End of the road for spend baby, spend!

Sand

There was always a touch of the "whut?" about the initial plans of many governments (and indeed many of the vested interests in Ireland) to try and spend their way out of the recession/depression. Having borrowed and spent their way into an unsustainable fiscal disaster, *more* borrowing and spending wasnt really a long term solution.

Whilst there is something to be said for counter-cyclical policy, with the government acting as the consumer of last resort, it needs to be counter-cyclical. The government needs to be fiscally disciplined in the good times, so that it builds up the reserves to spend in the bad times. Having engaged in pro-cyclical polices for almost a decade and more, governments simply did not and do not have the reserves to suddenly engage in counter-cyclical policy. Certainly not on top of foolhardy decisions to bail out badly run and mismanaged banks.

And finally, faced with the realisation that they have maxed out their 7 credit cards, the EU governments have put aside the plans to spend their way out of the recession, and are now looking instead to adjust to the new normal.

To back up the planned tightening of the rules, the ministers also said they will press ahead with deficit cuts next year, balking at U.S. pleas for looser budget policies to help speed the recovery from the worst recession since World War II.....Europe’s determination to press ahead with belt-tightening measures defies a June 5 call by U.S. Treasury Secretary Timothy F. Geithner for “stronger domestic demand growth” in countries like Germany with trade surpluses.

Krugman will be furious no doubt, Obama is one of the last holdouts having begged his comrades to keep to the true faith.

Ireland on the other hand will be able to get some kudos, having at least talked the talk well in advance of their neighbours. The only shame being that more was not done sooner. But at least the PR is good.

gurramok

I wonder if spend thrift Irish Labour and the PS unions are watching these events unfold?

There is talk on the BBC website of the UK govt going to copy what the Canadian govt did in the 90's, a 'get it over and done with quickly' approach within 4 yrs and no cuddling up to the unions...and look at how gentle Canada survived the recent recession!!

Klingon Hamlet

So will Cowen's planned €400,000 upgrade of his offices be put on hold?

Will he insist on TDs publicly displaying their expenses, or will he let them off?

We're a nation of apathetic grumblers lead by the nose by seasoned gangsters. Trust me, there will be cuts, but it will only line the pockets of the elite. The regular Joes will still suffer.