Alan Barrett from the ESRI on moaning Ireland this morning saying too much too soon. Worried about a deflationary spiral of low growth and high unemployment
The Beggar on later saying the same thing.
Tony Foley (economist from DCU) saying slow death or quick death not much different. There’s a whole heap of bank costs that will start to come due from 2014 on, so we need to have our house in order by then.
Anyway, Mr. Foley sounds like a sensible fellow to me, but what do the rest of you think?
You know what I think. Although, I do admit that not liking the proposed solution doesnt mean its not the only option we have.Does that mean we can sum up your position as “fast death” with the hope of resurecction on the third day?
edit: the only alternative I see is a slow death Japan style. Which, as I’ve said before may have been the only option the Japanese were prepared to take - the only one open to them. Whatever we do in saying that quick death is horrible, we need to be aware of how horrible a slow death is.
The ESRI afe falling into the “I’m a stupid economist” trap.
It’s all about what’s to come. Nothing about how we got here.
All the damage and blowing up happened between 2000 and 2008 (including the Good Friday… Oooops! I mean Croke Park Agreement).
Now we just reap the whirlwind.
ESRI should be stating why we are facing such enormous deficit reduction and calling for a co-ordinated approach - no more energy prices rises - in fact they have to fall by X% to match the deficit reduction, etc.
In fairness, saying that we are facing into at least 3 years of sky high unemployment, tax hikes, scrums at the departure gates of Dublin airport, massive social problems is not the most palatable of messages. At least Osborne could claim that the impact on growth resulting from cuts can be offset by savy use of monetary policy. Our lot cant even do that.
Politicians have to give people hope. its not easy under these conditions.
I agree with that too. I dont like saying it but also about how this affects consumer sentiment and confidence. So if and when the political establishment decide in unison to tell the truth here are 2 possible reactions from the masses:
Thanks for telling us the truth. We know where we stand now, understand that there is worse to come, but there is light at the end of the tunnell. Which arguably could engender a form of confidence.
Holy shit! I didnt realise it was that bad. Im going to stash every penny I have under the matress.
There’s plenty more in the piece and I think it is worth a read. For us, I think we can’t avoid structural reform. And we can’t avoid the absolute debt levels that both the banks and the deficit have left us with. Interest rates will not always be favourable and this is an issue both for households and for the state. So what should we do?
Incentivise saving to reduce debt - switch from mortgage interest relief to capital repayment relief. Time-limited (say five years at maximum rate tapering off over the next five years), ceilinged, not tax related (i.e. you get the saving however much tax you pay). Not open to new mortgages. This should collapse the stamp and property arguments. Leave DIRT where it is - aside from anything else, the banks need the deposits.
Private sector jobs. How? Dunno. The smart economy thing is a bust. We need non-smart jobs.
It should never be worth your while not to work. Benefit ceiling, linked to a sliding scale of benefit, so your benefit reduces as you earn more, but you are always better off.
Flat rate social security charge on all income - the social security fund is deeply in deficit- whether from the state or private income.
Universal pensions (as I’ve outlined before).
Universal health. Administered by private companies - effectively privatise the billing and admin side of the health service, while at the same time only having a public health system. Increase the effective level of the health levy in the social security charge as a result.
Send this post to Government buildings and force them to implement the above. What a breath of fresh air. Finally someone who understand the mechanics of how it works and knows how to articulate it what changes need to be implemented. On point 5 and 6, may I suggest some smart heads in the government (are there any?) are sent to teh Netherlands and try and copy what they do there. It does not have to be difficult. Just go and see how others have done it.
Oh and I would not be worried about what the ESRI say. They do not have the manpower nor the models to predict anything properly. It is all guess work. Same for DoF and CSO. I wish all of you could have a look at how the CSO for intsance do their data gathering and more interestingly what econometric models they use… It would worry you.
I think this is a bit of a case of the fleas arguing over who owns the dog…
Our shower of gobshites can’t restart the economy, the last ten years was a mirage, a property bubble that hooked 20% of the workforce into an unsustainable situation which produced tax revenue that the Government misused, & that we’re now going to have to remove from our spending.
If we aren’t to go Japanese we have to prepare the country to take advantage of any revival of the European economy. That means cutting our costs so that we start to become attractive to jobs investment & growth when & if this revival happens. I don’t see how we can drag this out, we need to adjust our spending to our income ASAP !
How much can we save by cutting off funding to the ESRI?
They are a private sector organisation, why should they receive taxpayer subsidy?
Their function as yes men for the government of the days’ policies has come to an end,the EU/ECB central powers have decided the they want to save the euro and our economic policy will be dictated within that framework for the next few years.
Agree completely - these guys were talking about the soft landing months after the economy had hit the ground nose first. Fitzy has been left in the background on this one and the they pushed Barret out front.
What was constructive about what they led with today - nothing but a public sector union view point.
Some things we need to do
Overhaul the health spend by cutting high end wages, close the VHI, cut the incentives for prescribign high cost medicines
Cap public sector pensions at €80k - including related quangos such as NTMA and semi-states - the scale of somers pension package is shocking
Encourage heavy investment now in green energy via semi-states ie build the wind-farms now etc Ensure good connections to europe so we can sell them energy
Cut the quangos including the likes of the central bank (we do not need them)
Cut reliefs such as pensions - we can restore late
Get incentives to encourage 25,000 FTBs into the market in 2011 and put a floor on property prices. Correction at 50% plus is probably far enough. The spiral downwards from here is more damaging than the benefit - it is discouraging spending on a vast scale
Give internet related businesses a company PRSI holiday for 10 years - need to get that sector to ireland
Cut the red tape
Simplify the tax system completely
Provide finance to the irish exporters (which would produce jobs with our new competitiveness) and FX exposure cover and possibly credit insurance
Good points generally from Maine08 there. Just a point of information to add to what he’s saying
Now I haven’t seen the numbers for this. But I believe the thinking on giving people brand-name medicines is that they are higher quality and get you better faster and get you out of a hospital bed faster so that it is vacant for the next patient who needs it. As far as I know this isn’t in doubt. The doubt would be if the price is justified - if it gets you better fast enough to save money to the public purse overall. I have no clue if there has been any cost-benefit analysis on this - I’m just saying that band-name medicines might not be a bad idea in spite of their higher price.