IMF: social welfare benefits 'too high'

Scofflaw

seaside911 wrote: »

No Mate , Im kinda suggesting that we stop giving money to the IMF and the Banks much like Iceland did. And you cannot blame the long term unemployed for going mad borrowing during the boom because as you know the banks have always been choosy about who gets their loans.

Er, Iceland certainly hasn't ever refused to give the IMF money. And the money it refused to pay out on with respect to the banks was the deposits of non-Icelandic savers in Icesave.

cordially,
Scofflaw

Head The Wall

Yes they were very choosy, they chose me and I said no, I don't care if I am pre approved for a loan or not and no I don't want a mortgage.

Also, don't be blaming the banks for the deficit, day to day govt spending makes up the bulk of it (70%

Tea drinker

seaside911 wrote: »

No Mate , Im kinda suggesting that we stop giving money to the IMF and the Banks much like Iceland did. And you cannot blame the long term unemployed for going mad borrowing during the boom because as you know the banks have always been choosy about who gets their loans.

As someone who didn't go mad, I couldn't give a toss for people who did. Sure RTE-Pravda had 10 property porn pragrammes per day, doomongers should kill themselves etc - but all the signs were there to be cautious - if I wanted to raise my head from the trough.

later12

seaside911 wrote: »

No Mate , Im kinda suggesting that we stop giving money to the IMF

You don't just "stop giving money" to the IMF or any other sovereign creditor, though.

The last sovereign to do this was North Korea in 1984.

What inevitably happens is that you work out a plan with the IMF or the creditors as regards how the default will be paid back and the arrears cleared - even Zimbabwe are doing that. Be under no illusion: the debt cannot go away, i.e. be repudiated. That has to be out of the question.

later12

Live register figures for August published today ; non seasonally adjusted figure down about 4,000 from last month; seasonally adjusted claimant numbers down 2,000 from last month.

Standardised Unemployment Rate remains the same.

http://cso.ie/en/media/csoie/releasespublications/documents/labourmarket/2012/lreg_aug2012.pdf

Meanwhile, here is the Eurostat Job Vacancy Rate for the GIPS (excluding Italy due to lack of data), the UK, the EU average and the EA average.

http://epp.eurostat.ec.europa.eu/portal/page/portal/labour_market/job_vacancies/main_tables

Scortho

seaside911 wrote: »

Hold on a mo.

The money given to the unemployed is what keeps our economy going whether they sit on their arses or not. I'd far rather an Irish citizen got a share of my tax than an IMF agent

The money given to the unemployed leads to an ever increasing Debt-GNP ratio as the government is borrowing it.
While it might contribute towards our economy, it kicks the can down the road, onto my generation and our childrens generation. Cheers!

Also it's the IMF that are giving us money at the moment!

Cheerful Spring

Head The Wall wrote: »

Yes they were very choosy, they chose me and I said no, I don't care if I am pre approved for a loan or not and no I don't want a mortgage.

Also, don't be blaming the banks for the deficit, day to day govt spending makes up the bulk of it (70%

Mortgages if you can pay long-term and not run into trouble by all means do what you like.

But remember banks owe your home until you pay that last payment plus the enormous interest they charge you which is obscene in my view. Mortgage holders often forget that just because you have the keys doesn't means its yours.

Cheerful Spring

Scortho wrote: »

The money given to the unemployed leads to an ever increasing Debt-GNP ratio as the government is borrowing it.
While it might contribute towards our economy, it kicks the can down the road, onto my generation and our childrens generation. Cheers!

Also it's the IMF that are giving us money at the moment!

We've taken a bailout because we agreed to without a "fight" pay back the Irish bank losses.

We also had a deficit in our budget from overspending and rise in employment obviously effected the amount of income tax coming in. But we could have easily fixed this by borrowing from elsewhere. Ireland sovereign debt is relatively low. But the previous Irish Government instead decided to stay in the EU and allow other countries with more power in Europe to push us around.

How many billions have left this country due to the banking crisis?

The only way unemployment can be reduced is with jobs. Cutting rates will increase the social tensions within this country and poverty will also increase. If we are going to cut welfare than the cost of living must be reduced first.

Godge

Cheerful Spring wrote: »

We've taken a bailout because we agreed to without a "fight" pay back the Irish bank losses.

We also had a deficit in our budget from overspending and rise in employment obviously effected the amount of income tax coming in. But we could have easily fixed this by borrowing from elsewhere. Ireland sovereign debt is relatively low. But the previous Irish Government instead decided to stay in the EU and allow other countries with more power in Europe to push us around.

How many billions have left this country due to the banking crisis?

The only way unemployment can be reduced is with jobs. Cutting rates will increase the social tensions within this country and poverty will also increase. If we are going to cut welfare than the cost of living must be reduced first.

Who was going to lend to us when Moody's and all the rest had downgraded our debt? I have heard this type of argument put out before but it seems more ludicrous today than it was at the time.

Seanachai

poeticseraphim , I hear what you're saying about the second language issue. But I'm sick of hearing announcements about call centre jobs and seeing ribbons being cut on the news. We need sustainable long term industry and employment. Call centres are revolving doors , for the sake of your mental health ( not being trivial ) and personal finances people do not generally spend very long in these workplaces unless they progress to management level. I've worked in one of these call centres for four years now and it'll take at least a year for my mental health to recover once I leave. We can do a lot better than being a magnet for call centres.

Cheerful Spring

Godge wrote: »

Who was going to lend to us when Moody's and all the rest had downgraded our debt? I have heard this type of argument put out before but it seems more ludicrous today than it was at the time.

Ever here of a country called China? The second largest economy in the World Who'd offered to help out countries in the EU like Greece and Portugal in 2010.

America? Did we try there for a better deal?

The Middle East did we ask a rich country like Saudi Arabia for help? Brazil or India did we ask them?

Our sovereign debt is in the low billions Godge pocket change for countries in those areas of the world. Our banking debt is the high billions. Banking debt is the debt crippling our country and its not even owed by the Irish citizen.

China has a few trillion or more in reserves and has for years bought the debt of other countries not connected with the EU. So to say there was no other choice is rubbish.

Cheerful Spring

Our national debt was 40 billion in 2007-2008 it now stands at 133 billion we owe. This includes interest on the debt we do not owe, but have agreed to pay.

Are people that dumb they think the bailout was the only choice we had? There is no going back now we are screwed for years because of the decisions we made in 2008 and up till now.

View

Cheerful Spring wrote: »

Ever here of a country called China? The second largest economy in the World Who'd offered to help out countries in the EU like Greece and Portugal in 2010.

America? Did we try there for a better deal?

The Middle East did we ask a rich country like Saudi Arabia for help? Brazil or India did we ask them?

None of whom were offering to help us back in 2010 so all a bit moot.

The IMF only get called in when a country has run out of both economic credibility and actual lenders.

Cheerful Spring

View wrote: »

None of whom were offering to help us back in 2010 so all a bit moot.

The IMF only get called in when a country has run out of both economic credibility and actual lenders.

Do you expect countries do come to our aid without asking them first for help?

You have to get off your ass and do it yourself and seek this help out. Unfortunately Irish politicians have proven themselves time and again to be a lazy bunch, short on ideas, and they are only capable of reacting to situations when someone else is informing them about it.


IMF coming in only happens when you allow it to happen and have no other choice. Like i said we had places to turn to, but the Irish government made the decision to stay in the EU and agree to everything the European banks told us to do. That is the reality of it. You can believe we had know other choice but i call that brainwashing and it seems to have worked in your case.

Chips Lovell

Cheerful Spring wrote: »

But remember banks owe your home until you pay that last payment plus the enormous interest they charge you which is obscene in my view.

This is incorrect. You own your house. The house being security on a loan does not mean the bank owns it.

Cheerful Spring wrote: »

But we could have easily fixed this by borrowing from elsewhere. Ireland sovereign debt is relatively low.

Our bond yields had reached 7 per cent prior to the bailout. That is not "relatively low". Leaving the EU wouldn't have changed that.

Cheerful Spring wrote: »

Ever here of a country called China? The second largest economy in the World Who'd offered to help out countries in the EU like Greece and Portugal in 2010.

America? Did we try there for a better deal?

The Middle East did we ask a rich country like Saudi Arabia for help? Brazil or India did we ask them?

Our sovereign debt is in the low billions Godge pocket change for countries in those areas of the world. Our banking debt is the high billions. Banking debt is the debt crippling our country and its not even owed by the Irish citizen.

China has a few trillion or more in reserves and has for years bought the debt of other countries not connected with the EU. So to say there was no other choice is rubbish.

Why weren't they lending to us then?

View

Cheerful Spring wrote: »

Do you expect countries do come to our aid without asking them first for help?

There is something called the "international bond markets" - any of those countries could have purchased Irish bonds on them, none of them did.

That should tell you how willing they were in practice to loan us money at lower interest rates that they would have gotten by buying our bonds on the international bond markets.

Cheerful Spring wrote: »

IMF coming in only happens when you allow it to happen and have no other choice.

That is basically repetition of what I said in the absence of any evidence of there having being someone willing to lower us money at rates less than the IMF at the time.

Cheerful Spring wrote: »

You can believe we had know other choice but i call that brainwashing and it seems to have worked in your case.

On the contrary, I believe we had other choices but we exercised our sovereignty and decided to borrow from the IMF and the EU rather than face the alternatives of either borrowing at considerably higher interest rates or cutting our borrowing to zero overnight with the resulting horrific cut-backs in government spending that that would entail.

Cheerful Spring

Vladimir Kurtains wrote: »

This is incorrect. You own your house. The house being security on a loan does not mean the bank owns it.



Our bond yields had reached 7 per cent prior to the bailout. That is not "relatively low". Leaving the EU wouldn't have changed that.



Why weren't they lending to us then?

If you owed your "home" why have a mortgage? Borrowing for a house isn't ownership. If you could afford it you would have bought the house with money of your own.

Words have meaning. Ownership is something you personally own and nobody has the right to take it from you legally or morally. I don't think you understand the difference.

We could have borrowed outside the markets, the interest on our bonds, went very high while we were still trading. We get money now don't we and we are no longer selling our bonds!! We needed money 2008-2009 but we could have came up with new plan for raising funds and asked some other countries would they like to buy our sovereign debt. They could have refused to do this for various reasons, but we never asked did we that's obvious to anyone with a working brain!

If had we borrowed just for the sovereign debt/ would we have national debt of 133 billion? This is what it is now!

2007-2008 40 million was our national debt.

How much of gap was there between how much we spent and took in. Well we had a shortfall in tax and we spent more than we should have. But it was fixable if we borrowed about 30 billion over three to four years. The guaranteeing of banks caused our sovereign debt to rise therefore the cause was we needed to take a bailout.

Owing 70 billion compared to 133 would have been acceptable in my book. You might think its ok to pay foreign banks money money we own. I don't and we will regret the decisions we have allowed here to happen.

Chips Lovell

Cheerful Spring wrote: »

If you owed your "home" why have a mortgage? Borrowing for a house isn't ownership. If you could afford it you would have bought the house with money of your own.

Words have meaning. Ownership is something you personally own and nobody has the right to take it from you legally or morally. I don't think you understand the difference.

I'm not talking about your own personal definition of ownership. I'm talking about the legal one.

Cheerful Spring wrote: »

We could have borrowed outside the markets, the interest on our bonds, went very high while we were still trading.

Why do you think that if we stepped outside the bond markets and tried to get a bilateral loan people all of a sudden would start lending to us at a lower rate?

Cheerful Spring

Vladimir Kurtains wrote: »

I'm not talking about your own personal definition of ownership. I'm talking about the legal one.



Why do you think that if we stepped outside the bond markets and tried to get a bilateral loan people all of a sudden would start lending to us at a lower rate?

Vladimir you obviously have your own interpretations, and to be honest, you have convinced yourself your right when your obviously are wrong (especially about the housing mortgage thing)

Therefore there is know point in further debating this with you. I know we'll never agree because we can't even agree on this "fact" been true. I have said what i had to say people can make up their own minds on it.

Scortho

First of all a mortgage is where an owner pledges their interest in the property as security for the loan. This is only lifted once the final payment is made.
It's a facility for a person to buy a home and spread the cost of the purchase over a long period of time. If you're not happy with that, fair enough don't buy a home until you have enough cash in place to do so.

The country is running a current budget deficit. It's taking in less than what's going out. It has to close the gap somewhere. Personally I'd prefer if they reduced this faster, but this may have detrimental effects on the local economy in the short term. However by doing it gradually, it kicks the can down the road and who knows what problems this may cause in the future.

On the matter of our national debt, yes the bank bailout has contributed to a significant chunk of the debt. However budget overruns have also significantly contributed to burgeoning size.

On the matter of borrowing of outside the markets, that is what we are doing at the moment.

We're borrowing of the Troika at a significantly reduced interest rate compared to the one on offer from the international bond markets. They're keeping the lights on in this country and paying our nurses and teachers.

Just because China has trillions in reserve, it isn't going to loan anyone money unless they think they'll get it back. There was nothing stopping China or the Bric countries from doing this through the bond markets and reducing the basis point spread.

On the matter of the bank bailout, who knows what would have happened had we not done it. I don't know if you remember the Ulster Bank fiasco, but that was a result of a computer program going a bit belly up. People couldn't access savings or be paid for a nearly a month.

Now imagine what would have happened had that guarantee not been put in place. Anglo was on the verge of collapse and while it may not have had a large public presence such as ATMs or residential mortgages, it was a fairly significant force in Irish Banking. The effect it would have had on the wider banking system could have been colossal had it been allowed go to the wall at the time.

On the matter of leaving the EU no we shouldn't. The EU opens up a massive market that Ireland has full access to. This is very attractive to the Multinationals as well as indigenous companies who sell into these markets.

Compare Ireland before 1973 and after 1973. I know which one I'd be choosing!

Godge

Cheerful Spring wrote: »

Do you expect countries do come to our aid without asking them first for help?

You have to get off your ass and do it yourself and seek this help out. Unfortunately Irish politicians have proven themselves time and again to be a lazy bunch, short on ideas, and they are only capable of reacting to situations when someone else is informing them about it.


IMF coming in only happens when you allow it to happen and have no other choice. Like i said we had places to turn to, but the Irish government made the decision to stay in the EU and agree to everything the European banks told us to do. That is the reality of it. You can believe we had know other choice but i call that brainwashing and it seems to have worked in your case.

Actually there were rumours in 2008 that we tried to sell Anglo to the Arabs or the Chinese - a quick easy way to get an EU banking license. Unfortunately, they took one look at the bank and at the economy and ran away.

In November 2010, we had two real choices:

- Accept the bailout
- Cut borrowing to zero overnight through massive cuts and taxes, crippling our economy

Tea drinker

http://www.irishtimes.com/newspaper/breaking/2012/0910/breaking33.html

The IMF has encouraged the Government to focus upcoming fiscal adjustments on how social supports are targeted, reform of the health and education sectors and broadening the tax base rather than increasing rates.

In a report published this afternoon, the IMF says maintaining expensive universal supports and subsidies at their current rates was “difficult to justify under present budgetary circumstances”.

It said improved targeting of spending on child benefit, the medical card and college fees “could generate significant immediate savings and contain demographic related spending pressures over the longer term, while effectively protecting the poor”.

The organisation, which is part of the State’s troika of international bailout lenders, said a targeted reduction of State pensions, which have been exempted from adjustments to date, should also be considered given the broad decline in consumer prices.

It said this was notable in view of the expected 3 per cent annual growth in the eligible population. “One approach would be to reduce or eliminate the premium - currently 5 per cent - on the contributory pension over the means-tested pension,” the report says.

ardmacha

“One approach would be to reduce or eliminate the premium - currently 5 per cent - on the contributory pension over the means-tested pension,”

Actually this I very much disagree with. When someone worked for a lifetime and paid PRSI they are entitled to a premium over someone who did not pay in. Indeed if pensions were somewhat related to the amount paid in the contrast with the PS would not be so dramatic.

Even the IMF is losing the plot.

antoobrien

Cheerful Spring wrote: »

Our national debt was 40 billion in 2007-2008 it now stands at 133 billion we owe.

The banking debt is not considered part of the "National Debt" but rather the "General Government Debt" (which is all debt including PNs). Even then the GGD only include the €32bn promissory notes that were issued to IBRC. It does not include NAMA, or capital put into AIB, BOI, EBS or IL&P via the NPRF.

Cheerful Spring wrote: »

Our sovereign debt is in the low billions Godge pocket change for countries in those areas of the world. Our banking debt is the high billions.

You've got that backwards.

The actual amount spent on banks from the exchequer (including 1 PN to IBRC and other money to Anglo & IBRC) is less than €17bn (from 1/1/2008 to 31/8/2012). Adding the rest of the PNs (approx €29bn) gives us banking debt of 46bn.

GGD stands at approx 171bn (108% of GDP) - €125bn of GGD is down to non banking spending by the government.

If you don't believe me, download the exchquer statements from the DOF website and double check.

Geuze

End 2011 GG debt, from the NTMA = 169.3bn

http://www.ntma.ie/GovernmentDebt/historicalData.php

Cost of the banking crisis = 62.8bn

Geuze

This table is from Seamus Coffey's blog.

Original GG debt in 2006 = 44bn
Add 98bn in GG deficits over 8 years = 142bn

54bn of extra debt due to the banking crisis.

antoobrien

Geuze wrote: »

End 2011 GG debt, from the NTMA = 169.3bn

http://www.ntma.ie/GovernmentDebt/historicalData.php

Cost of the banking crisis = 62.8bn

Cost of banking crisis != borrowing.

There is over €20 bn from the NPRF that has been used to fund the recapitalisations of AIB/EBS & BoI (some of which has been paid back).

antoobrien

Geuze wrote: »

This table is from Seamus Coffey's blog.

Original GG debt in 2006 = 44bn
Add 98bn in GG deficits over 8 years = 142bn

54bn of extra debt due to the banking crisis.

Any chance of a link to the blog post because his figures look off, I want to see how he explains a number of things.

I make the cumulative 2007-2010 deficit to be over 57bn (exchequer figures). Even allowing for the "unusual payments" to the banks (the troika also ignore these for deficit/gdp calculations) there a gap between my calculations and his of about 4bn.

There are other things in there that I think are inaccurate but I'll address them if after I get a chance to read the blog post.

mollymosfet

Seeing droves of people "thanking" these hideous comments acting like welfare cutbacks are a necessary thing and how courageous are the economy-destroying IMF for pointing it out makes me want to throw up.

There is a great myth here that out welfare spending is the highest in europe - it's not. When counting for cost of living, etc. it's about average for EU at best, and our overall social protection spending is actually very low.

There are still many people who are struggling to get by on welfare. Plus if you really think cutting welfare will help the economy - you are economically illiterate. Totally and utterly. You will see more local shops, pubs etc. close down, less jobs, less tax. The flow and distribution of money is as important as the presence of it.

This link shows, factually, that Ireland's SW payments are not the highest in europe. I am willing to bet that none of those calling for payments to be reduced will care about the facts being presented to them - because it's not about that. They do not care about poor people, old people freezing to death in the winter, disabled people having services stripped from them. They care vastly, infinitely more about their ideology or being seen to support "tough decisions" which do not impact them personally. They are not good people, and it's about time we realised how toxic he anti-welfare mentality is:

http://www.eapn.ie/documents/1_Social%20Welfare%20How%20Ireland%20Compares%20in%20Europe.pdf

And for good measure:

http://robertnielsen21.wordpress.com/2012/07/26/rich-get-richer-poor-get-poorer/

later12

mollymosfet wrote: »

Plus if you really think cutting welfare will help the economy - you are economically illiterate. Totally and utterly.[/url]

Ok, as with most people who make bold, blanket statements, you're only looking at it from one biased perspective. You're saying that lowering welfare will indirectly make it more difficult to eliminate an output (recessionary) gap by impeding Planned Aggregate Expenditure. That's only one argument, but it's not the only one & it is quite remarkably incorrect to state that anyone who deviates it or qualifies it with more pressing concerns, thereby at least partially dismissing it, is "economically illiterate".

You must accept that the Irish Government do not have all of the tools available to them to respond to this recessionary gap as, say, Keynesians would urge. All that they can do is cut spending in line with the Troika programme in the hope that that alternative method will slowly build confidence in the economy, first on a large/ international scale, and then domestically.

It's a fair argument and it's something that has worked in Ireland before*. In fact we are something of a poster boy for it.

* 1987 - c. 1992. although in fairness, we could devalue back then.

Geuze

To be clear, I always point out that our UI payments are lower than many other countries.

Irl = 188 pw

Germany = 60% of former net pay

USA = typically 50% of former pay, up to 405 USD pw in some states.

Indeed, I suggest that UI payments (= JSB) be increased in Irl, not cut further.

It's the unlimted duration of JSA (= dole) that I oppose.

Geuze

antoobrien wrote: »

Any chance of a link to the blog post because his figures look off, I want to see how he explains a number of things.

http://economic-incentives.blogspot.ie/

http://economic-incentives.blogspot.ie/2011/09/could-irelands-2014-debt-be-190-billion.html

golden lane

mollymosfet wrote: »

Seeing droves of people "thanking" these hideous comments acting like welfare cutbacks are a necessary thing and how courageous are the economy-destroying IMF for pointing it out makes me want to throw up.

There is a great myth here that out welfare spending is the highest in europe - it's not. When counting for cost of living, etc. it's about average for EU at best, and our overall social protection spending is actually very low.

There are still many people who are struggling to get by on welfare. Plus if you really think cutting welfare will help the economy - you are economically illiterate. Totally and utterly. You will see more local shops, pubs etc. close down, less jobs, less tax. The flow and distribution of money is as important as the presence of it.

This link shows, factually, that Ireland's SW payments are not the highest in europe. I am willing to bet that none of those calling for payments to be reduced will care about the facts being presented to them - because it's not about that. They do not care about poor people, old people freezing to death in the winter, disabled people having services stripped from them. They care vastly, infinitely more about their ideology or being seen to support "tough decisions" which do not impact them personally. They are not good people, and it's about time we realised how toxic he anti-welfare mentality is:

http://www.eapn.ie/documents/1_Social%20Welfare%20How%20Ireland%20Compares%20in%20Europe.pdf

And for good measure:

http://robertnielsen21.wordpress.com/2012/07/26/rich-get-richer-poor-get-poorer/[/QUOTE]


the social welfare bill is too high..?.....yes it is, because the country cannot afford it.....it has nothing to do with comparisions.....

there are many other ways that the country can cut it's spending......but what it spends overall has to be brought down to manabable levels....

that is the reality of the situation......and if no action is taken, things will only get worse...

KyussBishop

The primary reality of the situation is that we are locked into a cuts-only course due to political inertia at a European level, since we handed over sovereign control of our currency by adopting the Euro (which with retrospect, was incredibly stupid).
This cuts-only approach is demonstrably counterproductive, as every cut perpetuates a need for more cuts due to slowing down the economy, and that is totally unnecessarily decimating our internal economy; we'll balance the budget eventually, but only by creating ongoing economic and social damage (this way, things definitely get worse).

There is not enough that can be done locally on a national level in Ireland (due to lack of control over currency), so what needs to be done is an internationally led (Euro-wide) effort to relieve private debt (thus easing debt-deflation), and provide financing through money creation for Welfare (and other necessary expenditure), or more preferably a Job Guarantee program, which will ease social/economic damage and eventually bring GNP/GDP above deficit levels.

This seems quite manageable without causing runaway inflation, but political inertia at an EU level is blocking any path other than austerity.

mollymosfet

later12 wrote: »

Ok, as with most people who make bold, blanket statements, you're only looking at it from one biased perspective. You're saying that lowering welfare will indirectly make it more difficult to eliminate an output (recessionary) gap by impeding Planned Aggregate Expenditure. That's only one argument, but it's not the only one & it is quite remarkably incorrect to state that anyone who deviates it or qualifies it with more pressing concerns, thereby at least partially dismissing it, is "economically illiterate".

You must accept that the Irish Government do not have all of the tools available to them to respond to this recessionary gap as, say, Keynesians would urge. All that they can do is cut spending in line with the Troika programme in the hope that that alternative method will slowly build confidence in the economy, first on a large/ international scale, and then domestically.

It's a fair argument and it's something that has worked in Ireland before*. In fact we are something of a poster boy for it.

* 1987 - c. 1992. although in fairness, we could devalue back then.

"We could devalue back then" isn't just an "although in fairness", it was the entire point. Historically, austerity measures have only ever worked when such additional measures are taken alongside it. Just cutting does not work.

Cutting welfare will not recover the economy. It will take money away from the foundations of local economy and will loose jobs. If it's just "One argument", what are the alternatives?

"all they can do" - bollocks to that. What we're doing doesn't work, isn't working, and historically hasn't worked. Regardless of our circumstances, things are too extreme just to fall in line right now - we don't want to end up like Greece. We need to tell them no - a complete and utter rejection of austerity and it's associated ideology. The argument to this is - we're shutting ourselves out of europe and the rest of the world by doing so. But do you really think Ireland would be alone with that? If we continue, it will destroy the country - we will be in permanent recession and everything will end up privatised. This is the mandate the IMF has had in countries up until now, it's not a conspiracy, and it doesn't work.

These are policies which are devised by, in many cases, thoroughly and completely evil men who are looking to profit off collapsing economies, or push a certain ideology at the expensive of human lives and livelihoods.

What you don't realise is "International confidence" is not a monolith - while we're appealing to the banks and right wing ideologues many people consider what we're doing pure insanity.

Many people are already struggling to survive on welfare. I have clearly pointed out that our welfare rates are not as generous as people believe, and that they play a huge role in addressing poverty. How are you going to improve internal confidence if you ignore? People will end up dying if you cut things further. This is not a fact up for debate. Crime rates will go up, less people will be able to afford to see their doctors, heat their homes, there'll be more cutbacks to gards, hospitals etc. How is this supposed to improve confidence when you're dragging the entire country's standard of living down and down? You are literally suggesting killing people as a means of improving the economy.

Perhaps I should be more accurate - as I am no economics professor myself - you are either illiterate or very biased towards a certain field of (frankly, failed) ideology.

mollymosfet

golden lane wrote: »

the social welfare bill is too high..?.....yes it is, because the country cannot afford it.....it has nothing to do with comparisions.....

By which measure can we "not" afford it? You do realise that the economy is more complicated than that? The country cannot afford to welfare, because it is a natural stimulus to the economy. You are aware of the stimulus packages that other countries have had to improve their economy? We haven't had that, so all we have is welfare keeping local business afloat.

We will end up in a worse position if we cut welfare further.

there are many other ways that the country can cut it's spending......but what it spends overall has to be brought down to manabable levels....

This is not a way of doing it.

that is the reality of the situation......and if no action is taken, things will only get worse...

Things will get worse if you take this course of action. The only serious economists who believe otherwise are either in the pockets of big business, or slaves to the Chicago & Austrian schools of the economics.

golden lane

mollymosfet wrote: »

By which measure can we "not" afford it? You do realise that the economy is more complicated than that? The country cannot afford to welfare, because it is a natural stimulus to the economy. You are aware of the stimulus packages that other countries have had to improve their economy? We haven't had that, so all we have is welfare keeping local business afloat.

We will end up in a worse position if we cut welfare further.



This is not a way of doing it.



Things will get worse if you take this course of action. The only serious economists who believe otherwise are either in the pockets of big business, or slaves to the Chicago & Austrian schools of the economics.

thanks for the reply......i am a pensioner, former construction worker....

live beyond your means = problems...

Count Dooku

mollymosfet wrote: »

By which measure can we "not" afford it? You do realise that the economy is more complicated than that? The country cannot afford to welfare, because it is a natural stimulus to the economy. You are aware of the stimulus packages that other countries have had to improve their economy? We haven't had that, so all we have is welfare keeping local business afloat.

We will end up in a worse position if we cut welfare further.

Cutting welfare will hit mostly retail, but Lidl and Aldi will survive because they have very efficient model

mollymosfet

golden lane wrote: »

thanks for the reply......i am a pensioner, former construction worker....

live beyond your means = problems...

Well, good luck with that when the IMF starts cutting your pension.

Running a state is not like running a household. That's one of the first most basic things you need to know about economics. Because money you spend has an effect(often positive) on the economy, you can end up with more money than you had started with.

Money spent on certain things(for example the arts, grants to small business) can result in getting more money back. As such measuring "your means" becomes very difficult.

In other words, a state invests, much of it's spending can be thought of an investment, whereas generally, the average household will not.

So unfortunately sir, you are totally wrong on this.

mollymosfet

Count Dooku wrote: »

Cutting welfare will hit mostly retail, but Lidl and Aldi will survive because they have very efficient model

That's the problem though, taking jobs away from local businesses. As is many people on welfare can still afford to shop locally to an extent, and go down the pub. Taking more time out of people's day too by making them drive out to such locations is likely to result in more tired/less productive workers as well. Convenience can actually help a lot. Cut welfare any further and many of these people will be left with the bare essentials, forcing them to pay German discounters that we don't make much money back off (more so thanks to our low corporation tax).

See the problem? We were relying too much on foreign business before.

Our low corporation tax makes us competitive but I think a modest increase of 2-3% would help a lot. More funds for local businesses since that's what drives the economy and can provide the same employment as foreign corporations, but in a more stable fashion.

I know some people are ideologically opposed to the idea of people on welfare not living on foodstamps, but the vast majority of people on welfare right now are genuine cases and unlikely to get a job anytime soon. I Don't think people should have to suffer such a vast drop in the quality of living because other people messed the economy up.

Believe it or not, the "% of your previous wage" method, despite resulting in more welfare payments in many cases, is actually a big reason why such economies have been coping better. It's pretty clear that the "we can't afford it" thing is reductive nonsense when high welfare can actually be an eventual remedy. If the economy quickly recovers, you have far less people on the register. The numbers are going up despite high emigration. What we're doing isn't working. Cut the dole more, more people will emigrate.

Scortho

mollymosfet wrote: »

Seeing droves of people "thanking" these hideous comments acting like welfare cutbacks are a necessary thing and how courageous are the economy-destroying IMF for pointing it out makes me want to throw up.

There is a great myth here that out welfare spending is the highest in europe - it's not. When counting for cost of living, etc. it's about average for EU at best, and our overall social protection spending is actually very low.

There are still many people who are struggling to get by on welfare. Plus if you really think cutting welfare will help the economy - you are economically illiterate. Totally and utterly. You will see more local shops, pubs etc. close down, less jobs, less tax. The flow and distribution of money is as important as the presence of it.

This link shows, factually, that Ireland's SW payments are not the highest in europe. I am willing to bet that none of those calling for payments to be reduced will care about the facts being presented to them - because it's not about that. They do not care about poor people, old people freezing to death in the winter, disabled people having services stripped from them. They care vastly, infinitely more about their ideology or being seen to support "tough decisions" which do not impact them personally. They are not good people, and it's about time we realised how toxic he anti-welfare mentality is:

http://www.eapn.ie/documents/1_Social%20Welfare%20How%20Ireland%20Compares%20in%20Europe.pdf

And for good measure:

http://robertnielsen21.wordpress.com/2012/07/26/rich-get-richer-poor-get-poorer/

First of all I never said that are payments were the highest in Europe.
Secondly we're one of the worst performing economies.

Where do you think this money is going to come from. At the moment we are borrowing significant sums of money to pay welfare. We cannot afford to do this.

Borrowing for capital expenditure such as roads and airports is important as it increases output, increases inward investment and benefits future generations.

Borrowing, to cover day to day spending is not a wise idea. Day to day spending is meant to be covered with taxes collected. By borrowing for day to day spending, it makes it harder in the long run to recover.

This is why the government have the balance the books. Last year, EXCLUDING money used to recapitalise the banking system, the deficit was 14.4 billion. Social welfare makes up a large portion of this. It will be very difficult for the government to cut this deficit, without targeting certain areas of social welfare.

If you have realistic alternative suggestions where the government can get their hands on this 14.4 billion please share them with us. We'll be more than glad to hear them.

mollymosfet

Scortho wrote: »

First of all I never said that are payments were the highest in Europe.
Secondly we're one of the worst performing economies.

That has nothing to do with having high welfare, since our welfare rates are actually average at best. Our economy performs poorly partly because we keep contracting and people are unable to grasp the fact that a state is not the same as a household.

Where do you think this money is going to come from. At the moment we are borrowing significant sums of money to pay welfare. We cannot afford to do this.

Are you listening to anything I've been saying? The economy is not as simple as that. Cutting spending has a negative effect on the economy. If you end up with less money than you started with by contracting the economy - how can you afford to do that? Think before you make these sorts of arguments.

If you have realistic alternative suggestions where the government can get their hands on this 14.4 billion please share them with us. We'll be more than glad to hear them.

But cutting welfare will not, in the long term, raise them any more money. That's the point, and they are taking advantage of the fact that stubborn people such as your self refuse to listen.

The welfare class cannot afford to horde. All of that money goes back into the economy. It's essentially the government giving lots of mini-grants for various businesses, etc.

later12

mollymosfet wrote: »

"We could devalue back then" isn't just an "although in fairness", it was the entire point.

No, you're incorrect. It was an "in fairness" because I was being honest. What I did not add was that the devaluation happened before the serious consolidtation actually got underway ; consildation happened during the period when the Irish Givernment fixed the exchange rate under the ERM, and Ireland still demonstrated an expansionary fiscal consolidation.

Now you could take the view of someone like Paul Krugman and argue that this is because of a net export boom, which he argues very well. But all that proves is that this method is not applicable universally, which is a fair point. But Ireland is a strong exporter & it has worked for Ireland in the past, even leaving exchange rate depreciation aside.

What has overwhelmingly been shown not to work in Ireland was the contrasting economic policy of the FitzGerald era brought the economy to the doorstep of the IMF by way of a revenue based consolidation... which I assume you are suggesting. Or are you suggesting we just spend at the same level as we do today, and leave revenue and expenditure measures intact?

"all they can do" - bollocks to that. What we're doing doesn't work,

No I'd like you to expand on why this is not "all they can do".

Your elaboration so far has been to suggest that the current procedure is incorrect. But that remains to be seen and the evidence from Ireland is not on your side - nevertheless what I am asking you is what other options exist under the current EU/ EA framework.

I have clearly pointed out that our welfare rates are not as generous as people believe

i have often pointed that out myself ; i have done it in this very thread.

I'm saying welfare needs to come down because government expenditure needs to come down, not because I think welfare is too generous, which ESRI research generally suggests it is not.

you are either illiterate or very biased towards a certain field of (frankly, failed) ideology.

Don't tell me I am economically illiterate or that I am an idealogue and I won't bore you by insisting I'm not. Just show me the contrary evidence and I'd be delighted to change my mind.

mollymosfet

later12 wrote: »

No, you're incorrect. It was an "in fairness" because I was being honest. What I did not add was that the devaluation happened before the serious consolidtation actually got underway ; consildation happened during the period when the Irish Givernment fixed the exchange rate under the ERM, and Ireland still demonstrated an expansionary fiscal consolidation.

Now you could take the view of someone like Paul Krugman and argue that this is because of a net export boom, which he argues very well. But all that proves is that this method is not applicable universally, which is a fair point. But Ireland is a strong exporter & it has worked for Ireland in the past, even leaving exchange rate depreciation aside.

What has overwhelmingly been shown not to work in Ireland was the contrasting economic policy of the FitzGerald era brought the economy to the doorstep of the IMF by way of a revenue based consolidation... which I assume you are suggesting. Or are you suggesting we just spend at the same level as we do today, and leave revenue and expenditure measures intact?


No I'd like you to expand on why this is not "all they can do".

Your elaboration so far has been to suggest that the current procedure is incorrect. But that remains to be seen and the evidence from Ireland is not on your side - nevertheless what I am asking you is what other options exist under the current EU/ EA framework.


i have often pointed that out myself ; i have done it in this very thread.

I'm saying welfare needs to come down because government expenditure needs to come down, not because I think welfare is too generous, which ESRI research generally suggests it is not.

Don't tell me I am economically illiterate or that I am an idealogue and I won't bore you by insisting I'm not. Just show me the contrary evidence and I'd be delighted to change my mind.

The problem is you're not providing any real evidence yourself that cutting welfare will improve the economy in the first place. This is something that will push thousands into poverty - and will kill people. It's up to you to defend such a measure given that cuts, thus far, have not been working, no matter what you dress that fact up in.

And of course, yes, there are other factors that can lead to recovery alongside austerity. This is fairly normal for economies loosely based on Keynesian theory. For example, if we do eventually swing back up from this, it won't be because of what we did, but in spite of this.


Let's go over this -

1) Why does government expenditure need to come down, and how will this help recover the economy(our problem is primarily structural rather than one of outright debt);
2) Why is attacking the most vulnerable members of society a valid way of doing so;
3) How do you expect to compensate for the impact reduced welfare will have on local economy? In absence of investing in jobs, this is the only way to keep the money flowing.

As I've hinted to, we should refuse any additional austere policies handed to us by the Troika.

later12

I've shown you where fiscal consolidation has worked in the past based on similar principles- in this very economy. I also contrasted it with alternative measures, under FitzGerald, which quite clearly have not worked for an export economy like ours.

Now can you actually answer the rest of the post?

What are you suggesting we do and where's your evidence?

mollymosfet

later12 wrote: »

I've shown you where fiscal consolidation has worked in the past based on similar principles- in this very economy. I also contrasted it with alternative measures, under FitzGerald, which quite clearly have not worked for an export economy like ours.

Now can you actually answer the rest of the post?

What are you suggesting we do and where's your evidence?

But it is clearly not working now, and the circumstances under which it happened were very different. Regardless of which order it occurred in, there were still other measures taken.

Also, I do not have to be able to suggest an alternative if what we're doing is clearly not working. Doing nothing at all, as is, would be better than what we are doing currently. You have provided zero evidence that our current measures are recovering the economy, and again, almost all of the time, unless under certain circumstances, it doesn't work.

later12

mollymosfet wrote: »

But it is clearly not working now, and the circumstances under which it happened were very different. Regardless of which order it occurred in, there were still other measures taken.

What other measures were taken? What are you talking about? We joined ERM, it was all fiscal consolidation thereafter. It was one of the most famous examples of an expansionary fiscal consolidation in modern economic history.

Also, I do not have to be able to suggest an alternative if what we're doing is clearly not working.

I don't necessarily agree that it's not working. I agree that growth rates are not coming in where we want them, that'snot really up for contest.

But what you keep avoiding is what your alternative plan is and what evidence you have to show where it has worked in a similar economy in the past.

And yes, that is important, because until this policy has been shown to fail or be inferior to an alternative, then we have nothing to replace it with. We have a proven near-precedent from the late 1980s. So what's your proven near-precedent which you feel to be superior?

mollymosfet

You're also forgetting that the nature of fiscal crisis of the 1980s was completely different to the one we're having now, and it's intellectually dishonest to use it as a poster child for the kind of financial crisis for which, to my knowledge, austerity has never worked. Also, despite the fixed currency - keep in mind that there was a sudden coincidental devaluation of the Sterling, amongst other things - perhaps "circumstance" would have been more accurate than "Measures taken". Unfortunately while I read into it before, I do not have full knowledge of it in hand, because I was aware of how different the situation was and didn't think anyone serious would try to use it as a model for our current issues which are based on the construction bubble, banking system and various structural issues with our economy, the EU economy and the global economy.

I am not against the idea of scaling back some expenditure, given the fact that we increased government spending based on a bubble which is no longer there. However the idea of making people at the bottom suffer more when high-welfare economies are coping better on average, is just not just cartoon villainy, it makes no economic sense and I don't think you've made a compelling argument for it.

Why are you focusing on welfare? This is an important question. As it happens, yes I Would tend to go more along with the lefty suggestions of taxing the rich more and investing more in local economy, because frankly from what I've seen in other countries, it works better. I am curious as to your current position in society if you can seriously say that our current measures are in any way working. Keep in mind that with most downturns, past a certain point you will start to see some signs of recovery, regardless. You have to, or downturns would be a death sentence.

I don't necessarily agree with it's conclusion, but this article does a good job of explaining how vastly different the crisis in the 1980s was to our current one:

http://centreforum.org/assets/pubs/dealing-with-debt.pdf

And this article addresses the general myth of the expansionary fiscal consolidation(or at least some of them, as it says):

http://www.bis.org/events/conf110623/perotti.pdf

later12

mollymosfet wrote: »

You're also forgetting that the nature of fiscal crisis of the 1980s was completely different to the one we're having now

Explain the relevance of your point with reference to fiscal policy - I don't believe the nature of the origin of either crisis is too important, what matters is that the country wakes up one day/ month/ year and realises it has a significant recessionary output gap which needs to be remedied somehow. Hoe that gap came about is not necessarily of prime concern, so perhaps you could expand, stating why that proposition is economically useful.

Why are you focusing on welfare? This is an important question.

Because it's one of the biggest spending departments. It's hard to see what other departments could pick up the hit while such a major portfolio could be preserved. Which department do you suggest we hit in order to reach the deficit target for 2012-2015?

And this article addresses the general myth of the expansionary fiscal consolidation(or at least some of them, as it says):

http://www.bis.org/events/conf110623/perotti.pdf

eh.. lol?

Sorry about my juvenile response but Roberto Perotti, whose paper you just cited, is one of the most outspoken proponents of expenditure based fiscal consolidations alive today, and possibly in the last 20 years. He writes, here in the paper which altogether forms a strong argument in favour of expenditure based consolidation you cite and obviously did not read:

But what can account for the difference between the two [irish] consolidations, 1982‐86 and 1987‐89? After all, as Giavazzi and Pagano (1990) correctly point out, exports were strong even during the first stabilization (see Table 9). The most often cited difference is in the composition of the budget consolidation, which was tax‐ based during the first and spending‐based during the second. It is easy to see why it could matter: spending cuts made room for tax cuts on labor income, which in turn enhanced competitiveness; wage reductions in the public sector, that were announced repeatedly during the first stabilization but implemented only during the second, enhanced the confidence in the ability of the government to carry out its programme and set the stage for more wage moderation in the private sector (see Hoanhan 1989 p. 205) .

Perotti also cites wage restraint (collective bargaining) and appreciation of the sterling as being key - both of which also have relevance today with the depreciation of the Euro and the Croke Park Agreement, as well as more quiet ensurers of industrial peace like fear of unemployment.

mollymosfet

Sorry, I copied the wrong link -

http://www.voxeu.org/debates/commentaries/fallacy-austerity-based-fiscal-consolidation

I wanted to post this link in particular because there was a part in the conclusion that I believe addressed a point you were pushing with regards export- based economies:

The world is a closed economy. When every other country is facing the prospect of a growth slowdown or outright recession, no major economy can depend on exports to compensate for cuts in domestic expenditure. Large economies are also closed enough, in the sense that their own growth depends on domestic demand, rather than external growth. Investor confidence works in a symmetric and pro-cyclical way – it rising with a booming economy and falling when the economy is in a downtrun.

We need internal growth, and domestic demand can't be kept up if the average person has no money.

As I said I don't have a lot of this information on hand so am trying to dig up a lot of older articles I haven't read in a while. I was in the middle of reading the Perotti link, but I really don't have that much time to sink into it.

Also, you are entirely wrong that how it came about is not of concern, because "how it came about" is not an instantaneous event in time and has after effects. You cannot claim that all financial crises are somehow the same and require the same remedy.

For example, if we were running a deficit prior to the downturn, then it would be reasonable to scale back spending accordingly. Since we were not - it probably isn't. Because our problems are a result of a structural issue, you need to address that.

You have also still failed to justify why you think welfare in particular is a valid target for this consolidation. "Because it's the biggest" is not a valid reason when it impacts the livelihoods of individuals so directly. It's big because there is high unemployment. It will be reduced, naturally, when the economy picks up and jobs are created.

And again, I am curious as to how you think the current measures are working in any shape or form.