Would the irish economy have contracted anyway

mariaalice

Re the Celtic tiger, the bankers and so on.

Ireland economy would have contracted and un employment would have risen anyway because of the contraction in the world economy, the internal Irish economy was keep going by cheap credit and exorbitant wage rates being paid to construction workers and other services employees, plus the way we shop and conduct business has changed due to the INTERNET, no matter what happens thing will never return to the way they were.

All the boarded up shops on the main st of every town is not solely caused by the banking collapse and the tightening up of credit.

daithicarr

Other counties haven't collapsed , and very few to the same level as us. Mostly due to better management.

So no we wouldn't be in this mess either way.

mariaalice

So if we didn't have the banking collapse every thing would be just grand!

daithicarr

I dont understand your logic, are you saying that if we didnt have the banking collapse and building bust , the two are inextricably linked. We would be still in a massive recession ?

How ?
it was the cheap credit and property bubble which caused the recession, so if we had managed our affairs better and avoided them, the overwhelming cause of our bust would be removed.

mariaalice

Un employment was "cured" by having so many people involved in the building industry and not just directly plus a whole range of services industries were keep going by the housing bubble( including banking), anything from hairdresser to restaurants and golf club, it was all artificial so there is no going back. The internet, banking on line, shopping on line have all completely changed the economy and the way we do bussiness and socialise.

daithicarr

But, if they had avoided putting so much of our national income in to something so unsustainable and maybe diversified out in a few other more sustainable sectors , like many other country's do, why would we have gone bust?

mariaalice

We could have manged the economy better thats undoubled true, however to solely blame the banking collapse for everything is completely off the mark I think.

Sand

If you didn't have the bankers/celtic tiger, GDP figures would have been far lower from 2003 onwards. GDP is just a measure of income, not wealth. If you borrow, GDP goes up. The GDP decline in recent years has been a reset down to a lower level once you removed the wild borrow and spend strategy of the banks/construction/public sector.

So in one sense, the Irish economy would not have contracted anywhere near as much as it has done, and would probably have far less long term damage done to it: the borrow and spend years led to a lot of people investing in black holes, or spending years training to do jobs which simply do not and will not exist anymore. A total waste of the economic potential over those years. You'd have to assume the Irish economy would have been smaller, but more robust by the time 2007/2008 rolled around if the bankers/social partners mania hadn't occurred.

Its one of the reasons we have to be very suspicious of the "stimulus" borrow and spend plans being circulated these days. It will probably make GDP go up, but it will lead to further long term economic damage in the medium term.

Boskowski

The Irish economy was deliberately over-exposed to the property market and related industries.
What was going to happen? Were we supposed to keep uptrading for ever and ever and buy second, third and don't know how many houses? Just to keep the builders and the plumbers and the electricians flush on the back of which we were all supposed to be flusher?
Of course it would have to come to an end at some stage. We probably had gone beyond a reasonable point already. The crisis was just a catalyst then.

mariaalice

Sand wrote: »

If you didn't have the bankers/celtic tiger, GDP figures would have been far lower from 2003 onwards. GDP is just a measure of income, not wealth. If you borrow, GDP goes up. The GDP decline in recent years has been a reset down to a lower level once you removed the wild borrow and spend strategy of the banks/construction/public sector.

So in one sense, the Irish economy would not have contracted anywhere near as much as it has done, and would probably have far less long term damage done to it: the borrow and spend years led to a lot of people investing in black holes, or spending years training to do jobs which simply do not and will not exist anymore. A total waste of the economic potential over those years. You'd have to assume the Irish economy would have been smaller, but more robust by the time 2007/2008 rolled around if the bankers/social partners mania hadn't occurred.

Its one of the reasons we have to be very suspicious of the "stimulus" borrow and spend plans being circulated these days. It will probably make GDP go up, but it will lead to further long term economic damage in the medium term.

I am wondering how you think social partnership contributed to economic contraction?

SupaNova2

mariaalice wrote: »

I am wondering how you think social partnership contributed to economic contraction?

One of the reasons for keeping the housing boom rolling was the giveaway budgets it allowed. The longer you stoke the boom to feed the public spending frenzy the more severe the inevitable contraction.