What if we all agreed to spend more ?

MooseJam

So is the recession just in our heads - we all go wooo theres a recession better not spend any money and businesses go bust and people lose their jobs and the recession gets worse and we all go wooo it's getting worse better not spend etc etc

what if we all agreed to spend lots more money - recession over

am I being overly simplistic here ?

towel401

that is exactly how it works.

People think things are going to be bad, and therefore they are already bad.

Also if people think shares in some company are going to go up then they have already gone up.

galwayrush

Give me the extra money and i'll spend it.:)

andrew

If we spend more on consumption and less on investment, then that means less economic growth in the future. So what we need to be doing is investing in goods which will contribute to the economy. What goods? Not a clue?...this is coming from 3 months of economics so i'm probably wrong.

Shacklebolt

A lad named John Maynard Keynes has beaten you to it Im afraid.

andrew

Lets do what Keynes says then, agreed?

Edit: wait..no...lets not do what Keynes says?

phasers

I blame TV3 news for Stephen

galwayrush

So, in the UK, VAT was reduced to encourage more spending to help the economy recover from Recession, and we here in Ireland have a Goverment who increased VAT for, well,............... why exactly?:rolleyes:

earlyevening

MooseJam wrote: »

what if we all agreed to spend lots more money - recession over

Ok, you start. (I'll be here darning my socks and reusing tea bags).

brianthebard

I'm already in debt.

big b

MooseJam wrote: »

So is the recession just in our heads - we all go wooo theres a recession better not spend any money and businesses go bust and people lose their jobs and the recession gets worse and we all go wooo it's getting worse better not spend etc etc

what if we all agreed to spend lots more money - recession over

am I being overly simplistic here ?

Not at all.

Go out & spend your whack. If you suddenly find yourself unemployed, the Government will give you your money back.

galwayrush

I'm selling my lawnmower................:p

InkSlinger67

andrew wrote: »

If we spend more on consumption and less on investment, then that means less economic growth in the future. So what we need to be doing is investing in goods which will contribute to the economy. What goods? Not a clue?...this is coming from 3 months of economics so i'm probably wrong.

Hehehe.....rookie mistake! :pac:

....wait! What does Economics mean again?

....preemptive, self-imposed /facepalm

deleriumtremens

ladies and gents, the reality of the situation still stands.....










































































colm and jim-im are still out there, existing!!!!!! ARGHHHH!!!!

ShooterSF

OP you better hope Stephen's all seeing eye doesnt spot this thread. He wont be happy.

Shacklebolt

andrew wrote: »

Lets do what Keynes says then, agreed?

Edit: wait..no...lets not do what Keynes says?

He is a divisive figure isnt he? Using Keynesian theory will either save the country or destroy it completely its all down to luck really.

brianthebard

Shacklebolt wrote: »

He is a divisive figure isnt he? Using Keynesian theory will either save the country or destroy it completely its all down to luck really.

So economics is actually just a dice roll and totally meaningless? Not surprised.

andrew

Shacklebolt wrote: »

He is a divisive figure isnt he? Using Keynesian theory will either save the country or destroy it completely its all down to luck really.

So what would the opposite of Keynesian theory be then?

Shacklebolt

andrew wrote: »

So what would the opposite of Keynesian theory be then?

Economic conservatism.

book smarts

We need to start producing goods for export again. Not services. The country is broke, so the last thing we need is to get into more pointless consumptive debt. It'll never happen though, because too many vested interests stand to lose. Just sit back and watch the train wreck...

BlitzKrieg

what if we all agreed to spend lots more money

depends what you spend it on I think?

If we all agreed to spend it on building new things it would save the current structure, but we are gonna run out of things to build at some point.

course the government was told this years ago.

brianthebard

book smarts wrote: »

We need to start producing goods for export again. Not services. The country is broke, so the last thing we need is to get into more pointless consumptive debt. It'll never happen though, because too many vested interests stand to lose. Just sit back and watch the train wreck...

Again? When did the country produce anything other than cattle? Dependency on TNC's isn't any sort of replacement for current economic trends.

hussey

Yes we should all spend more .. but how about 'investing' instead?

here is how it work .. you and 9 of your friends give me 500 euro each and then I'll tell you the secret to make 4500 in just days!

genericgoon

MooseJam wrote: »

So is the recession just in our heads - we all go wooo theres a recession better not spend any money and businesses go bust and people lose their jobs and the recession gets worse and we all go wooo it's getting worse better not spend etc etc

what if we all agreed to spend lots more money - recession over

am I being overly simplistic here ?

What money? Our banks are teetering close to the edge and have ridiculous loan to deposit ratios, which they are now trying desperately to cut. (This is one of the major reasons that our banks have become so reluctant to give out new credit and not just a lack of capital.) The interbank lending system is still clogged up and it will be a year or two yet till there is enough trust there for financial institutions to start lending to each other freely again. So the banks are trying to reduce their loans and can't get access to credit. Most normal Irish people are already highly in debt with credit cards, mortgages, loans etc. Our Government is already has very dangerous levels of debt which the EU are keeping a close eye on. At the moment, they're just trying to keep the public finances above water and with the still possible spectre of bank recapitalisation, the Government has good reason to keep its debts as low as possible.

So the question is, how can you increase spending if there's no money in the system?

swingking

nope we just do what the Government told us to do; tighten our belts.

MooseJam

genericgoon wrote: »

What money? Our banks are teetering close to the edge and have ridiculous loan to deposit ratios,

I don't get this, where did all the money go, banks lend it out to punters who buy houses, money goes to developers who deposit it in banks , thats what I would have though happens

are the developers just burning the money ? don't they give it back to the banks

Overheal

swingking wrote: »

nope we just do what the Government told us to do.

Yeah... becuase they havent been trying to convince us that the economy wouldnt go into recession for over 15 months now. And only admitted to it officially This Week.

ejmaztec

I think that the government meant that we had to tighten the belts around our necks - I see no trousers mentioned specifically. Those chinless inbreds never got where they are today by not being able to solve an economic problem.

yawnstretch

Economic problems summarized for all:

Trust betrayed, fear, system contracts like an animal. When we all chill out and spread the love all will be fine.

The end.

genericgoon

MooseJam wrote: »

I don't get this, where did all the money go, banks lend it out to punters who buy houses, money goes to developers who deposit it in banks , thats what I would have though happens

are the developers just burning the money ? don't they give it back to the banks

The problem is that cycle has come to an abrupt halt and now most of the developers are stuck with a whole load of housing stock that they can't shift. Not so good for the balance sheet when you have a large amount of capital tied up in houses which are rapidly losing their value. The large amount of unfinished and cancelled developments is pretty good proof that many developers did not see this coming, or at least didn't predict the scale the crash would take.

Also yawnstretch is pretty accurate. At its base, finance is based around trust and with that trust having had a huge hole pierced through it thanks to this whole sub prime mess, the whole world financial sector is taking a severe beating. The fact that so many Irish investors were so exposed just means we're going to have an even harder landing.

ronbyrne2005

We racked up a few hundred billion in debt over past decade. Thats what fuelled the economy with people borrowing huge sums to give to developers and their political wing FF who then lashed the money out at the public sector to win votes and builders, interior decoraters etc to build new property which employed builders etc at inflated rates who then spent their wages on everything from the bookie and breakfast rolls to pricey shirts, BMWs and bollinger.
If in theory we borrowed a hundred billion from the global markets tomorrow and gave everyperson in country 50k to spend on what they want(but they couldnt save it) then we would grow GNP or "grow de economy" in laymans terms by 100% next year. Now everyone would say, look at plucky rich little Ireland they are so amazing but when they look at our balance sheet they see the big national debt we have and the growth is seen for what it is, unsustainable and of poor quality.
You see the celtic tiger ended in 2001 and from then on the economic growth was based on a debt fueled economy, it worked because credit was cheap and upon joining the euro rates were kept even lower, but the growth was of poor quality and not based on exports and sustaible productive activities. We got another boost when the EU accession states joined in 2004 and a few hundred thousand people came here and boosted GNP as they had to rent and live here so GNP overall got even more distorted and probably fell on a per capita basis.
Anway , economys fooked for a long time.:pac:

dSTAR

Here's how the Aussie government have tried to stave off a pending recession. Firstly they pushed the local councils and City of Melbourne, Sydney, Brisbane or wherever to put up their Christmas lights and decorations early to artificially stimulate spending. Then they cut the official interest rate by one percent in the hope that home owners would go out and spend the extra cash. So far we are still afloat but that could go tits up at any stage.

Overheal

dSTAR wrote: »

Here's how the Aussie government have tried to stave off a pending recession. Firstly they pushed the local councils and City of Melbourne, Sydney, Brisbane or wherever to put up their Christmas lights and decorations early to artificially stimulate spending. Then they cut the official interest rate by one percent in the hope that home owners would go out and spend the extra cash. So far we are still afloat but that could go tits up at any stage.

isnt tits up a good thing in Australia?

dSTAR

Overheal wrote: »

isnt tits up a good thing in Australia?

Depends on if you are with the right sheila

gar32

Its like this things are moving fast these days with money, information people, business and even food etc etc etc. The cycle of up and down in peoples life just happens so lets just try get things moving down to the bottom fast. then start working (WORKING) are way back to the growth that will come as soon as the strong fight for their place in buiness. when the wake are gone. We will grow again.

So lets all spend the same but on good quality product's. Irish, European and the rest of the world in that order.

Happy living what ever money you have to spend

SimpleSam06

Shacklebolt wrote: »

He is a divisive figure isnt he? Using Keynesian theory will either save the country or destroy it completely its all down to luck really.

Keynesian theory, while important, is only a part of the current economic theories being taught at the moment.

ronbyrne2005 wrote: »

If in theory we borrowed a hundred billion from the global markets tomorrow and gave everyperson in country 50k to spend on what they want(but they couldnt save it) then we would grow GNP or "grow de economy" in laymans terms by 100% next year. Now everyone would say, look at plucky rich little Ireland they are so amazing but when they look at our balance sheet they see the big national debt we have and the growth is seen for what it is, unsustainable and of poor quality.

Even the positive effects would be a net negative, since all of the loans are just taken from future earnings, its not really bringing new money into the economy at all. It only acts as a stimulus when its put into positive things, like domestic industry and infrastructure. We had our chance over the last eight years, and it was royally blown by the government. We'll be a long time waiting for another opportunity like that.

gar32 wrote: »

Happy living what ever money you have to spend

Its a sad fact that the behaviour which is best to survive a recession (saving) is also the behaviour that will guarantee the recession gets worse on a larger scale. Theres nothing much that can be said without strong top down leadership.

gurramok

Private sector debt is nearly €400bn.

You cannot expect consumers to spend money they do not have!

BroomBurner

I'm ignoring that clown Lenehan from now on, he's a dimwit, shouldn't be in charge of our countries finances. Not taking any sort of advice from a TD, sure they know f*ck all about what living in the real world is like.

In short, I will buy only what I need, when I need it, and at the lowest possible price, in whatever country I can find it in.

MooseJam

gurramok wrote: »

Private sector debt is nearly €400bn.

You cannot expect consumers to spend money they do not have!

so we are all in debt and the banks have no money either, where the fupp is the money gone

Tigger

MooseJam wrote: »

so we are all in debt and the banks have no money either, where the fupp is the money gone

don't look at me http://bedzine.com/blog/wp-content/uploads/2007/06/hidingmoney.jpg

Quazzie

Money is only a representation of something else and can rise and fall in value the same way as gold, oil or any other commodity does

MooseJam

yes it can rise and fall but what about it's location, where is all the money we all had a decade ago now

slimjimmc

It's tied up in empty housing estates.

Exit

hussey wrote: »

Yes we should all spend more .. but how about 'investing' instead?

here is how it work .. you and 9 of your friends give me 500 euro each and then I'll tell you the secret to make 4500 in just days!

I would, but I don't trust a fella with my money who can't do basic maths.

Kipperhell

Say if you have money and are earning a lot, what should I do with my cash?

I think I will just pay off the mortgage early

iPlop

towel401 wrote: »

that is exactly how it works.

People think things are going to be bad, and therefore they are already bad.

Also if people think shares in some company are going to go up then they have already gone up.

What recession every shopping centre is jammers not just for christmas but for the last 2 months ,people may not be buying houses and thats what caused this recession.But people that are not connected to the financial,building envirioment are still out living normally.Ok yeah people are more cautious and I have friends that have been hit finacially pretty hard by this ,but all I see is people out spending their bollox off every day.So they are financially ok or their in DENIAL!;)

Húrin

MooseJam wrote: »

So is the recession just in our heads - we all go wooo theres a recession better not spend any money and businesses go bust and people lose their jobs and the recession gets worse and we all go wooo it's getting worse better not spend etc etc

what if we all agreed to spend lots more money - recession over

am I being overly simplistic here ?

We were spending on credit before. Spending money you don't have is bad and unsustainable.

OPENROAD

Septic Leper wrote: »

What recession every shopping centre is jammers not just for christmas but for the last 2 months ,people may not be buying houses and thats what caused this recession.But people that are not connected to the financial,building envirioment are still out living normally.Ok yeah people are more cautious and I have friends that have been hit finacially pretty hard by this ,but all I see is people out spending their bollox off every day.So they are financially ok or their in DENIAL!;)

I would say lots of people are paying with their flexible friend.