Irish Economy and Budget Watch / / /Emergency Budget Announced for April 7th

Hardly surprising when Harney is pissing away money like a drunken sailor on an overdue shore leave

http://www.irishtimes.com/newspaper/ireland/2009/0224/1224241710998.html

Slim Buddha wrote:

Hardly surprising when Harney is pissing away money like a drunken sailor on an overdue shore leave

http://www.irishtimes.com/newspaper/ireland/2009/0224/1224241710998.html

Hahahahahaahaha.

Heeeehehehehehehehe. Hohohohohohoh



Where's the town crier.

Quote :

Ireland’s going bust
This was in Bloomberg last Friday:

Quote :

Ireland led a surge to record levels in the cost of hedging against losses on European government bonds on concern the high price of bank bailouts and economic stimulus packages will strain public finances.

Credit-default swaps on Irish government bonds rose 7.5 basis points to 355, and have jumped 95 basis points this week, according to CMA Datavision prices. Contracts linked to French, German, U.K and Spanish debt also rose to all-time highs.

The perceived risk of holding Irish debt soared the most after the government said it will invest 7 billion euros ($9 billion) in Allied Irish Banks Plc and Bank of Ireland Plc to cushion a rise in bad debts as property prices plunge.

It is glaringly obvious Ireland can no longer afford its commitments; commitments that were fuelled by its low corporate tax policy.

That low tax rate will have to go as a condition of the inevitable forthcoming bail out.

- Comment by Richard Murphy - Tax Advice UK.

The Irish Question - CDS graph and comments on it as an indicator for national default - http://paul.kedrosky.com/archives/2009/02/13/the_ireland_pro.html

cactus flower wrote:

Quote :

Ireland’s going bust
This was in Bloomberg last Friday:

Quote :

Ireland led a surge to record levels in the cost of hedging against losses on European government bonds on concern the high price of bank bailouts and economic stimulus packages will strain public finances.

Credit-default swaps on Irish government bonds rose 7.5 basis points to 355, and have jumped 95 basis points this week, according to CMA Datavision prices. Contracts linked to French, German, U.K and Spanish debt also rose to all-time highs.

The perceived risk of holding Irish debt soared the most after the government said it will invest 7 billion euros ($9 billion) in Allied Irish Banks Plc and Bank of Ireland Plc to cushion a rise in bad debts as property prices plunge.

It is glaringly obvious Ireland can no longer afford its commitments; commitments that were fuelled by its low corporate tax policy.

That low tax rate will have to go as a condition of the inevitable forthcoming bail out.

- Comment by Richard Murphy - Tax Advice UK.

Richard Murphy is a tax fascist who has had a bee in his bonnet over our 12.5% corporate tax rate since its inception. He believes in tax in somewhat the same way as some people believe in God, except he thinks tax is more important. He also seems to think that UK tax rates should be the internationally excepted norm and that all accountants should be burned at the stake, a strange man so he is.

tonys wrote:

cactus flower wrote:

Quote :

Ireland’s going bust
This was in Bloomberg last Friday:

Quote :

Ireland led a surge to record levels in the cost of hedging against losses on European government bonds on concern the high price of bank bailouts and economic stimulus packages will strain public finances.

Credit-default swaps on Irish government bonds rose 7.5 basis points to 355, and have jumped 95 basis points this week, according to CMA Datavision prices. Contracts linked to French, German, U.K and Spanish debt also rose to all-time highs.

The perceived risk of holding Irish debt soared the most after the government said it will invest 7 billion euros ($9 billion) in Allied Irish Banks Plc and Bank of Ireland Plc to cushion a rise in bad debts as property prices plunge.

It is glaringly obvious Ireland can no longer afford its commitments; commitments that were fuelled by its low corporate tax policy.

That low tax rate will have to go as a condition of the inevitable forthcoming bail out.

- Comment by Richard Murphy - Tax Advice UK.

Richard Murphy is a tax fascist who has had a bee in his bonnet over our 12.5% corporate tax rate since its inception. He believes in tax in somewhat the same way as some people believe in God, except he thinks tax is more important. He also seems to think that UK tax rates should be the internationally excepted norm and that all accountants should be burned at the stake, a strange man so he is.

There is no doubt that Richard Murphy is extremely hostile to Ireland. There is also no doubt that he reflects the British position generally, that is, furious with Ireland for tax haven/beggar my neighbour tax policies. These were tolerated in the boom when their finance sector was firing on all cylinders globally, but now that it is contracting violently, no mercy will be shown. The pre-G20 meeting a few days ago did not include Ireland and agreed a strategy for naming and cracking down severely on tax havens. There are warnings that regulation and tax policies will be centralised. Facing this off while we have a begging bowl in our hands would not be easy. Ireland faces a loss of soveignty in terms of control over our fiscal, social and economic policies that makes Lisbon look like less than nothing. Ireland is running out of money and the ability to raise it. EU terms will squeeze out any tax advantages that smaller and peripheral countries have used to redress their disadvantages.

Still this morning we have the Tanaiste on the radio saying that tax increases wont be considered for nearly a year, and that everything is going to plan.

Garrett FitzGerald on Morning Ireland


Crisis is much more serious than any we've ever faced. The problem is a lack of revenue and decreasing tax revenue. I cannot see Govt. or Opposition facing up that.

We had to bring in an emergency budget months after getting into power in 1982 when the country was nearly bankrupt - not nearly as bankrupt as we are now - and we got little support for that [FG were branded after as the party which taxed children's shoes].

We need an emergency budget which brings in Revenue and we need to avoid the notion of a national government.

The Govt. are reluctant to get into the issue of raising tax because of the local and European elections - everything is dominated by elections - everything should be dominated by saving the country. We need an emergency budget as soon as possible supported by the Opposition.

We need a higher rate of tax and for everyone to contribute ..

A very bad and dangerous situation will get worse - we can't go on much longer the way we are. We may no longer have the ability to run our own affairs. We should be able to run our own affairs and not have to rely on someone else to bail us out.

We need a Whittaker to save the country.

When things get bad, someone somewhere might face up to doing something.

He is quite right too. It was Garrett at his typical goodself, telling it how it is. Both the necessity to raise the higher rate of tax, to pull some people on the lower end of the higher rate of tax out of it but also to bring more people into the tax system at the lower end too. He highlighted that people on the average wage in Britain generally pay up to 20% tax and it can be as high as 35% in France whereas alot here pay nothing. We have got to take more from the rich and we have got to protect the very poor, but equally everyone is going to have to contribute.

Garrett Fitzgerald and Peter Sutherland are saying in or about the same thing.
If Dick Spring and Pronsias De Rossa chimed in it would help.

I am convinced. The Government need to bring forward emergency tax increases.

del - dbl post

Why are the Government so reluctant to bring forward an emergency budget? Is it really just a matter of saving face? That is incredible, in every sense of the word. (Except maybe in this sense)

I would say there are days in it. We should be on the streets demanding they do what is needed - across the board, fast and fairly - and keep the IMF out.

The TDs and Ministers should all step up and take a 40% cut, or let us find a Government that will work for the average wage.

Trichet - another good thing. We need "less regulation" ??????

Quote :

26/02/2009 - 13:49:28
The President of the European Central Bank has praised the Irish Government for its handling of the recession.

Speaking in Dublin today, Jean-Claude Trichet (pictured) said the Government was acting resolutely to address the situation it found itself in.

He said he was optimistic about Ireland’s chances of weathering the economic storm and believed the Government was taking the right action by cutting spending and moderating wages.

Mr Trichet also warned that Ireland was facing severe challenges in the coming years and that further hard decisions would have to be taken.

He said he would like to see more wage restraint and less regulation and believed Ireland was well-placed to benefit from an eventual recovery in the global economy

Trichet's speech in Dublin

http://www.finfacts.ie/irishfinancenews/article_1016056.shtml

This is dragging on far too bloody long and it's just frustrating people. I agree we should have another budget.
Get the taxes up, get the strikes on and get stuck in.

All this walking on eggshells is just time wasting nonsense. And it's only getting people down.

Just do it !

+1
"Get on with it Motherf_cker"

Another Tallaght Strategy on the way ?

Enda Kenny said on Morning Ireland just now that would be willing to go in behind closed doors with Brian Cowen to discuss an emergency budget. He said what this country really needs is for a general election to be called but an emergency budget is more urgent right at this point in time.

You know what?? I agree. How about they slap the taxes up (especially for the wealthy) and then give everyone at least 9 months of stability. We could use it, for those little green shoots of recovery.

I seem to remember the last budget didn't go down too well with the public.

If there is to be another budget now, it will contain massive tax hikes, but also service cutbacks.

You are precisely right, eoinmn. People are delusional if the think any new budget is going to only tax the wealthy in society. There are going to be cuts in services and a rise in taxation for 90% of people with an income. It is going to have to be in income tax, something which Fianna Fáil seek to avoid most of the time. VAT physically cannot go any higher (it is already damaging our economy) and there is no point doing anything to capital gains because frankly there is nobody in Ireland who has made a profit over the past 18 months. Capital Gains Tax isn't going to recover for several years after the illusionary upturn because you can right off the losses you made during this recession against future profits.

Ireland has really got to realise that it does not have the economic clout or the domestic resources, industry or population to rapidly come up with some radical new departure in global economy whereby we can renounce our ties to the outside world in favour of Dev's crazy dream of self sufficiency. Our debt is all denominated in Euro so even if we were to withdraw from the Euro it would not make a difference, we would devalue our currency but still owe money in Euro. We don't have the domestic demand economy or the indigenuous exporting economy to go it alone. It might be beneficial to do so but it would take years to build up that capacity, Ireland would be bankrupt twice by the time we could achieved it. Our main aim must simply be to survive this situation until the wheels of the global economy begin to turn once again. In order to do that the cutting of costs (including salaries) is going to be, very sadly, a huge factor in our survival.

One has to have huge sympathy for virtually everyone in this society. In some respects this dichotomy between public and private sector workers is a nonsense. The vast majority of workers in both sectors as well as employers in the private sector have had very little do to with the making of this crisis, apart from their implicit 'going with the flow' which almost everyone in Irish society is guilty of from the company which is over leveraged to the 30 year old who with a little foresight might not have signed up for the 40 year mortgage in the first place. However, sympathy and empathy are only going to get you so far. There is plenty of blame to be given but blame is not going to save our economy. While we talk and talk and talk the share value of Irish banks is still declining at near 10% a day, capital outflows continue at a high level. These banks may not last another two weeks. Of course nobody has much sympathy for the plight of these banks but if (when?) they do go bust, people might suddenly realise how little the pension level in the public sector and salary cuts in the private sector actually affect them in comparison to what lies around the corner.

johnfás wrote:

You are precisely right, eoinmn. People are delusional if the think any new budget is going to only tax the wealthy in society. There are going to be cuts in services and a rise in taxation for 90% of people with an income. It is going to have to be in income tax, something which Fianna Fáil seek to avoid most of the time. VAT physically cannot go any higher (it is already damaging our economy) and there is no point doing anything to capital gains because frankly there is nobody in Ireland who has made a profit over the past 18 months. Capital Gains Tax isn't going to recover for several years after the illusionary upturn because you can right off the losses you made during this recession against future profits.

Ireland has really got to realise that it does not have the economic clout or the domestic resources, industry or population to rapidly come up with some radical new departure in global economy whereby we can renounce our ties to the outside world in favour of Dev's crazy dream of self sufficiency. Our debt is all denominated in Euro so even if we were to withdraw from the Euro it would not make a difference, we would devalue our currency but still owe money in Euro. We don't have the domestic demand economy or the indigenuous exporting economy to go it alone. It might be beneficial to do so but it would take years to build up that capacity, Ireland would be bankrupt twice by the time we could achieved it. Our main aim must simply be to survive this situation until the wheels of the global economy begin to turn once again. In order to do that the cutting of costs (including salaries) is going to be, very sadly, a huge factor in our survival.

One has to have huge sympathy for virtually everyone in this society. In some respects this dichotomy between public and private sector workers is a nonsense. The vast majority of workers in both sectors as well as employers in the private sector have had very little do to with the making of this crisis, apart from their implicit 'going with the flow' which almost everyone in Irish society is guilty of from the company which is over leveraged to the 30 year old who with a little foresight might not have signed up for the 40 year mortgage in the first place. However, sympathy and empathy are only going to get you so far. There is plenty of blame to be given but blame is not going to save our economy. While we talk and talk and talk the share value of Irish banks is still declining at near 10% a day, capital outflows continue at a high level. These banks may not last another two weeks. Of course nobody has much sympathy for the plight of these banks but if (when?) they do go bust, people might suddenly realise how little the pension level in the public sector and salary cuts in the private sector actually affect them in comparison to what lies around the corner.

Thanks for that post johnfás - a lot of thought for food there.

I'd be into the country trying to push for self-sufficiency to be honest. I'm of the mind it's more and more possible to try to do that as technology and machinery get better, cheaper, more available and as other human and social systems get scrutinised, updated and employed. In the world at large a self-sufficiency movement could be swelling - I see this as instrumental in preserving an endangered environment, as promoting democracy and fairness and justice and as a natural consequence of the history of human ingenuity.

We've enslaved ourselves to over a trillion euros in personal, national and other debt though - that's something that's likely to wipe out any ideas we have of self-sufficiency for the moment unless there was a massive effort on a warlike footing to repudiate debt, preserve the infrastucture we have, start building a self-sustaining economy and an equitable and just society and then slowly heal up international relations with those whose debt we have repudiated. We'd probably need to start trading with other pariah countries who might be able to trade with us for the things we'd not be able to produce here - oil and oranges. I wouldn't be holding my breath for any of this but it's an interesting thought.

At best we can try not to become more enslaved to debt and try to make sound judgements as we go forward. The equity vultures looking at Anglo are starting to give me the creeps now. I think the country should watch those vultures like a hawk.

Auditor #9 wrote:

johnfás wrote:

You are precisely right, eoinmn. People are delusional if the think any new budget is going to only tax the wealthy in society. There are going to be cuts in services and a rise in taxation for 90% of people with an income. It is going to have to be in income tax, something which Fianna Fáil seek to avoid most of the time. VAT physically cannot go any higher (it is already damaging our economy) and there is no point doing anything to capital gains because frankly there is nobody in Ireland who has made a profit over the past 18 months. Capital Gains Tax isn't going to recover for several years after the illusionary upturn because you can right off the losses you made during this recession against future profits.

Ireland has really got to realise that it does not have the economic clout or the domestic resources, industry or population to rapidly come up with some radical new departure in global economy whereby we can renounce our ties to the outside world in favour of Dev's crazy dream of self sufficiency. Our debt is all denominated in Euro so even if we were to withdraw from the Euro it would not make a difference, we would devalue our currency but still owe money in Euro. We don't have the domestic demand economy or the indigenuous exporting economy to go it alone. It might be beneficial to do so but it would take years to build up that capacity, Ireland would be bankrupt twice by the time we could achieved it. Our main aim must simply be to survive this situation until the wheels of the global economy begin to turn once again. In order to do that the cutting of costs (including salaries) is going to be, very sadly, a huge factor in our survival.

One has to have huge sympathy for virtually everyone in this society. In some respects this dichotomy between public and private sector workers is a nonsense. The vast majority of workers in both sectors as well as employers in the private sector have had very little do to with the making of this crisis, apart from their implicit 'going with the flow' which almost everyone in Irish society is guilty of from the company which is over leveraged to the 30 year old who with a little foresight might not have signed up for the 40 year mortgage in the first place. However, sympathy and empathy are only going to get you so far. There is plenty of blame to be given but blame is not going to save our economy. While we talk and talk and talk the share value of Irish banks is still declining at near 10% a day, capital outflows continue at a high level. These banks may not last another two weeks. Of course nobody has much sympathy for the plight of these banks but if (when?) they do go bust, people might suddenly realise how little the pension level in the public sector and salary cuts in the private sector actually affect them in comparison to what lies around the corner.

Thanks for that post johnfás - a lot of thought for food there.

I'd be into the country trying to push for self-sufficiency to be honest. I'm of the mind it's more and more possible to try to do that as technology and machinery get better, cheaper, more available and as other human and social systems get scrutinised, updated and employed. In the world at large a self-sufficiency movement could be swelling - I see this as instrumental in preserving an endangered environment, as promoting democracy and fairness and justice and as a natural consequence of the history of human ingenuity.

We've enslaved ourselves to over a trillion euros in personal, national and other debt though - that's something that's likely to wipe out any ideas we have of self-sufficiency for the moment unless there was a massive effort on a warlike footing to repudiate debt, preserve the infrastucture we have, start building a self-sustaining economy and an equitable and just society and then slowly heal up international relations with those whose debt we have repudiated. We'd probably need to start trading with other pariah countries who might be able to trade with us for the things we'd not be able to produce here - oil and oranges. I wouldn't be holding my breath for any of this but it's an interesting thought.

At best we can try not to become more enslaved to debt and try to make sound judgements as we go forward. The equity vultures looking at Anglo are starting to give me the creeps now. I think the country should watch those vultures like a hawk.

I'll second that.

Great post from johnfás too.

We are all going to suffer now for the madness of the last (half-)decade. The main thing is that everyone suffers according to their capacity to bear it and that we don't screw sectors of the economy likely to serve as drivers of a recovery. Squire has had a lot to say on this point. I think we can all agree that property/construction speculators need to be taxed to within an inch of their lives before we start cutting language support teachers and special needs classes. Nobody needs three houses. Those who have them can afford to lose them before traveller children can afford to lose educational supports.

I'm with you there Audi. I must say that I both appreciate and understand Johnfás' points too.

Philosophically speaking, as an anarchist, my views on this are pretty easilly gauged. And in the final analysis, particularly when considering those who disagree with me, I must confess that it falls to mere opinion.

However, I'm a real stick in the mud for logic. And I must argue that this question of self sufficiency does not stem exclusively from my philosophy and politics. It stems much more from my ideas on efficiency. I believe that this country has the potential and the ability to be self sufficient with regard to food, water, shelter, education and health (though drugs etc. would still need to be imported for the foreseeable future). The most efficient arrangement that can see to the distribution and provision of these essential needs is via self sufficiency. And I've never seen an argument that would suggest otherwise. Now, if that argument is a given, then it must be considered that we deal with the rest of the world from a very inefficient standpoint and that each and every interaction thereafter, involved with the specifics I've mentioned, adds to the inefficiency, even if it satiates needs. Therefore, all politcs aside, the most logical pathway to be followed in dealing with the rest of the world, is one in which the journey begins from a self sufficient position. To complicate matters, most other countries are in the same position as ourselves, this imo is a multiplier with regard to inefficiency.

Hermes wrote:

...I believe that this country has the potential and the ability to be self sufficient with regard to food, water, shelter, education and health (though drugs etc. would still need to be imported for the foreseeable future)....

The cold truth is that if you cannot be self sufficient in energy terms then you cannot be self sufficent in any other terms. My guesstimate is that we are at least 40 years away from being self sufficient in energy terms.

coc wrote:

The main thing is that everyone suffers according to their capacity to bear it and that we don't screw sectors of the economy likely to serve as drivers of a recovery. Squire has had a lot to say on this point. I think we can all agree that property/construction speculators need to be taxed to within an inch of their lives before we start cutting language support teachers and special needs classes. Nobody needs three houses. Those who have them can afford to lose them before traveller children can afford to lose educational supports.

I agree with you morally and philosophically. However, johnfas is right that it is fantasy to believe we can recover without making painful cuts. Everybody says we need to make cuts but the second anything is cut in health, social welfare or education - the big drains on the public finances - the same people cry blue murder.

I am sorry but I think that is what your post does. It's a kind of cognitive dissonance. The Government could do their best to protect growth and to make the cuts that would least hurt the vulnerable. However, once the politicians touch the vulnerable at all they will be subject to accusations of eating your young. That is why I do not believe FG and Labour when they say they are willing to row in with the Government. They will take the children and travellers into their arms until they get into the government. By then things will be so bad that people will accept any measures at all. It will be VAT on children's shoes all over again except in reverse.

The whole construction industry and all who were reliant on it, tens of thousands of people are all on their knees already subject to negative equity. Let's be clear about this, you want to tax people who are in debt on assets that they cannot sell to pay the tax. So, many people who are in the negative equity trap will now be subject to taxes and penalties increasing day by day which they have no hope of paying.

This may prompt banks to foreclose as the borrower's ability to get back on his feet is scuppered by the tax. It might cause more creditors to enforce debts and force company wind ups and liquidation as the people they are dealing with will become less able to repay loans.
This could prompt more fire sales, thereby further devaluing the banks loan books. If the tax is payable before the borrower gets his money then it further screws the banks asset values. If we can sustain then it might be a great way of accelerating property prices ot the floor. On the other hand, it seems highly unlikely that we could sustain it.

I think that perhaps a new tax is desirable which is linked to positive equity in assets and/or net income. We need to get at those who have assets and large net wealth. However, it is hard to see how that would be workable and how it would not promote a further false economy in property, so we will probably have to stick with income tax no matter how pleasant taxing "developers" sounds to the baying masses. Whatever about the developers at least they (as opposed to property speculators) actually took business risks and employed people. They might move into other businesses and employ people again if they can get up off the floor.