For those who think NAMA/Anglo are our only problem...

DeVore

Just tweeted this but I think it deserves more than 140 chars of discussion!

http://www.bbc.co.uk/news/business-13366011

Mouse over the names of countries to see the graphs, but I've highlighted Portugal Greece and Ireland there. Anyone see a trend?

Also, watch Portugal today. Obviously Greece is a hotspot given their vote in parliament but Portuguese bonds fall due today and its possible they wont be able to pay them.

DeV.

stevenmu

+1, our deficit is a huge problem. There are some causes for hope though.

One is that we have a relatively small and agile (and export led) economy, turning around such a big deficit won't be as hard for us as it might be for other larger economies.

Another is that various figures for the deficit sometimes include at least parts of the 'bank bailout' and/or 'recapitalisation', though it's not clear how much they factor into that graph. So those payments will hopefully dissapear in the near future, and if the banks can recover well may actually contribute to future income.

It is still the biggest problem facing us by far though, and it seems to be often overlooked by commentators in the media, presumably becuase they don't want to be percieved as advocating the massive spending cuts and tax increases obviously needed.

SugarHigh

I think it shows why we haven't had riots and that's because we really haven't had to face serious cuts. People haven't felt the full brunt of the recession because we are still deluding ourselves and overspending.

Nijmegen

Regardless of our banking crises, our deficit problem would still be one of the largest in the world.

As I've said many times, we paid for our welfare state through once off taxes like stamp duty. A 30% tax take in a welfare state is not sustainable.

Tax as a % of GDP either widens to 45%+ or we narrow the scope of the state.

Sand

One is that we have a relatively small and agile (and export led) economy, turning around such a big deficit won't be as hard for us as it might be for other larger economies.

The thing is, we heard this 2-3 years ago as well. We have yet to find a way to tap this mythical small/agile/export led economy.

It might be truer to say we have a small, agile, export sector thats mainly here for the low corporate tax rates and EU membership, and given increasingly poor educational standards in the work force they might not be interested in hanging around to be milked.

We then have a larger, sluggish public sector/renter economy which gorges itself on borrowed money and which fights tooth and nail to keep its snout firmly in the tough.

Im still bemused that in the face of deficits, the HSE prefers to close hospitals and end services rather than cut wages, and/or reform work practises. There doesnt seem to be any of the agility we're famed for to be found. Services didnt improve significantly despite massive spending on health, but even modest cuts must lead to widespread closures...

We need serious reform of how services are delivered in Ireland, but with the trade unions Labour in power, it seems unlikely anything will be achieved other than shuffling a few deck chairs around whilst we wait for the Germans to take on the burden of paying for our Loreal public sector. What "reform" does come will be focused on removing public services from the Irish taxpayers, whilst maintaining wages, pensions, benefits and crazed work practises for the public sector.

Another is that various figures for the deficit sometimes include at least parts of the 'bank bailout' and/or 'recapitalisation', though it's not clear how much they factor into that graph. So those payments will hopefully dissapear in the near future, and if the banks can recover well may actually contribute to future income.

Irish banks will be deleveraging for a decade or more. Theyre highly unlikely to generate any sort of return on investment for the Irish govenment, especially given policy up until this point has been to ensure the Irish taxpayer gets the absolute worst deal possible.

Sand

Nijmegen wrote: »

Tax as a % of GDP either widens to 45%+ or we narrow the scope of the state.

I think, given the ability of the state to plan or deliver services, the Irish tax payer would be better off narrowing the scope of the state and saving their money so they can go with the private option. A small, incompetent state is less of a problem than a large, incompetent state.

What benefit would there be in paying 45% GDP in taxes, when wed still have to pay for private health insurance to get access to proper treatment afterall.

Icepick

Public sector and people on welfare say hi.

DeVore

We need a public sector. We need Social Welfare too.

What we also need is to live within our means and that graph is pretty terrifying.

DeV.

Nijmegen

DeVore wrote: »

We need a public sector. We need Social Welfare too.

What we also need is to live within our means and that graph is pretty terrifying.

DeV.

I think it's very clear that the Irish state is determined to remain largely the same size (reducing from €54.7bn in 2010 to €48bn in 2014 by the four year plan) and sustain itself through increased tax revenue.

I would argue that we have not looked seriously enough at what kind of a state we want to be - and the option of reducing the size of the state has not been discussed in any major, total rethink of the way we live, sense.

oppenheimer1

While the deficit graph doesn't make for nice reading, its important to note that the bailout monies are included within it. More important is the structural deficit, which is around 10%. Still far too high of course but not as bad as that graph makes out

hinault

Nijmegen wrote: »

I think it's very clear that the Irish state is determined to remain largely the same size (reducing from €54.7bn in 2010 to €48bn in 2014 by the four year plan) and sustain itself through increased tax revenue.

I would argue that we have not looked seriously enough at what kind of a state we want to be - and the option of reducing the size of the state has not been discussed in any major, total rethink of the way we live, sense.

I agree with what you posted, Nij.

In 2000, total government expenditure totalled €25 billion.
By 2007, total government expenditure totalled €50 billion.

A 100% increase in expenditure in a 7 year period is neither rational or prudent.

Dannyboy83

Nijmegen wrote: »

Regardless of our banking crises, our deficit problem would still be one of the largest in the world.

As I've said many times, we paid for our welfare state through once off taxes like stamp duty. A 30% tax take in a welfare state is not sustainable.

Tax as a % of GDP either widens to 45%+ or we narrow the scope of the state.

If you accept that increased taxes means reduced output, then wouldn't you agree 45% is probably on the low side?

i.e.
If GDP didn't contract further, 45% might cut it.
But because more tax=lower GDP, you have to increase by more, on a declining output, e.g. 50-55% on the actual 2015 figure



I wonder what these tax increases are going to amount to, per person?
20% decrease in net income per person?
Any takers?

Scofflaw

oppenheimer1 wrote: »

While the deficit graph doesn't make for nice reading, its important to note that the bailout monies are included within it. More important is the structural deficit, which is around 10%. Still far too high of course but not as bad as that graph makes out

Yes - the solo nosedive by Ireland there reflects the fact that we're the only country to have officially taken our bank bailout costs onto the sovereign balance sheet.

The graph for Ireland should look more like the red line here:



Alternatively, several of the other economies should also be nose-diving the same as us.

Mind you, the basic point is quite correct - our deficit will amount to much more than the bank bailouts plus NAMA.

cordially,
Scofflaw