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Boom bust economy?

[Deleted User]

Around where I live in the west of Ireland things are flying, no doubt, loads of work, people can hardly find a house to rent, place is doing great. Spoke to someone in Dublin last night who said he can’t even get trainees for quite prestigious, very well paid roles, said it’s the same in many sectors, lot of labour shortage.
Think it’s fair to say we are right back to a Celtic Tiger style boom, this one seems to have crept up, four years ago it was totally different.
Of course it’s great we have recovered, but why are things so hit and miss? Why are we always the fastest growing or the worst in Europe? A period of stability would probably be very good for us in the next five years, with growth, but a little less dramatic.

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Montage of Feck

Greentopia wrote: »

I always hear the "it's a small open economy" reason as if that should explain why we can't keep things in a more steady state economically.

Denmark is a small economy with a similar population size and even smaller land mass.
Iceland (apart from the crash years) and with a population of only around 360,000 has managed to bounce back and remain on an even keel since then with very low unemployment. They both have very diverse economies, some of the lowest rates of income inequality in the world and consistency ranked in the top 5 happiest nations on earth and highest on the UN Human Development Index.

Norway also similar population and rankings. Yes they have oil, but it still only accounts for less than 4% of GDP and even if they never discovered it the country would still, according to economists and economic historians there still be "on par with Sweden and Denmark." https://sciencenorway.no/economy-forskningno-norway/what-would-norway-be-like-without-oil-money/1442935

We should be asking ourselves why they can manage to largely avoid boom and bust and we can't and what can we learn from them.

I think the problem in this country is we seem happy to put all our resources into foreign investment instead of developing enough indigenous industries leaving ourselves more open to outside shocks, don't invest in our people enough -affordable access to the best education for everyone, not just those who can afford it, have too much income inequality driven by the wrong government policies, allow neoliberal "market forces" to dictate everything causing lack of affordability and choice in the housing sector in particular, and have a tax system that is too narrow and inadequate to cater for the investment needed in radically improving public services.

We also have politicians who have little imagination and just follow the Anglo-Saxon economic model in the UK particularly instead of drawing from and copying aspects of the best examples from other similar size economies in Europe that manage to do some things better than us.

We need a Viking party to contest the next election.

riclad

I see 2 problems we have now, high rental cost,s ,
lack of quality rental housing in many area,s .
This will tend to put off small companys from investing in ireland.

The lack of high speed broadband outside, citys and large towns .
Some rural area,s are already seeing a downturn in tourist,s
from the uk.
before brexit even happens .
After brexit irish good,s could cost 20 per cent more for uk consumers to buy .
Thats not even taking into account possible falls in the value of sterling
vs the euro.

El_Duderino 09

riclad wrote: »

I see 2 problems we have now, high rental cost,s ,
lack of quality rental housing in many area,s .
This will tend to put off small companys from investing in ireland.

The high cost of property is beneficial to those who have property. Imagine for a moment if we added all the property we need in Dublin in the morning. The cost pf property would fall. So property owners would be cross with the government who allowed enough property to be built because it interferes with their investments and retirement plans.

People who own property tend to be old, wealthy and vote. So the situation we have is not entirely accidental. It’s partly contrived to make sure that old, wealth voters, have their investments paid for by renters. Renters tend to be young, poor and less likely to vote.

So it’s not as simple as solving the problem. There are voters who are perfectly happy with the situation as it is, thank you very much.

dotsman

ILoveYourVibes wrote: »

Recession is the norm he said ..growth is unusual.

Well, when he makes ridiculous statements like that, then it's no wonder people don't listen.

RobbingBandit

Why do you think all the building work is going on at the moment the nature of a recession is the debtor comes to collect their payment you tell them it's at Bills house and Toms house then the magic of find the money begins when it can't be found nothing can be done no more money.

Metaphysical Macroeconomics keep on keeping on until they come to collect.

Quantum Erasure

dotsman wrote: »

Well, when he makes ridiculous statements like that, then it's no wonder people don't listen.

continuously increasing growth is unsustainable, recessions are inevitable in that economic model

beejee

The time to get ready for a global downturn was a year ago, 6 months minimum.

There's a lot to say that this next one will be the acid-test for globalism, in other words it's going to be truly bad.

Thinking of putting yourself in line for a decades long mortgage? New car that you don't need? Other extravagance? .. Don't do it. Think first. And still don't do it

[Deleted User]

beejee wrote: »

The time to get ready for a global downturn was a year ago, 6 months minimum.

There's a lot to say that this next one will be the acid-test for globalism, in other words it's going to be truly bad.

Thinking of putting yourself in line for a decades long mortgage? New car that you don't need? Other extravagance? .. Don't do it. Think first. And still don't do it

It’s very hard for people to make decisions about buying houses nowadays, if the market didn’t fluctuate so dramatically it’d certainly be better. If the State had got behind a few big housing projects it could have been a great move and headed off a number of various problems, but no go.

dotsman

orli na nh wrote: »

continuously increasing growth is unsustainable, recessions are inevitable in that economic model

Of course recessions are inevitable. Nobody's stating otherwise.

But the statement I was quoting was implying that recessions are the normal state, and that growth is unusual.

Greentopia

Sunny Disposition wrote: »

Interesting post, politicians certainly are a big part of the problem. But would we listen to anyone who wasn’t offering more of the same? Who genuinely was prepared to change course?

I don't know because we've never had an alternative with enough power to challenge the FFG monopoly. I'm more a radical than gradualist and reformist but I'm hoping the Social Democrats here can become a force in Irish politics in the coming years to take on the status quo so that at least we don't continue going backwards in areas like housing policy and social and income inequality.

They seem to take a lot of inspiration for their policies from the Nordic model, same as the Greens take theirs from the German Green Party. It's the only way I can see Ireland breaking out of the boom and bust cycle and making real progress socially, politically and economically.
Also the realisation has to come that if we want nice things like a properly run health service, well paying decent job opportunities for all and an education system designed to treat all our children equally we have to be broadly accepting that we have to pay a lot in taxes for it, and bring in a lot more people into the tax net than are at present.

Doling out crumbs before an election to a disgruntled electorate who continually choose the least worst option to rule for the next 4 years is a terrible way to run a society and economy. Root and branch reform is needed in many areas.

Greentopia

Mad_maxx wrote: »

Ireland is not especially unequal

I've lived here and in Sweden. Ireland by comparison is a way more unequal country. Way more. You don't have to believe me, but there's plenty of empirical evidence available to back this up.

InTheShadows

I see sheep wrote: »

Paddy bailed out the banks who destroyed the economy.
But yes it's the pensioners and people out of work who are to blame of course.

Paddy likes to piss on the poor and doff the cap to his supposed betters, always has always will.

[Deleted User]

EmmetSpiceland wrote: »

Don’t forget the bond holders, they got “protected” too. Which, I believe, was on the advice of Peter Sutherland, who had “vested” interests in that.

Going to say something slightly irritating here "E", but even bondholders were burned -- admittedly not all of them, and years ago I would have said not enoughof them, but surprisingly the advice given to the Government has indicated their approach was correct.

Firstly, obligations that were sold on secondary markets, ie the headline bondholder selling his asset at a loss (or subsequent buyers selling at a loss from say 2009 - 2013) represent a so-called burning. Especially when you consider that a that such "paper" was bought by EU institutional lenders like the ECB, EFSF, ESM etc who (effectively) had a licence for printing money as good as if they were the Irish Central Bank of old.
In effect, such purchases on the secondary markets resulted in a direct cash transfer to the Irish Government and its financial system. It represented a real (and deserved) loss to private bondholders.

Secondly, there were some limited "haircuts" of Irish financial debt, where the ultra-conservative legal advisors would permit it. Although these were limited, and some were being litigated before the courts until fairly recently, when you look at the recovery in the economy over the past 5 years, it's probably safe to say that the Government was correct not to go Full Argentina.

Finally, it's rarely commented upon that there was a 'trickle-down' bailout effect to household borrowers. This was twofold. Firstly when the pillar-bank capital injections gave the banks, and their borrowers, the breathing space not to move on reposessions; and when the economy recovered, the space to allow write-down on mortgage arrears, which has happened and is ongoing.

The people who really got very little from the bank bailout were those of us who, at that time, had no loans/ arrears and had no pensions worth saving. But even we have benefitted from having returned to a very successful economy with almost full employment, and a reputation for adherence to the rule of law -- at least officialy.

I'm no apologist for the FF and FG governments. I am proud I that have never voted FG in my life and never will. But if financial stability and a pro-business economy is a legitimate aim of theirs, then they can fairly be said to have managed that objective successfully.

Franz Von Peppercorn II

InTheShadows wrote: »

Paddy likes to piss on the poor and doff the cap to his supposed betters, always has always will.

Who is Paddy? Friend of yours?

Franz Von Peppercorn II

Greentopia wrote: »

I've lived here and in Sweden. Ireland by comparison is a way more unequal country. Way more. You don't have to believe me, but there's plenty of empirical evidence available to back this up.

Post transfers (ie tax) Ireland isn’t that unequal but I too would prefer to live in a society where we weren’t so unequal to begin with.

El_Duderino 09

Franz Von Peppercorn II wrote: »

Post transfers (ie tax) Ireland isn’t that unequal but I too would prefer to live in a society where we weren’t so unequal to begin with.

The gaps have widened since the late 2000s. Wealthy people recovered from the recession and are experiencing a boom. Poor people didn’t recover, aren’t experiencing a boom in pay and are paying a greater proportion of their income than ever before on housing.

It’s going on the wrong direction.

Mad_maxx

Greentopia wrote: »

Mad_maxx wrote: »

Ireland is not especially unequal

I've lived here and in Sweden. Ireland by comparison is a way more unequal country. Way more. You don't have to believe me, but there's plenty of empirical evidence available to back this up.

I didn't know we were comparing Ireland to Sweden

Low income earners pay eight times more tax in Sweden than here, the left here don't want high taxes on anyone bar Denis o Brien, in other words they don't want the nordic model

As for the soc dems, wooly liberals of the highest order who are open borders fools

Mad_maxx

El_Duderino 09 wrote: »

Franz Von Peppercorn II wrote: »

Post transfers (ie tax) Ireland isn’t that unequal but I too would prefer to live in a society where we weren’t so unequal to begin with.

The gaps have widened since the late 2000s. Wealthy people recovered from the recession and are experiencing a boom. Poor people didn’t recover, aren’t experiencing a boom in pay and are paying a greater proportion of their income than ever before on housing.

It’s going on the wrong direction.

The generational gap is widening in terms of wealth

I'm very much in favour of property tax and no exemptions for pensioners

Wanderer78

Mad_maxx wrote:

I didn't know we were comparing Ireland to Sweden

It ll be interesting to see what happens the Swedish economy, as they try deal with their building boom

Wanderer78

Mad_maxx wrote:

I'm very much in favour of property tax and no exemptions for pensioners

I do think a land value tax would be a better approach

Mad_maxx

Wanderer78 wrote: »

Mad_maxx wrote:

I'm very much in favour of property tax and no exemptions for pensioners

I do think a land value tax would be a better approach

Most people don't own land

Wanderer78

Mad_maxx wrote:

Most people don't own land

From my vague understanding of it, a lvt would reduce land hoarding, and put land to more productive use, rather than price speculation

BattleCorp

Mad_maxx wrote: »

I'm very much in favour of property tax and no exemptions for pensioners

Grand in theory until you have a pensioner in a nice house or in a wealthy area but they are only on a state pension (€248.30 per week).

ednwireland

orli na nh wrote: »

continuously increasing growth is unsustainable, recessions are inevitable in that economic model

thats what i think the earth is a closed system with limited resources - if yourre doing better someone somewhere is doing worse out of it. we shoudl really be spending our time making things last as long as possible not throwing things away for the next new shiney thing (guilty here as anyone else)

It needs a complete turn updside down of our thingking and i cant see it happening.

Mad_maxx

Wanderer78 wrote: »

Mad_maxx wrote:

Most people don't own land

From my vague understanding of it, a lvt would reduce land hoarding, and put land to more productive use, rather than price speculation

Why not have both?

Mad_maxx

BattleCorp wrote: »

Mad_maxx wrote: »

I'm very much in favour of property tax and no exemptions for pensioners

Grand in theory until you have a pensioner in a nice house or in a wealthy area but they are only on a state pension (€248.30 per week).

They can sell the house and buy another, young people make all the sacrafices nowadays, we can't constantly cosset the elderly

Mad_maxx

BattleCorp wrote: »

Mad_maxx wrote: »

I'm very much in favour of property tax and no exemptions for pensioners

Grand in theory until you have a pensioner in a nice house or in a wealthy area but they are only on a state pension (€248.30 per week).

They can sell the house and buy another, young people make all the sacrafices nowadays, we can't constantly cosset the elderly

El_Duderino 09

BattleCorp wrote: »

Grand in theory until you have a pensioner in a nice house or in a wealthy area but they are only on a state pension (€248.30 per week).

That’s precisely the point of the tax.

In that situation the pensioner is living beyond their means. Their income has dropped to €248 a week so their lifestyle will obviously need to match it. Or else they’re living beyond their means. They just need to downsize like any other person in a capitalist society. It’s not a problem.

JohnnyFlash

The next recession is going to be another biggie. And it’s going to be about sovereign debt and the knock on impact of absolutely decimating the value of pension funds.

Mad_maxx

El_Duderino 09 wrote: »

BattleCorp wrote: »

Grand in theory until you have a pensioner in a nice house or in a wealthy area but they are only on a state pension (€248.30 per week).

That’s precisely the point of the tax.

In that situation the pensioner is living beyond their means. Their income has dropped to €248 a week so their lifestyle will obviously need to match it. Or else they’re living beyond their means. They just need to downsize like any other person in a capitalist society. It’s not a problem.

It's about choices, the vast majority of people can't afford a million euro house, if you happen to live in one, don't expect the state to cover the costs of it

Besides, the state pension is more than enough to put away five hundred euro per annum for property tax