Tax on this, tax on that...

Count Dooku

KyussBishop wrote: »

None of that is relevant to your claim though, as it is all based on looking at government post-crisis, without looking at the pre-crisis causes of the current situation; the situation we are dealing with post-crisis is caused by 1: the socialization of bank debt and 2: the output-gap (GDP being far below potential) and associated unemployment, creating a shortfall of taxes below what there would be, if there was full employment and GDP was at full potential.

1) How much state pays for "socialization of bank debt"?
2) tax take-to-GDP ratio is so low because 75% of GDP is generated by MNC, which pay low taxes. As soon as you will try to increase CT, most of them will leave.
State has to learn to live on what it has, instead pretending that what it during property bubble was normal

KyussBishop

carpejugulum wrote: »

Utter nonsense. Unemployment was low only because of the enormous debt incurred during the bubble years. So the tax revenue was just a bubble that needs to be paid by someone now.

To support that argument, you have to implicitly say there is nothing else people could have been employed doing, if the property boom had not happened, and that the country would permanently be at such a high rate of unemployment without construction.

If you make any argument there, other than one where there would be persistently high unemployment, then you are wrong because there would be a similar level of employment, and a similar rate of tax income, thus sustainable public expenditure.

If you did argue that unemployment would remain permanently high, then anyone can see that that would be ridiculous.


As things were, it was private industry that put those people to work in an unsustainable property bubble, and caused the later shortfall in taxes (through unemployment and economic harm), and the increase in public expenditure (through the resulting deficit, including that from unemployment payments).

KyussBishop

Count Dooku wrote: »

1) How much state pays for "socialization of bank debt"?
2) tax take-to-GDP ratio is so low because 75% of GDP is generated by MNC, which pay low taxes. As soon as you will try to increase CT, most of them will leave.
State has to learn to live on what it has, instead pretending that what it during property bubble was normal

1: Again, that's relevant to the post-crisis situation only, not relevant to the pre-crisis events caused by private industry, that put the public finances in their current state.

Point 2 there doesn't seem to relate to what I said, and seems to be a bit of a red herring.


Anyway, whatever way people want to try and spin it, the public finances pre-crisis were totally in order as far as sustainability goes; it was private industry that put all the workers into a property bubble, thus crowding out investment that could have occurred in more sustainable industries.

It's pretty straightforward, and it seems odd that some posters who would champion deregulation, try to blame government for events private industry created, that deregulation removed government control over.

Count Dooku

KyussBishop wrote: »

To support that argument, you have to implicitly say there is nothing else people could have been employed doing, if the property boom had not happened, and that the country would permanently be at such a high rate of unemployment without construction.

If you make any argument there, other than one where there would be persistently high unemployment, then you are wrong because there would be a similar level of employment, and a similar rate of tax income, thus sustainable public expenditure.

If you did argue that unemployment would remain permanently high, then anyone can see that that would be ridiculous.


As things were, it was private industry that put those people to work in an unsustainable property bubble, and caused the later shortfall in taxes (through unemployment and economic harm), and the increase in public expenditure (through the resulting deficit, including that from unemployment payments).

So you are saying that with property bubble Ireland could have emigration instead of immigration and we wouldn't have such big unemployment
If it all private sector fault, why not to admit that private sector cannot afford public sector in present form and cut public expenditure according to incomes?

Count Dooku

KyussBishop wrote: »

1: Again, that's relevant to the post-crisis situation only, not relevant to the pre-crisis events caused by private industry, that put the public finances in their current state.

Point 2 there doesn't seem to relate to what I said, and seems to be a bit of a red herring.


Anyway, whatever way people want to try and spin it, the public finances pre-crisis were totally in order as far as sustainability goes; it was private industry that put all the workers into a property bubble, thus crowding out investment that could have occurred in more sustainable industries.

It's pretty straightforward, and it seems odd that some posters who would champion deregulation, try to blame government for events private industry created, that deregulation removed government control over.

Public finances were not in order because they were based on transactional taxes generated by property bubble
Income tax take now is much higher than it was 6 years ago

KyussBishop

Count Dooku wrote: »

So you are saying that with property bubble Ireland could have emigration instead of immigration and we wouldn't have such big unemployment
If it all private sector fault, why not to admit that private sector cannot afford public sector in present form and cut public expenditure according to incomes?

You're in a rush to straw-man me there; I didn't say anything about emigration.

You seem to be implying heavily, that if the property bubble had not happened, that the unemployment rate would have stayed permanently high (with the only other release valve being emigration); if that's what you're getting at, that's a pretty silly line of argument, as there is nothing backing the claim that unemployment would remain permanently high.

Currently, with the post-crisis situation, government are cutting public expenditure; post-crisis events though, aren't all that relevant in discussion about pre-crisis sustainability.

KyussBishop

Count Dooku wrote: »

Public finances were not in order because they were based on transactional taxes generated by property bubble
Income tax take now is much higher than it was 6 years ago

Well you're ignoring half the post there; that property bubble was created by private industry, so again, private banks etc. bear responsibility for the post-crisis shortfall in funds, and in the absence of the property bubble there's no indication that unemployment would have remained permanently high, and thus tax intake less than what it was.

I'm curious, do you argue in favour of financial deregulation? If you do, how would you reconcile that, with arguing government should have been aware of and dealing with the property bubble, created by private industry?

Count Dooku

KyussBishop wrote: »

Well you're ignoring half the post there; that property bubble was created by private industry, so again, private banks etc. bear responsibility for the post-crisis shortfall in funds, and in the absence of the property bubble there's no indication that unemployment would have remained permanently high, and thus tax intake less than what it was.

I'm curious, do you argue in favour of financial deregulation? If you do, how would you reconcile that, with arguing government should have been aware of and dealing with the property bubble, created by private industry?

Property bubble have been created by public sector - every day public were told that banks were regulated by financial regulator and central bank, while in reality they were not. It was responsibility of Central Bank to tell public that country is in middle of property bubble, but because benchmarking for PS workers were more important, they were hiding such information.

creedp

Count Dooku wrote: »

Property bubble have been created by public sector - every day public were told that banks were regulated by financial regulator and central bank, while in reality they were not. It was responsibility of Central Bank to tell public that country is in middle of property bubble, but because benchmarking for PS workers were more important, they were hiding such information.

Interesting .. so now we're back full circle with the indivdual not in any way responsible for taking out unsustainable mortgages. Now its the Govt that is fully the blame and the banks are squeaky clean. Yet as you say earlier the people are not blaming FF as they are rising in the polls... so who/what actually is the blame? Benchmarking??

KyussBishop

Count Dooku wrote: »

Property bubble have been created by public sector - every day public were told that banks were regulated by financial regulator and central bank, while in reality they were not. It was responsibility of Central Bank to tell public that country is in middle of property bubble, but because benchmarking for PS workers were more important, they were hiding such information.

They were certainly culpable for not fulfilling their regulatory role, and potentially some even encouraging the property boom (so I agree with government fault in both those instances), but the laying of blame there is notably missing private banks and finance, whose responsibility it is to follow regulations (some of which, fraudulently breached regulations) and in general not to stoke a property boom themselves.

However, this was not a problem of public finances, but a problem of (largely private-bank lead) encouraging of a property boom and making it crash; government always had the option of stepping in and counteracting the boom, before a crash leading to widescale unemployment and economic damage became inevitable.

If you think about it, government reducing spending pre-crisis wouldn't have made it any more or less 'sustainable', because tax intake would have gone down with the reduction in spending, and then post-crisis the socialized bank debt, the unemployment payments, and the general reduction in tax intake from the economic hit, would have put government right back in its currently unsustainable position anyway.

So yes, a problem of having a property bubble (with responsibility shared there, by people participating in that bubble, private banks/finance, and government), not of public finances.


To credit, you don't favour financial deregulation, so the inconsistency I wondered about in my previous post wouldn't apply to you, but potentially to others.

noodler

KyussBishop wrote: »

Actually the deficit is largely to do with the economic crisis causing large scale unemployment, and thus a loss of tax revenue; this largely is a problem created by the banks.

No.

We helped foster the culture of poor regulation, voted for FF Governments, spent the money created by the property boom on PS wages, tax cuts etc etc. A huge number of people buy houses for silly money, far too many people get involved in construction etc etc.

It is denial of the highest order to then state that it was all the banks fault once that money disappears and we have to balance the books.

KyussBishop

noodler wrote: »

No.

We helped foster the culture of poor regulation, voted for FF Governments, spent the money created by the property boom on PS wages, tax cuts etc etc. A huge number of people buy houses for silly money, far too many people get involved in construction etc etc.

It is denial of the highest order to then state that it was all the banks fault once that money disappears and we have to balance the books.

'We' doesn't represent me, or any of the rest of the population who either didn't vote FF, or didn't desire them to push a property boom (and didn't participate in it); generalizing about the population like that, is inherently inaccurate.
Also, you (like others) notably leave out any blame apportioned to banks, despite banks/finance being the primary drivers of the entire property bubble; all of those people working in the property bubble were put there by the private sector as well (I also, if you read my later posts, do put fault on government, where it is due).

Again, no matter what rate the government spent at pre-crisis (even if they slashed it right down), finances were going to become unsustainable post-crisis no matter what, because of the property boom, and resulting socialization of bank debt, the falloff in tax intake caused by unemployment and the general economic damage, and the increase in spending due to unemployment.

The existence of the property boom, was going to make post-crisis public finances unsustainable, no matter what the pre-crisis public spending level was; that's in no way a problem of unsustainable public finances, but of an unsustainable property boom in the private sector.

djpbarry

creedp wrote: »

Not everyone who bought a house was an investment manager and an accountant who were buying as a sound investment. Many, many were ordinary joes buying a home. I'm not absolving these ordinary joe's of all responsibility but I do think the Govt and the banks have to shoulder a large part of the blame.

I think you misunderstand me. They bought the place as a home, no different to any other “ordinary Joes”.

djpbarry

KyussBishop wrote: »

Also, you (like others) notably leave out any blame apportioned to banks, despite banks/finance being the primary drivers of the entire property bubble...

So if it’s all (or mostly) the banks fault, why didn’t every country in Europe (or even just the Eurozone) experience a property boom similar to Ireland’s?

KyussBishop wrote: »

Again, no matter what rate the government spent at pre-crisis (even if they slashed it right down), finances were going to become unsustainable post-crisis no matter what, because of the property boom, and resulting socialization of bank debt, the falloff in tax intake caused by unemployment and the general economic damage, and the increase in spending due to unemployment.

I think you’re grossly over-stating the effect of unemployment on the public deficit. The collapse in transaction-derived taxes played a far bigger role.

KyussBishop wrote: »

The existence of the property boom, was going to make post-crisis public finances unsustainable, no matter what the pre-crisis public spending level was; that's in no way a problem of unsustainable public finances, but of an unsustainable property boom in the private sector.

How is a tax system that was heavily dependent on the proceeds of an unsustainable property boom, which was aided and abetted so far as was possible by successive governments, not itself unsustainable?

KyussBishop

djpbarry wrote: »

So if it’s all (or mostly) the banks fault, why didn’t every country in Europe (or even just the Eurozone) experience a property boom similar to Ireland’s?

I did not say it was all the banks fault; you even specifically cut off the latter half of that sentence in quoting me, where I explicitly state I do not put fault entirely on banks.

Your question presumes that a lack of property bubbles elsewhere, means Irish banks were not at fault; that does not logically follow.
Banks in other countries, where there was not a property bubble, did not pump credit into a property bubble as Irish banks did.

djpbarry wrote: »

I think you’re grossly over-stating the effect of unemployment on the public deficit. The collapse in transaction-derived taxes played a far bigger role.

I think almost everyone would say that unemployment is causing a significant strain on the public finances right now.

The collapse in transaction-derived taxes is also in large part down to unemployment, because people have less money, and thus are spending less, with that having reduced aggregate demand and transactions all over the economy.

djpbarry wrote: »

How is a tax system that was heavily dependent on the proceeds of an unsustainable property boom, which was aided and abetted so far as was possible by successive governments, not itself unsustainable?

You're directly ignoring, the part of my previous post you quoted, that addressed this:

KyussBishop wrote:

Again, no matter what rate the government spent at pre-crisis (even if they slashed it right down), finances were going to become unsustainable post-crisis no matter what, because of the property boom, and resulting socialization of bank debt, the falloff in tax intake caused by unemployment and the general economic damage, and the increase in spending due to unemployment.

The root problem of the crisis was not public spending, but the property boom that led to public spending becoming unsustainable post-crisis, and which was going to make it unsustainable no matter what public spending was at pre-crisis.

Instead of dealing with the root issue of the property bubble, you would have had government cut public spending pre-crisis, when the later damage from the property bubble would require cuts regardless of governments pre-crisis spending (which could have been avoided by dealing with the property bubble).

creedp

djpbarry wrote: »

I think you misunderstand me. They bought the place as a home, no different to any other “ordinary Joes”.

My point being that an investment manager and an accountant might reasonably be considered to have a certain financial/business/investment acumen not available to many 'Joes' and yet still went ahead and bought the house at the prevailing price.

djpbarry

KyussBishop wrote: »

I did not say it was all the banks fault; you even specifically cut off the latter half of that sentence in quoting me, where I explicitly state I do not put fault entirely on banks.

You’re saying it was mostly the fault of private banks and you’ll note that I put “mostly” in brackets.

KyussBishop wrote: »

Your question presumes that a lack of property bubbles elsewhere, means Irish banks were not at fault...

It absolutely does not. My question presumes that most banks operate on a similar mindset and I find it very hard to believe that the mentality within Irish banks is vastly different to that in banks elsewhere in Europe.

KyussBishop wrote: »

Banks in other countries, where there was not a property bubble, did not pump credit into a property bubble as Irish banks did.

And why is that? Could it be that there simply was no demand for 100% mortgages in, say, Germany?

KyussBishop wrote: »

The collapse in transaction-derived taxes is also in large part down to unemployment, because people have less money, and thus are spending less, with that having reduced aggregate demand and transactions all over the economy.

That sort of misses the point that the exchequer should never have been so dependent on these taxes in the first place.

KyussBishop wrote: »

You're directly ignoring, the part of my previous post you quoted...

Just because I don’t quote your entire post, doesn’t mean I haven’t read your entire post.

KyussBishop wrote: »

The root problem of the crisis was not public spending, but the property boom that led to public spending becoming unsustainable post-crisis...

That doesn’t make a lick of sense. If there is a reasonable danger of public spending suddenly becoming unsustainable, then public spending is by definition unsustainable.

Chemical Burn

OU812 wrote: »

OK, so we have the property tax, it's here & it's sticking around.

We also have the upcoming Water charges, & Broadcasting charge (should probably be called receiving charge, but not my call) we also have out bin charges.

So why aren't these all lumped in together in one charge & revenue collect the whole bloody lot ?

And.. why are they called "Charge" & not "Tax" does that difference give it any special powers ?

A tax on boards ... watch out :eek:

And a national toll troll charge too :cool:

djpbarry

creedp wrote: »

My point being that an investment manager and an accountant might reasonably be considered to have a certain financial/business/investment acumen not available to many 'Joes' and yet still went ahead and bought the house at the prevailing price.

Precisely my point. A lot of people who bought property at over-inflated prices would have been university-educated, supposedly "smart" people. I have a very hard time absolving such people of blame (or even most of it) for making such silly purchases. Not that I'm at all convinced that a university-educated individual is necessarily smarter than a so-called "average Joe".

Count Dooku

KyussBishop wrote: »

Your question presumes that a lack of property bubbles elsewhere, means Irish banks were not at fault; that does not logically follow.
Banks in other countries, where there was not a property bubble, did not pump credit into a property bubble as Irish banks did.

Irish banks did only what they were allowed to do and have not been given any warnings from regulatory bodies where it could bring them. "Soft landing" was Central bank idea.

KyussBishop wrote: »

I think almost everyone would say that unemployment is causing a significant strain on the public finances right now.

If everyone would say, it doesn't mean that it is right. Increase in JB/JA payment mostly compensated by increase in tax take.

KyussBishop wrote: »

The collapse in transaction-derived taxes is also in large part down to unemployment, because people have less money, and thus are spending less, with that having reduced aggregate demand and transactions all over the economy.

People didn't had money before, they were simply spending deposits of others in Irish banks and money of bondholders, brought to them by property bubble.

KyussBishop wrote: »

The root problem of the crisis was not public spending, but the property boom that led to public spending becoming unsustainable post-crisis, and which was going to make it unsustainable no matter what public spending was at pre-crisis.

Root problem of crisis is spending, because without it country wouldn't be in crisis at all. Country still spend as property bubble is not over

Count Dooku

KyussBishop wrote: »

If you think about it, government reducing spending pre-crisis wouldn't have made it any more or less 'sustainable', because tax intake would have gone down with the reduction in spending, and then post-crisis the socialized bank debt, the unemployment payments, and the general reduction in tax intake from the economic hit, would have put government right back in its currently unsustainable position anyway.

Do you mean that only way to increase tax take is to increase salaries in public sector and get one euro back for every two wasted on it?

creedp

djpbarry wrote: »

Precisely my point. A lot of people who bought property at over-inflated prices would have been university-educated, supposedly "smart" people. I have a very hard time absolving such people of blame (or even most of it) for making such silly purchases. Not that I'm at all convinced that a university-educated individual is necessarily smarter than a so-called "average Joe".

Its also precisely my point. Many, many people who bought houses did not have the necessary financial expertise to evaluate what was being fed to them day in, day out by the media and banks and accepted this advice on its merit.

By the way I'm not calling for mass debt forgiveness for mortgage holders .. I'm simply making the point that banks must accept a large part of the blame for doling out unsustainable mortgages and thereby driving the property boom in a such an unsustainable manner. Its not just mortgages either, it was the pre-approved car loans, the continuous unsolicited increasing of credit card limits, etc, etc. This approach to easy credit is now finished not becasue people have asked for it to happen but becasue banks have changed their lending policies. Had they pursued a more conservative approach during the so called boom years we may not have had the so called boom years and avoided the worst excesses of this recession.

creedp

Count Dooku wrote: »

Do you mean that only way to increase tax take is to increase salaries in public sector and get one euro back for every two wasted on it?

Define waste? Do you mean the value of the services provided? Do you mean the extra spend injected into the local economy due to both pay and public investment in infrastructure etc? Or is it the case, as has been referred to previously on here, that as PS are more likely to go on foreign holidays, buy foreign holiday homes, etc, etc they are likely to waste more of their income abroad?

KyussBishop

djpbarry wrote: »

You’re saying it was mostly the fault of private banks and you’ll note that I put “mostly” in brackets.

It absolutely does not. My question presumes that most banks operate on a similar mindset and I find it very hard to believe that the mentality within Irish banks is vastly different to that in banks elsewhere in Europe.

And why is that? Could it be that there simply was no demand for 100% mortgages in, say, Germany?

I said the property bubble was primarily driven by private banks, which it was, through throwing out ridiculous amounts of credit (and this, without absolving government or the public of fault).

You imply the entire blame for 100% mortgages lies with the public here, when it is obvious that it is highly risky for banks to be putting out such mortgages in the first place, and that in doing so they were helping to drive the property bubble, when they should have been more restrictive with credit.

It would seem clear, that German banks were far more responsible (in their handling of loans/credit) than Irish ones.

djpbarry wrote: »

That sort of misses the point that the exchequer should never have been so dependent on these taxes in the first place.

Just because I don’t quote your entire post, doesn’t mean I haven’t read your entire post.

I didn't say you hadn't read it, I said you ignored a part of it, and you did it again right here, as you have to be selectively ignoring what I am saying, to miss that I have already addressed the above.

Again, as I said: Instead of dealing with the root issue of the property bubble, you would have had government cut public spending pre-crisis, when the later damage from the property bubble would require cuts regardless of governments pre-crisis spending (which could have been avoided by dealing with the property bubble).

djpbarry wrote: »

KyussBishop wrote:

The root problem of the crisis was not public spending, but the property boom that led to public spending becoming unsustainable post-crisis...

That doesn’t make a lick of sense. If there is a reasonable danger of public spending suddenly becoming unsustainable, then public spending is by definition unsustainable.

This in particular, shows how you like to deliberately ignore parts of posts, in order to change the context of what you are replying to; here is the same part, with the rest of the sentence added back in:

KyussBishop wrote:

The root problem of the crisis was not public spending, but the property boom that led to public spending becoming unsustainable post-crisis, and which was going to make it unsustainable no matter what public spending was at pre-crisis.

So again, you are selectively ignoring content and context in posts, and often the point of what is being said, to nitpick while ignoring arguments presented; that, combined with cutting up quoted sentences to leave out important context, is arguing in bad faith (especially as there is absolutely no reason to cut off the end of a really short sentence like that).


Repeating the full content of what I had posted:
Again, no matter what rate the government spent at pre-crisis (even if they slashed it right down), finances were going to become unsustainable post-crisis no matter what, because of the property boom, and resulting socialization of bank debt, the falloff in tax intake caused by unemployment and the general economic damage, and the increase in spending due to unemployment.

The root problem of the crisis was not public spending, but the property boom that led to public spending becoming unsustainable post-crisis, and which was going to make it unsustainable no matter what public spending was at pre-crisis.

Instead of dealing with the root issue of the property bubble, you would have had government cut public spending pre-crisis, when the later damage from the property bubble would require cuts regardless of governments pre-crisis spending (which could have been avoided by dealing with the property bubble).

KyussBishop

Count Dooku wrote: »

Irish banks did only what they were allowed to do and have not been given any warnings from regulatory bodies where it could bring them. "Soft landing" was Central bank idea.

You try to absolve banks of all blame here, with arguments that could apply equally as well to the public as a whole.

Also, banks committed fraud as well, breaching regulations i.e. the law (which makes it illegal whether or not the regulator notices), as documented by Jonathan Sugarman:
http://whistleblowerirl.blogspot.ie/

What you reply is also irrelevant to what you quoted, and implicitly acknowledges that banks are at fault for pumping credit into the property bubble (just tries to absolve them of blame for doing so), and thus, that they drove the property bubble.

Count Dooku wrote: »

If everyone would say, it doesn't mean that it is right. Increase in JB/JA payment mostly compensated by increase in tax take.

Unemployment payments are greater than the size of our deficit, and use up a large chunk of our tax intake, thus unemployment is putting a significant strain on public finances.

Count Dooku wrote: »

People didn't had money before, they were simply spending deposits of others in Irish banks and money of bondholders, brought to them by property bubble.

Without even getting into this bit, that doesn't relate to what I said.

Count Dooku wrote: »

Root problem of crisis is spending, because without it country wouldn't be in crisis at all. Country still spend as property bubble is not over

That makes no sense, you think government spending fueled the property bubble?

The property bubble came first, the crisis of spending after; all the problems lead from the property bubble, and the property bubble was not caused by public spending, it was caused by private bank lending.

Count Dooku wrote: »

Do you mean that only way to increase tax take is to increase salaries in public sector and get one euro back for every two wasted on it?

No, I was pointing out the pre-crisis spending would have become unsustainable post-crisis anyway.

djpbarry

KyussBishop wrote: »

You imply the entire blame for 100% mortgages lies with the public here...

I have implied no such thing. I have already stated quite clearly that everyone involved must share the blame: banks, government, house buyers, construction contractors, etc.

KyussBishop wrote: »

It would seem clear, that German banks were far more responsible (in their handling of loans/credit) than Irish ones.

Perhaps. The lack of a property-related psychosis among the German population may also have been a factor.

KyussBishop wrote: »

Again, as I said: Instead of dealing with the root issue of the property bubble, you would have had government cut public spending pre-crisis...

Could you point out where I said any such thing?

KyussBishop wrote: »

This in particular, shows how you like to deliberately ignore parts of posts, in order to change the context of what you are replying to; here is the same part, with the rest of the sentence added back in:
...
So again, you are selectively ignoring content and context in posts, and often the point of what is being said, to nitpick while ignoring arguments presented; that, combined with cutting up quoted sentences to leave out important context, is arguing in bad faith (especially as there is absolutely no reason to cut off the end of a really short sentence like that).

So I’m “arguing in bad faith” because I don’t quote the entirety of your posts when responding (the reason I don’t, obviously, is that it’s pointless to continuously reproduce posts in their entirety), but it’s ok for you to attribute to me things I have never said?

Do hypocrisy much?

KyussBishop wrote: »

Repeating the full content of what I had posted:
Again, no matter what rate the government spent at pre-crisis (even if they slashed it right down), finances were going to become unsustainable post-crisis no matter what, because of the property boom, and resulting socialization of bank debt, the falloff in tax intake caused by unemployment and the general economic damage, and the increase in spending due to unemployment.

Explain to me how that renders my point invalid? Tax revenue, and therefore public spending, was heavily dependent on the property bubble. Given that the property bubble was obviously unsustainable, the tax regime was unsustainable and therefore government spending was unsustainable. Crash or no crash.

KyussBishop

djpbarry wrote: »

KyussBishop wrote:

Again, as I said: Instead of dealing with the root issue of the property bubble, you would have had government cut public spending pre-crisis...

Could you point out where I said any such thing?

You are railing against the pre-crisis level of government spending, labeling it unsustainable, are you not? If you are, that implies you wanted pre-crisis spending cut.

djpbarry wrote: »

So I’m “arguing in bad faith” because I don’t quote the entirety of your posts when responding (the reason I don’t, obviously, is that it’s pointless to continuously reproduce posts in their entirety), but it’s ok for you to attribute to me things I have never said?

Do hypocrisy much?

Here you do it again, misrepresenting my posts; I didn't take issue because you didn't "quote the entirety of [my] posts", and you know that, yet you portray it that way, thus ignoring my actual criticism and trying to pretend that you have addressed it.

Here, repeating what I said, is what I took issue with:

KyussBishop wrote:

djpbarry wrote: »

That sort of misses the point that the exchequer should never have been so dependent on these taxes in the first place.

Just because I don’t quote your entire post, doesn’t mean I haven’t read your entire post.

I didn't say you hadn't read it, I said you ignored a part of it, and you did it again right here, as you have to be selectively ignoring what I am saying, to miss that I have already addressed the above.

djpbarry wrote: »

KyussBishop wrote:

The root problem of the crisis was not public spending, but the property boom that led to public spending becoming unsustainable post-crisis...

That doesn’t make a lick of sense. If there is a reasonable danger of public spending suddenly becoming unsustainable, then public spending is by definition unsustainable.

This in particular, shows how you like to deliberately ignore parts of posts, in order to change the context of what you are replying to; here is the same part, with the rest of the sentence added back in:

KyussBishop wrote:

The root problem of the crisis was not public spending, but the property boom that led to public spending becoming unsustainable post-crisis, and which was going to make it unsustainable no matter what public spending was at pre-crisis.

So again, you are selectively ignoring content and context in posts, and often the point of what is being said, to nitpick while ignoring arguments presented; that, combined with cutting up quoted sentences to leave out important context, is arguing in bad faith (especially as there is absolutely no reason to cut off the end of a really short sentence like that).

djpbarry wrote: »

Explain to me how that renders my point invalid? Tax revenue, and therefore public spending, was heavily dependent on the property bubble. Given that the property bubble was obviously unsustainable, the tax regime was unsustainable and therefore government spending was unsustainable. Crash or no crash.

Repeating myself again, with the sentence coming directly after the one you quote:
The root problem of the crisis was not public spending, but the property boom that led to public spending becoming unsustainable post-crisis, and which was going to make it unsustainable no matter what public spending was at pre-crisis.


So, public spending was not the issue, government was not being profligate, it was the property bubble that was the issue, and which piled on enormous amounts of bank debt onto government (among other stuff) post-crisis, which made the public finances unsustainable.

If government knows about the property bubble, the solution is to counteract the property bubble and deflate it without it causing an economic crisis, allowing workers to be employed elsewhere, which doesn't affect public finances.

2moreMinutes

The main problem with all these charges is that they are only being introduced now. If they were introduced at the same time as the Govt were handing out wads of cash, nobody would have batted an eyelid and maybe, just maybe, we wouldnt be in quite as large a pile of manure as we currently are.

Overall, we all need to change our mindsets. We overspent, we overindulged and we enjoyed the hell outta life for a few years when we just couldnt afford it. A lot of people seem to be thinking that these charges & cutbacks will only be temporary before we get back to the good ol' days. All thats happening is we're trying to get outselves back to a sustainable level that we're gonna stay at for a long time to come.

Our mindsets also need to change in relation to property ownership. Part of the reason why the property bubble was so devastating in Ireland is our infatuation with owning property irrespective of the cost or affordability.

creedp

2moreMinutes wrote: »

Our mindsets also need to change in relation to property ownership. Part of the reason why the property bubble was so devastating in Ireland is our infatuation with owning property irrespective of the cost or affordability.

Part of the reason why we have such an infatuation with owning property is that we have no history of renting in this country. There are no/limited controls to protect tenants who want to rent a residential property long term. They can effectively be turfed out with minimum notice. While that is fine for a single person who is free to get up and move at the drop of a hat, it is not suitable for families who have ties with schools etc.

So instead of berating people for trying to acquire some continuity in relation to where they set up home maybe people would be better employed berating the unregulated private landlord system of residential housing in this country. When we get a similar apporach to long term rental protection as has been the case in mainland Europe for generations then maybe, just mabe over time we would get the rental rates that exist there also.

KyussBishop

With a properly regulated property market, not allowing for bubbles and with well-planned, socially sustainable planning for construction, there's not really any reason houses couldn't be affordable for almost all people.

A healthy rental market would still be perfectly good and desirable (much reform needed there), but it doesn't have to be one or the other; no reason at all why house prices should be held high, to the point that they are unaffordable to some.

djpbarry

KyussBishop wrote: »

You are railing against the pre-crisis level of government spending, labeling it unsustainable, are you not?

Actually it’s the tax regime that was in place to fund this spending that I’m “railing against”.

KyussBishop wrote: »

If government knows about the property bubble, the solution is to counteract the property bubble and deflate it without it causing an economic crisis...

Which the Irish government didn’t even attempt to do. In fact, they did precisely the opposite – property speculation was encouraged with tax breaks. Of course the general public were perfectly happy with this so long as their houses continued to increase in value.

KyussBishop wrote: »

...allowing workers to be employed elsewhere, which doesn't affect public finances.

It most likely would have affected public finances, as tax revenues would probably not have grown as they did.

KyussBishop

djpbarry wrote: »

Actually it’s the tax regime that was in place to fund this spending that I’m “railing against”.
Which the Irish government didn’t even attempt to do. In fact, they did precisely the opposite – property speculation was encouraged with tax breaks. Of course the general public were perfectly happy with this so long as their houses continued to increase in value.
It most likely would have affected public finances, as tax revenues would probably not have grown as they did.

Ok, well I agree on the criticisms of government not having counteracted the bubble, but unless unemployment remained high without the property bubble having occurred, it does not seem like it would have affected public finances much, because the workers would have been employed elsewhere, and the economic activity would have grown in places other than property.

Geuze

paul71 wrote: »

Because the 70% of the national debt had nothing to do with the banks and everything to do with the ordinary Joe Soap, and 100% of the current deficit of 10.5 billion a year is to do with the ordinary Joe soap.

The current GG Debt is 170bn

http://www.ntma.ie/business-areas/funding-and-debt-management/debt-profile/historical-information/

The cost of the banking crisis was 64bn, so that's 37% approx of the public debt.

So a large chunk of int payments are due to the banking crisis.

Also, int rates on public debt are higher due to the bigger debt caused by the costs of banking crisis.

Yes, it's true that the 64bn fiscal cost of the banking crisis was booked into the fiscal accounts during earlier years.

So, yes, it may be correct to say that the 2012 or 2013 fiscal deficits are not directly due to the banking crisis.

But due to the huge ongoing int costs, part of the fiscal deficit in 2013 is due to the banking crisis.

Count Dooku

KyussBishop wrote: »

Unemployment payments are greater than the size of our deficit, and use up a large chunk of our tax intake, thus unemployment is putting a significant strain on public finances.

Lie
JB = 927,105,000( in 2005 it was 418,085,000 )
JA = 2,974,987,000 ( in 2005 it was 667,483,000)
http://www.welfare.ie/en/downloads/statsc2011.pdf
Increase only 3 bn, but deficit is much higher

KyussBishop wrote: »

That makes no sense, you think government spending fueled the property bubble?

Yes

KyussBishop wrote: »

The property bubble came first, the crisis of spending after; all the problems lead from the property bubble, and the property bubble was not caused by public spending, it was caused by private bank lending.

If government wouldn't increase spending, we wouldn't had crisis in such big scale
Deficit would be increased only by 2Bn and wouldn't be any need in bailout

carpejugulum

KyussBishop wrote: »

To support that argument, you have to implicitly say there is nothing else people could have been employed doing, if the property boom had not happened, and that the country would permanently be at such a high rate of unemployment without construction.

If you make any argument there, other than one where there would be persistently high unemployment, then you are wrong because there would be a similar level of employment, and a similar rate of tax income, thus sustainable public expenditure.

If you did argue that unemployment would remain permanently high, then anyone can see that that would be ridiculous.


As things were, it was private industry that put those people to work in an unsustainable property bubble, and caused the later shortfall in taxes (through unemployment and economic harm), and the increase in public expenditure (through the resulting deficit, including that from unemployment payments).

Household debt went from 66bn in 2002 to 212bn in 2008/09.

KyussBishop

Count Dooku wrote: »

Lie
JB = 927,105,000( in 2005 it was 418,085,000 )
JA = 2,974,987,000 ( in 2005 it was 667,483,000)
http://www.welfare.ie/en/downloads/statsc2011.pdf
Increase only 3 bn, but deficit is much higher

Ah, right so, was looking at total social protection spending.

Count Dooku wrote: »

KyussBishop wrote:

That makes no sense, you think government spending fueled the property bubble?

Yes

Well, you need to explain how you think public spending fueled the property bubble?

It is really really clear, that it was credit thrown out by private banks that fueled it, so it is really strange to put that blame on government spending.

Count Dooku wrote: »

KyussBishop wrote:

The property bubble came first, the crisis of spending after; all the problems lead from the property bubble, and the property bubble was not caused by public spending, it was caused by private bank lending.

If government wouldn't increase spending, we wouldn't had crisis in such big scale
Deficit would be increased only by 2Bn and wouldn't be any need in bailout

The property bubble lead to the eventual crisis in public spending, so the clear thing to do is to counteract the property bubble, thus removing any need to alter public spending.

KyussBishop

carpejugulum wrote: »

Household debt went from 66bn in 2002 to 212bn in 2008/09.

That doesn't address anything in my post though.

2moreMinutes

KyussBishop wrote: »

It is really really clear, that it was credit thrown out by private banks that fueled it.....

No private business is going to flourish without demand from the public.

If the people didnt want 100% mortgages for their perfect house that they now for some reason feel isnt good enough for them anymore or for a holiday home in Portugal or for an apartment for little Mary to stay in during her college years, the banks wouldnt have offered the products. The blame for the property bubble does not lie squarely at the feet of the banks.

KyussBishop

2moreMinutes wrote: »

No private business is going to flourish without demand from the public.

If the people didnt want 100% mortgages for their perfect house that they now for some reason feel isnt good enough for them anymore or for a holiday home in Portugal or for an apartment for little Mary to stay in during her college years, the banks wouldnt have offered the products. The blame for the property bubble does not lie squarely at the feet of the banks.

I don't lay it all on the banks though, I put blame where appropriate, on the people participating in the property bubble, and on government too.

Things aren't as simple as public demand either, because it is well known by economists, that the availability of bank credit, directly relates to the price of houses; the easier it is to get credit, the higher house prices get bid up, and the more people have to go into debt to get a house (which goes in circles, fueling the inflation of house prices).

That is going to happen just by there being lax credit, so strict sustainable credit policies are exceptionally important.

schnitzelEater

Where's the third round of benchmarking?

K-9

KyussBishop wrote: »

Repeating myself again, with the sentence coming directly after the one you quote:
The root problem of the crisis was not public spending, but the property boom that led to public spending becoming unsustainable post-crisis, and which was going to make it unsustainable no matter what public spending was at pre-crisis.

Do you think low Income Tax and PRSI wasn't a big part of the problem? We financed the high expenditure mostly by property bubble taxes while also cutting Income Tax and PRSI levels

So, public spending was not the issue, government was not being profligate, it was the property bubble that was the issue, and which piled on enormous amounts of bank debt onto government (among other stuff) post-crisis, which made the public finances unsustainable.

How the expenditure was financed was the issue. If we hadn't cut PAYE and PRSI so much the deficit wouldn't be as bad, and we wouldn't be increasing taxes to such an extent in recessionary times.

We had a couple of options, not boost expenditure so much or not at all and still cut taxes, or not cut taxes and continue with big increases in spending. You seem to totally exclude those ideas and just blame the property bubble and bank debt.

The finances were low tax, and pretty high spend with windfall taxes plugging the holes. Government actively pushed this with all the main parties proposing low taxes and high spending.

KyussBishop

K-9 wrote: »

Do you think low Income Tax and PRSI wasn't a big part of the problem? We financed the high expenditure mostly by property bubble taxes while also cutting Income Tax and PRSI levels

Upon giving it a closer look, things like stamp duty definitely were a big problem:
http://smarttaxes.org/2010/10/20/irish-transaction-based-property-taxes-have-fallen-off-a-cliff/

I'd agree there alright, since that was directly feeding into the property boom (and shouldn't have offset income-tax/PRSI); however, that's not as straightforward as it seems, because government was running a surplus well before the property bubble first started to expand, and while that surplus was eaten into part way through the bubble, it expanded again before the crash.

It's a bit difficult to search around for raw numbers on that though, to see how it compares to property-based stamp duty income; I wouldn't say the surplus fully counteracts the potential unsustainability of the property stamp duty, but it does reduce the potential unsustainability of it.

K-9 wrote: »

How the expenditure was financed was the issue. If we hadn't cut PAYE and PRSI so much the deficit wouldn't be as bad, and we wouldn't be increasing taxes to such an extent in recessionary times.

We had a couple of options, not boost expenditure so much or not at all and still cut taxes, or not cut taxes and continue with big increases in spending. You seem to totally exclude those ideas and just blame the property bubble and bank debt.

The finances were low tax, and pretty high spend with windfall taxes plugging the holes. Government actively pushed this with all the main parties proposing low taxes and high spending.

If enough of the taxes were specifically dependent on the property bubble (such that, had the workers in property, been put to work elsewhere in the economy, there would have been a shortfalll) I'd agree, and while I see now that stamp duty definitely played a big part, I'm not yet sure on this seeing as there were other factors like the surplus.

Is there a good breakdown of that property-bubble-based public funding anywhere? (especially good, if comparable to what funding may have been like without the property bubble)

K-9

KyussBishop wrote: »

Upon giving it a closer look, things like stamp duty definitely were a big problem:
http://smarttaxes.org/2010/10/20/irish-transaction-based-property-taxes-have-fallen-off-a-cliff/

I'd agree there alright, since that was directly feeding into the property boom (and shouldn't have offset income-tax/PRSI); however, that's not as straightforward as it seems, because government was running a surplus well before the property bubble first started to expand, and while that surplus was eaten into part way through the bubble, it expanded again before the crash.

It's a bit difficult to search around for raw numbers on that though, to see how it compares to property-based stamp duty income; I wouldn't say the surplus fully counteracts the potential unsustainability of the property stamp duty, but it does reduce the potential unsustainability of it.


If enough of the taxes were specifically dependent on the property bubble (such that, had the workers in property, been put to work elsewhere in the economy, there would have been a shortfalll) I'd agree, and while I see now that stamp duty definitely played a big part, I'm not yet sure on this seeing as there were other factors like the surplus.

Is there a good breakdown of that property-bubble-based public funding anywhere? (especially good, if comparable to what funding may have been like without the property bubble)

You've too narrow a focus. Property VAT receipts also were part of the problem.

To put it in perspective, something like 25% of GDP was construction related. Building and buying houses mania fed into print media, online, estate agents, builder providers, the likes of Kingspan, Quinn Group and so on.

As for unemployment, you might have a point, from 00-07 we'd full employment, http://www.tradingeconomics.com/ireland/unemployment-rate, that would explain actively looking for immigrants to come here.

In another way, you don't have a point, we already had full employment before the property bubble really kicked of. Once our economy was running well, that wasn't enough, we had to keep a high growth rate going, once we had 7-10% growth rates we had to keep doing that, instead of just doing what mature Western Economies do and just go back to 3-4% growth levels.

PS. I never talked about a surplus, I don't why you are. We ran surpluses, mainly because of property windfalls, which is why I never mentioned surplusses, it never entered my mind.

KyussBishop

K-9 wrote: »

You've too narrow a focus. Property VAT receipts also were part of the problem.

To put it in perspective, something like 25% of GDP was construction related. Building and buying houses mania fed into print media, online, estate agents, builder providers, the likes of Kingspan, Quinn Group and so on.

As for unemployment, you might have a point, from 00-07 we'd full employment, http://www.tradingeconomics.com/ireland/unemployment-rate, that would explain actively looking for immigrants to come here.

In another way, you don't have a point, we already had full employment before the property bubble really kicked of. Once our economy was running well, that wasn't enough, we had to keep a high growth rate going, once we had 7-10% growth rates we had to keep doing that, instead of just doing what mature Western Economies do and just go back to 3-4% growth levels.

PS. I never talked about a surplus, I don't why you are. We ran surpluses, mainly because of property windfalls, which is why I never mentioned surplusses, it never entered my mind.

I mainly brought up surpluses, as it counteracts some (though not all) of the potential unsustainability of government spending; i.e. we would be overspending by 'construction tax intake' minus 'surplus'.

I'm not sure the 25% share of GDP is correct; I can only find stuff stating 9% (not small by any means, but not as big), such as here:
https://en.wikipedia.org/wiki/Irish_property_bubble
http://www.cso.ie/en/media/csoie/releasespublications/documents/construction/current/constructhousing.pdf (search 'GDP')

I found this document, and there is quite a good and relevant section near the top, 'The conduct of fiscal policy: 2001-2007' (as well as the next section), which seems to detail exactly this topic quite well:
http://www.irisheconomy.ie/Notes/IrishEconomyNote11.pdf

It notes the surplus well, but notes that it wasn't sufficient to counter the mishandled structuring of taxes; it also has some good charts at the bottom showing the actual structure of taxes, and their 'elasticity' i.e. showing how much different taxes were prone to change/fall, after the property bubble burst.

So yea, definitely the structure of taxes were unsustainable; would be interesting to see an even more detailed study, showing the numbers for tax falloff, for taxes directly related to the property boom, and also what a more sustainable tax base would have looked like.

carpejugulum

KyussBishop wrote: »

That doesn't address anything in my post though.

In simple terms, without the enormous debt that needs to be paid back now, there would not have been low unemployment and high tax intakes during the 6 or so years of the so-called boom.
Ireland is traditionally a high-unemployment country for the same reasons why the current high unemployment will not go significantly down in foreseeable future.