Off Topic Thread 3.0

Deleted User wrote: »

Are you trying to shift the goalposts here? The EU did not tell us to do any of what I have described above. All of which directly led us to the situation that we saw post GFC.

The problem with Ireland in the Noughties wasn't about the value our budget figure (which is something that the S&GP could have had an issue with - otherwise totally irrelevant to this discussion) but how that figure was structured. We eroded our ability to deal with any other paradigm other than a continuous property bubble, and shock horror, when that bubble was burst, we had no options left but to chop back spending to try to bring the deficit under control.



Again, none of those men, not one, had any power whatsoever when it came to changing the shape of Ireland's tax policy. The policy which fundamentally hoisted the Government's ability to finance the state onto the back of the building industry.

We did. Ireland made that decision. The premise that we are we were are due to the EU is fundamentally flawed simply by that alone. The banking bailout costs are not the largest contributor to our enormous debt figure, we are.

I'm not shifting any goalposts. That's why I said "Of course they didn't tell us how to achieve the targets, but they certainly pushed us towards chasing growth". You are right. None of those people told us how to run our government. My point is that the motivation behind our fiscal policy was externally influenced, I don't think anyone in that government would disagree with that.

Also you use language like "shock horror" now. But lets be fair to them and point out that nobody really saw it coming and our government was FAR from the only one who made these mistakes, we were just punished for them far more than anyone else.

But my point is not that the Fianna Fail government were great, its that we could easily have reversed the mistakes made by that government with far less impact if the ECB had done its job in the first place rather than forcing us to squeeze for 3 years and then doing what they told us they never would do.

Deleted User wrote: »

Go on.....

What should have happened is the ECB begin sensible policies at the onset of the crisis in order to prevent a crash, and during that extended period our government as well as those across Europe would have had more time to react. Giving us a chance to shift away, and I believe Strauss-Kahn's proposal was that the EIB should support countries most exposed to the banking sector during that period.

Deleted User wrote: »

What ECB polices could have been useful in preventing Ireland's 30% deficit in 2010? And subsequent years trying to scrabble together a suitable tax base which could be used to support the state as it had developed to?

Giving us money at intensely favourable prices? (hint: that is what happened, through the ESM)

I did actually already say that earlier. Draghi's policies once he replaced Trichet were greatly beneficial. LTROs and OMTs being the two I'm most aware of.

I just don't understand how people can think austerity is necessary OR self-inflicted in our case. Austerity as a policy has never ever resulted in a successful outcome. About the only thing austerity has ever been able to consistently produce is political extremism (and we're very lucky that didn't happen here). Its the bad idea that never goes away (to steal a phrase).

The original bailout of Irish banks did not have to be done by the Irish government. And that is absolutely key to this. That doesn't mean we needed to follow Iceland and let them fail, it means the EU themselves should have stepped in either via the ECB or a mixture of the ECB and EIB. It was a European banking problem and we were dealing with a symptom of it.

As for why, The bailout of Irish banks led to a massive increase in our public debt. Around the same time our debt-to-GDP ratio increased, European politicians were reading things like Growth in a Time of Debt and the "90% rule" became accepted as a genuine threshold of unrecoverable debt. This theory was eventually disproven and then this was followed by the embarrassment of excelgate which is a very amusing story... but it was widely believed by center-right EU politicians at the time that once a state exceeded 90% debt-to-GDP they had to undergo severe austerity in order to remain stable. And that was what originally forced us into undertaking huge cuts to our public spending, bad economics by bad economists. That combined with the French and German governments being terrified by the prospect of the bond rates going crazy because of Trichet.

And of course in this scenario there follows basic mathematics which leads to our debt being nowhere near where it is today had all that been approached correctly. Firstly we never would have taken on the huge amount of nationalised private debt. After that we never would have been required to slice into our own GDP and destroy growth. And so both the numerator and the denominator of our debt-to-GDP fraction would have remained far more sensible even as we started to run a (smaller) deficit while the construction sector struggled. Blyth put it best (in 2010) when he said "People want to say: look at those profligate governments, spending all that money. We’ve got to restore fiscal sanity. But it wasn’t fiscal insanity that got us here. It was private-secor leverage and the insanity of banking that brought us to this point. So the bankers put it on the state, and the state turned around it put it on the taxpayer. It’s the biggest bait-and-switch in human history.” So of course we haven't run a surplus since... but I'm not remotely upset that we're not paying down the debt we never should have had forced upon us in the first place.

awec wrote:

Football semi final was absolutely filthy.

Was not a pretty game at all. Mayo by far the better side but it was an ugly match. I was surprised it took until 60 minutes for a red card to arrive.

Fair play to Mayo but I'm completely unconvinced by them mentally still. They were 8 points up and a poor Kerry team reeled them in to 4 points before the red card.

If David Clarke didn't make a truly world class double save, that game would have slipped away, I reckon. Either of those stops were stupendous on their own.

pickarooney wrote:

I haven't watched a Gaelic match in a good while. Has it gone very soft in terms of cards? There seemed to be bookings for very harmless stuff.

Clamped down heavily on niggly, deliberate fouling and rightly so.

Deleted User wrote: »

So the only possible thing that's not-austerity is a Government budget that is strictly increasing into perpetuity?

Ridiculous.

Yes, and that is what happens in the real world. Maybe I was wrong and you aren't familiar with the General Theory! It's not remotely ridiculous, its fairly basic economics that's been widely accepted since the 30s (albeit questioned for a few years when everything was running great in the 2000s and everyone loved Milton Friedman)

There are 4 ways to deal with a fiscal crisis. Default, Inflate, Devalue or Cut. Bonds are valued against the risk of the first 3 happening.

When you don't have a central bank and you're petrified of defaulting on your neighbours, the only option is to undergo austerity. So its the only option we had while Trichet was hiding under his bed. Since then we've began inflating massively, QE is at 40 billion euro per month this year I think. Meanwhile countries with their own currency and central banks were able to start inflating from the beginning.

Deleted User wrote: »

So much wrong here. Perhaps you should do some reading - https://en.wikipedia.org/wiki/Post-2008_Irish_banking_crisis

Eh, how about I skip a wikipedia article.

Post Property bubble our neighbours did not hold our debt. We could have defaulted on the national debt and become a pariah at any stage (still can of course), saving us some percentage (but nowhere NEAR 30%) of our spendings. Our neighours only became our creditors in late 2010 after our inability to fund the state in the immediate and medium term became so obviously catastrophic and they helped us out.

I think there is some confusion here. The states did not hold our debt but their banks were massively exposed to our debt. I'm not saying the states held Irish debt and I never meant to say that. However French and British banks were massively exposed to Ireland and there were tremendously over-levereged. Here's some amazing figures:



This is British bank assts in proportion to the UK's GDP




This is French bank assets in proportion to French GDP



Why are these important? Well what were these banks holding? Irish sovereign debt. Greek sovereign debt. Portuguese sovereign debt. To give you some perspective of that, here is the convergence of those bond rates leading into and during the 2000s:





So while no foreign state held Irish debt. Their banks were engaging in a massive moral hazard trade because they knew that when they loaded themselves up with sovereign bonds they ballooned in size up to far larger than their governtments' economies. Look at BNP Paribas. This made them "too big to bail" and so there was no way their government could ever allow any periphery European state to default, because the contagion risk (if one bond defaults, others follow quickly) would lead to France/England/Germany going bankrupt overnight.

We had three-ish options post GFC from 2008 -> 2010, we could start to drastically cut spending to match our revenues, we could try desperately to increase our revenues to enable us to fund our spending, or we could make up the funding gap by asking for help.

We took the third.

If you think that Governments should never ever cut any spending, then you can never ever exercise the first option. It cannot even be considered.

So for you, the only option is the second, seek to raise almost 50% more in revenues than we managed in 2010. That would have gone well. I imagine the emigration figures would have been useful in terms of reducing the need for spending in the short term. I'm sure a bottom rate of tax of 25% and top rate of 48%, with corporation tax rising to 18-20% in a year of a recession would be fine -said nobody-.

You keep talking about things as if anyone but us had a say in this. We had no obligation to entertain the option of the EFSM and could have instead attempted to either raise revenues or decimate expenditure 10x as we did. That deficit, and the following years of ever decreasing but still enormous deficit figures have added far more to our National Debt than the Bank Bailout did. Or of course we could have taken market rates for those loans instead of the preferential rates that were offered by the EFSM. Again, I'm not sure many would be keen to argue that that would have been a good option.

Ireland's deficits - http://ec.europa.eu/eurostat/tgm/refreshTableAction.do;jsessionid=eRsfa_T053-YpeZE1R05b8qmcxTFfo48DXZj6b5mxvh3OAGt1nOm!-1750503842?tab=table&plugin=1&pcode=teina200&language=en

2008 - €13bn
2009 - €23bn
2010 - €54bn
2011 - €22bn
2012 - €14bn
2013 - €10bn
2014 - €7bn

but yeah, the ECB and Anglo did the real damage. The long lasting stuff.

There's a fair bit of straw-manning here. I never said we would have to drastically increase our revenues, you just magiced that opinion out of thing air. I don't think you're reading what I'm saying at all. The deficit would NEVER have been that size if we hadn't engaged in austerity. I don't know why you're not taking that into account. Austerity leads to a decrease in total expenditure and thereafter leads to a deficit, even accounting for Riccardian equivalence. What I'm saying that correct action in 2008 would have subdued the size of the deficit, you're acting as if I'm saying the deficit wasn't there in the first place. Most importantly, what I'm also saying which you seem to be completely missing is that our deficit shouldn't have mattered so much (and it doesn't today thanks to OMT).

So the big fight...who's going to win.

One is a loud mouth gurrier with no class. The other is a wife beating show off with no class.

My money is on IBF...

irishbucsfan wrote: »

I'll knock him out with the 7,000th post

I laughed!! On a side note, I'm in madrid atm and it's a really nice city. Good food and drink and lots of lovely sights. Plus I've found an irish bar showing the dublin tyrone game tomorrow...happy days.

Mayo