Micky Noonan tells us to all go shopping

If Noonan wants people to spend he has to give them some sort of solid belief in their ability to do so. In other words, we need confidence.

One way to get people spending would be to slash the tax on fuel. If petrol was say, a euro a litre then it would encourage people to travel a bit more, maybe head out a sea-side town for a day and have lunch or whatever. This would, in turn, generate more VAT which is money in the coffers but it has the added effect of keeping people in jobs and creating new ones. This is why heavy tax is like cyanide to a economy and the best way out of recession is to keep as much money as possible in the hands of citizens.

Higgzy wrote: »

What Noonan is saying is ridiculous. Say if I'm earning 30K a year, I'm barely making enough to make ends meet and I spend it all. Is he suggesting that I should borrow (for example) another 20k - money I don't have - to spend 50k a year? And if he thinks that's such I good idea, why doesn't he lead by example and run the government finances like that.

Oh.

Nooooooooooo!! He's not saying that at all!! Jesus Christ, nothing even approximating that! Are people just in the mood to be outraged today??

On a bigger scale, take the German economy in the early 2000's, they had very weak growth rates indeed, purely because people were not "spending" and saving that money instead, presumably. Where did the German Banks do with that saved money end up again? Oh wait..

Just a thought.

Surely though, the most simple idea in this situation is to save money when times are good, just in case you need in when times are bad. This is the natural thing to do. Unfortunately, many Irish people are doing this (which is why our GNP is still taking heavy hits). This is where the core issue lies, people need the confidence to spend some of that saved money. I'll admit that if Irish people have learned generally about the importance of saving some of their income, its a very good thing going forward(makes us more "German", if you would allow). It will at least mean that the borrowing frenzy that was the early to mid 2000's will not happen again in the next while, not that it will be allowed to happen, hopefully. Hopefully people are realising that borrowing money is something that should be avoided unless you absolutely have to.

chelseavera wrote: »

Dont think what I've got to spend will rescue the economy!

It's called the multiplier effect. Not too complicated. You spend it, the person that you gave it to spends it, the person they gave it to spends it and we all keep each other going.

On the bright side, if people go spending all their savings, Noonan will have to go begging to the ECB for some funds to recapitalize the banks.

I'm serious in saying this, I can see this being the prelude to a deposit raid - as was seen in the pension raid.

Noonan: "If people aren't going to spend it, we'll take it off them and spend it for them"

Its all about confidence and certainty.

People must have confidence in the euro - if not they should spend them like crazy while they are still worth something and not be hording them.

And certainty. If Noonan wants people to spend he should publish his full 5 year tax plans immediately and stick to them. That way people can plan without surprises and will spend more.

Its quiet simple....if you don't spend the money you have the govt will tax it out of you....

There may be tax increases on the way....if we continue our current trend of fiscal prudence there WILL be tax increases on the way...

I believe the statement was directed at people with the means to spend....and there are a lot of people with money to spend ( ie I believe over 50% of properties in the country have no mortgage attached )

Then again we on this island do extremes better than anyone else in the world....

Silentcorner wrote: »

I believe over 50% of properties in the country have no mortgage attached

That's a good point, on the surface, but you could equally look at all new 2011 scrappage deal cars around and assume people have loads of money. But how many of those cars have been taken on finance?

I wonder how many of these homeowners are still paying a mortgage........... just not their own.

Very few of the people I graduated with managed to buy a house.
The majority of those who did tho, did so with help from their parents.
Now many of the same people are relying on their parents to help them pay their mortgages, particularly those who have kids or where one partner has lost a job.

Then you have to look at how many of these people own their house in Ireland, but are paying a mortgage for a holiday-home in West Cork, or for an apartment in Spain/Bulgaria, or large medical bills, or parents in nursing homes, and so on.

As regards the surge in savings, well - property has been untouchable for 3 years and counting. 85% of applicants are being refused a mortgage.
Savings are going to surge.
Are these savings disposable?

It's a given that your going to need a 10% deposit minimum, when it finally becomes safe to buy again, just to qualify for a mortgage, preferably higher to insulate from ECB interest rate increases and stealth taxes.


So back to the scrappage scheme, would there be the present abundance of 2010/2011 cars on the road, if the climate hadn't be created to entice people to buy.
Not a f***ing hope.

What would people have thought if, when the car industry was imploding, Brian Lenihan came out and pleaded with those who have money to buy new cars?
They'd say, he's incompetent and he's desperate.

That's what they did say when the government pleaded with people to buy locally and support the Rip Off Republic merchants (while increasing Vat).
Plenty of people voted with their cars and went over the border.
Many of those who couldn't go over the border went online.

For me, the idea of Noonan coming out and saying that people with money ought to spend sounds like the exact same incompetence and desperation that we heard from Fianna Fail.

JustinDee wrote: »

Nothing wrong with what he says, provided Paddy spends his own money for a change.

Context...

Why would people want to spend their savings when there is yet more spending cuts and tax hikes around the corner?

If they stop cutting and stop deflating the domestic economy, then people will regain confidence.