Turned a corner?

Dyslexic I am

The country currently spends 50 bn and receives 32 bn.

Total deficit: 18 bn.

Even if, by magic, the government's coffers swelled by 20% to 38.4 bn, and if spending is reduced by 20% to 40 bn, that still leaves a shortfall of 1.6 billion nicker.

There really is no way out of the economic crevasse I'm afraid.

Victor

The €50 billion includes sorting out the banks, for which we should get some (not enough!) money back.

Dyslexic I am

Victor wrote: »

The €50 billion includes sorting out the banks, for which we should get some (not enough!) money back.

If you take away 'sorting out the banks', how much is the total structural deficit?

And are you taking future increases of debt repayment into account?

easychair

The Irish economy has the highest level of debt to GNP in the developed World( even worse than what is popularly thought to be the most indebted economy in the world, Japan), and the second highest debt to GDP.

What that means in laymans terms is that Ireland is the most bankrupt economy in the world, even more so than Japan.

Japan has tools at its disposal that ireland simply does not have to help cope with that - Japan has the prospect of devaluation, is able to control its own interest rates, and Ireland also has considerably larger levels of private and corporate debt, which is the sort of debt that has a larger adverse impact on an economy than government debt.

There are constantly stories talked about that Ireland will have an export led recovery, and it should be noted that Japan exports a far higher percentage of its manufactured goods than does Ireland, and no one could seriously argue that Japan has reduced its debt burden or brought it under control after many years of exports led growth.

Victor

Thats only under one measure of debt. Many countries are in a much worse position than Ireland regarding pensions.

easychair

Victor wrote: »

Thats only under one measure of debt. Many countries are in a much worse position than Ireland regarding pensions.

When you are bankrupt, the level of debt is very important, and he cost of (a) servcing the debt and (b) paying off the capital depend on teh level of debt.

How will "pensions" affect Irelands ability to get out of its debt crises, in a way which Japan has not been able to use "pensions" for the last number of years to help Japan? Can you explain?

wildefalcon

As most people seem to judge the economy by house prices I'll get this said first:

House prices

They have quite a bit further to go, sorry, my guess is another 10 to 25 % from peak.

Sorry.

Balance of trade

Ireland is really winning, and if agri and biochem continue as they are, then Ireland will continue to improve

Public Sector/spending

Still very expensive, and poorly managed, but about par for the rest of the world. A LOT better than Grease. Impact on the economy: Higher taxes and commercial rates DON'T cause an economy to grow.

Native economy (local shops, small industry, the un-glamorous nuts and bolts of the economy)

Still badly messed up - they geared up during the tiger on cheap credit, and are paying a heavy price in interest and reduced revenues. Surviving, but unless things improve a lot will fail, the remainder will be ultra cautions and won't/can't expand if and when a lift happens.

The absence of credit at a local level will hamper new entrants to the local economy.

What can be done:

The native economy needs a boost, small businesses employ the most people. Government can make credit available, but unless a business is competitive it won't survive.

Overheads are the killer. So Government needs to reduce them, lower rates would be a start, relaxed planninng rules for start-ups, lower tax rates and lower employers taxes would also help.

The fall in property values will help here - lower rents help a heck of a lot.

The future

If the Gov't implements serious local government reform, and this translates into lower Rates, then the Economy has a good chance of coming out of recession in 2 or 3 years.

A raft of new taxes, failure to reduce costs (compare UK postage with ROI postage - 3 TIMES the price) and the burden of excessive local taxes will mean that the economy will remain in recession for a considerable period of time, until EU wide inflation makes the currently high wages and prices closer to those of competing economies.

Or perhaps not!

I'm getting some breakfast, now!

easychair

I'm not sure what most people judging the economy by house prices have to add.

the facts are that Ireland is the most bankrupt country in the developed world, and the levels of personal debt and corporate debt (excluding the financial institutions), are also the highest in the developed world.

Thats a hard position to get out of, and Japan is the prime example of undergoing years of depression and it still has no immediate prospect of recoveing from its still massive debts.

Debtocracy

Japan's not so bad in that most of its debts are internal. So the payment of debt by the govenrment is mostly a redistribution of money to different areas of the economy. The problem with Ireland is that so much of the boom was fuelled by external sources of credit, and therefore payback will be a process of draining money from the entire economy.

duke916

The future

...until EU wide inflation makes the currently high wages and prices closer to those of competing economies.

Or perhaps not!

I'm getting some breakfast, now![/QUOTE]


high wages??? wtf. wages have been slashed across the board of the middle and lower classes already. half the people in this country consider it more beneficial to be on the sh1t end of the dole queue than work 40 hours a week for a slaves wage. over the last three years ive had no increase whatsoever, no bonus and a slap in the face reduction of 30% which makes my wallet over 800euro lighter each month! its prices that need to come down on food products, petrol, insurances and other essential day to day living items, not more pay cuts. the balance is all wrong here. in the good times prices were high because wages were also high, now wages are low and prices still rise. if this continues, more businesses will fall because people simply cant (not wont) spend.

wildefalcon

duke916 wrote: »

The future

...until EU wide inflation makes the currently high wages and prices closer to those of competing economies.

Or perhaps not!

I'm getting some breakfast, now!

high wages??? wtf. wages have been slashed across the board of the middle and lower classes already. half the people in this country consider it more beneficial to be on the sh1t end of the dole queue than work 40 hours a week for a slaves wage. over the last three years ive had no increase whatsoever, no bonus and a slap in the face reduction of 30% which makes my wallet over 800euro lighter each month! its prices that need to come down on food products, petrol, insurances and other essential day to day living items, not more pay cuts. the balance is all wrong here. in the good times prices were high because wages were also high, now wages are low and prices still rise. if this continues, more businesses will fall because people simply cant (not wont) spend.

Sure!

Irish wages are high - top 8 in Europe.

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

Of course you are right, it doesn't feel like a lot. Wages are high, but the cost of stuff is much higher, so Irish people are worse off.

Which is why the Government has to tackle the cost base that business experience.

I'm not saying that these cost savings will be passed on by existing businesses, it doesn't work that way. What happens is that new business will start up and compete.

SO, if the Gov't made Rates lower, lowered insurance costs (Public Indemnity) and made it cheaper and easier to start a business, then prices would come down.

We're so job starved, that we tend to keep every business on life support, long after the plug should be pulled. If there is enough economic activity then the failure of one business means a lot less (in general) as there will be 3 or 4 new businesses to scoop up the lost trade and jobs.



Damn, that was a nice Pizza, good crust.

Minister B

With regard to turning a corner, Ireland's 10 year bond yield has fallen below 8% for the first time since November 9th 2010. Cautious optimism as this could rocket again if Greece was to pursue an orderly default.

http://www.bloomberg.com/quote/GIGB10YR:IND

easychair

The bond rates are really a small part of the problem, which is Ireland has too much debt, and is currently, as said, the most indebted country in the developed world.

The EU's solution? To encourage Ireland to keep adding more and more to the debt, which is an unusual way to try to resolve what is, effectively, a debt crises. Unfortunately the EU wants to do what is best for the EU, and not for any individual country within the EU.

ei.sdraob

Minister B wrote: »

With regard to turning a corner, Ireland's 10 year bond yield has fallen below 8% for the first time since November 9th 2010. Cautious optimism as this could rocket again if Greece was to pursue an orderly default.

http://www.bloomberg.com/quote/GIGB10YR:IND

Jebus whatever happened to perspective
thats the rate that brought IMF into to town about a year ago

Taxi Drivers

ei.sdraob wrote: »

Jebus whatever happened to perspective
thats the rate that brought IMF into to town about a year ago

Yes, but then yields were only going in one direction. They rose from 5% and blew through the 8% mark. Now the momentum is in the opposite direction. They were 14% in mid-July and have no tumbled back through the 8% mark.

8% is still a very high bond yield but if we are to get back to "normal" they had to pass through 8% at some stage - and today just happens to be that day. Getting back to 5% is the really significant one.

ei.sdraob

Taxi Drivers wrote: »

Yes, but then yields were only going in one direction. They rose from 5% and blew through the 8% mark. Now the momentum is in the opposite direction. They were 14% in mid-July and have no tumbled back through the 8% mark.

8% is still a very high bond yield but if we are to get back to "normal" they had to pass through 8% at some stage - and today just happens to be that day. Getting back to 5% is the really significant one.

No the significant point would be to actually going back to markets and selling bonds and then being able to manage the interest payments which are already in the 10 billion a year range on existing debt, never mind new one.

BTW none of the causes that led this country into such a trainwreck have been addressed or solved.

djpbarry

easychair wrote: »

The bond rates are really a small part of the problem, which is Ireland has too much debt, and is currently, as said, the most indebted country in the developed world.

By what measure?

easychair wrote: »

The EU's solution? To encourage Ireland to keep adding more and more to the debt, which is an unusual way to try to resolve what is, effectively, a debt crises.

It's not a debt crisis, it's a liquidity crisis.

ei.sdraob

djpbarry wrote: »

It's not a debt crisis, it's a liquidity crisis.

It is a debt crisis,
even the EU overlords finally admitting it with the likes of Barroso daily using the words now.

djpbarry

ei.sdraob wrote: »

It is a debt crisis...

Debts only become a problem when you don't have the cash to service them. Anyways, it's semantics, I suppose.

ei.sdraob

djpbarry wrote: »

Debts only become a problem when you don't have the cash to service them. Anyways, it's semantics, I suppose.

Points at Greece (and us for that matter)

Dyslexic I am

djpbarry wrote: »

By what measure?
It's not a debt crisis, it's a liquidity crisis.

LOL!

It is very much a debt crisis!

Ireland has to borrow(ie, take on debt) to get liquidity just to keep the lights on.

Back to school with you.

easychair

Dyslexic I am wrote: »

LOL!

It is very much a debt crisis!

Ireland has to borrow(ie, take on debt) to get liquidity just to keep the lights on.

Back to school with you.

You are right, and as ei.sdraob says even the EU seems to be waking up to it. I made a post here which might help to explain and show the extent of Ireland's debts http://www.boards.ie/vbulletin/showpost.php?p=74653789&postcount=148

djpbarry

Dyslexic I am wrote: »

Ireland has to borrow(ie, take on debt) to get liquidity...

So how does that make debt the problem? The problem isn’t the borrowing – Ireland has always borrowed. The difference now is that many have lost confidence in Ireland’s ability to repay those borrowings (although this is slowly being restored).

Let me put it like this. Ireland has recently taken on a whole load of new debt in the last couple of years – does all of that need to be repaid before the economy has a chance of recovering? Or does Ireland just need to balance the books?

ei.sdraob

Lack of liquidity is a result of having too much debt, the root cause remains debt. Both Greece and Ireland are unable to raise more debt due to no one on the open market willing to lend at rates that are not suicidal, this is a direct result of both having acquired too much debt, therefore having to turn to EU/IMF who are (somewhat grudgingly due to the size of debt and local politics) are willing (but keep dragging their feet over the years) to lend at lower rates but with strings attached.

One can say that a person died from blood loss, but the root cause of death would be the same person drink driving and hitting a wall.

Like I said earlier look at the language being used by euro politicians, at first (few years) they went thru denial but now they are moving to acceptance with Greek default being discussed in the open and the words being used finally reflecting the root causes.

cheerio

StudentDad

ei.sdraob wrote: »

Lack of liquidity is a result of having too much debt, the root cause remains debt. Both Greece and Ireland are unable to raise more debt due to no one on the open market willing to lend at rates that are not suicidal, this is a direct result of both having acquired too much debt, therefore having to turn to EU/IMF who are (somewhat grudgingly due to the size of debt and local politics) are willing (but keep dragging their feet over the years) to lend at lower rates but with strings attached.

One can say that a person died from blood loss, but the root cause of death would be the same person drink driving and hitting a wall.

Like I said earlier look at the language being used by euro politicians, at first (few years) they went thru denial but now they are moving to acceptance with Greek default being discussed in the open and the words being used finally reflecting the root causes.

cheerio

This 'economy' has turned so many 'corners' it's beginning to look like a hedge maze.

SD

ei.sdraob

StudentDad wrote: »

This 'economy' has turned so many 'corners' it's beginning to look like a hedge maze.

SD

Krugman commented on this yesterday



Graph speaks for itself

ardmacha

Graph speaks for itself

It speaks, but not very clearly. Obviously learned professors post things on their blogs that are about as clear as some of the stuff here.

What is the Y axis?. GNP per capita?? In what currency? Adjusted for PPP?
I'd say it is in dollars which explains the bulge at the end of 2010, which doesn't reflect anything real in the economy.

It shows a decline, not sure what it says about corners.

OMD

ardmacha wrote: »

It speaks, but not very clearly. Obviously learned professors post things on their blogs that are about as clear as some of the stuff here.

What is the Y axis?. GNP per capita?? In what currency? Adjusted for PPP?
I'd say it is in dollars which explains the bulge at the end of 2010, which doesn't reflect anything real in the economy.

It shows a decline, not sure what it says about corners.

It's all about lies and statistics

thebman

ardmacha wrote: »

What is the Y axis?. GNP per capita?? In what currency? Adjusted for PPP?
I'd say it is in dollars which explains the bulge at the end of 2010, which doesn't reflect anything real in the economy.

Really p***es me off about economists that so many do this.

If your drawing a graph, you appropriately label your axes so that it is clear what they represent unless you don't care if people get your point or not or your unsure of your figures or what they represent...

Yahew

ardmacha wrote: »

It speaks, but not very clearly. Obviously learned professors post things on their blogs that are about as clear as some of the stuff here.

What is the Y axis?. GNP per capita?? In what currency? Adjusted for PPP?
I'd say it is in dollars which explains the bulge at the end of 2010, which doesn't reflect anything real in the economy.

It shows a decline, not sure what it says about corners.

It shows a decline which is lessening, and possibly reversing.

Sand

It also shows theres been temporary rallies previously, which have then been followed by further declines. The good news story is from Q2. Q3 will be remembered for the ECB shoving the struggling European economy under an oncoming train in the name of idealogical purity. How Ireland is doing is that unemployment continues to rise, as does the long term unemployment problem.

And as Krugman noted, some growth is not unusual. Economies tend to grow over the long term. The real key for Ireland is to grow *enough* to sustain all the debts that have been loaded on our shoulders. And to reduce unemployment in line with the plans targets. And to gain control of the fiscal situation - with the unions already threatening war over modest pension reform which will save the princely sum of a few hundred million in 2050...

We're barely into the woods, let alone out of them.