Why has the €20 Billion deficit not reduced ?.

When you take money out of an economy, whether this is through pay cuts or inceased tax you depress domestic demand, hence less employment, VAT and income tax and more social welfare. People also save more. It is extremely difficult to break out of this downward spiral.

This is why there is no real alternative to looking at taxes based on wealth and property as part of the mix. A lot of people made a lot of money during the boom. For those still sitting on it, time to cough up a bit.

The problem when paople talk about this is we all view it through the prism of self interest.

social welfare is a handout; business grants are incentives
my pay cut is unfair; yours is necessary
minimum wage is too high; my professional fees are fair (you do know I went to college?)
we must cut public spending; leave our hospital alone

Finnbar01 wrote: »

Are you assuming that it is the well off who have €135 billion in savings?

Because if you are, you're wrong.

Well it is the not the homeless poor or those who are struggling to pay bills who have €135 billion in savings, so it must be people who are relatively well-off.

murphaph wrote: »

What you mean is: You want the government to grab money from anywhere they can get it and use it to maintain the boom time wages of the public service.

It's despicable.

What we need to do is facilitate an EXPORT led recovery. That means NOT taxing the balls off of anyone who might have the gumption to actually set up a business and export sh!t. The domestic economy should NOT be of much importance to us. We should be focusing all our efforts on exporting.

If people have been prudent and NOT engaged in mad property speculation and actually saved (there are some of them out there!) then why should the state take that (already taxed!) money off them to pay a teacher 60 or 70 thousand Euro a year to deliver 26th grade maths results???

Our deficit problem is one of over-spending. There's a few bob to be raised in increased taxes but very little. We are not a land of Robert Bosch's, Thyssen Krupp's and Mercedes Benz's. We are a small land, almost totally dependent on FDI for our economic existence. We need to be a lean, mean state and we aren't. We don't have the luxury of others to raise taxation. If it's raised, companies and individuals capable of starting them will just leave.

The gravy train is over. The government just haven't realised it yet. Come next year the IMF will be applying pressure to show real savings and they'll only come from large spending cuts.

If they have savings, they are not spending the money in the domestic economy to boost growth. Neither are they investing it in export-led businesses to boost growth. Tax the savings and they might do one or the other. Simple.

murphaph wrote: »

What you mean is: You want the government to grab money from anywhere they can get it and use it to maintain the boom time wages of the public service.

It's despicable.

Thanks very much murphaph for telling me what i mean. Some people are just a little too obsessed with the public service. Its not healthy.

Has somebody already mentioned the report in one of today's papers, are read over the morning show on 96fm, Cork, that Public Service pay had actually risen 3% over the private sector, despite pay cuts balahdedebalh?

Coillte_Bhoy wrote: »

You have really thought this thriugh havent you?:rolleyes:

What hasn't he thought through? Is it that closing the deficit by materially cutting spending will cause a catastrophic collapse of output from the Irish economy?

Well maybe he has thought it through. Maybe he realises that the economy would crash. And maybe he thinks that that may not be a bad thing.

Let's face it; too much of the Irish economy is fake. Five years ago we had fake demand created by reckless banking and construction sectors. Now we have fake demand created by ongoing reckless government borrowing.

There's probably 15% of spurious GDP that needs to be let go. Trying to keep the fake economy spluttering along is killing us. It's misguided pseudo-Keynesian borrow-till-the-cows-come-home rubbish.

I'd be happy for Ireland to keep borrowing if we were borrowing to sustain something worthwhile. But we're not. We're borrowing to sustain a fantasy. A fantasy that says little gombean Ireland can have the highest paid politicians, public servants and unemployed in the world. A fantasy that should be consigned to the dustbin of history with Bertie and the Celtic Tiger.

Economic Armageddon would help reset our dysfunctional economy. Let's stop trying to keep up appearances. Cut the deficit. Take the pain. Start again and next time let's build a genuinely sound economy that our great country can be genuinely proud of.

If it means we have to suffer a huge hit to our standard of living, then so be it. If it means may salary is slashed further, so be it. If it means a spike in unemployment, then so be it.

I am ready to take the hit. I am ready to lose ownership of my home. I am ready to help those that might suffer more than me. I am ready to see Ireland face up to the reality of the situation that we have found ourselves in.

We can get through it if we pull together, help each other, and revive our fading sense of community. We might get back some of what was lost during those horrid bubble years. Remember when Irish people used to care more about their neighbours than their bling? Well maybe economic Armageddon would force us to realise what's really important. Our friends, our family and our communities. Not car loans and credit cards.

The bubble wasn't normal. We shouldn't be trying to revive that kind of econmomy. Let's stop looking back 10 years and let's start looking back 20 to when we were a bit poorer, but we had hope. Let's take the pain fast and hard and get back to having a future worth looking forward to.