How fubared are we?

eamonnm79

At present our national debt is 50 billion.
At present the government believes the gap between our income and expendature is about 25 billion (57-32billion).
It is commiting to get this back on track within 5 years.
So lets have a look at the best case scenario.
25 billion deficit this year, 20 next, 15 the year after, 10 the next and then 5
presuming we can actually manage this level of cuts.
Thats a total of 75 billion on top of the 50 billion plus interest.
Add to this that the GDP is shrinking. Add to this that our intereest payments are going up due to our poor credit worthiness. Add to this that cuts of 5 billion per year will cause unemployment to increase and peoples living standards to decrease rapidly.
Add to this that the government is pinning its hopes of recovery on a US upturn that as far as I can see is based on the assumption that the US can continue to get away with printing their way out of their problems (this is based on the fact that china cant call in their loans to the US as it would cause global catastrophie).

Somebody please tell me im wrong and that we are going to be back stronger than ever.
I need someone to show me economic indomitable Irishry!
Oh feck it I think I will just try to get laid alot for the next few years and hope for the best!

Fratton Fred

I'm guessing 79 is the year you were born right? don't listen to all the doom and gloom. so what if the country goes bust, it won't really affect you.

We are going through a change. We have all had it very very good for the last 10 or 12 years, house buying, new cars, new furniture, all that is happening is that all this consumerism will end.

People who buy their first house will have to accept offers of second hand pots and pans, an old sofa and watch a portable TV for the first few months, like they used to.

first time buyers should never have been able to go out and buy a brand new Plasma TV, New Blu Ray player, new sofa, new beds etc on top of their over inflated nre property, but they did.

That is all going to come to an end for a few years, just like the two holidays a year and the brand new 4x4 to park outside the new flat full of new furniture.

Life is going to get harder, but it was ridiculously easy to begin with.

eamonnm79

Damn you are good! 79 spot on. Can you guess my star sign too?:)

Fratton Fred

eamonnm79 wrote: »

Damn you are good! 79 spot on. Can you guess my star sign too?:)

I only say that because those of us with an extra ten years life experience (I sound like an old git don't I??) have seen a recession before.

If you can tough it out, keep your head down and are lucky enough to keep you job then a recession is not as bad as people think.

Ireland will not go back to the 80s, the country has moved on enough for that not to happen.

Diarmuid

Fratton Fred wrote: »

I'm guessing 79 is the year you were born right? don't listen to all the doom and gloom. so what if the country goes bust, it won't really affect you.

Even if you were born in 1920, you have never experienced Ireland going "bust", so I wouldn't go handing out advice just yet.

is_that_so

Yep agree with Fred on this. A lot of the future disaster is based on what I call If-then economics. Followed to logical conclusions we could end up run by the IMF but it needs an awful lot of variables in place first. Yes the whole thing could collapse completely in the same way as we could get landed with over €400 billion bill because of a complete collapse of the banking system.

I think however Fred's point is that those who lived through a longer em lifespan, have more coping mechanisms for this type of thing. As my brother commented , in his own workplace it's the under 35s who are panicking. That said we are in a very bad place but one we can come out of provided the government adopt the right kind of approach. And that's where most people are rightly worried because they've shown themselves to be utterly useless at figuring out what the right kind of approach is so far.

mike65

I guess the under 35s are pannicking cos they are most likely the ones who bought property at the height of the market with 100% 40 year lead weights.

Fratton Fred

People have to get used to the fact that in general life is not that easy. Ok, the last ten years money has been easy to get, but the simple fact is, money has to be repaid. If you borrow more money than you are likelt to earn in the next 40 years then you will struggle more than most. Keep it simple and within budget and you will be fine. That never has and never will change.

ardmacha

People who buy their first house will have to accept offers of second hand pots and pans, an old sofa and watch a portable TV for the first few months, like they used to.

first time buyers should never have been able to go out and buy a brand new Plasma TV, New Blu Ray player, new sofa, new beds etc on top of their over inflated nre property, but they did.

Good point Fred. I had some pretty decent furniture that came from a deceased aunt. I offered it to a recently married young couple who had built a large house as something to furnish up the 4th bedroom in the interim until the house was fully stocked. They seemed to prefer just going to a furniture emporium and buying lots of glitzy new stuff on hock.

The world economy will recover, it always does and surely something was learned from the 1930s. If Ireland concentrates on doing things of some actual use, rather than just selling overpriced houses to each other, then we can take advantage a growing world trade as we did in the 90s. In such circumstances the government can cut the deficit and hopefully they have learned some lessons.

SkepticOne

is_that_so wrote: »

Yep agree with Fred on this. A lot of the future disaster is based on what I call If-then economics. Followed to logical conclusions we could end up run by the IMF but it needs an awful lot of variables in place first. Yes the whole thing could collapse completely in the same way as we could get landed with over €400 billion bill because of a complete collapse of the banking system.

Caution here is also in order. I remember the possibility of the bursting of the housing bubble (incidentally the cause of much of our current troubles) also being dismissed as if-then economics even though it was fairly obvious at the time that the housing market was on its last legs.

is_that_so

Indeed and that was of our own making, mostly fuelled by sheer foolishness. Much of our recovery from this hinges on factors we (thankfully) don't control. The commentary on the housing bubble did have a number of "dissenters" whereas there is no suggestion nor belief IMO in any quarter beyond occasional dubious rumours from across the water in the UK that we will become an IMF fiefdom. For now there is no evidence that this will happen.

Tech3

Fratton Fred wrote: »

so what if the country goes bust, it won't really affect you.

I thought if the country goes bust, the deposits in our bank accounts are worth nothing? Is it even safe now to keep money in your bank account in fear the country might go bust?

SkepticOne

is_that_so wrote: »

The commentary on the housing bubble did have a number of "dissenters" whereas there is no suggestion nor belief IMO in any quarter beyond occasional dubious rumours from across the water in the UK that we will become an IMF fiefdom. For now there is no evidence that this will happen.

I think the key lesson is that we should put aside what this or that person is saying. Whether or not there are dissenters is irrelevant imo. We should look at the factors independently. Personally I think we are in a special type of economic situation due to a combination of factors coming together that the word recession does not quite do justice.

1. The bursting of a large asset price bubble (like Japan in the early 90's).
2. Private debt extremely high due to 1. above.
3. Lack of indiginous exporting base (unlike Japan in the '90s).
4. The collapse of the construction industry about double the size of construction sectors in other developed economies.
5. The collapse of tax revenue due to 4. above.
6. The fact that the public sector was allowed to expand to the extent it has based on unsustainable tax revenue now gone.
7. The worldwide credit crunch.

I have never seen such a combination of factors coming together this way in a developed western economy such as ours.

markfla

SkepticOne wrote: »

I think the key lesson is that we should put aside what this or that person is saying. Whether or not there are dissenters is irrelevant imo. We should look at the factors independently. Personally I think we are in a special type of economic situation due to a combination of factors coming together that the word recession does not quite do justice.

1. The bursting of a large asset price bubble (like Japan in the early 90's).
2. Private debt extremely high due to 1. above.
3. Lack of indiginous exporting base (unlike Japan in the '90s).
4. The collapse of the construction industry about double the size of construction sectors in other developed economies.
5. The collapse of tax revenue due to 4. above.
6. The fact that the public sector was allowed to expand to the extent it has based on unsustainable tax revenue now gone.
7. The worldwide credit crunch.

I have never seen such a combination of factors coming together this way in a developed western economy such as ours.

These 7 points hit the current Irish situation right on the head, the Irish government has been responsible for 6 out of these 7 factors, a refusal to support R&D in Irish companies...it's all well and good getting in foreign investment....Ireland had the biggest gap between GDP and GNP! we became good at rolling out their products (until our costs rose) but left incapacitated to research and develop our own new products which lead to our own big corporations.....the reason for our massive growth was that we had a lot of ground to make up on the rest of the world, there was an economic gap to be made up....but to sustain that level of growth we needed more reliance on our own products and services whereas new products command high prices as they are cutting edge. This is why Japan had the ability to bounce back....there's no reason in the world that the Irish people could not have developed their own silicon valley where the raw material is Brains......most pHD grads had to leave our country to gain employment....The biggest crime was that the government was warned/advised to invest in R&D in the 90's. We still lag behind the EU average in filling patents.....how in hell can we become a knowledge economy when we don't even make the average?

Bottom line is the government chose to line their pockets with the construction bigwigs....I could never understand how a country could be governed by barristers, teachers and family dynasties......but the people you need running a country need to have a proven successful business backgrounds imo. people who know how to keep ahead of the game economically........who did we send to negotiate with Dell before they pulled out.... Mary Coughlan and Willie O' Dea FFS!!!.....a god damn social worker and a barrister!!!!

Anyway end of Rant...look up Fagerberg's economic gap theory which is around since 1987 and is just pure cop-on documented......our TDs need it slapped on their faces

Fratton Fred

SkepticOne wrote: »

Caution here is also in order. I remember the possibility of the bursting of the housing bubble (incidentally the cause of much of our current troubles) also being dismissed as if-then economics even though it was fairly obvious at the time that the housing market was on its last legs.

That is why I have no confidence in this government to manage the situation properly.

We had Bertie saying he didn't know why people didn't hang themselves because they were saying themaths didn't add up, we then have the German's saying the position is worse than the Government make out and are told that they should mind their own business and we have Charlie saying that the British are waging some sort of war through the press.

Maybe, just maybe, everyone else is right and this government is just trying to kid everyone it is ok. i mean, it worked with the whole dig out thing. People believed them then and voted them back in.

tech2 wrote: »

I thought if the country goes bust, the deposits in our bank accounts are worth nothing? Is it even safe now to keep money in your bank account in fear the country might go bust?

where else are you going to keep your money? Bank of Ireland, Ulsterbank AIB etc are probably as safe as you are going to get at the moment. A country does not have to go bust before the IMF give it a dig out, look at Romania and hungary for example.

SkepticOne wrote: »

I have never seen such a combination of factors coming together this way in a developed western economy such as ours.

That again is what worries me about the Irish economy. It has suffered a perfect storm. I personally this is the enima the country needs though. ireland will suffer more than most and may take longer to pull through, but it will be a lot stronger for it, unless no one learns of course.

is_that_so

SkepticOne wrote: »

I think the key lesson is that we should put aside what this or that person is saying. Whether or not there are dissenters is irrelevant imo. We should look at the factors independently. Personally I think we are in a special type of economic situation due to a combination of factors coming together that the word recession does not quite do justice.

1. The bursting of a large asset price bubble (like Japan in the early 90's).
2. Private debt extremely high due to 1. above.
3. Lack of indigenous exporting base (unlike Japan in the '90s).
4. The collapse of the construction industry about double the size of construction sectors in other developed economies.
5. The collapse of tax revenue due to 4. above.
6. The fact that the public sector was allowed to expand to the extent it has based on unsustainable tax revenue now gone.
7. The worldwide credit crunch.

I have never seen such a combination of factors coming together this way in a developed western economy such as ours.

Again you'll get very little argument from me, but I still don't see the collapse of Ireland in that. While they could certainly be factors, unlike the past 2-3 years no-one now is denying that we have a problem and need to address it. I am sure you would agree that many of these can be addressed, with the possible exception of the construction industry.

Factors 5 & 6 are what the government are supposed to be doing something about and we'll know all about it this time next week. Factor 7 will right itself and according the Central Bank Factor 2 , at least in terms of personal CC debt has reduced substantially. It is also likely to continue to reduce overall as people save more and spend less.

egan007

eamonnm79 wrote: »

Somebody please tell me im wrong

You're wrong.

johnnyskeleton

is_that_so wrote: »

I think however Fred's point is that those who lived through a longer em lifespan, have more coping mechanisms for this type of thing. As my brother commented , in his own workplace it's the under 35s who are panicking. That said we are in a very bad place but one we can come out of provided the government adopt the right kind of approach. And that's where most people are rightly worried because they've shown themselves to be utterly useless at figuring out what the right kind of approach is so far.

Would it be fair to say though that the over 35s are much more secure in their employment?

is_that_so

His point was that people of a certain vintage have seen something like this before and that they may be better able to cope with it. I'd argue that over 35s are more at risk, as they tend to cost more, which makes them more "logical" targets for downsizing.

johnnyskeleton

is_that_so wrote: »

His point was that people of a certain vintage have seen something like this before and that they may be better able to cope with it. I'd argue that over 35s are more at risk, as they tend to cost more, which makes them more "logical" targets for downsizing.

I disagree, although it does depend on the area. A lot of companies operate on a last in first out system (unofficially) and people who are over 35 usually have more experience than younger people. Managers are more likely to be older rather than younger and the people who have been at the firm longer might have built up friendships with the bosses.

Fratton Fred

johnnyskeleton wrote: »

I disagree, although it does depend on the area. A lot of companies operate on a last in first out system (unofficially) and people who are over 35 usually have more experience than younger people. Managers are more likely to be older rather than younger and the people who have been at the firm longer might have built up friendships with the bosses.

Maybe, but when I look at my neighbours and relatives, the ones with the flash cars are the 20 somethings who have never had to save, they get it all on credit. The older ones have never had brand new cars and don't expect them.

At my last job, if you looked at the car park, the older people generally drove 2 or 3 year old Astras, Focuses, Mondeos etc whilst the younger people drove much newer A3s or Minis.

Who would be crapping themselves most if the company went bust, the ones with the €20k car loan or the one with the old Astra?

SkepticOne

is_that_so wrote: »

Again you'll get very little argument from me, but I still don't see the collapse of Ireland in that. While they could certainly be factors, unlike the past 2-3 years no-one now is denying that we have a problem and need to address it. I am sure you would agree that many of these can be addressed, with the possible exception of the construction industry.

What I was arguing against mainly was the use of the blanket phrase "if then economics", which suggests that no reasoning can be done using present data plus logic to suggest the future direction. However I would agree it can't be done with absolute certainty.

johnnyskeleton

Fratton Fred wrote: »

Maybe, but when I look at my neighbours and relatives, the ones with the flash cars are the 20 somethings who have never had to save, they get it all on credit. The older ones have never had brand new cars and don't expect them.

At my last job, if you looked at the car park, the older people generally drove 2 or 3 year old Astras, Focuses, Mondeos etc whilst the younger people drove much newer A3s or Minis.

Who would be crapping themselves most if the company went bust, the ones with the €20k car loan or the one with the old Astra?

Another valid point (I would even go so far as to say that in certain circles, the worse your car is the better, but that's a matter for another thread), but in any event, I don't believe this "People over 35 have seen it all before and are better able to cope because of their experience" talk. The reason they are better able to cope is because they are usually in a better position job-wise.

As to how fubared we are, see here - http://www.irishtimes.com/newspaper/breaking/2009/0402/breaking73.htm.

gman2k

johnnyskeleton wrote: »

As to how fubared we are, see here - http://www.irishtimes.com/newspaper/breaking/2009/0402/breaking73.htm.

Christ, that's really shocking.
"Minister for Finance Brian Lenihan tonight admitted the Governments fiscal position was "unsustainable"
This is from the same fool who admitted he cost the state €700m through the VAT increase fiasco.
In some jobs you get a serious rap on the knuckles if €7 is missing from your shift. Why is this gombeen not in stockades somewhere?

Flamed Diving

Does anyone else think Munsun'd is a better term here?

machintoshlover

gman2k wrote: »

Christ, that's really shocking.
"Minister for Finance Brian Lenihan tonight admitted the Governments fiscal position was "unsustainable"
This is from the same fool who admitted he cost the state €700m through the VAT increase fiasco.
In some jobs you get a serious rap on the knuckles if €7 is missing from your shift. Why is this gombeen not in stockades somewhere?

He didn't cost the state €700 million in that 'fiasco'. The main reason shoppers are going up the North is due to the current exchange rate - the actual impact of an increase in VAT is minimal compared to what the exchange rate does. I believe your referring to the Sunday Independent headline that was completely inaccurate and mixed up two different parts of his speech that culminated in that headline.

ardmacha

Exactly. NI shopping is largely a function of exchange rates and some rip off pricing which means that prices in the South far exceed any tax differences. Even if VAT did have something to do with it,do you not think that the 2.5% UK reduction was more important than the 0.5% increase implemented by Lenihan?

funky.monkey

I think we are totally FUBARED - if they raise taxes on Tuesday the economy will go into total free-fall. Consumer spending and confidence is down already, and tax rises will only make that worse.
In the last recessions we had emmigration (and I was one of the ones who took this route back then). But this time round there are no easy escape routes as the UK and US are in recession too.
Things will have to get a lot worse before they finally start to get better. Only when the government is not able to borrow any more money from abroad, will they take the tough decisions on cutting waste and inefficiencies that they are so reluctant to do now.

Flamed Diving

funky.monkey wrote: »

I think we are totally FUBARED - if they raise taxes on Tuesday the economy will go into total free-fall. Consumer spending and confidence is down already, and tax rises will only make that worse.
In the last recessions we had emmigration (and I was one of the ones who took this route back then). But this time round there are no easy escape routes as the UK and US are in recession too.
Things will have to get a lot worse before they finally start to get better. Only when the government is not able to borrow any more money from abroad, will they take the tough decisions on cutting waste and inefficiencies that they are so reluctant to do now.

You have seen the budget then?

Cool!

May I have a copy?

is_that_so

johnnyskeleton wrote: »

I disagree, although it does depend on the area. A lot of companies operate on a last in first out system (unofficially) and people who are over 35 usually have more experience than younger people. Managers are more likely to be older rather than younger and the people who have been at the firm longer might have built up friendships with the bosses.

Again I think you missed my point. I am not talking about salaries or jobs. People of a certain vintage have more experience of measures they may need to take themselves in order to adjust to the current circumstances. Whether an individual takes them or not is another question.

johnnyskeleton

is_that_so wrote: »

Again I think you missed my point. I am not talking about salaries or jobs. People of a certain vintage have more experience of measures they may need to take themselves in order to adjust to the current circumstances. Whether an individual takes them or not is another question.

I get your point but I don't agree with it. So many people believed the "Ireland is Different" line and actually thought the good times would go on forever. You could equally say that younger people are better able to adapt as they are not as set in their ways (or as mortgaged up to the hilt with several "investment" properties). I don't accept that having the experience of previous recessions has meant that people are any better prepared for what is happening now than the people who have only ever read about recessions.