Recession predictions

Deub · 15-07-2020 7:11am

Deub wrote: »

Without forgetting what the Minister of Finance said in February:

"one thing we can be certain of is that the current high levels of corporation tax cannot be relied on in the long term.”
https://www.irishtimes.com/business/economy/corporate-tax-take-cannot-be-relied-upon-in-future-warns-donohoe-1.4189282

Maybe bad news coming about corporation tax. EU may be looking going after low corporation tax countries:

https://www.ft.com/content/4068b83a-2c64-43e9-b82a-0b77c454164b

leinsterdude · 15-07-2020 7:21am

cannotlogin wrote: »

There are so many businesses in Ireland currently on life support due to a number of subsidies at present:-

- Wages subsidy scheme
- Deferred rental
- stay on evictions
- warehousing of revenue payment
- loan moratoriums
- creditors payment plans

All of the above will come to an end, staring in September/October. Some businesses will be kept going on the basis that Christmas is usually a bumper month in terms of Revenue so bank/suppliers/landlords will gamble on that just in case it is enough to help some businesses get over the worst of it.

Realistically many businesses won't open after Christmas with further casualties as the year goes on. The cash reserves some businesses have will also be reducing over this time too.

A second wave may accelerate this but next year is when we will see the real damage I think. As the first tranche of businesses fail, there will be knock on effects to their suppliers, landlords etc and depending on the amount of businesses failing in 2021, the knock on effects will last well into 2022 which could be even worse.

This will also be compounded by some of the advantages businesses have gained from work from home - more automated processes will reduce staff, reduced numbers of staff in office etc. This will have a negative effect on transport services, petrol stations etc due to reductions in commuters. There will also be reduced footfall in shops, cafes etc if there are less staff in offices.

We are also looking at increased taxes at some stage as all the borrowing has to be paid back.

Unlike the last recession, where people could move country or change sector, there are less options available to people which makes me think this will be a deeper recession than last time.

I'm not trying to be negative, just realistic.

I also agree, apart from one thing, I think most people working from home say now this is it for them and feck the commute, but they will mostly trickle back to the office over the next few months.

Viscount Aggro · 15-07-2020 7:45am

Higher income earners will be made to pay.
I predict an extra 2 - 3% onto the income tax rate, for earners above 70K.
Incrementally, this is the fairest means to raise extra tax revenue.
Low and middle income earners would be spared.

brisan · 15-07-2020 8:21am

leinsterdude wrote: »

I also agree, apart from one thing, I think most people working from home say now this is it for them and feck the commute, but they will mostly trickle back to the office over the next few months.

I think the main driver for this will be office managers and those higher up the chain who now find themselves exposed as to the amount of actual work they do
They will want people back in the office quickly.
However I think WFH is here to stay
My son in London started a new job in May ( HR in a tech firm )and has not yet been in to the office

brisan · 15-07-2020 8:22am

Viscount Aggro wrote: »

Higher income earners will be made to pay.
I predict an extra 2 - 3% onto the income tax rate, for earners above 70K.
Incrementally, this is the fairest means to raise extra tax revenue.
Low and middle income earners would be spared.

I would not consider 70k a high income

Wanderer78 · 15-07-2020 8:27am

Deub wrote:

Maybe bad news coming about corporation tax. EU may be looking going after low corporation tax countries:

I do think partially accepting revenue as stocks and shares is the way to go here

wassie · 15-07-2020 9:25am

David McWilliams is a proponent of this idea of creating a type of sovereign wealth fund I think is certainly worth exploring. May well help to anchor the MCNs here as well.

Viscount Aggro wrote: »

Higher income earners will be made to pay.
I predict an extra 2 - 3% onto the income tax rate, for earners above 70K.
Incrementally, this is the fairest means to raise extra tax revenue.
Low and middle income earners would be spared.

70K supporting a family with a mortgage doesn't leave a lot left over in many cases and you want to squeeze them for more is not fair.

How about shaking up the massive tax benefits property owners get in this country. I'm not talking about the family home here either. I'm talking about taking away the tax incentives for holding onto unproductive assets and redirecting that into businesses that actually provide economic benefits and try and relieve the burden on the taxpayer.

Give us an incentive to work harder.

brisan · 15-07-2020 2:07pm

https://youtu.be/HEI3GIU5m3s

Opinions on weather this is likely to happen here ??

brisan · 15-07-2020 2:24pm

https://youtu.be/c7BU3haN3Ro

Wanderer78 · 15-07-2020 2:25pm

brisan wrote: »

Opinions on weather this is likely to happen here ??

no offence, but a global crash could occur in the next 5 minutes, nobody knows, what issues are you particularly interested in?

Wanderer78 · 15-07-2020 2:31pm

brisan wrote: »

Opinions on weather this is likely to happen here ??

seems like his thinking is largely neoclassical, so id ignore it

brisan · 15-07-2020 2:41pm

Wanderer78 wrote: »

no offence, but a global crash could occur in the next 5 minutes, nobody knows, what issues are you particularly interested in?

housing market specifically

Wanderer78 · 15-07-2020 2:45pm

brisan wrote: »

housing market specifically

seems like both of those videos are neoclassically based, ignore them, neoclassical forecasts and models are notoriously inaccurate, you ll find one of the main factors that influences house prices is the availability, or lack of, credit, neoclassical economics doesnt accept this, hence why most didnt foresee the previous crash coming, but some critics of it did.

KyussB · 15-07-2020 6:24pm

wassie wrote: »

David McWilliams is a proponent of this idea of creating a type of sovereign wealth fund I think is certainly worth exploring. May well help to anchor the MCNs here as well.

Sovereign wealth fund is a no-go - basically foregoing urgent/necessary spending today, in order to buy-in to financial instruments and corporate bonds etc. - it doesn't make sense to operate government finances that way. The countries with sovereign wealth funds, typically are pouring money in from massive resource extraction profits - i.e. oil rich countries. We can't emulate that success, and we aren't resource rich.

David McWilliams has unusual views. Sometimes he seems progressive, but then on the other hand almost all major Irish economists end up reverting back to fiscal conservatism in one form or another - so I can find myself agreeing with him on one thing, then wondering where on earth he came up with the idea on other things.

wassie · 15-07-2020 6:51pm

I agree with what your saying, but surely different thinking is needed. Why cant we extract capital differently to fund future obligations. Only in the last few days has the pension timebomb raised its head again. I recall 15 years the conservative government of the day in Australia set up a sovereign wealth fund (unremarkably called the 'Future Fund') to primarily cover its future unfunded pension obligations of the federal public service.

KyussB · 15-07-2020 7:14pm

Government finances aren't like business/household finances. Funding future obligations in advance, is just a code word for holding back GDP from its maximum potential, through spending cuts or hiking taxes today (in order to just put the money aside doing nothing/very-little) - you want to keep GDP at its maximum potential, at Full Output, as close to all the time as possible.

Pensions aren't a funding problem - they are an allocation problem. A demographic shift towards having more people of old age, just means a greater proportion of GDP will be allocated to services and spending for those people, than there is today. That's fine and perfectly normal.

The push to present it as a funding problem, is by fiscal conservatives who want us to run surpluses (which are actually a bad thing - causing greater reliance on Private Debt to fill the gap in spending required for maximizing GDP), and want to hold back government spending in general.

Wanderer78 · 15-07-2020 7:27pm

KyussB wrote: »

Sovereign wealth fund is a no-go - basically foregoing urgent/necessary spending today, in order to buy-in to financial instruments and corporate bonds etc. - it doesn't make sense to operate government finances that way. The countries with sovereign wealth funds, typically are pouring money in from massive resource extraction profits - i.e. oil rich countries. We can't emulate that success, and we aren't resource rich.

David McWilliams has unusual views. Sometimes he seems progressive, but then on the other hand almost all major Irish economists end up reverting back to fiscal conservatism in one form or another - so I can find myself agreeing with him on one thing, then wondering where on earth he came up with the idea on other things.

id have to disagree, i think mcwilliams is onto it regarding swf's, dont forget in relation to mnc's, hes advocating for the small percentage that isnt given to us by mnc's, apparently this is typically 1/2% of the 12.5%. our richest 'resources' is in fact the mnc's that operate here, but we currently have very limited access to a large proportion of their wealth, which is more than likely in their assets, including their stocks and shares. partially accepting the revenue from this sector in stocks and shares makes sense, in order to get more access to this wealth, the value of the wealth fund will clearly fluctuate with the markets, but id imagine it would increase our ability to borrow from within the global financial markets? mcwilliams has been receiving positive reactions for this idea, including from the ft.

KyussB wrote: »

Government finances aren't like business/household finances. Funding future obligations in advance, is just a code word for holding back GDP from its maximum potential, through spending cuts or hiking taxes today (in order to just put the money aside doing nothing/very-little) - you want to keep GDP at its maximum potential, at Full Output, as close to all the time as possible.

Pensions aren't a funding problem - they are an allocation problem. A demographic shift towards having more people of old age, just means a greater proportion of GDP will be allocated to services and spending for those people, than there is today. That's fine and perfectly normal.

The push to present it as a funding problem, is by fiscal conservatives who want us to run surpluses (which are actually a bad thing - causing greater reliance on Private Debt to fill the gap in spending required for maximizing GDP), and want to hold back government spending in general.

this is why i also advocate for the creation of public banking systems here, so rainy day funds can be put to good use, we have to stop pushing our money supply out to the private sector, the debts created are slowly turning our economies into debt zombies

Limpy · 15-07-2020 7:35pm

How long can Ireland keep the economy going as things stand.

Wanderer78 · 15-07-2020 7:37pm

Limpy wrote: »

How long can Ireland keep the economy going as things stand.

how longs a piece of string, there are limits within the system, and im sure we re testing those, but we re playing a dangerous game with this virus, central banks can never run out of money but id imagine theres limits there to

KyussB · 15-07-2020 7:59pm

Wanderer78 wrote: »

id have to disagree, i think mcwilliams is onto it regarding swf's, dont forget in relation to mnc's, hes advocating for the small percentage that isnt given to us by mnc's, apparently this is typically 1/2% of the 12.5%. our richest 'resources' is in fact the mnc's that operate here, but we currently have very limited access to a large proportion of their wealth, which is more than likely in their assets, including their stocks and shares. partially accepting the revenue from this sector in stocks and shares makes sense, in order to get more access to this wealth, the value of the wealth fund will clearly fluctuate with the markets, but id imagine it would increase our ability to borrow from within the global financial markets? mcwilliams has been receiving positive reactions for this idea, including from the ft.

this is why i also advocate for the creation of public banking systems here, so rainy day funds can be put to good use, we have to stop pushing our money supply out to the private sector, the debts created are slowly turning our economies into debt zombies

Why would we want a stake in the wealth of companies that we are supposed to be regulating and are up to their ears in unethical/questionable/often-illegal practices, though? Conflicts of interest abound, there. It's not compatible with an independent government, that is supposed to be regulating those industries.

We don't want to buy-in to corporations and finance - as it's inherently corrupting to our government and public finances, if we make the latter dependent on gains generated from corporate/financial corruption.

Agreed on Public Banks, though! I notice that is something the Green's swiftly abandoned on their way into government, which previously they had as one of the things they advocate.

Wanderer78 · 15-07-2020 8:23pm

KyussB wrote:

Why would we want a stake in the wealth of companies that we are supposed to be regulating and are up to their ears in unethical/questionable/often-illegal practices, though? Conflicts of interest abound, there.

Because a very large proportion of wealth is accumulating within them, and we desperately need more access to it, this is also a growing problem globally. Large corporations aren't all bad, they do create a large proportion of employment, directly and indirectly, and they do create a large proportion of our much needed goods and services, and very well at that. Of course they ain't angels either, but if society has a bigger stake in them, we might just be able to slowly change these negatives. They're here to stay for now, they ain't going anywhere, and we need them for the above reasons. We obviously already interact with these mnc's, so there's always been conflicts of interest, but we really do need them at the moment. I'd also advocate that all employees of mnc's should obtain a small proportion of their pay as stocks and shares, reducing inequality within the respected businesses.

KyussB wrote:

We don't want to buy-in to corporations and finance - as it's inherently corrupting to our government and public finances, if we make the latter dependent on gains generated from corporate/financial corruption.

Corruption between them already exists, even though this should not be encouraged, in fact everything should be done to reduce it, ideally abolish it, but I think corruption is a human condition, and possibly impossible to completely eradicate. We need to re-democratise our work places, gaining access to more share ownership could be a critical element of this, along with other activities such as reunionising the work place, and possibly placing workers on the boards of directors.

KyussB wrote:

Agreed on Public Banks, though! I notice that is something the Green's swiftly abandoned on their way into government.

I spotted that to, I know a green TD, I ll be hitting him with this the next time I see him, if they're good enough for the Germans, they're good enough for us!

KyussB · 16-07-2020 12:34am

Wanderer78 wrote: »

Because a very large proportion of wealth is accumulating within them, and we desperately need more access to it, this is also a growing problem globally. Large corporations aren't all bad, they do create a large proportion of employment, directly and indirectly, and they do create a large proportion of our much needed goods and services, and very well at that. Of course they ain't angels either, but if society has a bigger stake in them, we might just be able to slowly change these negatives. They're here to stay for now, they ain't going anywhere, and we need them for the above reasons. We obviously already interact with these mnc's, so there's always been conflicts of interest, but we really do need them at the moment. I'd also advocate that all employees of mnc's should obtain a small proportion of their pay as stocks and shares, reducing inequality within the respected businesses.

Corruption between them already exists, even though this should not be encouraged, in fact everything should be done to reduce it, ideally abolish it, but I think corruption is a human condition, and possibly impossible to completely eradicate. We need to re-democratise our work places, gaining access to more share ownership could be a critical element of this, along with other activities such as reunionising the work place, and possibly placing workers on the boards of directors.

I spotted that to, I know a green TD, I ll be hitting him with this the next time I see him, if they're good enough for the Germans, they're good enough for us!

Strong government spending is the antidote to concentrated corporate/financial power/wealth, though

If we use government spending to buy-in to corporations/finance, then we are giving corporations/finance power/wealth through the government, and also making part of government finances dependent on their unethical deeds etc..

The wealth that has accumulated in private hands doesn't actually matter. Governments don't have to buy-in to a single cent of that wealth, in order to engage in strong government spending.
Strong government spending, aimed at permanent Full Employment, proper public services, and proper regulation, can tip the balance away from capital and to labour, away from the wealthy back to the average joe, and gradually breaks up concentrated private power - without having to go after a single cent of the money the wealthy have.

It's a gigantic mistake to ever think we need the money the wealthy have. We don't.
Separation of state and business/finance is as important as separation of church and state as well.

I do agree with you though, that the workers in corporations should get a bigger portion of shares/ownership in these companies - big enough to have a strong say as stakeholders, in the running of the business they're a part of - with increased unionization etc. as well.

Geuze · 18-07-2020 12:51pm

Wanderer78 wrote: »

Because a very large proportion of wealth is accumulating within them, and we desperately need more access to it, this is also a growing problem globally. Large corporations aren't all bad, they do create a large proportion of employment, directly and indirectly, and they do create a large proportion of our much needed goods and services, and very well at that. Of course they ain't angels either, but if society has a bigger stake in them, we might just be able to slowly change these negatives. They're here to stay for now, they ain't going anywhere, and we need them for the above reasons. We obviously already interact with these mnc's, so there's always been conflicts of interest, but we really do need them at the moment. I'd also advocate that all employees of mnc's should obtain a small proportion of their pay as stocks and shares, reducing inequality within the respected businesses.

Any assets owned by firms are owned by the shareholders.

As a shareholder in Ryanair, I own a tiny slice of all the aircraft.

"If society has a bigger stake in them" - surely society already owns 100% of all firms, as all firms are owned by people?

Yes, I agree that employee share ownership is a good idea.

Geuze · 18-07-2020 12:56pm

Wanderer78 wrote: »

Because a very large proportion of wealth is accumulating within them, and we desperately need more access to it,

Yes, a good chuck of household wealth is financial, some of which is ownership of firms.

https://www.centralbank.ie/statistics/statistical-publications/behind-the-data/a-new-high-in-irish-household-wealth-what-is-different-this-time

chart-1-household-net-worth-has-exceeded-the-2007-peak.png?sfvrsn=8

chart-1-household-net-worth-has-exceeded-the-2007-peak.png?sfvrsn=8

Wanderer78 · 18-07-2020 1:00pm

Geuze wrote: »

Any assets owned by firms are owned by the shareholders.

As a shareholder in Ryanair, I own a tiny slice of all the aircraft.

"If society has a bigger stake in them" - surely society already owns 100% of all firms, as all firms are owned by people?

Yes, I agree that employee share ownership is a good idea.

the only problem is, share ownership is heavily skewed, and i personally think this is now at an extremely dangerous level, younger generations are getting hammered because if it, baring in mind, im a share holder myself. theres increasing evidence that maximizing share holder value is actually failing a large proportion of people, as they own very little if any shares in anything really.

inequality is growing globally, and ownership of assets is very badly distributed, spreading that wealth more evenly by share ownership makes sense, its common that in many large corporations, income ratios are typically 200/300:1, in extreme cases this can be as much as 1000:1, these ae now dangerous levels, share ownership could very well be the way to try resolve these inequalities.

KyussB · 18-07-2020 6:33pm

Geuze wrote: »

Yes, a good chuck of household wealth is financial, some of which is ownership of firms.

https://www.centralbank.ie/statistics/statistical-publications/behind-the-data/a-new-high-in-irish-household-wealth-what-is-different-this-time

Interesting breakdown of that financial share:
chart-3.png?sfvrsn=14

https://centralbank.ie/statistics/data-and-analysis/financial-accounts

Wanderer78 · 18-07-2020 6:35pm

KyussB wrote: »

Interesting breakdown of that financial share

not surprising, we ve nearly always been big savers, interesting graph though

riddles · 18-07-2020 6:49pm

We have the spectre of brexit, a digital tax from the EU which will be minus 1.5 to 2 billion from corpo tax. We have FDI exec decision makers unable to travel. Job displacement with technology. Farming coming under pressure. Looks like a lot more downside and also 10 billion a year just to service the current debt level. When you drive around towns they are dead economically, it’s a very distorted economy in Ireland. Brass plate companies distort the GDP levels.

Geuze · 18-07-2020 11:28pm

KyussB wrote: »

Interesting breakdown of that financial share:

https://centralbank.ie/statistics/data-and-analysis/financial-accounts

The first diagram, posted by me, is of stocks of wealth.

The second diagram shows flows, i.e. additions to wealth.

The issue of the distribution of wealth is interesting, yes.

Very high rents are hurting people.

Geuze · 18-07-2020 11:30pm

riddles wrote: »

We have the spectre of brexit, a digital tax from the EU which will be minus 1.5 to 2 billion from corpo tax. We have FDI exec decision makers unable to travel. Job displacement with technology. Farming coming under pressure. Looks like a lot more downside and also 10 billion a year just to .

Good points.

Note that interest on the public debt is 4.458bn in 2019, not 10 bn.

Recession predictions

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