Recession predictions

KyussB

Geuze wrote: »

KyussB wrote: »

We have the funding, we have the labour, we have the training capacity, we have the physical resources and industry needed - the private sector won't do it, so the government has to.

We have the finance, yes, but do we have enough skilled construction labour to build 50,000 houses per annum?

I hope we do, but I don't think so.

We've had most of a decade to train people up, and by the looks of things we'll have another decade to do it still. We can fill any skills gaps within a year or two, if we undertake this seriously - three at most.

There'll be a ramping-up stage, where we have to sort out skilled labour and resource bottlenecks - we won't be building 50,000 houses from day one - but that's just normal with large projects.

That applies to the private sector as well, with skilled labour etc., so it's a problem that needs to be sorted out one way or the other - and with the private sector sitting on its hands, the Job Guarantee is the fastest way to sort it.

Wanderer78

Geuze wrote:

I hope we do, but I don't think so.

Not a chance we have them right now, so we better get cracking training people, it's a very worrying time in regards this critical need

KyussB

KyussB wrote: »

We've had most of a decade to train people up, and by the looks of things we'll have another decade to do it still. We can fill any skills gaps within a year or two, if we undertake this seriously - three at most.

There'll be a ramping-up stage, where we have to sort out skilled labour and resource bottlenecks - we won't be building 50,000 houses from day one - but that's just normal with large projects.

That applies to the private sector as well, with skilled labour etc., so it's a problem that needs to be sorted out one way or the other - and with the private sector sitting on its hands, the Job Guarantee is the fastest way to sort it.

I am skilled fully qualified carpenter which left building industry about couple years ago.I was working as carpenter in joinery workshop and sites
Why I dont want back to workshop ?
Slavery conditions minus cold degrees at winter time no extraction stone age machinery low pay flat rate for overtime mostly places burn chipboard and MDF and I had breed this smoke.No canteen,no toilet.Must buy own tools have own transport because big problem with public transport.

Sites.Mostly agency work what mean minimum 3 months per year I had sit beside the phone and wait for phone call or begging for work annoying agency staff.I had have own tools generator transport and travel half day per day to site and from paying for house rent which been difficult when I did not have work on site and get social welfare permanently "updating" was mess because I couldnt get HAP ,medical card,WFS,etc

Finally I wen to engineering industry.Pay not great but I have white canteen every second day cleaned toilet I can work with T shirt in January in clean dust free workshop with gas heaters and air conditioning at Summer and do nixers on weekends.Dream Job.

All my mates fully qualified carpenters from Eastern Europe left Ireland because average pay at home minus sky high rent in Ireland plus better conditions at home .

High rent and growing pay at home will bring more Eastern europeans out of Ireland.The Covid pandemic will make this process faster

Geuze

European Commission Spring 2021 forecasts

https://ec.europa.eu/info/business-economy-euro/economic-performance-and-forecasts/economic-forecasts/spring-2021-economic-forecast-rolling-sleeves_en

Lmkrnr

[HTML][/HTML]

Revolution 1917 wrote: »

I am skilled fully qualified carpenter which left building industry about couple years ago.I was working as carpenter in joinery workshop and sites
Why I dont want back to workshop ?
Slavery conditions minus cold degrees at winter time no extraction stone age machinery low pay flat rate for overtime mostly places burn chipboard and MDF and I had breed this smoke.No canteen,no toilet.Must buy own tools have own transport because big problem with public transport.

Sites.Mostly agency work what mean minimum 3 months per year I had sit beside the phone and wait for phone call or begging for work annoying agency staff.I had have own tools generator transport and travel half day per day to site and from paying for house rent which been difficult when I did not have work on site and get social welfare permanently "updating" was mess because I couldnt get HAP ,medical card,WFS,etc

Finally I wen to engineering industry.Pay not great but I have white canteen every second day cleaned toilet I can work with T shirt in January in clean dust free workshop with gas heaters and air conditioning at Summer and do nixers on weekends.Dream Job.

All my mates fully qualified carpenters from Eastern Europe left Ireland because average pay at home minus sky high rent in Ireland plus better conditions at home .

High rent and growing pay at home will bring more Eastern europeans out of Ireland.The Covid pandemic will make this process faster

The last boom there was jobs everywhere, many eastern European's came and worked and filled the gaps in most of the industries.

The standard of living/working has improved in Eastern Europe so where will the low cost labor come from? We have the housing boom on steroids because of a shortage. Employers cant get low cost worker's as its easier to stay on social welfare and get housing support.

Something's gotta give.

Lmkrnr

Lmkrnr wrote: »

[HTML][/HTML]

The last boom there was jobs everywhere, many eastern European's came and worked and filled the gaps in most of the industries.

The standard of living/working has improved in Eastern Europe so where will the low cost labor come from? We have the housing boom on steroids because of a shortage. Employers cant get low cost worker's as its easier to stay on social welfare and get housing support.

Something's gotta give.

Huge cheap labor import from Brasil
Brasil population about 214 millions what is more than all Eastern Europe together
I meet many of them in building industry and hospitality sector already
Many meat factories employing them
The only thing huge cheap labor supply will make irish wages smaller the bigger competition on job market will keep wages at low level and increase emigration
What will affect property market and mortgages

Geuze

Given the scale of unemployment here, there is no justification for any non-EU labour immigration.

Wanderer78

Geuze wrote:

Given the scale of unemployment here, there is no justification for any non-EU labour immigration.

Many jobs are of low pay and poor conditions, of which many of us are unwilling or able to do, we need a steady flow of immigration to fulfill these roles, as theyre critical to our economy and society

Zenify

Geuze wrote: »

European Commission Spring 2021 forecasts

https://ec.europa.eu/info/business-economy-euro/economic-performance-and-forecasts/economic-forecasts/spring-2021-economic-forecast-rolling-sleeves_en

The inflation prediction on that is ridiculous. The bottlenecks from consumers spending again and businesses recouping costs from being shut for so long will create inflation 5x what they show there. US is experiencing inlfation of 4.3% and they aren't fully open.

I was buying heating oil on North last year paying 25 cents per ltr
Yesterday I paid 46 what is nearly 100 per cent inflation
But at same time 2 years ago I paid 57
What is all right by today calculation
Guys forget about inflation and never believe media.
Remember about what media wrote in 2007.

Timing belt

[Deleted User] wrote: »

I was buying heating oil on North last year paying 25 cents per ltr
Yesterday I paid 46 what is nearly 100 per cent inflation
But at same time 2 years ago I paid 57
What is all right by today calculation
Guys forget about inflation and never believe media.
Remember about what media wrote in 2007.

The base effect on US inflation is estimated at 1% which still leaves inflation in the US at 3.3%

If you drill into this 3.3% the big drivers of inflation in the Us are transport (notably air travel) and motor vehicles. I believe food inflation was only 0.6%. Once Covid19 goes away and there are no restrictions on flying air travel will become cheaper. whether we see sustained inflation will all depend on how will the world economy recovers.... Europe has used nearly all of its fire power with the ECB owning something like 50% of the EU bonds in circulation. This could result in them being forced to Taper the QE sooner than they would want to which will have the same effect as a rate rise and will kill inflation and slow down the recovery...we are not out of the woods yet.

Timing belt

Timing belt wrote: »

The base effect on US inflation is estimated at 1% which still leaves inflation in the US at 3.3%

If you drill into this 3.3% the big drivers of inflation in the Us are transport (notably air travel) and motor vehicles. I believe food inflation was only 0.6%. Once Covid19 goes away and there are no restrictions on flying air travel will become cheaper. whether we see sustained inflation will all depend on how will the world economy recovers.... Europe has used nearly all of its fire power with the ECB owning something like 50% of the EU bonds in circulation. This could result in them being forced to Taper the QE sooner than they would want to which will have the same effect as a rate rise and will kill inflation and slow down the recovery...we are not out of the woods yet.

Please forget about US talking about inflation
ES does not printing money US way
The euro and bucks is different same as prices by US dollars and euros
Same as ECB and US financial policy
The US printing buks trying get goods from Europe for free
The ECB printing euros trying support production
The question is how long world will accept US bucks

Timing belt

Revolution 1917 wrote: »

Please forget about US talking about inflation
ES does not printing money US way
The euro and bucks is different same as prices by US dollars and euros
Same as ECB and US financial policy
The US printing buks trying get goods from Europe for free
The ECB printing euros trying support production
The question is how long world will accept US bucks

The US will be able to undertake QE for a lot longer than Europe as it is the main currency that is used world wide. Just look at everything that is priced in USD (Oil, Gold etc.) If you undertake a FX Transfer it will nearly always be priced off USD with the exception of a few a major currencies. I don't see any of this changing anytime soon.

As for the QE from ECB and Fed being different I don't see it. The only difference is that in US the Fed deals with primary dealers (Who will source bonds from the wider market) and provide a credit to there reserve account with the fed. In Europe it is not as complicated but both achieve the same desired effect.

Saying that the US is undertaking QE to import cheaper goods and Europe are doing it to support production is nonsense. They are both deliberately manipulating the yield on government bonds in the hope that cheap lending will stimulate the economy.

You could argue that pre Covid this QE was only undertaken to recapitalise the finance industry after the 2008 crash as the majority of the QE never left the finance institutions (with the exception of Funds which invested some of it in the wider economy property, business etc.) which explains why it has not generated meaningful inflation up until now.

Since Covid the QE has been used to support government spending whether it was PUP payments Ireland or stimulus cheques in the US. Either way this time around the QE ended up in wider economy and should generate inflation. The big question is how long can they continue and whether it will be sufficient for the economies to recover in time and generate the inflation.

jay0109

Wanderer78 wrote: »

Many jobs are of low pay and poor conditions, of which many of us are unwilling or able to do, we need a steady flow of immigration to fulfill these roles, as theyre critical to our economy and society

No we don't as that then puts pressure on housing and other services. And is causing an upheaval in society as will be seen in politics for example over the next number of years.

We need to get Irish people out working by reforming the welfare system and stop with this ponzi scheme of constantly importing the next batch of cheap labour from a different part of the world every 10 years.

Wanderer78

jay0109 wrote:

No we don't as that then puts pressure on housing and other services. And is causing an upheaval in society as will be seen in politics for example over the next number of years.

jay0109 wrote:

We need to get Irish people out working by reforming the welfare system and stop with this ponzi scheme of constantly importing the next batch of cheap labour from a different part of the world every 10 years.

The free movement of capital is causing far more problems than free movement of people, this capital is helping to push up property prices, and leading to a slow monopolisation of our markets, locking out many. Again we need these immigrants, to maintain our economy.

What do you mean by reforming our welfare system? It definitely needs to be looked at post covid, as we ve seen, it's virtually impossible to live off the standard of 200 a week, even 350 must have been difficult for some.

NIMAN

Wanderer78 wrote: »

.... it's virtually impossible to live off the standard of 200 a week, even 350 must have been difficult for some.

So where do you think it should be set?

Above 350 per week? If you do that, it will only mean the wages will have to rise to make it worthwhile to go out to work.

Wanderer78

NIMAN wrote:

So where do you think it should be set?

We need to look at this, more money in people's hands, will more than likely mean more money in circulation, increasing the velocity of the supply

NIMAN wrote:

Above 350 per week? If you do that, it will only mean the wages will have to rise to make it worthwhile to go out to work.

Sounds like a plan then!

jay0109

Wanderer78 wrote: »

We need to look at this, more money in people's hands, will more than likely mean more money in circulation, increasing the velocity of the supply



Sounds like a plan then!

Joan Burton played that tune a few years ago...increase the dole and sure they spend it all every week anyways, so it benefits the economy and pays for itself!
I heard one of the Soc Dem's come out with the same line on the radio a few weeks ago.

The magic money tree school of economic thought

KyussB

Yes they're right, it's called counter-cyclical spending - it's been mainstream economics for about a century - you won't find a single credible economist opposing counter-cyclical policy as a concept.

'Magic money tree' economic thinking is expecting dole recipients to find the money to pay their rents and bills when there aren't enough jobs, and the dole doesn't cover the bills - or is cut.

Since there aren't enough jobs, and you want dole cut, are people supposed to find a 'magic money tree' so they don't starve or become homeless?

jay0109

No, lets keep borrowing and pass the debts on to our grandkids. Great legacy.

Prior to Feb 2020 and the Covid impact, there were plenty of jobs and not enough people to fill them. What was the excuse then?

AlmightyCushion

KyussB wrote: »

Yes they're right, it's called counter-cyclical spending - it's been mainstream economics for about a century - you won't find a single credible economist opposing counter-cyclical policy as a concept.

'Magic money tree' economic thinking is expecting dole recipients to find the money to pay their rents and bills when there aren't enough jobs, and the dole doesn't cover the bills - or is cut.

Since there aren't enough jobs, and you want dole cut, are people supposed to find a 'magic money tree' so they don't starve or become homeless?

Counter-cyclical spending also involves increasing taxes and decreasing spending during boom times to pay down debt and build up reserves that can be used to ramp up spending when the economy isn't doing so well.

We didn't do the former so doing the latter gets more difficult especially when we have things fiscal compact. I hope the fiscal compact gets altered after covid to allow governments to invest in public transport, housing and green infrastructure as a means of boosing the EU economy but we can't guarantee that.

KyussB

jay0109 wrote: »

No, lets keep borrowing and pass the debts on to our grandkids. Great legacy.

Prior to Feb 2020 and the Covid impact, there were plenty of jobs and not enough people to fill them. What was the excuse then?

Government finances don't work like personal finances. Governments routinely do roll debts over forever (something a person cannot do) - letting economic growth erode Public Debt vs GDP - and that is almost exclusively the normal way things are run, across the whole planet.

Neither the raw Public Debt figure is what matters, nor the Public Debt vs GDP figure - what matters is the overall servicing cost of the debt.

Right now interest rates are negative, and are set to remain that way for most of the decade (as central banks operate a policy of not raising rates until economic recovery causes inflation to hit targets) - this means that taking on more debt reduces the servicing cost of debt - making the overall debt less costly.

You claim to be worried about the cost of Public Debt, but you are arguing for making it more costly than it needs to be (by not taking on more negative interest debt), and you are arguing for holding back GDP growth from borrowing+spending, which again makes debt servicing more costly by reducing the rate of growth of Revenue/Tax intake (which would grow in line with GDP).

So you are claiming to be arguing for prudent government finances, but you are literally arguing for the exact opposite of that.

KyussB

AlmightyCushion wrote: »

Counter-cyclical spending also involves increasing taxes and decreasing spending during boom times to pay down debt and build up reserves that can be used to ramp up spending when the economy isn't doing so well.

We didn't do the former so doing the latter gets more difficult especially when we have things fiscal compact. I hope the fiscal compact gets altered after covid to allow governments to invest in public transport, housing and green infrastructure as a means of boosing the EU economy but we can't guarantee that.

It involves reducing spending and increasing taxes during boom times to dampen overheating sectors of the economy, to keep inflation down - it doesn't involve paying down debt - countries almost never pay down the stock of debt (worldwide a surplus is incredibly rare, and usually shortly followed by economic trouble), they grow the GDP portion of Public Debt vs GDP instead.

It doesn't involve saving money in boom times, because that makes no sense with fiat currencies - economically, central banks have to accommodate spending in downturns.

We don't use gold standard era countercyclical policies, where there is a real scarcity of money. With a fiat currency, money scarcity is only ever artificial.

jay0109

KyussB wrote: »

We don't use gold standard era countercyclical policies, where there is a real scarcity of money. With a fiat currency, money scarcity is only ever artificial.

aka The Money Tree

Borrowing to spend on infrastructure, yes a case can be made for that.

Borrowing to pay increased welfare payments is never good financial management in my book. Especially when you have a world record debt and talking about it 'just rolling over so it doesn't really matter' is crazy stuff. It's passing an horrendous legacy to those that come after us

Wanderer78

jay0109 wrote: »

aka The Money Tree

Borrowing to spend on infrastructure, yes a case can be made for that.

Borrowing to pay increased welfare payments is never good financial management in my book. Especially when you have a world record debt and talking about it 'just rolling over so it doesn't really matter' is crazy stuff. It's passing an horrendous legacy to those that come after us

you are correct about passing debts onto younger generations, but wrong about which debts, the far more dangerous being private debts, which is primarily in assets such as property and land. we have become over reliant on the magical money trees from private sector financial institutions, ie. credit, which is causing the majority of our debt problems. rolling over public debt is common practice globally, and doesnt cause as much problems as private debt, just as long as these debts are serviced and serviceable, theres no significant problems from doing so

KyussB

jay0109 wrote: »

aka The Money Tree

Borrowing to spend on infrastructure, yes a case can be made for that.

Borrowing to pay increased welfare payments is never good financial management in my book. Especially when you have a world record debt and talking about it 'just rolling over so it doesn't really matter' is crazy stuff. It's passing an horrendous legacy to those that come after us

Do you think the central bank digs money up from deep in the ground, like gold nuggets or something?

Yes, the central bank is effectively a 'money tree' - did you not know this? Regular banks also are 'money trees' - creating money when they give out loans (it is not loaned out from deposits).

Money scarcity is always artificial with a fiat currency. Money should be made artificially scarce when the economy is at Full Output, to prevent excessive inflation - all that means is the limit to government spending is not money or an arbitrary government fiscal/debt balance - the limit to spending is Full Output and associated inflation.

Rolling over the stock of government debt forever, letting GDP growth erode it away, is how all countries on earth have worked for centuries, it is normal.

The reason it sounds scary to you, is because you are talking about government finances as if they work like personal finances, when they work nothing like personal finances.

We put a burden on our grandchildren by not spending using negative-interest debt today, to build infrastructure and to boost the private sector by giving generous social supports - because not doing that leaves GDP, the size of the overall economy, smaller than it would have been - meaning our kids inherit a smaller economy, with less material wealth in terms of infrastructure and privately as well.

Don't treat government finances like they are the same as personal finances - they are nothing alike.

Timing belt

KyussB wrote: »

Do you think the central bank digs money up from deep in the ground, like gold nuggets or something?

Yes, the central bank is effectively a 'money tree' - did you not know this? Regular banks also are 'money trees' - creating money when they give out loans (it is not loaned out from deposits).

Money scarcity is always artificial with a fiat currency. Money should be made artificially scarce when the economy is at Full Output, to prevent excessive inflation - all that means is the limit to government spending is not money or an arbitrary government fiscal/debt balance - the limit to spending is Full Output and associated inflation.

Rolling over the stock of government debt forever, letting GDP growth erode it away, is how all countries on earth have worked for centuries, it is normal.

The reason it sounds scary to you, is because you are talking about government finances as if they work like personal finances, when they work nothing like personal finances.

We put a burden on our grandchildren by not spending using negative-interest debt today, to build infrastructure and to boost the private sector by giving generous social supports - because not doing that leaves GDP, the size of the overall economy, smaller than it would have been - meaning our kids inherit a smaller economy, with less material wealth in terms of infrastructure and privately as well.

Don't treat government finances like they are the same as personal finances - they are nothing alike.

So where do regular banks get money to lend out? Are you just talking theoretically because Last time I looked at the Irish banks customer deposits accounted for 80%+ of their funding.

KyussB

No it's no theoretical, it's how banking operations work:
https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy.pdf
https://www.bundesbank.de/en/tasks/topics/how-money-is-created-667392

Banks don't lend out from deposits, they create money when they make loans. Banks are constrained in their lending by capital requirements.

Reserve requirements exist (in some countries they don't), but because banks give out loans first and fix up their reserves later, and the central bank is guaranteed to help banks shore up their reserves - that means reserve requirements don't actually constrain lending, they only create a small penalty to profits from loans when the central bank has to shore up reserves - and so the whole idea of there being a fractional reserve 'money multiplier' is false.

As long as banks can expand capital, staying within capital requirements, they can expand loans as needed - creating money in the process.

The DayDream

jay0109 wrote: »

No, lets keep borrowing and pass the debts on to our grandkids. Great legacy.

Prior to Feb 2020 and the Covid impact, there were plenty of jobs and not enough people to fill them. What was the excuse then?

That's simply not true and the only people who think that are the ones who haven't had to jobseek in years or who live in Dublin.

I'm in the Northwest, which IMO never properly recovered from 06-08 recession. I finished college as a mature student in 2011. I had a lot of experience in different areas on my CV from before college. Then I got a degree. Should be easy to find work, right?

Other than a 1 year temp contractor job in a factory in 2013 and a 'jobbridge' internship in 2014 I was unemployed all the up until 2020. I was on 'Jobpath' too and it was full of employable people being forced to come into these meetings.

Somehow I got lucky and got a job in the middle of the pandemic in an 'essential' industry. Trust me no one wants to be on the dole. cutting it off the back of covid will compound the problems we're gonna have. It doesn't help anyone get off the dole by cutting it, it just makes them go from poor to destitute.

Jizique

KyussB wrote: »

Do you think the central bank digs money up from deep in the ground, like gold nuggets or something?

Yes, the central bank is effectively a 'money tree' - did you not know this? Regular banks also are 'money trees' - creating money when they give out loans (it is not loaned out from deposits).

Money scarcity is always artificial with a fiat currency. Money should be made artificially scarce when the economy is at Full Output, to prevent excessive inflation - all that means is the limit to government spending is not money or an arbitrary government fiscal/debt balance - the limit to spending is Full Output and associated inflation.

Rolling over the stock of government debt forever, letting GDP growth erode it away, is how all countries on earth have worked for centuries, it is normal.

The reason it sounds scary to you, is because you are talking about government finances as if they work like personal finances, when they work nothing like personal finances.

We put a burden on our grandchildren by not spending using negative-interest debt today, to build infrastructure and to boost the private sector by giving generous social supports - because not doing that leaves GDP, the size of the overall economy, smaller than it would have been - meaning our kids inherit a smaller economy, with less material wealth in terms of infrastructure and privately as well.

Don't treat government finances like they are the same as personal finances - they are nothing alike.

Why pay taxes then? If we can just print it and roll it over, why not let workers keep their earnings? That would allow companies to reduce their cost base, as I would be happy with a lower salary if no taxes.
I mean govts have decided that some of the largest companies like Amazon, Apple, FB should not pay tax, so why not pass that on to the worker as well.
We will have faster economic growth and we can just roll it over, simples