Could the deficit be cut all in one go?

ilovesleep

Cut the deficit be cut in one go? It doesn't make sense to borrow money, to give it to us, to then take it back from us to give it back to the lenders with interest.

smcgiff

Whatever the deficit is now you'd need to cut more than that, because if you only cut by the present deficit the much weaker economy would have less activity and therefore less tax intake - and therefore a deficit would still exist.

In short it would be too much of a shock to the system, imo.

RichardAnd

I agree somewhat that an immediate readjustment could be too much of a shock to the system to be feasible. I am aware that the country was run on less than 30 billion euro only a decade ago but to think that simply going back to 2000 spending will be seamless and clean is total nonsense.

Realistically, our economy should never have been allowed to swell as it did. Those hundreds of thousands of boom time jobs never should have existed either but all of this was a gradual process; it didn't happen over night. Likewise, I don't see us getting back to stability over night either.

One way or another though, the next few years will be "interesting".

ei.sdraob

smcgiff wrote: »

In short it would be too much of a shock to the system, imo.

Wait till we have no choice but to default, then we get to learn what "shock" means

ilovesleep

RichardAnd wrote: »

One way or another though, the next few years will be "interesting".

The next few more years will be very black

murphaph

It can't realistically be cut in one fell swoop (though that may well happen if we have to default) but we have to balance the books within 3 years or the debt we'll have built up will be a millstone around our kids necks-totally unfair to saddle them with this generation's debt.

We have become a state in which it makes more sense to remain on benefits than work for many people and this is the road to ruin. It should NEVER be more attractive to be on benefits than to work for your survival.

Benefits should go back to PRSI contributions as soon as possible. People made recently unemployed should benefit more than the layabouts who've been on the scratch for 10 years. There has to be a phased reduction in benefits with time. It has to be set up to basically "force" you to to take work, any work, if you've been on the dole for a longer time.

The public sector needs total reform as we all know and this includes paying wages that a country with real tax revenues of 32bn can afford. If we can't afford to pay the wages demanded by public servants then we'll have to do without their services if they won't reduce their demands.

There is a way out however. We saw this week Total Fitness go wallop and blaming high rents which their (idiot) landlords refused to negotiate on. Now the landlords have no income and will (in a few weeks probably) seek new tenants and will only find them for reasonable rents. This process, though painful, will allow Ireland to "reboot" to sane levels of rent, pay, welfare etc.

ilovesleep

IMO, SW cutting would have to happen in conjunction with culling immigration. It doesnt make sense to continue allowing immigrants in to work while we can't even look after our own, unless if immigrants have skills that the country needs and can be put to good use. Does the new government have any plans to cull immigration?

RichardAnd

murphaph wrote: »

There is a way out however. We saw this week Total Fitness go wallop and blaming high rents which their (idiot) landlords refused to negotiate on. Now the landlords have no income and will (in a few weeks probably) seek new tenants and will only find them for reasonable rents. This process, though painful, will allow Ireland to "reboot" to sane levels of rent, pay, welfare etc.

Total fitness were also allowing people to join up to the day they closed. I only joined before christmas so I've lost the lions share of my membership fee :mad: I think there's more to Total Fitness liquidating than rents though your point is still sound.

Permabear

This post has been deleted.

silverharp

essentially either at an individual level , a company level or even a country level this is a balance sheet crises. Its obvious that interest rates will rise and whoever is at the margin will topple first. For instance looking at Total Fitness, given their locations I assume they were one of the new kids on the block and they probably had the most debt, while rents were part of it they probably still had the most debt hence they folded first the same is going to be true of alot of consumer businesses here.
All I can see the government doing is choosing who goes bankrupt and protecting client sub groups all wrapped up in the national interest and some pavlovian belief that "credit needs to get flowing again"

marmurr1916

Cutting the deficit in one go, instead of gradually over the next four to five years, would be madness.

There is a gap of €16 billion between the state's receipts and its spending.

If €16 billion were cut in one go, there would have to be tens of thousands of redundancies in the public sector - all at once - which would lead to a massive fall in demand in the domestic economy, defaults on mortgages and a huge rise in unemployment payouts. Although the money to pay benefits would not be there.

Cutting the deficit in one go would create such a wave of anger and resentment against the government that Irish democracy would be in peril.

ei.sdraob

marmurr1916 wrote: »

Cutting the deficit in one go would create such a wave of anger and resentment against the government that Irish democracy would be in peril.

Because "Irish democracy"
has at some stage morphed into
"Being dependent on state handouts" :rolleyes:

professore

RichardAnd wrote: »

Total fitness were also allowing people to join up to the day they closed. I only joined before christmas so I've lost the lions share of my membership fee :mad: I think there's more to Total Fitness liquidating than rents though your point is still sound.

In fairness to them, should they have said - "We're negotiating our rent with our landlord, so until then we are not taking any memberships or paying our staff as it might not work out". I have a lot of sympathy for you but also for them. If you want to point blame, blame the landlords, who think they are owed a living from the rest of us by sitting on property, creating nothing, employing very few, and extorting money from honest businesses.

thebman

professore wrote: »

In fairness to them, should they have said - "We're negotiating our rent with our landlord, so until then we are not taking any memberships or paying our staff as it might not work out". I have a lot of sympathy for you but also for them. If you want to point blame, blame the landlords, who think they are owed a living from the rest of us by sitting on property, creating nothing, employing very few, and extorting money from honest businesses.

Total Fitness has a fair few complaints against them from members and former members as far as I know. I wouldn't be necessarily calling them honest.

http://www.google.ie/search?hl=en&client=opera&hs=dSx&rls=en&channel=suggest&q=total+fitness+complaints&aq=1&aqi=g2g-m4&aql=&oq=total+fitness+com