Lenihan: Budget cuts will impact on living standards

Amhran Nua · 27-10-2010 10:52AM

iMax wrote: »

Immediately you've got €260 a month extra money in your pocket, so you might book a holiday, buy a new TV/car, eat out more often, spend a little extra in general.

No, you won't, you'll stick it in the bank and save up because we're in a recession.

The whole idea of trying to use the domestic economy to shore up the sagging tax revenues is mad anyway, we're much too small a country to do that, and even continent sized countries like the US can't pull it off for long.

You can't stop people from saving, or force them to spend. Even if they did, how much of that money would just be siphoned out of the country by foreign owned chains?

If people just want to save, and they do, the government should be going hell bent for leather to encourage those savings to get into investment in domestic export based industries, tourism, anything to get money into the country from outside the country, that we don't need to repay with crippling interest. Added bonus, this will also create sustainable employment.

mickydoomsux · 27-10-2010 10:54AM

iMax wrote: »

Immediately you've got €260 a month extra money in your pocket, so you might book a holiday, buy a new TV/car, eat out more often, spend a little extra in general.

Or you could save it. But i forgot, the new Irish mentality is to spend every single penny you have and then even borrow money to spend every single penny you don't have. Then you turn around and blame the 'gubbermint' and 'developers' for the fact that you can't pay your mortgage on your over-priced ****box house because it's anyones fault but yours that you have zero money management skills.

27-10-2010 10:55AM

thebigbiffo wrote: »

its still an asset, it has value, but it's 'underperforming' (not increasing but decreasing in value) as is the case with 'real' NAMA loans. i'll also point out that the banks own all the loans that NAMA currently has.

i'm not going to argue my original point - one NAMA is seriously bad enough - but your argument is invalid!

I don't think you understand. Loans in NAMA aren't "under performing" because the assets involved are dropping in value, they are under performing when the guy isn't able to meet the repayments on the loan. Take this with the drop in value of the asset (and I'm using the term asset loosely) and the bank can't sell to recover its losses.

Besides, all this talk of spending to get the economy going. Sure it'd help, but where does the money end up? Very little of what we buy is produced here. We might get a brief windfall in taxes/job creation and then in a few years we're in an even worse position due to the amount of interest we're paying back on our national borrowings.

average_runner · 27-10-2010 10:59AM

deelite wrote: »

I heard David Williams on radio other morning and he suggested to freeze all mortgages for 2 years to encourage people to start spending, which I personally think is a great idea. He explained that for every one euro that you spend the government gets approximate 20 cent out of each euro.

Yeah this was a great idea from him except he couldnt back it up with when questions asked about it. For example:

Does the interest build up over the next two years?
People on tracker mortages, would they lose them, if so it be a stupid idea.
The banks owe money to other banks for these mortages, will they let the banks off for 2 years?

How will banks make money, lets face it they need to make money to get us out of this mess

gonedrinking · 27-10-2010 11:01AM

Rabidlamb wrote: »

It may seem a bit obvious to me but why isn't there a huge clamor to cut PS pay as part of these impending cuts.

Croke Park 'will be revisited, but public pay won't be cut'
http://www.independent.ie/national-news/budget/news/croke-park-will-be-revisited-but-public-pay-wont-be-cut-2395927.html

It was revealed last week that of the total Health Service budget 70% was soaked up in pay.
Why isn't someone stating the obvious here or are we not allowed talk about it ?.
Did I miss the memo ?.
Is it OK to mention the war ?.

Because the government can't fight the unions, they're too powerful. If cuts were made to public sector pay the unions would have the lot of them out protesting until the government caved in.

Amhran Nua · 27-10-2010 11:01AM

average_runner wrote: »

How will banks make money, lets face it they need to make money to get us out of this mess

Its fair to say that we need to start looking at other alternatives to banks to get us out of this mess.

-Trek- · 27-10-2010 11:02AM

I'm amazed at the amount of people lubing up and willing to take this up the ***, that it has to be done. FFS they were planning on taking €1bn out of the already crippled health service. Unless they plan to make the cuts in sorting the top heavy admin problem people wont be dying on trolleys they will be dying in the car park (that you now have to pay to a park in!).
/rant

average_runner · 27-10-2010 11:02AM

mickydoomsux wrote: »

Or you could save it. But i forgot, the new Irish mentality is to spend every single penny you have and then even borrow money to spend every single penny you don't have. Then you turn around and blame the 'gubbermint' and 'developers' for the fact that you can't pay your mortgage on your over-priced ****box house because it's anyones fault but yours that you have zero money management skills.

Well said.

ALot of the mess is down to the ordinary people of this country for not having basic common sense for managing their own money or thinking they might have kids down the line!!

Hyperbullet · 27-10-2010 11:02AM

mickydoomsux wrote: »

Or you could save it. But i forgot, the new Irish mentality is to spend every single penny you have and then even borrow money to spend every single penny you don't have. Then you turn around and blame the 'gubbermint' and 'developers' for the fact that you can't pay your mortgage on your over-priced ****box house because it's anyones fault but yours that you have zero money management skills.

Simple economic theory will tell you that people spending money on goods and services is what keeps and economy moving. Taking money out of the economy and having it sitting in banks etc is not the way out. I do not condone spending beyond your means at all, however everyone suddenly saving every bit of surplus income they have is not going to get us out of this mess.

yoshytoshy · 27-10-2010 11:02AM

Rojomcdojo wrote: »

Besides, all this talk of spending to get the economy going. Sure it'd help, but where does the money end up? Very little of what we buy is produced here. We might get a brief windfall in taxes/job creation and then in a few years we're in an even worse position due to the amount of interest we're paying back on our national borrowings.

Spot on and thats probably the biggest reason for getting us in the mess we're in now. A lot of our income was based around borrowed money and not on homegrown talent.

Hopefully we can change all of that and move on ,forget about spending the blues away.

Name Changed · 27-10-2010 11:05AM

I wouldn't mind taking another hit if everyone did. But as usual, I'm guessing that the highest earners will get away with it. How I pay more tax than someone earning over ten times more than me completely baffles me.

Amhran Nua · 27-10-2010 11:06AM

Hyperbullet wrote: »

however everyone suddenly saving every bit of surplus income they have is not going to get us out of this mess.

Its a bit of a conundrum alright - naturally people want to save for fear of losing their jobs, but the economy needs spending to keep ticking over. The solution to this apparent paradox, as mentioned, is to encourage those savings to get into investments in export business and working to bring money into the country from abroad. After all, the cash must come from somewhere besides foreign bank loans at the end of the day, and FDI isn't close to enough.

average_runner · 27-10-2010 11:06AM

Hyperbullet wrote: »

Simple economic theory will tell you that people spending money on goods and services is what keeps and economy moving. Taking money out of the economy and having it sitting in banks etc is not the way out. I do not condone spending beyond your means at all, however everyone suddenly saving every bit of surplus income they have is not going to get us out of this mess.

No offence but I think alot of ordinary people have now learnt that most things in our country are over priced, people will rather save now and look for bargain before we spend. So if you want people to spend then get the retailers to drop their prices more instead of increasing them again like they have lately

Perfect example I was willing to buy a brand new car this year but the car dealers are in their own dream world when it comes into offering you trade in deals etc.

Instead will sell my old car and buy a 2010 car (the same one) in 2011 at cheaper price. In the end they lose out.

Hyperbullet · 27-10-2010 11:06AM

Name Changed wrote: »

I wouldn't mind taking another hit if everyone did. But as usual, I'm guessing that the highest earners will get away with it. How I pay more tax than someone earning over ten times more than me completely baffles me.

That will probably be the sad reality of it.

thebigbiffo · 27-10-2010 11:07AM

Rojomcdojo wrote: »

I don't think you understand. Loans in NAMA aren't "under performing" because the assets involved are dropping in value, they are under performing when the guy isn't able to meet the repayments on the loan. Take this with the drop in value of the asset (and I'm using the term asset loosely) and the bank can't sell to recover its losses.

Besides, all this talk of spending to get the economy going. Sure it'd help, but where does the money end up? Very little of what we buy is produced here. We might get a brief windfall in taxes/job creation and then in a few years we're in an even worse position due to the amount of interest we're paying back on our national borrowings.

http://www.independent.ie/national-news/developers-challenge-to-nama-tests-its-power-2362713.html

just to point out that not all transfers to NAMA were from developers who couldnt pay...

but you're right and i agree with you. i just wanted to throw it out there i've heard so much about the idea but i'm not very sure.

i do think cuts are the only way to go. the croke park agreement should be ripped up for a start (as someone else pointed out, 70% of the HSE's budget goes on wages...and admin in the HSE is nothing short of a joke) but unfortunately new taxes and charges are going to further lower spending which is something that needs addressing...hence the socialist NAMA idea...

mickydoomsux · 27-10-2010 11:16AM

Hyperbullet wrote: »

Simple economic theory will tell you that people spending money on goods and services is what keeps and economy moving.

Indeed. But this only works if people have actual money to spend, not borrowed money that they have to pay back. They are basically making a double-loss in this situation, they lose the money by spending it and they lose more money paying it back with interest.

SeaFields · 27-10-2010 11:16AM

Maybe I'm mad and my little contribution will make fcuk all difference in the larger scheme of things but this Christmas (its less than two months away!) I have decided, and indeed started, to buy all my presents off small, independent Irish retailers. None of the big foreigner retailers, no online buying.

It might cost a bit more in the long run but I am spreading out my shopping due to my measly income so have started doing this already.

I suppose if everyone decided to buy even half their gifts off small Irish retailers it would make a big difference.

Mister men · 27-10-2010 11:22AM

No **** Lenihan. It won't impact your standard of living will it. Myself and the wife have jobs sorted in Canada for the new year so i could'nt give a ****. May return after 2020 with the kids if things improve but i doubt it. The apathy and lack of protest here againest cuts and this government made up my mind for me some time ago.

sollar · 27-10-2010 11:26AM

Amhran Nua wrote: »

Its fair to say that we need to start looking at other alternatives to banks to get us out of this mess.

True, and if we can create jobs and growth we will be asked to take even more and more pain in the years to come.

twinytwo · 27-10-2010 11:28AM

lets see them cut their own salaries first.. and cut their expenses down to 5 or 10% of what they currently are. which is what they should have been in the first place... but what cant have that. Country is going down the tube but biffo must still get is €400 bottles of wine:rolleyes: lets no forget the td's racked up millions in expenses while they were on holidays!!.. i dont even know how that works??.... TBf just like everything else the government are talking out of their asses... the budget will come and go we will get raped and 6 months down the line (assuming the country is actually still standing) they will be back with the same old story of they got their sums wrong and tax revenue wasnt what they thought etc etc.

27-10-2010 11:28AM

Amhran Nua wrote: »

No, you won't, you'll stick it in the bank and save up because we're in a recession.

The whole idea of trying to use the domestic economy to shore up the sagging tax revenues is mad anyway, we're much too small a country to do that, and even continent sized countries like the US can't pull it off for long.

You can't stop people from saving, or force them to spend. Even if they did, how much of that money would just be siphoned out of the country by foreign owned chains?.

I liked the idea that austrian town had - devaluing currency. Seemed to leave them very well off.
But it was very local and all spending stayed local so I don't think it could work here.
Still, there are ways.

mikom · 27-10-2010 11:29AM

SeaFields wrote: »

Maybe I'm mad and my little contribution will make fcuk all difference in the larger scheme of things but this Christmas (its less than two months away!) I have decided, and indeed started, to buy all my presents off small, independent Irish retailers. None of the big foreigner retailers, no online buying.

It might cost a bit more in the long run but I am spreading out my shopping due to my measly income so have started doing this already.

I suppose if everyone decided to buy even half their gifts off small Irish retailers it would make a big difference.

You Sir, are a patriot.
I salute you.

27-10-2010 11:29AM

Mister men wrote: »

No **** Lenihan. It won't impact your standard of living will it. Myself and the wife have jobs sorted in Canada for the new year so i could'nt give a ****. May return after 2020 with the kids if things improve but i doubt it. The apathy and lack of protest here againest cuts and this government made up my mind for me some time ago.

So you're against cuts eh? Got 15 billion lying around that you're not telling us about?

Amhran Nua · 27-10-2010 11:36AM

bluewolf wrote: »

I liked the idea that austrian town had - devaluing currency. Seemed to leave them very well off.
But it was very local and all spending stayed local so I don't think it could work here.
Still, there are ways.

There are! The question is why the government isn't looking at them! We have a civil service pickled in its own unsackability presenting policy options to small-town solicitors, publicans, and teachers, that's why.

jessiejam · 27-10-2010 11:39AM

It makes me laugh how lenihan states that the budget cuts will impact on living standards, and on the news last night all the ministers were being driven into leinster house in their big fuk off 2010 Audi A6's.

It may be a start if they gave up the 60k cars and drivers for one.
They don't know the meaning of living standards.
To them it will be maybe having to let the housekeeper go.... poor pets...
GGGGGGGGGGGRRRRRRRRRRRRRRRRR

Saadyst · 27-10-2010 11:39AM

Rojomcdojo wrote: »

So you're against cuts eh? Got 15 billion lying around that you're not telling us about?

I think a key point to pick up on is in his second sentence.

jimbling · 27-10-2010 11:41AM

Name Changed wrote: »

I wouldn't mind taking another hit if everyone did. But as usual, I'm guessing that the highest earners will get away with it. How I pay more tax than someone earning over ten times more than me completely baffles me.

Hyperbullet wrote: »

That will probably be the sad reality of it.

That's probably because you are not paying more tax than someone earning ten times more than you.

topper75 · 27-10-2010 11:43AM

SeaFields wrote: »

Maybe I'm mad and my little contribution will make fcuk all difference in the larger scheme of things but this Christmas (its less than two months away!) I have decided, and indeed started, to buy all my presents off small, independent Irish retailers. None of the big foreigner retailers, no online buying.

It might cost a bit more in the long run but I am spreading out my shopping due to my measly income so have started doing this already.

I suppose if everyone decided to buy even half their gifts off small Irish retailers it would make a big difference.

Bloody good post there. If we were all willing to pay small premiums to buy home-produced stuff, whilst sellers were as reasonable as possible with their margins, we could build an economy worth talking about. Are we willing to take the long view though as a nation?

Alternatively we could continue on our merry way to shop in Tesco and Riverisland and wondering why nothing is budging on the job websites.

Amhran Nua · 27-10-2010 11:45AM

topper75 wrote: »

Bloody good post there. If we were all willing to pay small premiums to buy home-produced stuff, whilst sellers were as reasonable as possible with their margins, we could build an economy worth talking about.

No, we couldn't. If we can convince people in other countries to buy our stuff, then we could. And it shouldn't be that tough to do.

Saadyst · 27-10-2010 11:45AM

mikom wrote: »

You Sir, are a patriot.
I salute you.

While it's a nice sentiment and perhaps patriotic, it doesn't have to be idiotic; don't "buy Irish" if you're going to get fleeced. Get the best deal for YOUR money, whether it's here, or somewhere else.

There's no point propping up things which just shouldn't work. One way or another, this country will have to become more competitive. No-one goes on holiday to Ireland and then thinks to themselves, "Wow, that place was really cheap, had a dinner for 4 and a few bottles of wine for €100!". You can go to a nice sunny town in Spain and get that - and we do come back and think that to ourselves when we're on holiday.

So don't buy it just because it's Irish - buy it because it's good value for what you are looking for.

Lenihan: Budget cuts will impact on living standards

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