Turned a corner?

ei.sdraob

Yahew wrote: »

It shows a decline which is lessening, and possibly reversing.

WOOT! We turned a corner!

easychair

Yahew wrote: »

It shows a decline which is lessening, and possibly reversing.

To be fair, it shows a decline. And could "possibly" show anything else, including a graph levelling out, a graph continuing to decline, or a graph reversing.

Yahew

ei.sdraob wrote: »

WOOT! We turned a corner!

Yep.

easychair wrote: »

To be fair, it shows a decline. And could "possibly" show anything else, including a graph levelling out, a graph continuing to decline, or a graph reversing.

It shows a decline levelling out at the moment.

You eternal pessimists are the same as the 2006 property never falls optimists. Its a game of extrapolation. Eventually property falls, and economies recover.

easychair

Yahew wrote: »

It shows a decline levelling out at the moment.

You eternal pessimists are the same as the 2006 property never falls optimists. Its a game of extrapolation. Eventually property falls, and economies recover.

Curiously, a few moments ago you claimed it was reversing. Now you say its levelling off.

A pessimist is what an optimist calls a realist.

djpbarry

easychair wrote: »

Curiously, a few moments ago you claimed it was reversing. Now you say its levelling off.

That graph quite clearly is, at the very least, levelling off. But then, GNP is not the only indicator of economic health. And why is the graph titled “Real” GNP?

Yahew

easychair wrote: »

Curiously, a few moments ago you claimed it was reversing. Now you say its levelling off.

A pessimist is what an optimist calls a realist.

It grew in the last quarter. However thats not enough data points for reversing.So lets say levelling over the last few Qs.

I am a realist. I opposed the property bubble and I oppose the doom and gloom now. You see the pessimism was needed when nobody had it, and not needed when everybody has it. Buffet said something like that.

Ireland has been through it's internal shocks, and adjusted back to a lower GDP where it can grow from. The only fly in the ointment is potential external shocks - Greece etc. Lets see.

Sand

@Yahew

You eternal pessimists are the same as the 2006 property never falls optimists. Its a game of extrapolation. Eventually property falls, and economies recover.

Of course. Eventually, things revert to the long term trend.

Despite all the disastrous policies pusued over the past 3 years....
- Ireland will eventually grow again on a consistent basis
- Ireland will eventually run a budget surplus again.
- Irish unemployment will eventually drop drastically again

None of that is surprising, and the eventual achievement of it will be in spite of the policies pursued rather than because of them ( Look at Iceland, already back in the markets issuing debt whilst we celebrate being just as locked out of the market as we were last month).

That said, just because the economic situation is getting worse less fast, or is levelling out does not mean then that growth will rocket. It may simply sit in Japan territory as budget continue to be cut, interest bills mount, banks refuse to lend, and a heavily indebted population cut back spending to pay down their debts and in fear of further government cuts.

The conditions needed for prosperity (which interestingly do not include confidence...confidence is product of prosperity) in the Irish economy are at best weak. Access to credit is highly reduced. Human capital is at best average ( far too many young people whose only skill is using a shovel or conveying property). Our export to growth model is about the only knife we have in the drawer, but unfortunately our trade partners are too going down the austerity/export to growth model. And in per capita terms, we are no longer the plucky little low cost location which can rely on a certain amount of "catch up" growth. We have caught up.

Describing a particular point of view as doom and gloom, and thus putting it at one end of spectrum of your own construction - with your own view of course in the moderate middle - doesnt necessarily mean what your think it means. Remember the "soft landing" theory came from people trying to compromise between those who said the property market was going to crash horribly (Morgan Kelly) and those who said it would grow forever and ever (Most banks and government economists). Picking a happy mid point of "soft landing" and presuming because it was the mid point it must be true didnt make it so then, or now.

Its worth noting that, statistically at least, Ireland grew throughout the 1980s. What a wonderful decade of economic prosperity that was...

easychair

Yahew wrote: »

It grew in the last quarter. However thats not enough data points for reversing.So lets say levelling over the last few Qs.

I am a realist. I opposed the property bubble and I oppose the doom and gloom now. You see the pessimism was needed when nobody had it, and not needed when everybody has it. Buffet said something like that.

Ireland has been through it's internal shocks, and adjusted back to a lower GDP where it can grow from. The only fly in the ointment is potential external shocks - Greece etc. Lets see.

Your last paragraph is interesting, but is also speculation. To assume that the current GDP will be a floor, and that the GDP will only rise from this point, is an assumption.

Ireland is still living beyond what it can afford, and is still borrowing billions upon billions to make sure the public services are still working. Each additional billion borrowed today means higher repayments tomorrow, and the capital will also have to be paid back.

The debt burden in Ireland, government debt, corporate debt, and household debt, is amongst the highest in the world, and to not understand just what a millstone that is going to be for years into the future, and how that is going to effectively act as a giant handbrake on growth, is to misunderstand how an economy works. Look at Japan (our debts are not worse than those of Japan), and see how debt has effectively rendered Japans economy stagnant now for 20 years.

djpbarry

easychair wrote: »

The debt burden in Ireland, government debt, corporate debt, and household debt, is amongst the highest in the world, and to not understand just what a millstone that is going to be for years into the future, and how that is going to effectively act as a giant handbrake on growth, is to misunderstand how an economy works. Look at Japan (our debts are not worse than those of Japan), and see how debt has effectively rendered Japans economy stagnant now for 20 years.

The fact that you repeatedly compare Ireland to Japan, while omitting the obvious economic differences between the two (Japan has an unemployment rate of just 4.7%, for example), demonstrates a lack of understanding on your own part - you're not really in a position to patronise others.

ei.sdraob

Right lets be realistic here, a very simple question

Have any of the issues that led us here have been solved? (and by solved i am not talking about kicking it down the road for someone else to solve like the NAMA brainfart)

more precisely:
* We still do not have a european deposit guarantee scheme that is complete, works and in any shape resembles FDIC, might be 2020 before we get it
* There is still no bank wind down procedure, Denmark are only ones to make any progress on this
* No one lost their job or was held accountable at the Regulator, what is there to stop them not doing their job again?
* What is in place to prevent another housing bubble developing? If anything the likes of NAMA and govt have an interest in re inflating it
* Where are the real reforms in welfare and PS? so far everything is pretty cosmetic with most of the "savings" being due to pushing people to retire and not hiring (which hurts the service) saving on wages but growing pensions more
* Where is the bankruptcy laws that where promised and supposed to be implemented under IMF/EU?
* Where is the house price database, and no that joke of an index from CSO, Revenue are sitting on all the sales data going back for a very long time, where is the transparency that was promised?
* What is to prevent politicians from engaging in policies of bribing the electorate with goodies in exchange for votes, FF havent gone away you know and still floating about like bad smell, bidding for their time.


So once again, 3 years on, what has been learned and what has been done?

As the world is about to enter a second recession do we really hope to ride it all out on exports alone? What happens to the economy if Obama finally closes the loophole for US companies and offers an amnesty as is reported in the Business & Finance magazine? what then we grow some spuds??

easychair

ei.sdraob wrote: »

Right lets be realistic here, a very simple question

Have any of the issues that led us here have been solved? (and by solved i am not talking about kicking it down the road for someone else to solve like the NAMA brainfart)

more precisely:
* We still do not have a european deposit guarantee scheme that is complete, works and in any shape resembles FDIC, might be 2020 before we get it
* There is still no bank wind down procedure, Denmark are only ones to make any progress on this
* No one lost their job or was held accountable at the Regulator, what is there to stop them not doing their job again?
* What is in place to prevent another housing bubble developing? If anything the likes of NAMA and govt have an interest in re inflating it
* Where are the real reforms in welfare and PS? so far everything is pretty cosmetic with most of the "savings" being due to pushing people to retire and not hiring (which hurts the service) saving on wages but growing pensions more
* Where is the bankruptcy laws that where promised and supposed to be implemented under IMF/EU?
* Where is the house price database, and no that joke of an index from CSO, Revenue are sitting on all the sales data going back for a very long time, where is the transparency that was promised?
* What is to prevent politicians from engaging in policies of bribing the electorate with goodies in exchange for votes, FF havent gone away you know and still floating about like bad smell, bidding for their time.


So once again, 3 years on, what has been learned and what has been done?

As the world is about to enter a second recession do we really hope to ride it all out on exports alone? What happens to the economy if Obama finally closes the loophole for US companies and offers an amnesty as is reported in the Business & Finance magazine? what then we grow some spuds??

The real economy in Ireland is alive and well and it's still working away producing goods and services and earning revenue for the country.

The problems, however, are not inconsiderable. As you point out, neither the FF government or the current government has grasped the issues and attempted to deal with them in any meaningful way, apart from what amounts to little more than window dressing.

Ireland's problems stem from the enormity of it's debts, and the solution from the EU, the IMF, and the ECB is to add to those debts as a solution.

That said, it's hard to know what Ireland can do at this point apart from hope that the EU or someone outside comes to the rescue. It would be great if Ireland eventually got a government which could actually inspire confidence and actually do something, as the likely beneficiaries of the growing discontent with the mainstream parties is likely to be, in part, Sinn Fein, whose policies would damage the country even further.

hinault

The Central Bank of Ireland appear to be upbeat:

"The Central Bank says the Irish economy should achieve growth of around 1% of GDP this year. It has revised upwards its growth estimate to 1% from its earlier estimate of 0.8% on the back of a stronger than expected economic performance in the second quarter.
In its latest quarterly economic bulletin, the Central Bank said that growth in the first half of the year was so strong that even the emerging evidence of a slowdown in the international economy in the second half will not tip the Irish economy back into negative territory.

But the bank has revised its growth estimate for next year downwards to reflect much weaker demand in Ireland's main trading partners in 2012. It now expects GDP growth next year of 1.8% compared to earlier forecasts of 2.1%.
GNP, which better reflects the domestic economy, is expected to contract this year by 0.4%, and grow next year by 0.7%.

The Central Bank expects incomes and employment levels to stabilise next year, but unemployment will remain high at 14%, with a small decline in unemployment due to emigration or people dropping out of the labour force.
The Central Bank also argues the case for making a bigger budget adjustment than the €3.6 billion agreed for next year in the EU-IMF programme. It says bringing forward some of the planned adjustments to 2012 could build some resilience into the public finances, and would lower the overall cost of the adjustment programme by reducing debt levels faster and saving interest costs.

It also feels the negative impact of a faster adjustment may no longer be significant, because households have a very high savings rate anyway, because of uncertainty over the economic situation.

But it cautions against overloading the adjustment programme. It says personal consumption - which accounts for roughly half the economy - will fall by 2.6% this year, and by 0.8% next year.
It also expects housing completions this year of 10,000 units - down almost 90% from the peak year of 2006. It expects housing output to remain at this level next year, consistent with a near 10% fall in investment.

In terms of competitiveness, the bank says more competition is needed in private sector service providers, as well as in the public sector.
It says the economic changes are significant, but pushing ahead with them would send a signal of the adaptability of the Irish economy, increasing confidence among investors, which it says would be beneficial to the adjustment process"
http://www.rte.ie/news/2011/1004/economy-business.html

mrgaa1

given the current issue with Greece and their alleged default about to happen I'd say the corners will be none existent as we fall into the abyss.

I've said this before and I'll say it again - a world-wide reset to zero of all debt should take place. The amount of money owing does not exist and will not exist. The debt is held in numbers on computer systems. So a simple reset should do it - of course there will have to be stringent regulations in place to avoid this but look we don't owe anything to anyone outside this planet so we as a civilisation should sort it out. Peoples lives are being ruined - are our governments here to ensure we all live poor lives?

murphaph

mrgaa1 wrote: »

I've said this before and I'll say it again - a world-wide reset to zero of all debt should take place. The amount of money owing does not exist and will not exist. The debt is held in numbers on computer systems. So a simple reset should do it - of course there will have to be stringent regulations in place to avoid this but look we don't owe anything to anyone outside this planet so we as a civilisation should sort it out. Peoples lives are being ruined - are our governments here to ensure we all live poor lives?

Do you have any savings? Would you be happy if the debtor (the bank, credit union etc.) reset their debt to you to zero and your savings vanished?

easychair

hinault wrote: »

The Central Bank of Ireland appear to be upbeat:

"The Central Bank says the Irish economy should achieve growth of around 1% of GDP this year. It has revised upwards its growth estimate to 1% from its earlier estimate of 0.8% on the back of a stronger than expected economic performance in the second quarter.

It now expects GDP growth next year of 1.8% compared to earlier forecasts of 2.1%.
GNP, which better reflects the domestic economy, is expected to contract this year by 0.4%, and grow next year by 0.7%.

The cost to the Irish economy, if the growth figures are attained, will be more tens of billions in borrowings. Anyone can "grow" any business by borrowing billions, the problems occur when it comes to paying it back. It's exactly this principle which was used by Anglo Irish Bank.

The other part of the picture is what effect inflation will have on the growth. If an economy grows at 1%, and inflation is at 2%, that's a net "growth" of -1%.

thebman

easychair wrote: »

The cost to the Irish economy, if the growth figures are attained, will be more tens of billions in borrowings. Anyone can "grow" any business by borrowing billions, the problems occur when it comes to paying it back. It's exactly this principle which was used by Anglo Irish Bank.

The other part of the picture is what effect inflation will have on the growth. If an economy grows at 1%, and inflation is at 2%, that's a net "growth" of -1%.

What businesses are borrowing tens of billions?

I was under the impression many businesses were declaring they were going under as they couldn't' get credit.

hinault

easychair wrote: »

The cost to the Irish economy, if the growth figures are attained, will be more tens of billions in borrowings. Anyone can "grow" any business by borrowing billions, the problems occur when it comes to paying it back. It's exactly this principle which was used by Anglo Irish Bank.

Is the CBI growth figure perdicated on borrowing?

easychair wrote: »

The other part of the picture is what effect inflation will have on the growth. If an economy grows at 1%, and inflation is at 2%, that's a net "growth" of -1%.

Good point.

easychair

hinault wrote: »

Is the CBI growth figure perdicated on borrowing?

Of course. If the Irish Government doesn't borrow the €14 billion or so it needs to keep paying all the salaries of those dependant on the public purse, the effect on the economy will be to take €14 billion out of the economy, which would be €14 billion less spent in the economy. That would have the effect of very negative growth.

djpbarry

easychair wrote: »

The cost to the Irish economy, if the growth figures are attained, will be more tens of billions in borrowings. Anyone can "grow" any business by borrowing billions...

Ignoring for a moment that businesses rarely borrow "billions", surely any growth that results depends on how those borrowings are invested in the business?

ei.sdraob

djpbarry wrote: »

surely any growth that results depends on how those borrowings are invested in the business?

So into what productive areas did our government(s) in the last 3 years "invested" the extra 100 billion or so of new debt they ran, do tell


What would you call a business that borrows lets say 100,000 then blows third of this on wages with no productivity improvements (ps), gives third away (welfare) and spends the remainder on hookers and coke (banks), all while doing only 20,000 in sales

mrgaa1

murphaph wrote: »

Do you have any savings? Would you be happy if the debtor (the bank, credit union etc.) reset their debt to you to zero and your savings vanished?

and what do you want us all to do? All bank related debt should be wiped. All monies is just virtual - it only exists within computer systems. Wipe out bank debt and government debt. Its not that difficult.

djpbarry

ei.sdraob wrote: »

So into what productive areas did our government(s) in the last 3 years "invested" the extra 100 billion or so of new debt they ran, do tell

You see, what you’ve done there is leaped to the conclusion that I was defending government policy, when in fact I was simply pointing out the flaw in easychair’s argument.

mrgaa1 wrote: »

All monies is just virtual...

So if your employer decides to start paying you with happy thoughts, that’s cool?

beeno67

mrgaa1 wrote: »

and what do you want us all to do? All bank related debt should be wiped. All monies is just virtual - it only exists within computer systems. Wipe out bank debt and government debt. Its not that difficult.

So like he said. Any savings you have (which is bank debt) would be wiped out. How about debt that is invested in businesses? Just wiped out too?

murphaph

mrgaa1 wrote: »

and what do you want us all to do? All bank related debt should be wiped. All monies is just virtual - it only exists within computer systems. Wipe out bank debt and government debt. Its not that difficult.

So say I owe the bank 500k and you have 500k savings with same bank and my debt is "wiped" off their system. Your savings don't sit in the vault of a bank, a bank only has to have a small percent of savings on reserve. If my debt is wiped, so are your savings. It's that simple.

You want your debt to be wiped, but not the debt of your debtors.

easychair

ei.sdraob wrote: »

So into what productive areas did our government(s) in the last 3 years "invested" the extra 100 billion or so of new debt they ran, do tell


What would you call a business that borrows lets say 100,000 then blows third of this on wages with no productivity improvements (ps), gives third away (welfare) and spends the remainder on hookers and coke (banks), all while doing only 20,000 in sales

That's the point. Governments have, misleadingly, said they were "investing" which was always code for spending more and more money. The money was taxpayers money and borrowed money, and even drunken sailors might have been embarrassed at the eye watering tens of billions involved.

When we examine it, the value for money was appalling, and in boom times few questioned it.

Anyone can borrow money, throw it at projects, and claim the results as growth.

And so it now continues, with Ireland bankrupt and the government still having to borrow billions after billions, with Ireland getting more and more indebted, adding to the fact that borrowing today is higher taxation tomorrow.

I don't claim to have any solutions which might not stoke serious civil unrest, but the longer its put off, the worse the day of reckoning is likely to be.

WalterMitty

easychair wrote: »

The cost to the Irish economy, if the growth figures are attained, will be more tens of billions in borrowings. Anyone can "grow" any business by borrowing billions, the problems occur when it comes to paying it back. It's exactly this principle which was used by Anglo Irish Bank.

The other part of the picture is what effect inflation will have on the growth. If an economy grows at 1%, and inflation is at 2%, that's a net "growth" of -1%.

Growth projections and results and generaly adjusted for inflation . Youre right about growth of 1% being nothing when it is being fueled by close to 20billion borrowings which are being injected into economy by gov. Same thing during the boom , the growth figures were stellar but it was all debt fuelled, angloa bank et al were borrowing tens of billions a year and injecting that into Irish economy which gave the massive growth figures. In both cases the borrowings on the balance sheet were being ignored in discussing GNP growth.Your hear people in media refering to GNP as being wealth when its actually more acurate to call it income.

djpbarry

easychair wrote: »

That's the point.

No, it isn't. You are stating that all future economic growth must come on the back of further borrowing. That is simply not true.

easychair

WalterMitty wrote: »

Growth projections and results and generaly adjusted for inflation . Youre right about growth of 1% being nothing when it is being fueled by close to 20billion borrowings which are being injected into economy by gov. Same thing during the boom , the growth figures were stellar but it was all debt fuelled, angloa bank et al were borrowing tens of billions a year and injecting that into Irish economy which gave the massive growth figures. In both cases the borrowings on the balance sheet were being ignored in discussing GNP growth.Your hear people in media refering to GNP as being wealth when its actually more acurate to call it income.

You make an interesting point, and "growth" fuelled by borrowing is phantom growth, as borrowing today is higher tax tomorrow, and higher tax tomorrow means lower growth.

Max Powers

On reflection, Im worried that the government is hiding behind increased export taxes and will not do what needs to be done to bring out budget back to surplus.

I dont see the necessary cuts being made,

• Croke Park doesnt go far enough,
• no getting rid of quangos,
• no talk of gettin rid of the Seanad (I thought that the referendum was going to be held with the preisdent election)
• no major reduction in SSB bosses, judiciary and politicians wages

What i do see is loads of Stealth taxes (water charges, household charges etc) that will stop any spending.

Tora Bora

easychair wrote: »

Of course. If the Irish Government doesn't borrow the €14 billion or so it needs to keep paying all the salaries of those dependant on the public purse, the effect on the economy will be to take €14 billion out of the economy, which would be €14 billion less spent in the economy. That would have the effect of very negative growth.

Minus the the amount which gets brought to Newery, to be spent there;)