Sweden shrunk a huge deficit through self disipline

cyberhog

“We have been able to show self discipline, to do structural reforms,” Borg said in the interview. “But I think the demands on discipline are higher if you’re outside and that is probably an advantage at least in these kinds of difficult times.

Sweden serves as a case for economic sovereignty. Sweden has shown us that you can recover from a banking and housing crisis and still maintain an independent monetary policy. Being outside the euro zone has given Sweden the impetus to get their finances in order and it is now one of the strongest economies in the European Union.

Sweden dodged a bullet in 2003 when 56% of voters said no to joining the euro. I think it's clear the political leaders are now very grateful the people said no.

“We can be very clear that it will be a long time before Sweden is a part of the currency unit,” Borg said in an interview in Copenhagen yesterday. “It has not worked as we expected. The problems have been much more severe.”

http://www.bloomberg.com/news/2011-12-06/sweden-to-shun-euro-for-long-time-amid-severe-woes-borg-says.html

zero_hope

It would not matter if Ireland was outside of the Eurozone, because Irish people are greedy and irrational, not a very good combination. Your greed has been your own downfall. Without EU money you would not last a year, instead you would end up like a piss poor country like Uganda.

cyberhog

zero_hope wrote: »

It would not matter if Ireland was outside of the Eurozone, because Irish people are greedy and irrational, not a very good combination. Your greed has been your own downfall.

The Swedes got greedy too but they've come back strong and they've done so without sacrificing economic sovereignty.

zero_hope

cyberhog wrote: »

The Swedes got greedy too but they've come back strong and they've done so without sacrificing economic sovereignty.

There is much more social solidarity and a sense of fair play which does not exist at all in Ireland. The attitude for a normal Irish person is the following: "I wanna take everything I can steal."

zero_hope

zero_hope wrote: »

There is much more social solidarity and a sense of fair play which does not exist at all in Ireland. The attitude for a normal Irish person is the following: "I wanna take everything I can steal."

I'm quite sure you're trolling, but in case you're not, there's a huge difference between, "I wanna take everything I can steal." and, "I'm entitled to it" and the classic, "Sure, as long as you're not caught, you'll be grand".

zero_hope

Deleted User wrote: »

I'm quite sure you're trolling, but in case you're not, there's a huge difference between, "I wanna take everything I can steal." and, "I'm entitled to it" and the classic, "Sure, as long as you're not caught, you'll be grand".

Among the poorer people you have couples pretending to be separated to get more benefits and among the super rich you have examples of the transferring assets to their relatives so that they cannot be taken in bankruptcy court.

The attitude among the Irish is truly: "I wanna take everything I can steal"

meglome

cyberhog wrote: »

The Swedes got greedy too but they've come back strong and they've done so without sacrificing economic sovereignty.

What Permabear said

Permabear wrote: »

This post has been deleted.

Scofflaw

The problem for Ireland is that inside the euro self-discipline and forethought is still required - even more so for a small country - but if one doesn't apply it one doesn't feel the pinch immediately. Ireland didn't, but feels the pinch now, and is applying discipline.

Could Fianna Fáil have applied discipline and forethought during the Tiger? Yes. Did they? No. Can Ireland do it? Yes. How do we know? Because we did it in the Nineties. Can it be done inside the euro? yes. How do we know that? Because we're now doing it.

Nothing in using the euro prevented Ireland from being disciplined and sensible during the Tiger years. It allowed it...but so, first and foremost, did the Irish government and electorate.

cordially,
Scofflaw

Lockstep

Ireland is in the Eurozone and in recession.
Sweden is not in the Eurozone and is not in recession.
Therefore Ireland should not be in the Eurozone.
QED


What strange logic.

cyberhog

Lockstep wrote: »

Ireland is in the Eurozone and in recession.
Sweden is not in the Eurozone and is not in recession.
Therefore Ireland should not be in the Eurozone.
QED


What strange logic.

:rolleyes:

The situation in Sweden in the 90's had clear parallels to Ireland today. What Sweden shows us is that being outside the euro zone creates a very strong incentive to get finances in order.

“Being an outsider, you must make sure your competitiveness and public finances are in order. We have had to impose on ourselves a self-discipline that euro countries did not feel they needed. If you know the winter will be very cold, you have to ensure the house has been built well. Otherwise you will freeze.”

http://www.economist.com/node/21541032

Now while the europhiles here are happy for Ireland to give up economic sovereignty to "save the euro" I think it's safe to say the rest of Irish society still value our hard-fought independence.The point I'm making is that if Ireland was not in the euro zone we could still dig ourselves out of this hole and wouldn't have to cede fiscal control to Brussels or Berlin.

femur61

cyberhog wrote: »

The Swedes got greedy too but they've come back strong and they've done so without sacrificing economic sovereignty.

We haven't a great history of doing the right thing, or electing the right people. We as a nation like to believe what we want tohear, we like to look after our own interests and not in the national interest. Parish pump politics is rife. The members of the trade unions are happy to protect their won wages and pensions an let other people suffer e.g cuts in disability, fuel allowance, school classes for our children are under pressure because 80% of education bill goes on wages. (I'm not affected by SW changes but heartbreaking to hear stories). Same for HSE, instead of people getting a bed a huge portion of their budget is spent on administration.

I'm glad someone else is going to make the budgertry decisions- the ordinary working person might get some chance and practical choices will be made.

oscarBravo

cyberhog wrote: »

What Sweden shows us is that being outside the euro zone creates a very strong incentive to get finances in order.

Are you saying that Ireland doesn't have a strong incentive to get its finances in order?

cyberhog

oscarBravo wrote: »

Are you saying that Ireland doesn't have a strong incentive to get its finances in order?

Being outside the euro zone clearly creates a stronger incentive to get finances in order. Hence the reason France and Germany are pressing for "a renewed contract between the euro area member states" with stricter fiscal rules.

K-9

cyberhog wrote: »

Being outside the euro zone clearly creates a stronger incentive to get finances in order. Hence the reason France and Germany are pressing for "a renewed contract between the euro area member states" with stricter fiscal rules.

Like Latvia and Hungary who ended up in the IMF?

Can you outline how clear this incentive is and the difference between that and the Euro?

robd

zero_hope wrote: »

It would not matter if Ireland was outside of the Eurozone, because Irish people are greedy and irrational, not a very good combination. Your greed has been your own downfall. Without EU money you would not last a year, instead you would end up like a piss poor country like Uganda.

If Ireland had been outside the Eurozone the market would likely have not put up with the nonsense giveway budgets backed by unsustainable windfall property transaction taxes. Thus borrowing costs would have gone up forcing tighter fiscal policy thus dampening the affects of the problems we are now suffering.

Lockstep

cyberhog wrote: »

:rolleyes:

The situation in Sweden in the 90's had clear parallels to Ireland today. What Sweden shows us is that being outside the euro zone creates a very strong incentive to get finances in order.

No it doesn't. Sweden has a vastly different society with a much stronger economy.


How the hell is Ireland's current situation NOT a strong incentive to get finances in order.



Also, Zimbabwe isn't in the Eurozone and they are not exactly getting their finances in order.

cyberhog

Lockstep wrote: »

No it doesn't. Sweden has a vastly different society with a much stronger economy.

Sweden didn't have a strong economy in the 1990's it was a disaster! and their woes, like Ireland's, came from a property-induced banking crisis.

Lockstep wrote: »

How the hell is Ireland's current situation NOT a strong incentive to get finances in order.

Erm, calm down, there's no need to get irate. It's just a discussion. Sweden's finance minister said " the demands on discipline are higher if you’re outside" the euro zone. If you take that to mean Ireland doesn't have a strong incentive to get it's finances in order then you've clearly misinterpreted his point.

kippy

robd wrote: »

If Ireland had been outside the Eurozone the market would likely have not put up with the nonsense giveway budgets backed by unsustainable windfall property transaction taxes. Thus borrowing costs would have gone up forcing tighter fiscal policy thus dampening the affects of the problems we are now suffering.

If's and but eh, very very difficult to prove.

The "market" doesn't really give a toss about all that once they get their money.
It is probably true to say that the credit bubble would not have existed were we not in the Euro and as a knockon effect all the cheap money that allowed the government to do those giveaway budgets, change taxation etc. Thats not to say however they wouldn't have done something equally as daft.
It is a rather simplistic arguement to say that we would have been sound outside the Euro. For one, it is too late. Secondly it's almost impossible to argue the "what if's".

henryporter

If we're comparing Sweden and Ireland then you have to think about all of the factors that make one economy strong and the other non-existent. Number 1 reason is industry; Sweden has lots (cars, trucks, steel, telephony, furniture etc), we have FDI run call centres and pharmaceuticals and possibly software could be included (although that requires highly skilled work) This is the big problem here - we don't produce anything (if you start putting names to the list of Swedish industries noted above you get Scania, Volvo, Saab, Ikea, Electrolux, and Ericsson).

Reason 2: natural resources - again Sweden has lots of Iron, copper and silver. On the other hand we have very little of any, in fact we only have gas and we've given that away.

Reason 3: differences in taxation - Swedish people pay for their services through an aggressive taxation system, we have paid for ours in the past by a pyramid scheme of property stamp duty collection and now pay by borrowings.

There's loads more differences between us and the swedes, a bit like comparing apples to screwdrivers really. I can't find any facts on how cute hoorish the average swedish county councillor is but at a guess I'd say not a lot!

Lockstep

cyberhog wrote: »

Sweden didn't have a strong economy in the 1990's it was a disaster! and their woes, like Ireland's, came from a property-induced banking crisis.

Sweden's economic 'disaster' lasted 3 years and they returned to 4% GDP growth by 1993 (aside from a slight dip in 1995) before returning to 4% growth.
By contrast, Ireland's recession is still ongoing and there hasn't been GDP growth since 2007 and even Sweden's unemployment rate only once broke double digits (slightly over 10%)

You seem to think that just because Sweden had a recession it's somehow comparable to Ireland. It's not. It's the PIIGS countries, not the PIIGSS.

cyberhog wrote: »

Erm, calm down, there's no need to get irate. It's just a discussion.

Who's getting irate? It's not like I swore at you or anything

cyberhog wrote: »

Sweden's finance minister said " the demands on discipline are higher if you’re outside" the euro zone. If you take that to mean Ireland doesn't have a strong incentive to get it's finances in order then you've clearly misinterpreted his point.

You've just repeated a comment by Sweden's finance minister without explaining why it is relevant: why is there more of an incentive if you're not in the Eurozone?
Ireland is engaging in painful austerity with high unemployment, emigration, colossal levels of public and private debt. Is that not an incentive enough?

It's bizarre that you gloss over all of these and assume Ireland doesn't have a strong incentive to get its finances in order just because we're in the Euro. As if that somehow is the main reason when there are so many other problems we are facing.

What clear parallels are there apart from "Sweden had a recession which is minor compared to ours"?

cyberhog

Lockstep wrote: »

You seem to think that just because Sweden had a recession it's somehow comparable to Ireland. It's not.

Well that's YOUR opinion. The Swedish finance minister believes there is quite a bit in common.

In the early 1990s, Sweden was in a position that has much in common with the situation in countries 
like Spain and Portugal today.We had public deficits of 11 per cent, unemployment had risen from 3 
to 10 per cent and the risk premium against Germany was several percentage points.The interest rate 
even reached 500 per cent for a while.The Swedish fiscal policy framework was among the weakest 
in the EU. The market lacked confidence both in the Swedish economy and in the ability of the political 
system to turn things around.So Sweden has previous experience of the situation that many EU 
countries find themselves in today. 

...

One essential condition for achieving the overall objectives of fiscal policy is that the public finances 
are sustainable in the long term.If they are not, the financial market, households and businesses lose 
confidence in the ability of the public sector to meet its commitments.It is this type of crisis of 
confidence that several European countries are now experiencing.Doubt about the sustainability of 
public finances poses a risk that the focus will have to shift from measures that promote growth, 
welfare and employment to deficit and debt reduction.

A clear example of this is what happened in Sweden during the crisis in the early 1990s, when 
rapidly rising government debt forced far-reaching corrective measures.We can see other examples 
now in Greece, Ireland, Portugal and several other European countries, where major consolidation 
programmes are being implemented. 

http://www.imfs-frankfurt.de/index.php?option=com_docman&task=doc_download&gid=48&Itemid=&lang=de

Lockstep wrote: »

You've just repeated a comment by Sweden's finance minister without explaining why it is relevant:

Borg believes the problem of increasing debt may be aggravated in a monetary union.

... the tendency to larger budget deficits and increasing debt may be reinforced with a single currency. In a country with its own currency, a very expansive fiscal policy may affect interest rates, exchange rates and inflation and this may have a disciplinary effect. In an area with a single currency, this effect is weakened since the fiscal policy of an individual country has a limited effect on these variables. Hence the disciplinary effect may be small. Instead, the costs of an expansive fiscal policy are passed on to other countries.

....

The difficulties experienced in maintaining existing EU rules to curb budget deficits and growing public debt ratios indicate a need for nations to act more responsibly and strengthen national frameworks for fiscal policy.


Sweden’s experience with a fiscal framework

From an international perspective, the current fiscal policy framework in Sweden is quite strict. The current Swedish deficit target is much more
ambitious than what the Stability and Growth Pact requires. There is a broad political support for the rules, which also means a higher cost for
breaking them.

...

Since the introduction of clear rules, public finances have strengthened substantially in Sweden. Deficits have been replaced by surpluses and the public debt as a percent of GDP has fallen steadily from its highest at 73 per cent in 1996 to under 40 per cent. This also means that Sweden today has room to manoeuvre in taking measures to combat the financial crisis.

http://www.regeringen.se/sb/d/9698/a/123426

Lockstep

cyberhog wrote: »

Well that's YOUR opinion. The Swedish finance minister believes there is quite a bit in common.

http://www.imfs-frankfurt.de/index.php?option=com_docman&task=doc_download&gid=48&Itemid=&lang=de

Our situation is worse than that our unemployment levels are around 14.4%, our gdp growth is worse than what they saw (and our GDP is heavily reliant on FDI) and of course, we don't have the natural resources or industry that they do.

cyberhog wrote: »

Borg believes the problem of increasing debt may be aggravated in a monetary union.

An aggravating factor? Possibly, but to be expected from a Eurosceptic finance minister. YOu're glossing over my main question: how is Ireland's current situation not an incentive for better finances? We have more than enough incentives but aren't doing anything about it whereas other non-Euro countries are having enoigh trouble of their own.

cyberhog

Lockstep wrote: »

YOu're glossing over my main question: how is Ireland's current situation not an incentive for better finances?

Please don't misrepresent my position. There is a clear difference between 1) claiming Ireland's current situation is not an incentive for better finances which I did not do and 2) claiming the demands on discipline are higher if you’re outside the euro zone.


Btw your ridiculous comment about the Swedish finance minister being a euro skeptic underscores your ignorance on this subject.

“A floating exchange rate can be an asset but for most of the years that I’ve worked with the Swedish economy, it has been a factor that is also quite complicated to deal with when it comes to a downturn in the world economy,” Borg told the audience at CBS. “This time, it worked and in general I think it’s actually been an asset. To my mind, it would be an advantage for Sweden eventually to join the euro system.”

Lockstep

cyberhog wrote: »

Please don't misrepresent my position. There is a clear difference between 1) claiming Ireland's current situation is not an incentive for better finances which I did not do and 2) claiming the demands on discipline are higher if you’re outside the euro zone.

Then what exactly is your point?
Your entire argument rests on the idea that 'Sweden serves as a model for economic sovereignty' based around the Euro.
We have a myriad of incentives for us to ensure fiscal discipline (which our government is engaging in with austerity measures) and somehow not being in the Euro would further accelerate this.

You need to show that leaving the Euro would provide a significant incentive above and beyond what we already have. If we had a strong economy as well as the Euro (like Germany) then we would not need to bother getting our finances in order. But we don't and that is why we have an incentive.
It's Irish recklessness and stupidity during the Celtic tiger that caused this and maintains us responsible for our woes. Not the Euro.

Have you any evidence beyond Borg? So far your claims have relied on quoting him.

cyberhog wrote: »

Btw your ridiculous comment about the Swedish finance minister being a euro skeptic underscores your ignorance on this subject.

He's a close ally of Cameron, it would be very difficult to maintain a close relationship on European matters without being a Eurosceptic, no?
I was presuming you were familiar with soft-Euroscepticism.