Nobel economist predicts Irish 'lost decade'

Mr.Micro

Nobel economist predicts Irish 'lost decade' as Troika complete review

Meanwhile, the American economist and Nobel Memorial Prize winner Joseph Stiglitz has warned that Ireland will experience a "lost decade" as a result of the European Union-International Monetary Fund bailout.
Mr Stiglitz is in Ireland as a guest of the UCD Clinton Institute and the Roosevelt Institute.
Speaking on RTÉ's Morning Ireland he said: "We know that austerity has essentially never worked and why that was not understood by the European leaders is beyond me.
"It was almost a religious notion if you sin so badly you have to feel the pain."
Mr Stiglitz, who won the Nobel Prize for Economics in 2001, said he was astonished at how little protest there was in Ireland following the decision to bailout the banks.
He said it was a "mistake" to burden taxpayers with bank debt.
"The ECB and others wanted to save the banks, so it was a trade off between banks all over Europe and the Irish citizens."
Asked about the economy's prospects of recovery, Mr Stiglitz said: "Will you get back to the growth path you were on? Almost surely, no.
"Will you get back to where you were with maybe a lost decade? Yes, I think you will. But it will be a lost decade, at least."
"That's the reality that Europe needs to wake up to," he added.

That piece sounds very worrying. Getting out from under the Troika is one thing, but it leaves us very vulnerable. Interesting times ahead methinks.


http://www.rte.ie/news/business/2013/1108/485479-nobel-economist-predicts-irish-lost-decade/

Permabear

This post has been deleted.

murphaph

Permabear wrote: »

This post had been deleted.

Yeah I was thinking the very same. Just another 5 years to go and happy days are here again!

Silentcorner

It is perfectly believable that we are looking at a lost decade. You only need look at the constant slashing of economic growth estimates...

Not one politician can claim that "nobody warned them about it"...not one.

All the while we have some of the best paid public figures in Europe.

Sheldons Brain

All the while we have one of the lowest proportions of GDP as tax in Europe.

Count Dooku

Sheldons Brain wrote: »

All the while we have one of the lowest proportions of GDP as tax in Europe.

We have biggest difference between GDP and GNP and most progressive tax in Europe...

hmmm

Nobel Prize-winning economist Joseph Stiglitz said the euro currency could dissolve “any time now.”

That was 2011. I'd listen to Meg the Soothsayer before I'd listen to any economist, their whole "science" has been exposed as a sham over the past few years.

Mr.Micro

hmmm wrote: »

That was 2011. I'd listen to Meg the Soothsayer before I'd listen to any economist, their whole "science" has been exposed as a sham over the past few years.

Well you must admit it came close to it when Greece defaulted, then there was trouble with Spain, Portugal, and of course ourselves. The Euro is still on a rocky road IMO.

_Kaiser_

Permabear wrote: »

This post had been deleted.

If it only takes a decade to recover from the mess that FF and FG have left us I'd be amazed TBH

Scortho

Kaiser2000 wrote: »

If it only takes a decade to recover from the mess that FF and FG have left us I'd be amazed TBH

No labour in there? No sf (voted for bank guarantee)?

hmmm

Mr.Micro wrote: »

Well you must admit it came close to it when Greece defaulted.

No, no it didn't.

Where are all the economists who were screaming that the Euro was going to collapse a few years ago? Sparking panic in Ireland. I'll tell you - most of them had the decency to go into hiding in their universities, but some of them are still building their media careers.

tipptom

Scortho wrote: »

No labour in there? No sf (voted for bank guarantee)?

Why are the Greens and the PDs left out of this party?

KindOfIrish

Mr.Micro wrote: »

Nobel economist predicts Irish 'lost decade' as Troika complete review




That piece sounds very worrying.


http://www.rte.ie/news/business/2013/1108/485479-nobel-economist-predicts-irish-lost-decade/

Don't worry! It's just usual anglo-saxon anti-european propoganda.
And austerity works. The best example is Germany.

Rightwing

KindOfIrish wrote: »

Don't worry! It's just usual anglo-saxon anti-european propoganda.
And austerity works. The best example is Germany.

Austerity doesn't work, it's not meant to work. It's not meant to be used, if it's needed you know your politicians failed.

As for that economist, he thinks you can solve all man made problems by printing money. :rolleyes:

Brussels Sprout

Rightwing wrote: »

Austerity doesn't work, it's not meant to work. It's not meant to be used, if it's needed you know your politicians failed.

As for that economist, he thinks you can solve all man made problems by printing money. :rolleyes:

So on the one hand you're saying that people shouldn't be made to live within their means (i.e. austerity) but on the the other hand you can't print your way out of trouble using quantitive easing as a stimulus.

What other options does that leave you

Rightwing

Brussels Sprout wrote: »

So on the one hand you're saying that people shouldn't be made to live within their means (i.e. austerity) but on the the other hand you can't print your way out of trouble using quantitive easing as a stimulus.

What other options does that leave you

You've just made the classic mistake.

Living within your means is exactly what should be done, but that's not what austerity is about. Economies that live within their means won't have to resort to austerity. A subtle but critical difference.

Scortho

tipptom wrote: »

Why are the Greens and the PDs left out of this party?

Apologies. I forgot about then, like everyone else!
Green who?

Sand

hmmm wrote: »

No, no it didn't.

Where are all the economists who were screaming that the Euro was going to collapse a few years ago? Sparking panic in Ireland. I'll tell you - most of them had the decency to go into hiding in their universities, but some of them are still building their media careers.

Yes, yes it did. It took Draghi going into the ECB and taking everything Trichet and Co had established as the rules and restrictions and throwing it out the window. Remember all the people telling us what the ECB and EU couldn't do back in 2010 and 2011? They're still around today too.

Draghi established a somewhat sane ECB response whereby he acknowledged that the ECB would do whatever it takes to preserve the Euro, regardless of politicial incompetence. That was something Trichet repeatedly refused to do - it bought a huge amount of time for the Eurozone.

The underlying contradictions of the Eurozone remain though.

As for the lost decade: yes, we've had 5 years already and have no reason to presume a hugely indebted economy with high unemployment and structural failings is going to do any better than flatline growth over the next few years. Every year growth rate projections are cut, and cut again.

coolshannagh28

This is a standard of living issue ,the Germans are willing to endure a lower standard of living than the rest of us in order that Germany advances economically .The Americans have recently complained about this with reference to low domestic demand in Germany depressing the Eurozone and the wider world economy . Its obvious that the German economic strategy is the most efficient as their lower standard of living makes them ultra competitive ,the converse of this is Ireland where we enjoy a higher standard of living than our economy warrants but it is politically impossible to cut it thus we have faux austerity rather than structural reform,leading to the lost decade Stiglitz speaks of .

Frank Lee Midere

coolshannagh28 wrote: »

This is a standard of living issue ,the Germans are willing to endure a lower standard of living than the rest of us in order that Germany advances economically .The Americans have recently complained about this with reference to low domestic demand in Germany depressing the Eurozone and the wider world economy . Its obvious that the German economic strategy is the most efficient as their lower standard of living makes them ultra competitive ,the converse of this is Ireland where we enjoy a higher standard of living than our economy warrants but it is politically impossible to cut it thus we have faux austerity rather than structural reform,leading to the lost decade Stiglitz speaks of .

They have plenty of spending power. They just are not property mad like us "AngloSaxons" - Ireland, the UK and the US.

tipptom

coolshannagh28 wrote: »

This is a standard of living issue ,the Germans are willing to endure a lower standard of living than the rest of us in order that Germany advances economically .The Americans have recently complained about this with reference to low domestic demand in Germany depressing the Eurozone and the wider world economy . Its obvious that the German economic strategy is the most efficient as their lower standard of living makes them ultra competitive ,the converse of this is Ireland where we enjoy a higher standard of living than our economy warrants but it is politically impossible to cut it thus we have faux austerity rather than structural reform,leading to the lost decade Stiglitz speaks of .

I would like to cut back on our 1 billion a month borrowing,but f*ck it,i don't want to live like a German.

Rightwing

coolshannagh28 wrote: »

This is a standard of living issue ,the Germans are willing to endure a lower standard of living than the rest of us in order that Germany advances economically .The Americans have recently complained about this with reference to low domestic demand in Germany depressing the Eurozone and the wider world economy . Its obvious that the German economic strategy is the most efficient as their lower standard of living makes them ultra competitive ,the converse of this is Ireland where we enjoy a higher standard of living than our economy warrants but it is politically impossible to cut it thus we have faux austerity rather than structural reform,leading to the lost decade Stiglitz speaks of .

Very good post. Who'd listen to the Americans now?

tipptom wrote: »

I would like to cut back on our 1 billion a month borrowing,but f*ck it,i don't want to live like a German.

You'll have no choice on the matter soon enough.

Scortho

Having been to Germany, I'd definitely like to live there long term. They just get up and go and do it, while paddy sits around wanting someone else to do it for him.

tipptom

Scortho wrote: »

Having been to Germany, I'd definitely like to live there long term. They just get up and go and do it, while paddy sits around wanting someone else to do it for him.

Well why don't you just do that and do take your hero Johnnie Ronan with you please,feel free to take the Maybach,leave us lazy inferior PADDIES sitting around waiting for someone else to do something for us.

Jesus,i lived in England in the early eightys and we used to drink in a conservative club in a village for the cheap drink,some of them old boys would make you both laugh and cringe for them in what they would say about the Irish but some posters here makes them look like liberals.

Scortho

tipptom wrote: »

Well why don't you just do that and do take your hero Johnnie Ronan with you please,feel free to take the Maybach,leave us lazy inferior PADDIES sitting around waiting for someone else to do something for us.

Jesus,i lived in England in the early eightys and we used to drink in a conservative club in a village for the cheap drink,some of them old boys would make you both laugh and cringe for them in what they would say about the Irish but some posters here makes them look like liberals.

When have I ever said he was a hero of mine?
Is he acting illegally? No. But paddy will moan about him off doing business deals and that it's not fair because paddy can't do these deals himself.

Me a conservative? I know very few conservatives who'd support abortion, gay marriage etc.

Frank Lee Midere

Scortho wrote: »

When have I ever said he was a hero of mine?
Is he acting illegally? No. But paddy will moan about him off doing business deals and that it's not fair because paddy can't do these deals himself.

Me a conservative? I know very few conservatives who'd support abortion, gay marriage etc.

He says your anti-Irish rhetoric was like what English conservatives in the 80's would come out with. Your other beliefs were not up for discussion.

Germany is far from an entrepreneurial culture these days. Ireland is more so, unfortunately most is Gombeen property related investment.

tipptom

Frank Lee Midere wrote: »

He says your anti-Irish rhetoric was like what English conservatives in the 80's would come out with. Your other beliefs were not up for discussion.

Germany is far from an entrepreneurial culture these days. Ireland is more so, unfortunately most is Gombeen property related investment.

I go to a lot of meetings of small start ups and I have to say you would be amazed at the amount of people there is with great enthusiasm and diversity of brilliant ideas, unfortunately we are told straight of the bat that there is no money for these start ups,it is all put in to luring big corporates to Ireland and anything and I mean anything hi-tech,but there is a great spirit to carry on despite the government and banks.

Small business employ 60% of the people with jobs in this country but that does not seem to matter as long as Enda and Richard can be seen on the evening news with some American CEO announcing 100 new jobs that may come to fruition in 2015 if they haven't pulled out to India by then.

NoCrackHaving

Scortho wrote: »

When have I ever said he was a hero of mine?
Is he acting illegally? No. But paddy will moan about him off doing business deals and that it's not fair because paddy can't do these deals himself.

Me a conservative? I know very few conservatives who'd support abortion, gay marriage etc.

Pffff, social and economic conservatives are very different things. To claim someone like Ron Paul isn't ultra conservative on economic issues while remaining liberal on social issues is ridiculous.

Just because you support gay marriage and abortion doesn't mean that you're not a follower of Reagan and Thatcher on economic issues.

harpsman

tipptom wrote: »

Well why don't you just do that and do take your hero Johnnie Ronan with you please,feel free to take the Maybach,leave us lazy inferior PADDIES sitting around waiting for someone else to do something for us.

Jesus,i lived in England in the early eightys and we used to drink in a conservative club in a village for the cheap drink,some of them old boys would make you both laugh and cringe for them in what they would say about the Irish but some posters here makes them look like liberals.

So you re happy to sit there and take "racial" abuse just for a bit o cheap grog-jesus i wouldnt be boasting about that.No wonder yer man is slaggin off paddies for sittin on their arses moaning.

Dave!

Possibly off-topic, but what do commentators mean when they say that austerity "doesn't work"? I'm no economist, but is its purpose not to reduce the deficit? I would think in general it's quite good at that... Certainly it's working in Ireland!

Again I may be wrong, but I don't think anyone argues that austerity actually grows the economy, how could it? The idea is surely to reduce the deficit (austerity) while trying to grow the economy (stimulus and other measures) in a sustainable way at the same time.

Cookie_Monster

Dave! wrote: »

Possibly off-topic, but what do commentators mean when they say that austerity "doesn't work"? I'm no economist, but is its purpose not to reduce the deficit? I would think in general it's quite good at that... Certainly it's working in Ireland!

Again I may be wrong, but I don't think anyone argues that austerity actually grows the economy, how could it? The idea is surely to reduce the deficit (austerity) while trying to grow the economy (stimulus and other measures) in a sustainable way at the same time.

Austerity is about making huge cuts in spending and services though, that has not happened. There have been cuts all right but nothing severe enough to be considered any form of austerity IMO

Dave!

Yeah I know, compared to Greece or somewhere our economic policies can hardly be called austere But nevertheless there are cuts to services and social welfare, and increases in taxes. Most commentators who say that austerity "doesn't work" are happy to call what we are doing "austerity".

spank_inferno

Unfortunately the government didnt have the grapes to be honest regarding austerity.

Knowing the electorate we have they chose to be all things to all people.... Growing the economy while reducing spending & borrowing.... (false of course, but its what the public wanted to hear).

It grinds my gears also when I hear "austerity doesnt work".
In a year or two the gov will all but have eliminated the primary defecit.
It took time, could have been done better, but it will be done.
So austerity did work.

So we will have a leaner, cheaper public service & welfare state.

Then the government can focus more of its energy on real growth.

tipptom

harpsman wrote: »

So you re happy to sit there and take "racial" abuse just for a bit o cheap grog-jesus i wouldnt be boasting about that.No wonder yer man is slaggin off paddies for sittin on their arses moaning.

What was I supposed to do,start body slamming 75 year olds for making nasty remarks that they were going to be making anyway if I was there or not.
A lot of them were ok,used to tell me about fighting with "pat" in the war and I don't think I was going to change their views while they were waiting in Gods waiting room and they got back as good as they gave.

It bothers me more when I hear it from self loathing Paddies.

Anyway don't think it is lazy to shop around for good value further away than the local;).

harpsman

tipptom wrote: »

What was I supposed to do,start body slamming 75 year olds for making nasty remarks that they were going to be making anyway if I was there or not.
A lot of them were ok,used to tell me about fighting with "pat" in the war and I don't think I was going to change their views while they were waiting in Gods waiting room and they got back as good as they gave.

It bothers me more when I hear it from self loathing Paddies.

Anyway don't think it is lazy to shop around for good value further away than the local;).

Fair enough-i suppose the question is where does self awareness end and self loathing begin.I think there are some legitimate criticisms to make of ourselves as a country-17% of voters voted FF in the last election for one thing!

tipptom

harpsman wrote: »

Fair enough-i suppose the question is where does self awareness end and self loathing begin.I think there are some legitimate criticisms to make of ourselves as a country-17% of voters voted FF in the last election for one thing!

You think 17% is bad,wait until they hit 29% in the next election.

I hope Michael Noonan knows something that he is holding to his chest,he is either going to be known as the the Cincinnati kid after the next election or the lion from the Wizard of Oz.

Hope we are not being rushed out of this mechanism to suit the FG party,so they can wrap the reclaimed tricolour around themselves in the next election.

clairefontaine

Scortho wrote: »

Having been to Germany, I'd definitely like to live there long term. They just get up and go and do it, while paddy sits around wanting someone else to do it for him.

The Irish do get up and do it, they just get up and do it in other countries.

Maybe a good question is to ask why?

Perhaps the paralysing effects of the austerity budget which suits Germany nicely apparently as they are the ones with the lowest unemployment rate in history while the remainder of the EU is at its lowest.

Count Dooku

clairefontaine wrote: »

The Irish do get up and do it, they just get up and do it in other countries.

Maybe a good question is to ask why?

Perhaps the paralysing effects of the austerity budget which suits Germany nicely apparently as they are the ones with the lowest unemployment rate in history while the remainder of the EU is at its lowest.

Germany fixed their own economy through austerity and reduced unemployment through cutting welfare benefits ( Hartz IV), decade ago Germany was sick man of Europe, now it become its engine - so why another countries shouldn't follow their example?

Geuze

Dave! wrote: »

Possibly off-topic, but what do commentators mean when they say that austerity "doesn't work"? I'm no economist, but is its purpose not to reduce the deficit? I would think in general it's quite good at that... Certainly it's working in Ireland!

Again I may be wrong, but I don't think anyone argues that austerity actually grows the economy, how could it? The idea is surely to reduce the deficit (austerity) while trying to grow the economy (stimulus and other measures) in a sustainable way at the same time.

The opponents of "austerity" are suggesting that the fiscal contraction is so painful that even though the deficit may be reducing, economic growth, consumption and jobs are being hurt so much that the deficit won't actually fall by much.

i.e. the medicine will make the patient sicker, or at least, not better.

Fiscal contraction = less Govt spending, higher taxes - leads to less consumer spending, less investment, no job growth, and so flat or less tax revenue.

So "austerity" may be self-defeating.

What FG are banking on is foreign trade to help GDP grow.

clairefontaine

Count Dooku wrote: »

Germany fixed their own economy through austerity and reduced unemployment through cutting welfare benefits ( Hartz IV), decade ago Germany was sick man of Europe, now it become its engine - so why another countries shouldn't follow their example?

I don't think Germany's economy is going to last that long tbh.

Cookie_Monster

clairefontaine wrote: »

I don't think Germany's economy is going to last that long tbh.

why's that then?

everdead.ie

Japan is just coming out of a lost decade at the moment where people in there early 30's haven't gotten the experience they normally would have and lose out on jobs to those with experience(older than them) and those new graduates just coming out of college.

Because of this they are generally lower paid and there are actually divisions in the workplace because of it.

I'll try dig up the article on it.

http://www.businessweek.com/stories/2007-05-17/japans-lost-generationbusinessweek-business-news-stock-market-and-financial-advice

murphaph

clairefontaine wrote: »

I don't think Germany's economy is going to last that long tbh.

cos they only make rubbish products that nobody anywhere in the world wants to buy?

creedp

murphaph wrote: »

cos they only make rubbish products that nobody anywhere in the world wants to buy?

Or maybe because they have such a low standard of living they can't afford to buy their own produce

murphaph

creedp wrote: »

Or maybe because they have such a low standard of living they can't afford to buy their own produce

<looks out window at a street parked full of German cars>

Germany has a realistic standard of living I would say. It's true that many German products (like luxury cars) are unaffordable to most Germans, but they are also unaffordable to most non-Germans.

creedp

murphaph wrote: »

<looks out window at a street parked full of German cars>

Germany has a realistic standard of living I would say. It's true that many German products (like luxury cars) are unaffordable to most Germans, but they are also unaffordable to most non-Germans.

Apologies I was being somewhat facetious as finding it hard to adjust to the idea of Germany having a low standard of living.

Geuze

Real GDP per person data for the years 2009, 2010 and 2011


Ireland = 130 129 129
EU27 = 100
Germany = 115 119 121

Ireland's very slow growth relative to Germany mean that German output-per-worker is catching up to Irish levels.

http://epp.eurostat.ec.europa.eu/cache/ITY_OFFPUB/KS-SF-12-047/EN/KS-SF-12-047-EN.PDF

NB: GDP data does not show the true picture in Ireland. So we can adjust, and use AIC, Actual Individual Consumption, a better measure of living standards.

MORE TO FOLLOW

ardmacha

Apologies I was being somewhat facetious as finding it hard to adjust to the idea of Germany having a low standard of living.

Germany is slightly below Ireland in the OCED Better Life index, although if you increase the weights of jobs Ireland can drop a little below
http://www.oecdbetterlifeindex.org/#/11111111111

At this point Ireland is at something of low relative to Germany, we can improve further.

antoobrien

Geuze wrote: »

The opponents of "austerity" are suggesting that the fiscal contraction is so painful that even though the deficit may be reducing, economic growth, consumption and jobs are being hurt so much that the deficit won't actually fall by much.

i.e. the medicine will make the patient sicker, or at least, not better.

Fiscal contraction = less Govt spending, higher taxes - leads to less consumer spending, less investment, no job growth, and so flat or less tax revenue.

So "austerity" may be self-defeating.

So if we look at the effects of our "austerity" we will see that GDP has not reduced due to austerity since austerity policies were introduced. In fact since Q3 2009 it's been pretty stable and GNP has rebounded slightly, despite the fact that serious cuts didn't start until 2009.

So while we have been making these spending adjustments, the economy has not gotten worse, so any attempts to describe austerity as "not working" without some pretty hefty explanations are more than likely erroneous.

Geuze

Eurostat:

"While GDP per capita is mainly an indicator of the
level of economic activity, Actual Individual
Consumption (AIC) per capita is an alternative
indicator better adapted to describe the material
welfare situation of households."

AIC per person for years 2009, 2010 and 2011


Ireland = 103 103 101
EU27 = 100
Germany = 115 117 120

This shows that somwhere behind the GDP stats lies a better picture of our standard of living.

Geuze

antoobrien wrote: »

So if we look at the effects of our "austerity" we will see that GDP has not reduced due to austerity since austerity policies were introduced. In fact since Q3 2009 it's been pretty stable and GNP has rebounded slightly, despite the fact that serious cuts didn't start until 2009.

So while we have been making these spending adjustments, the economy has not gotten worse, so any attempts to describe austerity as "not working" without some pretty hefty explanations are more than likely erroneous.

The opponents of austerity would point to flat or falling values in some elements of GDP, they would focus on the domestic economy, consumer spending, etc.

But yes, as you say, real GDP is up slightly between 2009 and 2012.

Here is the data for real GNP:

2009 = 132,051m
2010 = 132,750m
2011 = 130,662m
2012 = 132,984m

http://www.cso.ie/en/media/csoie/releasespublications/documents/economy/2012/nie2012.pdf