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

So were we all impressed by the Taoiseach on the PK LateLate? I thought he dealt well with the little pryings of Pat - he's right - it's a matter of access to credit because there's a shitload of goods out there to be bought. One of the questions must be whether can we supply work to ourselves which is not based on erecting concrete structures.

He did say that Ireland isn't a building site with a flagpole - I'm stuck for what more there obviously is but I'm sure he's right-ish.

If we can only buy on credit we are up s**t creek sans paddle.

cactus flower wrote:

If we can only buy on credit we are up s**t creek sans paddle.

Yeh, along with the rest of the West. Maybe the Bible and the Muslims are right about usury.... upon which our entire financial system is based... Don't see this one sorting itself out for quite some time.... but what is the alternative to the current system??

expat girl wrote:

cactus flower wrote:

If we can only buy on credit we are up s**t creek sans paddle.

Yeh, along with the rest of the West. Maybe the Bible and the Muslims are right about usury.... upon which our entire financial system is based... Don't see this one sorting itself out for quite some time.... but what is the alternative to the current system??

Douthwaite wrote a book "The Growth Illusion" that didn't convince me. But I am sure that there are inherent problems with a system based on growth, loans and usury. I don't think we should expect there to be an immediate answer on how to replace free market capitalism. I don't think Keynesianism is a replacement, it is just putting off the evil day by printing money and creating inflation. There were serious problems with the central command economy in Russia, from what one hears although I'm not knowledgable about it.

Every previous system has reached a sell-by date, so there is inevitably one for the free market economy. I suppose if we want an alternative, we'll have to do the work to come up with one.

**see cactus post immediately above

expat girl wrote:

cactus flower wrote:

If we can only buy on credit we are up s**t creek sans paddle.

Yeh, along with the rest of the West. Maybe the Bible and the Muslims are right about usury.... upon which our entire financial system is based... Don't see this one sorting itself out for quite some time.... but what is the alternative to the current system??

Lower interest - you said it already - Mohammed Achmed Economics. Already old Tom Parlon is talking about cheaper money for putting glass wool up on your ceiling - there will be an end to the building of houses we need and then what'll we do? We'll have to adapt them even more to ever fine criteria we place on ourselves. Backgarden windmills next.

Auditor #9 wrote:

Already old Tom Parlon is talking about cheaper money for putting glass wool up on your ceiling - there will be an end to the building of houses we need and then what'll we do? We'll have to adapt them even more to ever fine criteria we place on ourselves. Backgarden windmills next.

in this case, i think Parlo is onto something. Builders get jobs to do and pensioners get less high utility bills. Our balance of payments benefits... we import energy and this will still be true after they bring the Mayo gas ashore. This work is essential, I think the Govt needs to fund this one. After all, it isn't trying to stoke or re-start the bubble.

Builders could usefully be improving the energy ratings of buildings. They could also be constructing renewables networks. They had better learn how to stop dislodging blanket bogs before they do any more though.

Government could buy flats and houses at cost at the moment if they had their heads screwed on (not in Leitrim please) and house people off the housing lists.
They could also build schools.

When we are working out what these things cost we should factor in the cost of keeping skilled building workers on the dole.

Hear hear to all the above....they should keep Transport 21 on the agenda too. Electrifying our daily routines might be strategically important...more Luas and Dart purlease

The virtue of electrifying is that different renewables can be fed into the grid.
Electric buses would be the best bet in Ireland imo as we live far oo spread out for rail to be economic.

cactus flower wrote:

I don't think we should expect there to be an immediate answer on how to replace free market capitalism. I don't think Keynesianism is a replacement, it is just putting off the evil day by printing money and creating inflation. There were serious problems with the central command economy in Russia, from what one hears although I'm not knowledgable about it.

Every previous system has reached a sell-by date, so there is inevitably one for the free market economy. I suppose if we want an alternative, we'll have to do the work to come up with one.

Dont know about that. The free market economy has been with us since money was invented. Its probably the reason why money was invented.

The only way we can replace the free market system is by replacing money. That requires a radical shift in philosophy. If we dont do it(?) for money, what do we do it for?

Johnny Keogh wrote:

cactus flower wrote:

I don't think we should expect there to be an immediate answer on how to replace free market capitalism. I don't think Keynesianism is a replacement, it is just putting off the evil day by printing money and creating inflation. There were serious problems with the central command economy in Russia, from what one hears although I'm not knowledgable about it.

Every previous system has reached a sell-by date, so there is inevitably one for the free market economy. I suppose if we want an alternative, we'll have to do the work to come up with one.

Dont know about that. The free market economy has been with us since money was invented. Its probably the reason why money was invented.

The only way we can replace the free market system is by replacing money. That requires a radical shift in philosophy. If we dont do it(?) for money, what do we do it for?

We do it for stuff, I suppose - the necessities and enjoyments of life. But then some people want to accumulate more than they can use.

I don't think there was a free market under feudalism, and there was money then. I think maybe money came to be when there were surpluses - that's something that came about with agriculture. But markets were very heavily controlled and regulated.

There are posters on this site better able than me to talk about how the free market is limited in all kinds of ways. Then we have the Islamic model without interest, and attempts at central command economies. I'm not going to pretend I know much about these things now, but I'm hoping to learn.

Johnny Keogh wrote:

Dont know about that. The free market economy has been with us since money was invented. Its probably the reason why money was invented.

The only way we can replace the free market system is by replacing money. That requires a radical shift in philosophy. If we dont do it(?) for money, what do we do it for?

Ye could get could an interesting discussion going out of this one alone - could there be an end to the free market model? As Fannie and Freddie go tits up, Anorakphobia over on p.ie thinks it might be:

Anorakphobia wrote:

http://www.bloomberg.com/apps/news?pid=20601087&sid=azJ2NQoKxMnE&refer=home

After weeks of speculation the US Federal Reserve made their move in the early hours, announcing they were taking over Fannie and Freddie.
As far as I am concerned this is the end of free markets.

This is anathema to everything I ever learned in academic or professional life.
A government stepping in to support markets collapsing with financial alchemy again about to be used to lumber tax payers with the hundreds of billions price tag.

For what?
So a few big investment banks temporarily get off the hook and the whole swindle is allowed to continue.
With what?
God knows, (probably some bond issue with as much value as a bag of magic beans) but let's be sure of something, the man on the street is going to get it in the ass.

These people have fcuked with all our lives before any of us were even born but the stakes in their ludicrous roulette game are now cataclysmically high.

http://www.politics.ie/viewtopic.php?f=161&t=40708

As we speak about it here now and then, with regulation and government limits placed on some industries in order to include the 'externalities' in the price - is there really such a thing as a free market on a wide scale now? It's a benign mechanism in theory, or at least a neutral one once externalities are accounted for - i.e. it favours no creed, class or colour but is mixed up with this evil spectre of profit.

Profit is what exactly? A hedge against time, compensation for effort, an incentive? In an ideal village where everyone has a seriously durable house, everlasting clothes, magic televisions and other entertainments that never break down, an endless supply of energy from the sun, all they need to do is be able to produce food. A farmer employs 4 people and the five in total (farmer plus employees) produce enough food for more than the 100 people in total who live in the village. The other 95 do nothing but technology is so good that the five can do that. Is it unacceptable to think that the farmer and the four will all take a good bit more than the bare necessities that the other 95 get? (maybe they trade with another village and people from there come and clean the farmers house and is paid in the extra food. The other 95 have to clean their own houses)

Should there a limit to the volume of profit a company or individual can make? Some institutional budgets bizarrely come with an expiry date i.e. they must be used up by the end of the year .... does this reflect the reality that certain items do not last forever?

Profit represents the surplus value added by labour.


Monday might be interesting.

cactus flower wrote:

Profit represents the surplus value added by labour.

Really? Is that all? That doesn't sound like a lot.

Well, you buy a bunch of ingredients and a kitchen, you bake a cake, and sell it. Its the work of baking it that makes the difference between the price of the ingredients and what you get for the cake.

cactus flower wrote:

Every previous system has reached a sell-by date, so there is inevitably one for the free market economy. I suppose if we want an alternative, we'll have to do the work to come up with one.

We are not at the end of free market economics, free market economics are simply not being allowed to work. Everywhere around the world, governments are falling over themselves to intervene into markets they lack the skills with which to engage causing adverse reactions, moral hazard, inefficiency and the reward of failure.

If more businesses were let simply die, the calls for intervention ignored, the raw power of the market let do its work and governments concentrate on what they're good at, the whole problem would be dealth with much quicker.

The basic idea that a competitive market where freedom of entry and exit exists creates more wealth, more employment, better products and higher productivity holds firm. We must maintain that principle in our economic policy since it restrains inflation, improves jobs growth, enhances the consumer goods market and lifts our competitiveness by raising productivity standards. If we lose sight of that, we are committing ourselves to economic retrenchment in the long term.

I am not calling for a total free-for-all, but for a very great degree of openness and flexibility in our economy which is essential to see ourselves through this current maelstrom and emerge having preserved most of the economic gains of the previous era of expansion.

Free market capitalism allied to a well-developed liberal democracy is the best recipe humanity has ever found to combine prosperity with progress. Upsetting that mixture with continual interventions, stimuli, credit windows, stamp duty waivers are going to be destructive and merely forestall the necessary corrections which will fundamentally restructure our economies and ready them for the next upswing.

Is the US government wrong to intervene in Freddie and Fannie then, iyo?

cactus flower wrote:

Is the US government wrong to intervene in Freddie and Fannie then, iyo?

Freddie Mac and Fannie Mae should never have happened if the US government had been truer to free market principles before, if they had completely privatised these entities years ago, this sort of crisis wouldn't have unfolded.

It's like forest fire brigades. Some of them are so successful at putting out the small fires that, when the large ones come, they burn far stronger than ever before because they have so much fuel. This is because the small fires weren't let burn out by themselves. Nature put those small fires in as a natural restraint against large fires. If the brigade simply let the small fires burn then the large fires would be more manageable.

Freddie and Fannie are as a result of a history of over-intervention and government meddling in what should be a properly functioning free market. If the market had been sufficiently reformed years ago then the federal government wouldn't need to countenance what they are doing now.

Ard-Taoiseach wrote:

cactus flower wrote:

Is the US government wrong to intervene in Freddie and Fannie then, iyo?

Freddie Mac and Fannie Mae should never have happened if the US government had been truer to free market principles before, if they had completely privatised these entities years ago, this sort of crisis wouldn't have unfolded.

It's like forest fire brigades. Some of them are so successful at putting out the small fires that, when the large ones come, they burn far stronger than ever before because they have so much fuel. This is because the small fires weren't let burn out by themselves. Nature put those small fires in as a natural restraint against large fires. If the brigade simply let the small fires burn then the large fires would be more manageable.

Freddie and Fannie are as a result of a history of over-intervention and government meddling in what should be a properly functioning free market. If the market had been sufficiently reformed years ago then the federal government wouldn't need to countenance what they are doing now.

But weren't Freddie and Fannie formed in the first place because people didn't have homes ?

cactus flower wrote:

Is the US government wrong to intervene in Freddie and Fannie then, iyo?

Yes, and so with Northern Rock and all government interventions since time immemorial. However fannie and freddie were themselved vehicles of illadvised market invervention. They shouldn't have been formed, had they not faffed about with the market prior to their creation then being necessary we wouldn't be in this mess.

cactus flower wrote:

But weren't Freddie and Fannie formed in the first place because people didn't have homes ?

Well, they outlived their usefulness ages ago and exist as a distortion in the US mortgage market. The European mortgage market is perfectly privatised and operates more efficiently and effectively. Fannie and Freddie should've been abolished quite some time ago so that the US mortgage market could more effectively emulate its European counterpart.

cookiemonster wrote:

cactus flower wrote:

Is the US government wrong to intervene in Freddie and Fannie then, iyo?

Yes, and so with Northern Rock and all government interventions since time immemorial. However fannie and freddie were themselved vehicles of illadvised market invervention. They shouldn't have been formed, had they not faffed about with the market prior to their creation then being necessary we wouldn't be in this mess.

Is it your belief that the under a free market people would be adequately housed?

cactus flower wrote:

cookiemonster wrote:

cactus flower wrote:

Is the US government wrong to intervene in Freddie and Fannie then, iyo?

Yes, and so with Northern Rock and all government interventions since time immemorial. However fannie and freddie were themselved vehicles of illadvised market invervention. They shouldn't have been formed, had they not faffed about with the market prior to their creation then being necessary we wouldn't be in this mess.

Is it your belief that the under a free market people would be adequately housed?

Under no market conditions would everybody be housed. But there would be a position where the risks to a greater element of society in a myriad of ways would be lessened in a more free market. We will see on monday how this messing about withy fannie and Freddie will have knock on effects across the US economy.

cactus flower wrote:

cookiemonster wrote:

cactus flower wrote:

Is the US government wrong to intervene in Freddie and Fannie then, iyo?

Yes, and so with Northern Rock and all government interventions since time immemorial. However fannie and freddie were themselved vehicles of illadvised market invervention. They shouldn't have been formed, had they not faffed about with the market prior to their creation then being necessary we wouldn't be in this mess.

Is it your belief that the under a free market people would be adequately housed?

If they can't afford or arrange a mortgage for a house, they can rent(at a considerable discount to mortgages given the depressed nature of the market) or get social welfare housing or live in accomodation provided by an NGO such as Focus Ireland or the Simon Community.

I'd say that that is the proper order of the accommodation market.

Is it proper order for some people to live here, and other people to own three or four houses for their personal use ?