Realistic Economy News thread

Villa05 wrote: »

You are more intelligent than that. Debate the points made rather than deflecting to a completely different point

That is the point. The IMF, made up as it is of professionals with at least some understanding and working knowledge of economics, has never advocated that sovereign states should welsh on their debts. I presume that's why you conceded the point rather than engage in a vain effort to counter it. But others - whose knowledge of both finance and economics could most charitably described as "limited" - made those calls in respect of Ireland at the time we were given the next best thing to a soft landing by the Troika in 2010.

As others have pointed out, it's better for governments to manage their affairs intelligently and avoid getting into a fiscal crisis in the first place. But once they do get into trouble, the solution is not to walk away from their responsibilities, or to wish for help from the magic money fairies. The solution is to get stuck in and carry out the adjustments needed so as get public finances back on track.

That's what Ireland set out to do in 2010 - with, it cannot be denied, a huge measure of help from the EU and the IMF. And the responsible approach has been largely a success, especially when one considers the bleak prospects we all faced in 2010. That's realistic. It's also news, or at least it's news to some less well-informed folk, not least those who cried "default" back in 2010-2011.

Villa05 wrote: »

Can you justify the transfer of private bank debt on to the shoulders of people who had no hand act or part in creating it.

Yes. Easily. Can't you? Seriously? :eek::eek::eek:

Villa05 wrote: »

would it not be too difficult to negotiate a better debt resolution for Ireland....

Leaving aside the fact that the above is a slogan rather than a meaningful economic expression, it displays precisely the same economic and financial lack of understanding that was displayed so often on this forum in 2010-11, that was displayed in the responses of many people on boards to the Syriza-inspired crisis in Greece, and that has been so often displayed in recent years in the responses of so-called "socialists" to the issue of public debt.

Firstly, Ireland has already had a "better debt resolution"; so has Greece. Moreover, Ireland will get further improvements in the future; so will Greece. To refer to the words of the song.....

..."it ain't what you do, it's the way that you do it."

Secondly, if you desperately need to take a short cut to "better debt resolution" that's up to you, but it means taking from someone what is rightfully theirs. You cannot destroy a liability without also destroying an asset; the fact that the asset isn't yours might make it easier for you to pretend it isn't being destroyed, but it is.

Thirdly, the slogan above isn't an economic one; it is a political one. In 2010-11, many people - including many ill-qualified people on this forum - advocated that Ireland should repudiate its debts. The reason they advanced was not political, but economic. The reason they advanced was that the sheer size of the debt Ireland was taking on would be unsustainable and would grow and grow unless cut off and prevented from doing so.

That economic argument has been proven incorrect in Ireland's case, as can be seen from the fact that the debt burden has fallen significantly over the last two years.

The political argument is a different matter. If you wish to advance a political argument that says the banks' debts should never have been socialised in the first place, you go ahead and fill yer boots. Whether the scrapping of liabilities and the associated destruction of assets is acceptable or not is a matter for political debate......


.....but the economic arguments put forward by the naysayers in 2010-11 have been proven wrong.

Villa05 wrote: »

Again that is not what was proposed. The IMF are the world experts in debt resolution and they were opposed to socialising bank debt.
It is not leftist ideology, it goes against the fundamentals of capitalism.
The economy is growing now, but the policy of socialising these losses meant that growth was slower in coming.
We did not get improved deals because of our negotiators, we got them by jumping on the back of Greece 's extra concessions.
The interest burden of our debt has been mainly reduced as a consequence of the actions of Mario Dragi.
Our growth is down to the resilience of the irish people but a lot is down to favourable exchange rates with dollar and pound, these are temporary.

Complacency is building once again in the economy as rather than concentrating on repairing the damage we are reverting to habits that brought the country to its knees

Interesting as the above might be, none of it is connected to the point I made. I appreciate that you regard it as important - and I stress that I'm not arguing against your view of it as being important - but to have any direct relevance it would have to be set out in a debate prior to the decision to socialise the bank losses. Once that decision was made and the bank losses became part of government debt, debating points about whether or not the decision should have been made are intellectually interesting in a discussion about what the economy might have been like if it weren't the way it is, but they don't offer much value in terms of an analysis of where the economy is or where it is going.

And again I have to repeat the point, lest sight of it be lost: The economic argument people made in 2010-2011 for welshing on our debts has been shown to be wrong by the fall in the debt burden over the last couple of years.