What plan should the government have in place for the next credit crunch.

realitykeeper

Should the government have a plan for coping with the next economic crisis? For example, if another international credit crunch were to happen, could the government extend the state guarantee of the banks. If it could, should it?

Would the governments ability to guarantee the banks be believable and if not, would that affect Irish government bonds? Should people who find themselves back in negative equity (or in negative equity for the first time) be given assistance now that the government owns most of the banks? Could the government borrow to help them and what preconditions would be imposed by the lenders like the IMF and ECB?

Should austerity be tried on a scale never before attempted? How would the state cope with a major fall in revenue? Is the Irish government relying on an economic recovery? If it is, should it be? Or, should it instead be looking at its own expenditure? Is there a plan if the next international recession comes sooner rather than later? What should that plan look like?

chopper6

realitykeeper wrote: »

Should people who find themselves back in negative equity (or in negative equity for the first time) be given assistance now that the government owns most of the banks?

No..because it's only an issue if they're trying to sell the place.

And besides you enter into a contract with a bank or lending institution for say 30 years,why would you want your terms revisited at the taxpayers expense because the "value" of your purchase has decreased.


Stupid measures like this will only encourage further reckless borrowing.

hfallada

realitykeeper wrote: »

Should austerity be tried on a scale never before attempted? How would the state cope with a major fall in revenue? Is the Irish government relying on an economic recovery? If it is, should it be? Or, should it instead be looking at its own expenditure? Is there a plan if the next international recession comes sooner rather than later? What should that plan look like?

There is far too many questions.

Ireland had severe Austerity in the late 1980s. The budget deficit was slashed to 1.7% of GDP over night and between 1987 and 1990. The Debt to GDP ratio fell from 129% to 100%. But the economic started to recover. Which happens in the last few years. Harsh cuts eventually leads to growth, while increasing Government debt dampens consumer and business confidence.

The Government is making its budget projections on mild economic Growth, as does every country do the same. Its the right way to plan expenditure. The Government has looked at Expenditure and raising taxes. As a result the budget will be balanced in a few years.

Recession happens regularly, but most believe they occur in cycles. If we have just left a recession and there is strong signs of a strong economy eg good growth and incresing employment. A recession for a few years shouldnt be a concern.

A better objective of the Government would be reforms. Eg ending certain sections of societies belief that social welfare is for life. The Governments needs to get large sections of society into full time employment

Cookie_Monster

The most sensible option for trying to deal with the issue would be to raise the interest rates, unfortunately Ireland has no power to do that. Had we spent the last 2-3 years slowly raising the rates they cut be cut as a buffer once the next downturn started. but with rates remaining crazy low in the EU and US, neither blocs can use this option in the short to medium term.

CruelCoin

realitykeeper wrote: »

If it could, should it?

No.

I'm a staunch advocat of the free market.

The moment you promise an entitty that it will never fail, that you will always be there as a cushion, is the moment when that business stops being run in an efficient manner. "Who cares, sure i'll be looked after no matter what i do".

Any one entity must not be allowed to grow so large that it is too large to fail. That is one thing they can do. Break up any such entities.

realitykeeper

hfallada wrote: »

There is far too many questions.

Then I will ask just one. What emergency plan should the Irish government have in place for coping with an international economic crisis.

Voltex

realitykeeper wrote: »

Then I will ask just one. What emergency plan should the Irish government have in place for coping with an international economic crisis.

Simple...allow the market to correct itself free from the influence of Government.