The deficit

ilovesleep

From my understanding from reading threads here and correct me if im wrong the biggest problem is the deficit. I dont have any figures but there was a deficit in 07/08. Why was it not tackled and allowed to spiral out of control.

Gumbo

the deficit is not our biggest problem imo, it would of been sorted with some budget cuts over 5 or so years but the biggest problem is the shear amount of money needed to bail out the banks.

that money could not be paid back in our life time.

Scofflaw

kceire wrote: »

the deficit is not our biggest problem imo, it would of been sorted with some budget cuts over 5 or so years but the biggest problem is the shear amount of money needed to bail out the banks.

that money could not be paid back in our life time.

Er, no - I think you're thinking of the amount of the guarantee, or the figures that get thrown around in respect of notional Irish bank debt. Standard & Poor have the cost of the bailout at €50bn, which is equivalent to the deficit cost for the last three years (€12.7bn 2008, €20.6bn 2009, €20bn 2010). That figure includes the €10bn the government has committed to.

If we throw in the other €25bn available for the banks as 'contingency money' under the bailout fund, we could call the bank costs €75bn. However, over the same timeframe the bailout fund provides for €50bn to fund the deficit, taking that figure to €103bn, although the government figures claim only €38bn is expected to be necessary (that's based on their pie in the sky 2.75% growth figure, though).

Really, the problem isn't either the banks or the deficit, but the two together. We've put a staggering amount of money into the banks - the vast majority of it into Anglo, which shouldn't have been bailed out at all - but the cost of the deficit over these 7-8 years is even more staggering. Between the two of them, the State has taken on, or will take on, somewhere between €138bn and €175bn of additional debt during the lifetime of this government and the next.

Had the government chosen to let the banks fail, the costs are uncertain. They are presumed by the government to be larger than the cost of the rescue, because collapse is generally thought to cost more than an orderly and gradual wind-down (which is what's currently happening), but even if we assume instead that the failure would have cost the state half as much as the rescue, we'd still be looking at enormous numbers.

One way or another, Ireland was running a system from 1997-2007 which more or less guaranteed that we'd end up with a whopping bill - and that's why Fianna Fáil shouldn't be trusted with the reins of the economy again. Not because of the mistakes they may have made during the crisis, which can in some cases be defended as either really or apparently necessary and having to be made in a hurry - but because of the choices they made during the boom which set the whole thing up to be nothing other than a decision between a rock and a hard place when it ended. And those, it's worth pointing out, were the popular choices.

cordially,
Scofflaw

hmmm

I add up the cost of the bank rescue and the annual interest costs and I can't for the life of me figure out why people are saying we can't afford it. Looking at the numbers we can. Perhaps people are just repeating what their favourite financial guru is telling them, the same way as our property boom was driven by people following their favourite property guru and ignoring the simple maths. Even if we have to borrow 100 billion to bail out the banking sector, the interest costs will be less than 10 billion a year at worst. It's painful but not unmanageable considering our GDP is around 130 billion.

The deficit is largely due to the bursting of the property bubble and an approximate 20% decrease in economic activity. Spending hasn't gotten out of control, the problem is that revenues (tax) have collapsed. During the property boom tax flooded into the exchequer, but much of that tax was based on transactional taxes (e.g. stamp duty) which vary depending on economic activity in certain sectors. When those sectors collapsed, so did tax receipts. It would be wrong to say that the deficit spiralled out of control, it'd be more accurate to say that while government expenditures were largely fixed, we were paying for that expenditure using bubble level income that fluctuated and dropped rapidly when the bubble burst.

jimmycrackcorm

hmmm wrote: »

The deficit is largely due to the bursting of the property bubble and an approximate 20% decrease in economic activity. Spending hasn't gotten out of control, the problem is that revenues (tax) have collapsed. During the property boom tax flooded into the exchequer, but much of that tax was based on transactional taxes (e.g. stamp duty) which vary depending on economic activity in certain sectors. When those sectors collapsed, so did tax receipts. It would be wrong to say that the deficit spiralled out of control, it'd be more accurate to say that while government expenditures were largely fixed, we were paying for that expenditure using bubble level income that fluctuated and dropped rapidly when the bubble burst.

You sir, should have applied for a job as economic advisor to Lenihan.
So it's not spending get out of control - its that revenue has dropped :rolleyes:.

Don't you think that if we hadn't expanded public spending and instead saved the extra income generated during thee boom that we'd have no deficit now because our income would now match our spending or even balance a small deficit....

dcmraad

hmmm wrote: »

I add up the cost of the bank rescue and the annual interest costs and I can't for the life of me figure out why people are saying we can't afford it. Looking at the numbers we can. Perhaps people are just repeating what their favourite financial guru is telling them, the same way as our property boom was driven by people following their favourite property guru and ignoring the simple maths. Even if we have to borrow 100 billion to bail out the banking sector, the interest costs will be less than 10 billion a year at worst. It's painful but not unmanageable considering our GDP is around 130 billion.

We will be paying 10 billion + a year interest.

This is on top of the 20 billion we are borrowing to keep the country running.

The budget changes and the incorrect growth predictions are just BS, the fools that caused this mess, who have spent 9 years watching this slow car crash happen have been incapable of making any type of correct decisions. The sheer waste has not stopped.

What do you think will happen when mortgage defaults, unpaid loans, and massive credit card debt cannot be paid back. There is another €70 billion going to be needed to fill those holes.

Taxi Drivers

hmmm wrote: »

I add up the cost of the bank rescue and the annual interest costs and I can't for the life of me figure out why people are saying we can't afford it. Looking at the numbers we can. Perhaps people are just repeating what their favourite financial guru is telling them, the same way as our property boom was driven by people following their favourite property guru and ignoring the simple maths. Even if we have to borrow 100 billion to bail out the banking sector, the interest costs will be less than 10 billion a year at worst. It's painful but not unmanageable considering our GDP is around 130 billion.

The deficit is largely due to the bursting of the property bubble and an approximate 20% decrease in economic activity. Spending hasn't gotten out of control, the problem is that revenues (tax) have collapsed. During the property boom tax flooded into the exchequer, but much of that tax was based on transactional taxes (e.g. stamp duty) which vary depending on economic activity in certain sectors. When those sectors collapsed, so did tax receipts. It would be wrong to say that the deficit spiralled out of control, it'd be more accurate to say that while government expenditures were largely fixed, we were paying for that expenditure using bubble level income that fluctuated and dropped rapidly when the bubble burst.

Hmmm. Tax revenue has fallen as GNP has fallen but as a proportion of GNP is largely unchanged. It is expenditure that has surged ahead as a percentage of GNP.

This was doing the rounds a few weeks ago.

http://economic-incentives.blogspot.com/2010/12/presentation-to-ucc-economics-society.html

See # 5, 8, 9, 15 and particularly 20 I think.

kaiser sauze

hmmm wrote: »

I add up the cost of the bank rescue and the annual interest costs and I can't for the life of me figure out why people are saying we can't afford it. Looking at the numbers we can. Perhaps people are just repeating what their favourite financial guru is telling them, the same way as our property boom was driven by people following their favourite property guru and ignoring the simple maths. Even if we have to borrow 100 billion to bail out the banking sector, the interest costs will be less than 10 billion a year at worst. It's painful but not unmanageable considering our GDP is around 130 billion.

The deficit is largely due to the bursting of the property bubble and an approximate 20% decrease in economic activity. Spending hasn't gotten out of control, the problem is that revenues (tax) have collapsed. During the property boom tax flooded into the exchequer, but much of that tax was based on transactional taxes (e.g. stamp duty) which vary depending on economic activity in certain sectors. When those sectors collapsed, so did tax receipts. It would be wrong to say that the deficit spiralled out of control, it'd be more accurate to say that while government expenditures were largely fixed, we were paying for that expenditure using bubble level income that fluctuated and dropped rapidly when the bubble burst.

Based on your flawed logic, therefore, we need massive tax hikes-in addition to the modest ones just announced-and savage cuts in welfare.

Do you see any chance of the private pension arrangements being re-sweetened while paying €10Bn a year in interest.

I think talking out of both sides of one's mouth should be abolished, or at least taxed at 100%.

Scofflaw

hmmm wrote: »

I add up the cost of the bank rescue and the annual interest costs and I can't for the life of me figure out why people are saying we can't afford it. Looking at the numbers we can. Perhaps people are just repeating what their favourite financial guru is telling them, the same way as our property boom was driven by people following their favourite property guru and ignoring the simple maths. Even if we have to borrow 100 billion to bail out the banking sector, the interest costs will be less than 10 billion a year at worst. It's painful but not unmanageable considering our GDP is around 130 billion.

That depends on where our tax take gets to. If we can raise the tax take to €40bn, then we've paid that level of interest before without defaulting, back in 1991.

hmmm wrote: »

The deficit is largely due to the bursting of the property bubble and an approximate 20% decrease in economic activity. Spending hasn't gotten out of control, the problem is that revenues (tax) have collapsed. During the property boom tax flooded into the exchequer, but much of that tax was based on transactional taxes (e.g. stamp duty) which vary depending on economic activity in certain sectors. When those sectors collapsed, so did tax receipts. It would be wrong to say that the deficit spiralled out of control, it'd be more accurate to say that while government expenditures were largely fixed, we were paying for that expenditure using bubble level income that fluctuated and dropped rapidly when the bubble burst.

Yes, the government had shifted the tax base onto bubble income, but had ramped up spending as if bubble income was sustainable. The result was pretty predictable.

cordially,
Scofflaw

Dannyboy83

hmmm wrote: »

I add up the cost of the bank rescue and the annual interest costs and I can't for the life of me figure out why people are saying we can't afford it. Looking at the numbers we can. Perhaps people are just repeating what their favourite financial guru is telling them, the same way as our property boom was driven by people following their favourite property guru and ignoring the simple maths. Even if we have to borrow 100 billion to bail out the banking sector, the interest costs will be less than 10 billion a year at worst. It's painful but not unmanageable considering our GDP is around 130 billion.

The deficit is largely due to the bursting of the property bubble and an approximate 20% decrease in economic activity. Spending hasn't gotten out of control, the problem is that revenues (tax) have collapsed. During the property boom tax flooded into the exchequer, but much of that tax was based on transactional taxes (e.g. stamp duty) which vary depending on economic activity in certain sectors. When those sectors collapsed, so did tax receipts. It would be wrong to say that the deficit spiralled out of control, it'd be more accurate to say that while government expenditures were largely fixed, we were paying for that expenditure using bubble level income that fluctuated and dropped rapidly when the bubble burst.

The social welfare bill has doubled from '99 to '09
€100 to €207 per week. (amount to approx €21 billion per year)

The public sector pay & pensions bill tripled from '99 to '09.
€7 billion to €19.8 billion.

If you can say anything with certainty, it's that spending became (and still is) out of control.

scr123

jimmycrackcorm wrote: »

You sir, should have applied for a job as economic advisor to Lenihan.
So it's not spending get out of control - its that revenue has dropped :rolleyes:.

Don't you think that if we hadn't expanded public spending and instead saved the extra income generated during thee boom that we'd have no deficit now because our income would now match our spending or even balance a small deficit....

Can you put a rough figure on the amount that could and should have saved ? The national debt was reduced dramatically and hardly anyone noticed. The sum of 18b was put in the pension fund and the government was accused of being stupid for doing so, what would the screaming have been like if they had saved 50b or gone crazy altogether and saved 100b ?

The awful cliche " we are where we are " applies

The economy became grossly inflated

Deflation is the name of the game and fear is the main tool used in the process

The books have to be balanced to controllable levels and some of the goodies we got over the years will be taking away from us

The banks got involved in a massive credit bubble that burst and order will be restored eventually. This is being hampered by a terrible fear that has taken grip in the world of finance. We will sort things out in Ireland because we are a small economy

The national debt will grow and grow and then level off to manageable levels

There is a fundamental shake up in the world economy happening right now and when this is tackled to everyones satisfaction growth will start again and we will as always head towards another boom that will bust and the cycle goes on and on

Living in the past is pointless. All one needs to do is take a quick look backwards and that will tell you where you are headed

Permabear

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Scofflaw

donegalfella wrote:

This post has been deleted.

It was, in a very real sense, borrowed money - and money that the taxpayer was always going to have to pay back. The Irish taxpayer borrowed from the Irish banks to fuel his property and lifestyle addiction, the government taxed that borrowed money with consumption taxes to boost public pay and social welfare while slashing production taxes. The Irish government allowed the banks to inflate their loan books by valuing property assets at bubble prices, and didn't even try to keep them on the road of prudent lending because it needed ever greater multiples of income to be lent to Irish citizens in order to keep the scheme going.

House of cards - built almost entirely out of knaves, too.

cordially,
Scofflaw

Rob A. Bank

kceire wrote: »

the deficit is not our biggest problem imo, it would of been sorted with some budget cuts over 5 or so years but the biggest problem is the shear amount of money needed to bail out the banks.

that money could not be paid back in our life time.

Indeed our deficit would be managable without the bank bailout. 2/3rds of the present deficit is due to Mr. Lenihan's decision.

“the cheapest bailout in the world so far”
Brian Lenihan; 19 Nov 2008. Six One News.


.

Permabear

This post has been deleted.

ardmacha

Indeed national debt is cumulative. However, we started off with a low level of national debt. The problems is that cutting the deficit also aggravates the deficit by reducing demand etc the ability to borrow a bit more for regular services instead of putting it into the banks would be valuable. We could, for instance, build schools widen roads and the like when construction costs are low. We could have facilitated an increased intake into education to upskill people. We might end up with a similar deficit but we'd have these things to use in the future, fewer long term unemployed and less trauma generally. Now of course for some people on this forum trauma is desirable.

ilovesleep

donegalfella wrote: »

This post has been deleted.

Horrific!

Rob A. Bank

donegalfella wrote: »

This post has been deleted.

Im not sure what you mean...

The graphic clearly shows that our deficit in 2009 was 14.4% of GDP (blue columm) falling to 11.9% of GDP this year (if the bank money is subtracted)

A fall from 14.4% to 11.9% is not "runaway public spending" in my book...

Am I missing something ?



“the cheapest bailout in the world so far”
Brian Lenihan; 19 Nov 2008. Six One News.

later12

donegalfella wrote: »

This post has been deleted.

Well, obviously so since public spending is an ongoing current expenditure whereas the banking industry bailout is, one hopes, a more extraordinary spending measure that is at least not intended to be repeated over time.

The above is like a salesman telling a housewife at the doorstep that her food costs over the past three years were greater than the cost of the product he is trying to shift - such comparisons are remarkably bereft of logic.

Yes, public spending is far too high. But first one must account for the fact that, unlike the bank bailout, it is considered necessary that we spend significantly and continuously on public resources in order to achieve a positive return.
Whether we are likely to get a positive return based on the bank bailout is another matter, particularly (a) considering we still have a 30%+ chance of sovereign default over the coming 5 years according to market prices, and (b) considering that all options were not, in my opinion, adequately explored both in terms of bank defaults and the sovereign bailout.

So while the total bailout cost will obviously be less than cumulative costs arising from public expenditure over a given time period, that statement says nothing about the nature nor return offered by each expense.

Furthermore, it is arguable that the bank bailout is actually costing our economy more than what appears in balance sheet terms, as it may also negatively effect future growth potential and inward capital investment.

Soldie

later10 wrote: »

Yes, public spending is far too high. But first one must account for the fact that, unlike the bank bailout, it is considered necessary that we spend significantly and continuously on public resources in order to achieve a positive return.

Considered necessary by whom? From what I can see, we've had little in the way of positive return from our "significant and continuous" public spending to date -- education standards are plummeting, and the health system is still shambolic, amongst countless other examples.

hmmm

Taxi Drivers wrote: »

It is expenditure that has surged ahead as a percentage of GNP.

Because the headline GNP figure has fallen - expenditures have remained fairly consistent (I'm not arguing that expenditure is justified however).

hmmm

kaiser sauze wrote: »

Based on your flawed logic, therefore, we need massive tax hikes-in addition to the modest ones just announced-and savage cuts in welfare.

I don't know what I did to upset you, but you seem to be following me around with your off the wall posts. My logic is clear, why you think I'm advocating massive tax hikes is beyond me.

hmmm

Rob A. Bank wrote: »

Im not sure what you mean...

The graphic clearly shows that our deficit in 2009 was 14.4% of GDP (blue columm) falling to 11.9% of GDP this year (if the bank money is subtracted)

A fall from 14.4% to 11.9% is not "runaway public spending" in my book...

Am I missing something ?

The graphic you're quoting shows the effects of once off capital injections into the banks. Going forward those once off costs disappear and the impact on the deficit will be the interest payments required for any amounts borrowed by the state to finance the banks. Finger in the air estimate, the absolute worst case is that costs us 10 billion a year which is still less than the ordinary deficit we run on funding the state.

later12

Soldie wrote: »

Considered necessary by whom? From what I can see, we've had little in the way of positive return from our "significant and continuous" public spending to date -- education standards are plummeting, and the health system is still shambolic, amongst countless other examples.

First of all, I am not suggesting that we maintain current public expenditure spending.

I am saying that it is inevitable that public expenditure - on the basic civil machinery of state, the judiciary, education, health, and so on - would be both significant and continuous. The degree of significance can be debated, but the fact that it would be significant cannot reasonably be debated.

My point is that you cannot conceivably compare current expenditure on public infrastructure, on a cumulative basis through National debt, to extraordinary expenditure not intended to be repeated, such as bailing out the banking industry.

It is simply chalk and cheese.

The_Honeybadger

later10 wrote: »

First of all, I am not suggesting that we maintain current public expenditure spending.

I am saying that it is inevitable that public expenditure - on the basic civil machinery of state, the judiciary, education, health, and so on - would be both significant and continuous. The degree of significance can be debated, but the fact that it would be significant cannot reasonably be debated.

My point is that you cannot conceivably compare current expenditure on public infrastructure, on a cumulative basis through National debt, to extraordinary expenditure not intended to be repeated, such as bailing out the banking industry.

It is simply chalk and cheese.

I think it is perfectly reasonable to compare them if you are asking which has added more to the national debt throughout the period of our crisis. Of course public spending is going to be significant, but ideally you should be able to offset this 'significant and ongoing' cost entirely through taxation, at the moment we have a 20bn shortfall because both taxes were unbalanced and in many cases too low, and spending was and still is too high. Our union leaders are on TV all the time berating banks while their own policies and crazy demands have caused damage too, however as Scofflaw correctly pointed out this was all very popular at the time.

later12

mickeyk wrote: »

I think it is perfectly reasonable to compare them if you are asking which has added more to the national debt throughout the period of our crisis.

First of all that might make sense if we were not tackling public expenditure (note public expenditure is not equal to public service salary costs).
We are undertaking a serious contraction in public spending, and public expenditure must be slashed across the board. But in the short to medium term, it would be madness to just suddenly bore a crater into it. Can you indicate what sort of contraction, in numbers, you might be suggesting, to see whether we agree?

Of course public spending is going to be significant, but ideally you should be able to offset this 'significant and ongoing' cost entirely through taxation

That is unrealistic at present - hopefully it will be achievable in the long term.

Our union leaders are on TV all the time berating banks while their own policies and crazy demands have caused damage too

Absolutely correct, but public expenditure and public service staff costs are not the same thing.

The_Honeybadger

later10 wrote: »

First of all that might make sense if we were not tackling public expenditure (note public expenditure is not equal to public service salary costs).
We are undertaking a serious contraction in public spending, and public expenditure must be slashed across the board. But in the short to medium term, it would be madness to just suddenly bore a crater into it. Can you indicate what sort of contraction, in numbers, you might be suggesting, to see whether we agree?
That is unrealistic at present - hopefully it will be achievable in the long term.

Absolutely correct, but public expenditure and public service staff costs are not the same thing.

Eh, maybe you should read my post again, I never said anything about boring a crater, nor did I say public expenditure equals public service salary costs. In fact I don't believe I mentioned salaries at all

Perhaps you could explain why you have referred to salaries??

My point was I think it is perfectly reasonable to compare the cost of the bank bailout against what the deficit is adding to our debts each and every year seeing as so many public figures are going around crowing about how the banks alone are sinking us, when it is clear that it is a combination of both the banking collapse, unsustainable public spending and a collapsing tax take. Of course I understand why it is convenient for those with a personal interest in the government maintaining it's current spend to share this view.

I also agree that we can't suddenly just close the deficit in one swoop, it has to be done incrementally, let's hope for all our sakes we can get our affairs in order in the next few years.

Permabear

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kaiser sauze

Rob A. Bank wrote: »

Im not sure what you mean...

The graphic clearly shows that our deficit in 2009 was 14.4% of GDP (blue columm) falling to 11.9% of GDP this year (if the bank money is subtracted)

A fall from 14.4% to 11.9% is not "runaway public spending" in my book...

Am I missing something ?



“the cheapest bailout in the world so far”
Brian Lenihan; 19 Nov 2008. Six One News.

No, you are not, but donegalfella believes that €1 spent by government is €1 too much, so you have to view his comments from his perspective.

hmmm wrote: »

I don't know what I did to upset you, but you seem to be following me around with your off the wall posts. My logic is clear, why you think I'm advocating massive tax hikes is beyond me.

We both frequent boards, so it is inevitable that we cross paths, sorry to make you feel like you were being stalked. :rolleyes:

How could we not have massive tax hikes and savage cuts to welfare trying to service €10Bn in interest payments, with no reductions in the liability, from, let's say, €40Bn government receipts?

Your logic leads to only my conclusion.

kaiser sauze

Soldie wrote: »

Considered necessary by whom? From what I can see, we've had little in the way of positive return from our "significant and continuous" public spending to date -- education standards are plummeting, and the health system is still shambolic, amongst countless other examples.

You are talking about return on spending and efficiency here not the actual amount being spent, which is what was raised.

We do need more accountability and return, of course, but let's get the spending under control first and then we can focus on gutting the Croke Park Agreement when the public service inevitably fail to reach their targets.

Scofflaw

donegalfella wrote:

This post has been deleted.

Exactly - the decision to move the state's tax base to consumption taxes during a bubble was obvious, politically easy, and very dangerous. It gave the government a vested interest in encouraging consumption and spending rather than saving, and a vested interest in ignoring irresponsible lending by the banks and irresponsible borrowing by the electorate.

It's worth pointing out that the government paid down the national debt using the bubble tax proceeds, which suggests that they knew quite well what the end result would be - however, it seems probable that they believed they could actually engineer a 'soft landing' at the end of it. It's interesting to speculate on how they intended to do that - I'd say they expected to be able to use the now-enormous banks in some way to cushion the expected deficits and avoid real austerity measures. If that's so, though, their failure to keep a really close eye on the banks becomes doubly reckless.

cordially,
Scofflaw

hmmm

Scofflaw wrote: »

It's worth pointing out that the government paid down the national debt using the bubble tax proceeds, which suggests that they knew quite well what the end result would be - however, it seems probable that they believed they could actually engineer a 'soft landing' at the end of it.

I may be wrong, but I don't believe any debt was ever paid off. Our ratio fell of course as the economy grew.

I prefer to ascribe to stupidity rather than malice the policies that were adopted and I really do believe the politicians thought we were on a sustainable path. Securitisation and the wonders of structured products seemingly meant that it was "different this time". We had a regulator who believed the banks were strongly capitalised at the moment of their downfall and a central bank who believed the property bubble was no such thing. Allied to that you had politicians with no background in economics and a class of property developers who seemed to be the leading entrepreneurs of their day. It was mentioned somewhere else that the DOF had few staff with economics backgrounds. The perfect storm of incompetence.

Soldie

kaiser sauze wrote: »

You are talking about return on spending and efficiency here not the actual amount being spent, which is what was raised.

We do need more accountability and return, of course, but let's get the spending under control first and then we can focus on gutting the Croke Park Agreement when the public service inevitably fail to reach their targets.

I take issue with both the return on our spending and the amount we are spending. In principle, I'm in favour of drastically reducing our public expenditure.

Scofflaw

hmmm wrote: »

I may be wrong, but I don't believe any debt was ever paid off. Our ratio fell of course as the economy grew.

You are, of course, correct:

hmmm wrote: »

I prefer to ascribe to stupidity rather than malice the policies that were adopted and I really do believe the politicians thought we were on a sustainable path. Securitisation and the wonders of structured products seemingly meant that it was "different this time". We had a regulator who believed the banks were strongly capitalised at the moment of their downfall and a central bank who believed the property bubble was no such thing. Allied to that you had politicians with no background in economics and a class of property developers who seemed to be the leading entrepreneurs of their day. It was mentioned somewhere else that the DOF had few staff with economics backgrounds. The perfect storm of incompetence.

I'm forced to agree - not that I find it particularly hard to do so!

The idea that "things are different this time" seems to be embedded in the human psyche. It was believed at the time of the dot-com boom, it was believed during the late Eighties deregulation bubble in the UK - and it appears to have been believed in all the crashes as well. Whether it's a bubble or a bust, people seem to believe nearly every time that everything will change or has changed - that this bubble represents a transition to a new economy, that this crash will result in the sweeping away of the old order. Yet when all the dust settles, it's rare for things to have changed by more than a percent or two. I wonder about the psychological root of it - a basic need to see one's own life as existentially important?

cordially,
Scofflaw

ISAW

hmmm wrote: »

I may be wrong, but I don't believe any debt was ever paid off. Our ratio fell of course as the economy grew.

Sorry but You are wrong1 I thin Mc sharry in 1987 had about 60 billion in debt and the economy was about the same size as the debt By Mc creevys time it was less than 30 billion and the economy had grown to over 100 billion.

Here is the ratio:
http://www.ntma.ie/NationalDebt/debtGDP_trends.php

Hmm it appears you have a point. It was only under Mc Creevy the debt was reduced ( from 2000 on)
http://www.ntma.ie/NationalDebt/levelOfDebt_Trends.php

the bank thing then kicks in in 2008 and changed the whole scene.

ISAW

Soldie wrote: »

I take issue with both the return on our spending and the amount we are spending. In principle, I'm in favour of drastically reducing our public expenditure.

Look at how pay has gone from under 9 to over 20 billion!

http://www.finfacts.ie/irishfinancenews/article_1021202.shtml

later12

mickeyk wrote: »

Eh, maybe you should read my post again, I never said anything about boring a crater, nor did I say public expenditure equals public service salary costs. In fact I don't believe I mentioned salaries at all

Perhaps you could explain why you have referred to salaries??

I presume when you referred to Union officials and their policies and crazy demands, that you were referring to their crazy demands with regard to public sector workers. I think that is a reasonable assumption to make. What union policies and crazy demands, then, were you referring to in this statement?

Our union leaders are on TV all the time berating banks while their own policies and crazy demands have caused damage too

My point was I think it is perfectly reasonable to compare the cost of the bank bailout against what the deficit is adding to our debts each and every year

It is reasonable to take into account both economic implications in light of one another, but to actually physically compare to two numbers - that's the strange part.
It would be like comparing public expenditure to e-voting, or The Spire or any other one-off expense. Comparing the bailout to capex, I could stomach, but an ongoing cumulative expense that must, necessarily in the short term hopefully, be in the red, come on. As you said yourself you cannot just close the deficit in one swoop.

later12

donegalfella wrote: »

This post has been deleted.

Nobody suggested it was, so I am not sure why you directed this point to me. It is inevitable that public expenditure is both significant and continuous, and at the moment, financed through debt facilities. And nobody mentioned public sector salaries specifically, by the way.