Fintan O'Toole Article...Ireland is not finished.....yet.

Paddy Samurai

No two busts are exactly alike, but the Finnish depression of the early 1990s is probably the closest parallel to our current catastrophe. In a small, open economy, there was a similarly lethal cocktail of home-made follies: financial deregulation, a flood of cheap credit, a doubling of private debt in four years, a property and investment bubble. The doubters were shouted down by those who pointed to booming exports and full employment. And then there was an external shock – in Finland’s case, the collapse of one of its crucial trading partners, the Soviet Union.We don’t need to be told what happened next in Finland, because we’ve just experienced it. The banking system began to sink under the weight of bad debts. The stock market collapsed. House prices fell by 50 per cent. Investment slumped. Gross domestic product fell by 13 per cent in three years. Unemployment rose from 3 to 18 per cent. The national debt increased fivefold in five years.
What did the Finns do? Initially, pretty much what we’re doing. They slashed welfare and the public sector. They rescued their banks (at a cost of €6 billion – regarded at the time as a huge spend). It became clear that neither of these strategies was successful. The cuts in public spending turned the recession into a depression. The deficit, instead of being reduced by austerity, continued to rise. The bank bailout did not lead to the restoration of credit to the economy. Unemployment set in for a very long time – employment in Finland did not recover to pre-crash levels until 2008.
After these mistakes, however, Finland did four other things. One of them is not within our power: it devalued its currency. The other three, however, are entirely relevant to our circumstances.
First, Finland quickly put its delinquent bankers on trial. The trials were slow and did not always produce convictions. But they did help to create a sense of public accountability.
Second, the Finns developed a national strategy for innovation and growth. They learned the hard lesson that a country can’t rely on property bubbles for sustainable wealth. They invested, even during the depression, in innovation and technology and emphasised the development of indigenous companies. (Nokia is the most obvious example.) They gave Finland one of the best broadband infrastructures in the world. Today, every Finn has a legal right to a broadband connection and by 2015 everyone will be connected to a 100 Mbps service. It was economic growth, not slash-and-burn policies, that ultimately got the public finances back in order.
Third, the Finns invested in education. They reckoned a sustainable recovery would be possible only if they made a leap to the top of the global education charts. Finnish 15 year olds are now first in the international rankings for maths and science and second for literacy.
Perhaps as important as what Finland did, is what it did not do. It did not abandon investment in its people. It did not use the depression as an excuse to embrace a right-wing agenda of shrinking the state. It did not use the crisis to abandon the welfare state or to increase inequality by savaging the poor and protecting the rich. The Finns recognised that there could be no “smart economy” – and hence no sustainable recovery – without a smart society that invested in the skills and wellbeing of its people.

http://www.irishtimes.com/newspaper/opinion/2010/1109/1224282960638.html

If its a way out for us..........I'll take it.Anything is better than the usually end of the world senarios we are all hearing/reading about.

chin_grin

Can we please have a "Moanin' About the Economy Forum'? Pllllllllllllllllease?

gbee

chin_grin wrote: »

Can we please have a "Moanin' About the Economy Forum'? Pllllllllllllllllease?

No recession for you then? Maybe if we cut your salary in half to start with ..

humanji

chin_grin wrote: »

Can we please have a "Moanin' About the Economy Forum'? Pllllllllllllllllease?

Well, this isn't really a "moaning about the economy" thread. This is one of the few "we can actually save the country" threads that might give people a bit of hope.

thebigbiffo

well it's in many peoples interests to continually tell us we are in an 'unprecedented' crisis when in fact many countries have experienced the same problems we have - from bank bailouts to NAMA to housing bubbles to high unemployment to massive national debt - we WILL recover and nobody will starve...but, the reason we're constantly being told it's 'unprecedented'?

because you need to be scared s'hitless about the state of our economy otherwise you wont accept the huge 'adjustments' needed to save our sorry asses...

120_Minutes

The difference between us and them us that they were sensible. We won't be.

Bill2673

Generally speaking, i don't care too much what Fintan O'Toole has to say about the economy.

This appears to be a reaction to Morgan kelly's piece, to say oh its not all bad news, however its fairly 'back of the envelope' stuff compared to Kellys more researched journalism.

A couple of comments
-€6bn may have been a big sum for Finland but its still far less as a % of GDP compared to what we will spend on the banks.
- did the Finns face the same public spending deficit?
- this one gets on my wick.....loads of 'commentators' say, well, we have all the cuts but where are the plans for growth and job creation......how is the government going to 'invest in education' or in broadband when it is being forced to cut the budget for education, infrastructure and everything else besides....

You can't increase spending on something at the same time that you are cutting spending on it.

Finally, the currency is a biggie.

chin_grin

gbee wrote: »

No recession for you then? Maybe if we cut your salary in half to start with ..

Blah blah blah, in my day, blah blah blah yeh don't know yer born.

No, I've been through it. Had to take cuts. Lost my job. Was on the dole. (It's more depressing that you know!). But I'm soldiering on and taking it day by day in my new job and guarantee I don't take this one for granted!

I'm sure you're happy enough though. In Begrudgeville. ZING!

Dudess

No two busts are exactly alike

Well done Fintan, schoolboy humour intro will always hook in the reader... :pac:

thebigbiffo

in the interests of positive articles on our economy i'll see your fintan article and raise you one that was in the 'wall street journal' no less

http://www.independent.ie/opinion/analysis/irelands-economy-still-has-a-very-healthy-pulse-2412442.html

Ireland's economy still has a very healthy pulse

The financial engineering required to restore the Irish economy can be implemented -- now the Government must facilitate the growth and development of business, says London-based business analyst Oliver O'Connor in this article, which is reproduced from yesterday's 'Wall Street Journal

Some recent headlines and commentary seem to suggest that the Irish economy has all but collapsed. It hasn't, and it doesn't have to.
Ireland has had a property bubble and crash, a regulatory failure, a banking disaster and a fiscal crisis. Now, Ireland is caught up in the great macroeconomic issues of our times: how deep and how fast to cut debt; what will promote sustainable growth; the governance of the euro and its monetary policy; how to fix banks and who should pay; and bond investors' attitudes to sovereign risk. It's an uncomfortable place for a small country to be in.
Ireland's macro and fiscal challenges are real, well-known, and openly disclosed. The recurrent government deficit has to be cut to 3pc of GDP from nearly 12pc in just four budgets. A credible four-year plan has to be published this month, and by December 7, the Government must produce a 2011 budget with €6bn in savings. The brunt is to be borne by spending cuts. By early next year, Ireland will have to return to debt markets.
With all this attention on macroeconomics, and the disaster scenarios being painted around Ireland's latest thinly-traded 10-year government-bond price that hit more than 7.5pc, prognosticators seem to have forgotten just what's involved in the one thing on which so much depends: growth.
And in Ireland at least, growth will be about microeconomics, not the grand macro issues.
Forget about global imbalances. Forget about US and eurozone monetary policy. Forget about the latest Basel capital rules. Like most countries, Ireland is a price-taker on those decisions, as it is on global, US, eurozone and UK economic growth. The only growth factors Ireland can really affect for itself are its government finances and the business environment in the country.
Observers and bond investors are wondering, can Ireland "do it"? That would mean Dublin not defaulting on its debts, and achieving sustainable finances and economic growth. Aside from the Government's current drive to cut spending, this is fundamentally a question about Ireland's real economy as it now stands. In that context, here is the hand that Ireland now has to play: An economy consisting of about 4.5 million people that was heading to a value of €190bn per year, but is now settled back to €160bn. That's not poor; it's well-off, quite diversified and developed.
Since 1995, Irish people's purchasing power has shot ahead of the eurozone average, to 19pc above it in 2009 from 10pc below it in 1995. During the boom years, prices in the country got out of hand, but unit labour costs fell last year by more than 6pc relative to eurozone costs.
The median age of the population is 35, the lowest in the EU, and despite renewed emigration, it is still growing. Ireland has also experienced Europe's fastest increase in life expectancy, in which it now matches the world's wealthiest countries. These people are among the OECD's top performers in tertiary education attainment. They are also renowned for their creativity and their arts, which can be monetised.
This economy is embedded in a single market of 500 million people, with which it trades more than most. Ireland's latest quarterly exports were 103pc of second-quarter GDP, outstripping imports by nearly 25pc. Ireland's balance of payments is turning positive. A lot of this is due to the presence of more than 1,000 foreign companies with operations in Ireland, including large pharmaceutical firms, information-technology companies, and medical-device corporations. For some time, Ireland has been diversifying its economy, and moving away from low- and mid-level manufacturing. The value of Irish-made medical and pharmaceutical products increased fourfold between 2000 and 2008.
Ireland's service exports are also rapidly growing. In 2000, they were worth €13bn. By 2008, they had grown to €68bn and had more than doubled their share of total exports. Part of this is thanks to the back- and middle-office operations of the international financial-services sector, which was originally based in Dublin and is now spread around the country. This boom had nothing to do with the property bubble, and persists after it burst.
Irish people have close ties with, and easy travel to, the UK and major commercial centres around Europe. There also exists an extensive, well-disposed Irish network in the US and globally.
Some people claim this internationalisation makes Ireland's economy vulnerable, as foreign businesses can leave as easily as they came. But in the real global economy, change is the only constant: companies succeed, fail, grow, decline, move and change operations all the time. In this environment, and for Ireland in particular, the popular distinction between a domestic company and a mobile, international company, is not much use. In fact, Ireland's economic interest lies in seeing its own domestic companies become global and agile, as some have already done in food and manufacturing. If anything, Ireland has more cause for concern about global politics than about global business, insofar as protectionist sentiment may take hold.
Ireland also has the national memory of its last fiscal crisis in the late-1980s. The debt spiral they're trying to avoid now had already happened then. The debt-to-GDP ratio was above 120pc. Interest payments were 20pc of total government spending and 35pc of revenue. Those levels can be avoided now, given that debt should peak at around 106pc of GDP and the average cost of debt will still be lower than in the 1980s. Ireland's net debt level is also better than it was before, and cash and investments have been set aside in the national pension fund.
Crucially, the people of Ireland were different then too. Irish people now have a longer track record of innovating, marketing, selling, manufacturing, raising capital, and making deals in a range and depth of global markets than ever before.
Dublin can strengthen this hand even further. Just as the Government is intent on frontloading its fiscal correction, it can do the same with its microeconomic prospects. Most critical is the direction of change on Ireland's competitiveness. As well as investing in research and allowing universities to be sustainably funded, Dublin could take further actions to cut the costs of doing business in Ireland. Energy costs need to fall further. Training the unemployed also helps, but so do unambiguous policy decisions to reduce overall labour costs and improve the incentives to take up work.
If some new taxes are inevitable, Dublin can ensure they are the ones that will be least harmful to job creation, investment and enterprise, such as property-based taxes. Correspondingly, a cut in employers' social insurance rates should be part of the fiscal framework. In addition, Ireland cannot afford to become less competitive by raising its marginal income tax rates. Fortunately, there is no prospect of its 12.5pc corporate tax rate going up.
The crash did happen, but Ireland's economy still has a pulse, at least as strong as many of its larger partners around the world. Its debts are massive, but manageable -- no one has proven yet that they are not.
This is a playable hand. The financial engineering required to restore the Irish budget to health is doable, and is being done. Now, it's over to the political engineering, whose highest achievement would be to let the Irish people do what they do best: adjust and thrive.
Oliver O'Connor is a business consultant based in London and a former special adviser to Mary Harney





jesus h christ just noticed this guy was an adviser to mary harney

creditibility fail right there...

gbee

thebigbiffo wrote: »

- we WILL recover and nobody will starve...but, ..

We have had a C change, we will NEVER recover. Others, foreigners will move in as soon as any economic activity is here, a new culture will grow and displace the indigenous ~ it's already happening and there is no stopping it.

We will never recover, the Ireland that you knew five years ago is as destroyed as the Ireland of pre famine times is.

thebigbiffo

Dudess wrote: »

Well done Fintan, schoolboy humour intro will always hook in the reader... :pac:

i could be missing your joke here - but you know he was on about sculptures right?

dsmythy

Spend loads of money we don't have and hope it sticks. Cheers Fintan.

thebigbiffo

gbee wrote: »

We have had a C change, we will NEVER recover. Others, foreigners will move in as soon as any economic activity is here, a new culture will grow and displace the indigenous ~ it's already happening and there is no stopping it.

We will never recover, the Ireland that you knew five years ago is as destroyed as the Ireland of pre famine times is.

f'uck me you're a big barrel of laughs...

you're even blaming the 'fordenders' for something that has only happened in your imagination - you're right, with people like you around we are completely f'ucked

gbee

chin_grin wrote: »

Was on the dole.

Been there aswell, should have stayed there too. I took a gamble, I've lost, over 50% tax, no medical card, no doctors card, no money left and I can't get back on the dole.

danbohan

thebigbiffo wrote: »

well it's in many peoples interests to continually tell us we are in an 'unprecedented' crisis when in fact many countries have experienced the same problems we have - from bank bailouts to NAMA to housing bubbles to high unemployment to massive national debt - we WILL recover and nobody will starve...but, the reason we're constantly being told it's 'unprecedented'?

because you need to be scared s'hitless about the state of our economy otherwise you wont accept the huge 'adjustments' needed to save our sorry asses...

and when we cant borrow anymore ? . many other countries have had its problems but without having the handicaps we now face , ie euro zone , a totally overpaid ,inefficient ,overstaffed public service that no politicians have got to grips with dismantling , yet . its all very well looking at the positives as fintan o tooles is doing but you need to grasp the reality and he has completely failed to do so in this article

gbee

thebigbiffo wrote: »

you're even blaming the 'fordenders' for something that has only happened in your imagination - you're right, with people like you around we are completely f'ucked

Just think a second, who was going to occupy all those over stocked houses?

thebigbiffo

gbee wrote: »

Just think a second, who was going to occupy all those over stocked houses?

http://www.breakingnews.ie/ireland/ireland-set-for-new-baby-boom-451390.html

thebigbiffo

danbohan wrote: »

and when we cant borrow anymore ? . many other countries have had its problems but without having the handicaps we now face , ie euro zone , a totally overpaid ,inefficient ,overstaffed public service that no politicians have got to grips with dismantling , yet . its all very well looking at the positives as fintan o tooles is doing but you need to grasp the reality and he has completely failed to do so in this article

my point is still the same - you need us scared to support cutbacks in the likes of the HSE, to cut back so much we can afford the debt etc.

i actually dont think the article was that positive - it took them over 15 years to recover to pre bust unemployment levels...

the coutry will be fine - we had a property crash which caused most the problems we're facing. it's happened before and it'll happen again...

Dudess

chin_grin wrote: »

Blah blah blah, in my day, blah blah blah yeh don't know yer born.

No, I've been through it. Had to take cuts. Lost my job. Was on the dole. (It's more depressing that you know!). But I'm soldiering on and taking it day by day in my new job and guarantee I don't take this one for granted!

I'm sure you're happy enough though. In Begrudgeville. ZING!

What's begrudgery about that? When people say "You should be grateful to have a job" it is a pain in the hole, but any of us who have jobs at the moment are pretty fortunate (not something to be "grateful" for though, we worked hard to get where we are).

gbee

thebigbiffo wrote: »

- we had a property crash which caused most the problems we're facing. it's happened before and it'll happen again...

And this is EXACTLY the real problem, it WILL happen again. It will be engineered to happen and is sometimes the precursor to war.

it was used in the 30's in the USA to manipulate a population to be more meanable to joining the expected War as if a population is too comfortable, they won't go to war for you.

As you say, we need to be scared to submit, bow and genuflect ... I'm going back to the conspiracy forums. ;0

I-Shot-Jr

I don't think there is any hope whatsoever without a radical overhaul of our government and detaining and questioning every cabinet member and holding them accountable for their actions. An thorough independent inspection of their "own" assets may be in order too.

If our government could start from scratch personnel wise we might have hope, I'd also be in favour of introducing measures that ensure ministers are qualified for the positions they hold i.e. degree in Economics, commerce and/or experience in the field for anyone that wishes to become minister for finance.
I know Brian Lenihan talks the talk but in reality what experience does he have in the field outside of politics?

TheZohanS

gbee wrote: »

We have had a C change, we will NEVER recover. Others, foreigners will move in as soon as any economic activity is here, a new culture will grow and displace the indigenous ~ it's already happening and there is no stopping it.

We will never recover, the Ireland that you knew five years ago is as destroyed as the Ireland of pre famine times is.

Make sure you slit them lenghtways, not sideways. I for one will not miss posts like this.

TwoShedsJackson

No two busts are exactly alike

Obviously had Christina Hendricks in mind here.

gbee

TheZohan wrote: »

Make sure you slit them lenghtways, not sideways. I for one will not miss posts like this.

What used to be the signs in New York in the past and how many Irish related presidents did we provide to the US?

TheZohanS

gbee wrote: »

What used to be the signs in New York in the past and how many Irish related presidents did we provide to the US?

How is Babby Formed?

gbee

TheZohan wrote: »

Make sure you slit them lenghtways, not sideways. .

BTW, forget to thank you for this tip, I see you're an expert.

Earthhorse

Sculptures of naked chicks, right?

Cavehill Red

Fintan is wrong.

The WSJ is also wrong.

Ireland is totally and fundamentally screwed. Anyone in any doubt about that need only check the bond markets this week. They think we mightn't make it as far as January without help.

We cannot afford to pay for the dodgy banks. They are going to take the country down with them - in fact are already advanced in the process of doing so. The banks are the albatross around our necks.

Biffo's hairshirt budget - IF he gets it through - is simply deckchairs on the Titanic stuff, buying another month or two of market money at enormous social expense here in Ireland.

If he doesn't get it through, or if doesn't meet vulture capitalist approval, or if a general election looks imminent, the whole house of cards will come down a lot quicker.

All very well Fintan farting on about Finland. We're into uncharted waters with this one. This time, things really are different. Massive banking debts have been nationalised and the only currency the state has to pay them back with is its own sovereignty.

If Auntie Angela in Berlin doesn't help out (in return for our corporation tax rate) then the IMF will be running the show within six months.

biko

I don't care what happens as long as bankers heads roll.




Putting them in prison will do just fine too.

Mezcita

biko wrote: »

Putting them in prison will do just fine too.

That won't happen.

thebigbiffo

*stands up and shouts: WE'RE ALL GONNA DIIIIIIIIIIIIIIIIIEEEEEEEEEEEEE

jesus lads, tis only money:)

maxxie

chin_grin wrote: »

Can we please have a "Moanin' About the Economy Forum'? Pllllllllllllllllease?

you countered a moan with a winey moan! What do you propose to improve the situation!?

chin_grin

Dudess wrote: »

What's begrudgery about that? When people say "You should be grateful to have a job" it is a pain in the hole, but any of us who have jobs at the moment are pretty fortunate (not something to be "grateful" for though, we worked hard to get where we are).

Just being extremely sarcastic.

Are you not grateful for the things that you can do as a result of having a job though? In a kind of "a=b=c, therefore a=c" way.