Irish Economy -What is worst case scenario?

Highnoon

Lets assume for a moment that the world economy or even just Europoean / Irish goes pear shaped - what kind of thuigs can we expect? Does anyone know articles detailing these things. Would it be that the government would have no money to pay wages of Gardai, pay social welfare etc. Euro becomes worthless, bartering the order of the day. Would it be bread lines ala the great depression in the US. Just trying to get an idea - 'just in case'. Maybe try and prepare in some way. Paranoid? Maybe .

Cill Dara Abu

We all die of starvation

Sand

Nothing too bad to be honest.

Ireland will still exist. The sun will still rise. People will still want to make money. People will adjust to the new normal and then move on. Look at Iceland - they were bullied and threatened, and assured they would be destroyed. Even their own politicians begged them to simply do what they were told.

Despite doing everything wrong, theyre still afloat and alive.

Delancey

Lets assume Ireland leaves the Euro ( or the Euro leaves Ireland ).
The Govt will establish a new currency ( lets call it the Punt ) which will either launch at a very low value to other currencies or will soon acquire a low value on the market.
Given our accursed position as a small and open economy which imports a great deal we can expect to see a surge in inflation as the value of our currency is eroded.

Owldshtok

Highnoon wrote: »

Lets assume for a moment that the world economy or even just Europoean / Irish goes pear shaped - what kind of thuigs can we expect? Does anyone know articles detailing these things. Would it be that the government would have no money to pay wages of Gardai, pay social welfare etc. Euro becomes worthless, bartering the order of the day. Would it be bread lines ala the great depression in the US. Just trying to get an idea - 'just in case'. Maybe try and prepare in some way. Paranoid? Maybe .

Short answer is nobody knows including every expert everywhere.
The world,it's economy and life is becoming more and more random everyday.

The future has just as much chance of turning out to be good as bad.
Try not to think about it as 'just in case'.It is highly likely we will have clean running water,shelter,enough to eat,sanitation and electricity.After that try to stay healthy and you will survive any impending armageddon.

Icepick

The rich get richer.

swampgas

We get through the current crisis, then we drink the kool-aid again by deciding to have another bubble. Probably put FF back into government while we're at it.

The UK managed two property bubbles barely 10 years apart - different circumstances, but maybe something similar could happen here ...

http://en.wikipedia.org/wiki/Affordability_of_housing_in_the_United_Kingdom

Manach

Based on historical models, such as Europe in the 1870s, we'd get amalagated into another stronger state. This would at least allow the public sector wages to be paid.

johnnyskeleton

The choice for the government is to reduce public sector pay, social welfare and general expenditure now, or hope that a day won't come when the money runs out.

Lockstep

IMHO: Ireland defaults, is unable to borrow the €10bn needed to fund the deficit and has to engage in austerity measures that make everything previous look insignificant: slashing welfare, laying off swathes in the public sector which further depresses aggregate demand and causes the private sector to downsize even further with various strikes and unrest.
Government tries to offset by printing more cash leading to hyperinflation and driving out MNC.

Or something.

Delancey

I'm amazed the IMF/ECB et al actually tolerate the Croke Park Agreement - talk of a con job on the Irish taxpayer ......

Count Dooku

Lockstep wrote: »

IMHO: Ireland defaults

Russia and Argentina defaulted 13 years ago and now performing much better then Ireland

WalterMitty

Delancey wrote: »

I'm amazed the IMF/ECB et al actually tolerate the Croke Park Agreement - talk of a con job on the Irish taxpayer ......

They will eventually tell gov to cut public sector pay to close deficit . The gov is hoping growth will materialise to allow them keep public sector pay and welfare at current rates but i dont see any serious growth in next decade with less disposable income , emmigration , high unemployment etc. We are no longer as attractive to foreign multinationals to create jobs here and those that are created then to be filled by highest level grads from mainland europe.

johnnyskeleton

Count Dooku wrote: »

Russia and Argentina defaulted 13 years ago and now performing much better then Ireland

Sure. If the one and only measure of success is GDP growth.

The mantra in economic circles these days seems to be ABG - Always Be Growing. There is no problem that cannot be solved with infinite high levels of growth. Even if there is no actual change in wealth or quality of life, it doesn't matter. Grow Grow Grow. That's what good economies do.

thebman

WalterMitty wrote: »

They will eventually tell gov to cut public sector pay to close deficit . The gov is hoping growth will materialise to allow them keep public sector pay and welfare at current rates but i dont see any serious growth in next decade with less disposable income , emmigration , high unemployment etc. We are no longer as attractive to foreign multinationals to create jobs here and those that are created then to be filled by highest level grads from mainland europe.

I don't think they will tell the government to do that if the government are announcing their 3 year budget plan. Not unless things deteriorate at an unexpected rate compared to government predictions.

Ireland's immense decline as shown on the graph on this thread should mean we are due for a larger and faster correction I would imagine. There have already been a few positive articles by sources that have no reason to be falsely positive about Ireland's prospects.

femur61

Delancey wrote: »

I'm amazed the IMF/ECB et al actually tolerate the Croke Park Agreement - talk of a con job on the Irish taxpayer ......

That really annoys me to let the PS continue to think they deserve all they get they. Don't get it, we the taxpayer is paying thier wages and we need to borrow 20bn a year to keep the in wages and fund thier wages.

ei.sdraob

The worst case scenario is exports being hit, this is the only good thing going for the economy

either due to:
* the country loosing control over corporation taxation, seem to be heading in that direction...
* the world economy going into another big recession hurting exporters, stocks markets are falling of a cliff yet again ...

Lockstep

Count Dooku wrote: »

Russia and Argentina defaulted 13 years ago and now performing much better then Ireland

Dunno much about Argentina but Russia is a very bad example. Their economy is based heavily around oil and gas (amounting to 25% of GDP and 40% of taxes) making it overly dependent on world energy prices and basically has the rest of the economy based around this.
If energy prices drop (as in 1998) Russia's economy would go into tailspin again.

Comparing a petrostate to Ireland is nowhere near a decent comparison.

Sea Sharp

Worst case scenario is unemployment levels stay the same or get a few percent worse over the next 4 years of austerity cuts and then Ireland is stuck paying off 5bn a year in loans for the next 60 years.
(We might see riots due to austerity cuts, we'll need to increase taxes and decrease welfare dramatically.)

But that's not really taking the rest of the world into consideration. A double dip recession or a Chinese property bubble burst or major world banks defaulting would change things for us and the world dramatically.

WalterMitty

thebman wrote: »

I don't think they will tell the government to do that if the government are announcing their 3 year budget plan. Not unless things deteriorate at an unexpected rate compared to government predictions.

Ireland's immense decline as shown on the graph on this thread should mean we are due for a larger and faster correction I would imagine. There have already been a few positive articles by sources that have no reason to be falsely positive about Ireland's prospects.

All the low hanging fruit has been picked. Its gettin harder and harder for gov to make targets of reducing deficit . When they fail to make targets set by IMF/EU then they will say you MUST find certain amount of pay bill savings in coming quarter/s. This targets are moving and if growth continues to be so anaemic then greater savings will be required.

thebman

WalterMitty wrote: »

All the low hanging fruit has been picked. Its gettin harder and harder for gov to make targets of reducing deficit . When they fail to make targets set by IMF/EU then they will say you MUST find certain amount of pay bill savings in coming quarter/s. This targets are moving and if growth continues to be so anaemic then greater savings will be required.

I think with Labour there, we are more likely to see higher taxes again first, "in the interest of fairness".

My own opinion would be that they should implement the reforms they claim they wanted in the run up to the elections to make welfare and the public sector run properly.