow our way into recovery and use the future tax revenues to repay that debt. Its not a nice situation but I feel that its the only solutions, cuts and no stimulus is a bad bad plan. Cut must be evened out with job creation or its pointless.

Our current expenditure is based on years of bumper taxes due to people borrowing massive sums of money to buy property/cars etc

It was never our money in the first place. A large percentage of our economy has been wiped out completely and looks to stay that way for the foreseeable future.

So do we get real now? And make the cuts? Or do we hope and pray that another boom happens in a few years to let us begin to pay off these debts.

I feel we should be aiming for steady growth, and the way to begin that is to get our finances in order asap.

Maebh

K-9 wrote: »

It isn't that anti Govt.! They still have plans for infrastructural projects like the LUAS, metro etc. I can see somethings like the Western Rail Corridor being cut but unless things get seriously worse, there will be money spent on things like that.

I can see your position and agree with it to an extent, except, we still have the problem of why we have low tax revenues and high PS pay and SW. A situation that 75% or so of current expenditure is pay or SW isn't sustainable.

Neither is our current tax base, or lack of. We have an over reliance on indirect taxes, basically, a dependency on people spending their higher wages because we have low direct taxes (on lower to middle incomes).

'Scuse me, but why should the western rail corridor be scrapped?

Y'know there was better train infrastructure and mobility in the early 1900's out here than there is now....

And don't even get me started on the lack of buses in the west...

Off topic, I know, I'm just saying...

[Edit: sorry, misread you, ignore me :P]

masteroftherealm

Rojomcdojo wrote: »

Our current expenditure is based on years of bumper taxes due to people borrowing massive sums of money to buy property/cars etc

It was never our money in the first place. A large percentage of our economy has been wiped out completely and looks to stay that way for the foreseeable future.

So do we get real now? And make the cuts? Or do we hope and pray that another boom happens in a few years to let us begin to pay off these debts.

I feel we should be aiming for steady growth, and the way to begin that is to get our finances in order asap.

No please don't get me wrong I am NOT advocating no cuts, at all.

I am advocating a measured system of government restructuring (A Bloated and top heavy public sector which throws off average earning figures)

Tax base widening (A third rate of tax that I in the past would probably have been included in, I have no problems paying tax if I get infrastructure and support services , health education, in return)

Infrastructure investment, roads, broadband, public transport. Power investment to attract IT services outside of the Dublin region, data center investment is a booming sector. Increased international partnership in certain areas such as the broadband infrastructure. And a government that doesn't hand over important infrastructure contracts to incompetent companies such as 3.

And stimulus injection in the tertiary economy, move us to a services economy and away from farming and manufacturing which are essentially subsidized jobs in this country.