Recession predictions

KyussB · 13-12-2020 8:46pm

Timing belt wrote: »

The use of Job Guarantee and Corbyn/Sanders automatically makes me think communism. Just to be clear I'm not looking for a debate on communism just looking for clear answers instead of waffle.

So you want 'clear answers' about whether certain policies or people meet the definition of Communism - and you're not looking for a debate on the definition of Communism...

That's a well known shit-stirring/flamebait tactic, accusing everything you disagree with as being Communism. I'm not having a debate about that - I don't associate anything I advocate, with that.

Timing belt · 13-12-2020 8:59pm

KyussB wrote: »

So you want 'clear answers' about whether certain policies or people meet the definition of Communism - and you're not looking for a debate on the definition of Communism...

That's a well known shit-stirring/flamebait tactic, accusing everything you disagree with as being Communism. I'm not having a debate about that - I don't associate anything I advocate, with that.

No I want clear answer in plain English as to what policies you are advocating.

KyussB · 13-12-2020 9:05pm

Which you got and dismissed as Communism.

If you're not happy with that answer which you dismissed, then tough - I'm not willing to give you benefit of the doubt as arguing in good faith, past that point.

Timing belt · 13-12-2020 9:27pm

KyussB wrote: »

Which you got and dismissed as Communism.

If you're not happy with that answer which you dismissed, then tough - I'm not willing to give you benefit of the doubt as arguing in good faith, past that point.

What's the point being on this forum when you are unable (or unwilling) to articulate your policies or even to debate the merits of them.

Arthur Daley · 13-12-2020 9:28pm

Even though it's clearly pointed out that the majority of the deficit spending was not for the banks he still repeats the same thing over and over again. And there's the misuse of the term austerity again.

KyussB · 13-12-2020 10:24pm

Timing belt wrote: »

What's the point being on this forum when you are unable (or unwilling) to articulate your policies or even to debate the merits of them.

The policies which you dismissed as Communism, now suddenly weren't articulated?

Nobody is stopping you from replying to those policies - it is your choice to reply with "Durr Communism!" and then the flail about pretending no policies were expressed - instead of debating their actual merits.

Geuze · 13-12-2020 10:51pm

KyussB wrote: »

which aught to be coupled with a Job Guarantee .

I have said this before, to me this proposal sounds interesting.

Ireland does not have high rates of employment, and our LFPR is not high.

We have loads of households with zero market incomes.

We have been the leading country across the EU for the number of people living in VLWI households.

There are several reasons for this (design of the welfare state / childcare / social care preferences)

I would need to see the details, but a scheme that offers a Job Guarantee sounds good.

I have several questions:
is it only available to LT unemployed?
or is it available to any jobless person?
who will the employers be?
does this scheme replace JSA?

https://twitter.com/seamuscoffey/status/1094990982444134407/photo/1

KyussB · 13-12-2020 11:23pm

Ya I think it could benefit Ireland particularly well with regards to households with low work intensity and such - and particularly e.g. areas with discrimination and reduced job opportunities, like in the Traveller community, the disabled - among many other groups. Also helping people get off welfare dependency, and eliminating the 'dole scrounger' stereotype being applied to willing workers.

We should also look to it being EU-wide, because there are future economic crises and fresh Euro crises on the way - and it's exactly the kind of stimuluss and job-creation effort, that can help repair the malaise especially in the e.g Southern EU economies.

A JG position is supposed to be available to anyone who wants it, employed or unemployed - the employer would be the state (and the breadth of potential work can be quite large, and includes training if necessary) - and it would not replace unemployment payments (if people want to stay unemployed rather than go on the JG, that's fine).

There is, in my view, no lack of useful work to be done, and never will be either - and urgent projects like eliminating our carbon emissions etc. (a truly enormous amount of work that needs doing), would be the perfect present example.

Timing belt · 13-12-2020 11:52pm

KyussB wrote: »

Ya I think it could benefit Ireland particularly well with regards to households with low work intensity and such - and particularly e.g. areas with discrimination and reduced job opportunities, like in the Traveller community, the disabled - among many other groups. Also helping people get off welfare dependency, and eliminating the 'dole scrounger' stereotype being applied to willing workers.

We should also look to it being EU-wide, because there are future economic crises and fresh Euro crises on the way - and it's exactly the kind of stimuluss and job-creation effort, that can help repair the malaise especially in the e.g Southern EU economies.

A JG position is supposed to be available to anyone who wants it, employed or unemployed - the employer would be the state (and the breadth of potential work can be quite large, and includes training if necessary) - and it would not replace unemployment payments (if people want to stay unemployed rather than go on the JG, that's fine).

There is, in my view, no lack of useful work to be done, and never will be either - and urgent projects like eliminating our carbon emissions etc. (a truly enormous amount of work that needs doing), would be the perfect present example.

How do you finance such a proposition and in such a scenario would we not end up with full employment which in turn would lead to wage inflation or immigration to fill any new jobs in the economy. How would this be managed?

Also what is the logic in keeping unemployment payments in such a policy. I can understand if it is a short term unemployment payment whilst someone is looking for work but surely it would not included the long-term unemployed.

KyussB · 14-12-2020 12:30am

The actual jobs portion of the JG is only half of the policy - the other half is that it's an entire macroeconomic automatic stabilizer and inflation management policy, which replaces the use of unemployment as an automatic stabilizer and inflation management (i.e. dumps NAIRU).

Instead of the private sector money supply being tightened and raising unemployment to bring down inflation, private sector money supply is tightened and jobs shift from higher wage private sector work to living wage JG work, to bring down inflation.

Instead of the central bank using monetary policy to tighten the entire private sectors money supply, government taxation would be used to target overheating sectors instead.

It would set a de-facto wage floor for the economy at the living wage (the wage the JG pays) - when Full Employment is reached, adjustments to spending/taxation would be used to limit inflation at target levels (primarily taxes aimed at overheating/inflating sectors of the private economy).

There's no Euro crisis or threat to our ability to repay bonds, so we can afford any level of funding up to Full Employment.

The reason to keep unemployment payments, is so that people are not being forced to work - as that raises ethical/moral questions about the JG - and as you mention for cases like short term job churn. It's better/safer to keep unemployment payments as well, with the intention that very-few (almost no) people are on unemployment (and it would be a lot easier to identify the 'genuine' dole scroungers, then - the ones that really are work shy, long-term unemployed - but there may also be people still who, for one reason or another, aren't suitable for the labour force or have trouble).

KyussB · 14-12-2020 12:35am

I've only skimmed it, but Bill Mitchell and Warren Mosler are probably the primary and most authoritative Job Guarantee advocates - Bill's writing isn't always accessible though:
http://www.billmitchell.org/publications/journals/J40_2002.pdf

Should give a good overview of it, as a general macroeconomic policy. Most of the writing on it is not tailored to the Euro.

Timing belt · 14-12-2020 1:52am

KyussB wrote: »

There's no Euro crisis or threat to our ability to repay bonds, so we can afford any level of funding up to Full Employment.

Thank you for Reply and yes I can see the logic behind this but still question the ability to pay for it and the wider impacts that it would have.

Technically we would have full employment but this would be split between the private sector and public sector and Tax base would need to be widened to pay for this because if we were only reliant on government debt then that would not be sustainable and we would end up being locked out of the market or forced to pay debt servicing costs that would be unmanageable. Yes we could print money or undertake a form of QE to reduce this but that also has impacts.

For example if we assumed that Ireland still had its own currency (So as to eliminate the complexities of the Euro) the government would be able to borrow from the markets to fund this and if the cost of borrowing rose they could do there own form of QE to bring the rate down. The impact of this would be to devalue the currency which would help with exports but would increase the cost of imported inputs and any imported goods that we consume. The main one being oil as this is priced in USD.

Likewise if it was a regular occurrence to devalue the currency or undertake QE we would end up little or no investors as the value of the bonds they hold would devalue each time by the time the converted it to their home currency. Likewise there is a risk that the people of Ireland would loose confidence in the currency and would start to hold foreign reserves so they could pay for holidays or a expensive import (German Cars etc.) so not to be at risk of the price rising in Irish currency terms.

KyussB · 14-12-2020 2:35am

There is no Euro crisis anymore, and no question of our ability to repay government bonds. There is no debt sustainability issue.

The assumptions/models you use for predicting future interest rate levels is wrong. Officially predicted future interest rates have been persistently wrong for a long time, because of the use of bad assumptions/models.

The simplified reality is that central banks determine the interest rate and the rate on bonds will shadow that pretty closely - and the central bank interest rate is (simplified...) determined based on whether or not Full Employment has been reached (lower/zero/negative bound when it has not been reached - rising when it is reached).

Unless Ireland is at risk of crashing out of the Euro, our bonds shadowing the ECB interest rate will hold. The Eurozone is also not reaching Full Employment anytime this half of the decade most likely, so interest rates are not going to be a worry.

The sooner Ireland acts on this, the longer Ireland gets to take advantage of low interest rates and soak up spare EU-wide labour, massively expanding our economy and wealth - before the rest of the Eurozone catches up and brings the Eurozone to Full Employment, causing the spending boom to level out, and the Job Guarantee to wind down until the next economic crisis.

If Ireland had its own currency it would never need to borrow, the primary purpose of bonds would be to encourage saving if that was deemed to be macroeconomically desireable. The only time there is permanent devaluation, is if a government keeps on net-spending after reaching Full Employment - if a government does not do this (and the JG explicitly is against doing that), then the long-term value of the currency pre/post crisis is the same (simplified - since we're an open economy and who knows how a global crisis would hit trade). All of that is another topic though, and it's probably less complex/dissonance-inducing to stick to the Euro.

Still, it's worth emphasizing that QE/currency-printing does not devalue a currency, so long as there is an 'Output Gap' (GDP being below potential) which the newly created money is used to fill/close. That's exactly what the JG is for - and there is a very tight/close relationship between interest rates, Full Employment the Output Gap, currency value etc. - which are in perfect harmony with the JG policy, and are critical to focus on and understand.

Timing belt · 14-12-2020 3:09am

KyussB wrote: »

There is no Euro crisis anymore, and no question of our ability to repay government bonds. There is no debt sustainability issue.

The assumptions/models you use for predicting future interest rate levels is wrong. Officially predicted future interest rates have been persistently wrong for a long time, because of the use of bad assumptions/models.

The simplified reality is that central banks determine the interest rate and the rate on bonds will shadow that pretty closely - and the central bank interest rate is (simplified...) determined based on whether or not Full Employment has been reached (lower/zero/negative bound when it has not been reached - rising when it is reached).

Unless Ireland is at risk of crashing out of the Euro, our bonds shadowing the ECB interest rate will hold. The Eurozone is also not reaching Full Employment anytime this half of the decade most likely, so interest rates are not going to be a worry.

The sooner Ireland acts on this, the longer Ireland gets to take advantage of low interest rates and soak up spare EU-wide labour, massively expanding our economy and wealth - before the rest of the Eurozone catches up and brings the Eurozone to Full Employment, causing the spending boom to level out, and the Job Guarantee to wind down until the next economic crisis.

If Ireland had its own currency it would never need to borrow, the primary purpose of bonds would be to encourage saving if that was deemed to be macroeconomically desireable. The only time there is permanent devaluation, is if a government keeps on net-spending after reaching Full Employment - if a government does not do this (and the JG explicitly is against doing that), then the long-term value of the currency pre/post crisis is the same (simplified - since we're an open economy and who knows how a global crisis would hit trade). All of that is another topic though, and it's probably less complex/dissonance-inducing to stick to the Euro.

Still, it's worth emphasizing that QE/currency-printing does not devalue a currency, so long as there is an 'Output Gap' (GDP being below potential) which the newly created money is used to fill/close. That's exactly what the JG is for - and there is a very tight/close relationship between interest rates, Full Employment the Output Gap, currency value etc. - which are in perfect harmony with the JG policy, and are critical to focus on and understand.

It is not the interest rate that concerns me but more the impact on the currency exchange rate. And there would be currency fluctuation which is even stated in the link you sent earlier:
"A once-off, modest increase in ‘low end’ import spending is likely to occur because JG workers would have higher disposable incomes. Any depreciation in the exchange rate is likely to shift the distribution of imports away from the low end."

I can't see it working in a country with an open economy that relies heavily of FDI as the currency fluctuation alone would deter companies from setting up in Ireland.

KyussB · 14-12-2020 4:09am

Timing belt wrote: »

It is not the interest rate that concerns me but more the impact on the currency exchange rate. And there would be currency fluctuation which is even stated in the link you sent earlier:
"A once-off, modest increase in ‘low end’ import spending is likely to occur because JG workers would have higher disposable incomes. Any depreciation in the exchange rate is likely to shift the distribution of imports away from the low end."

I can't see it working in a country with an open economy that relies heavily of FDI as the currency fluctuation alone would deter companies from setting up in Ireland.

Under the Euro, that wouldn't be a concern due to the size of the EU and trade within the Eurozone.

Under a national currency the exchange rate would float more, but Ireland would also be a fairly different economy due to not being in the Euro, so we can't really compare present-day Ireland's economic conditions with regards to e.g. Euro-based FDI, to that.

Yes, with a national currency there will be more pressure on imports because of 1: More money domestically buying foreign goods, and 2: A (presumably) global slowdown reducing the demand for Irish exports - but the latter half of that is going to happen anyway, and the government has tools to reduce this effect by 1: Substituting imports for local goods (eliminating climate changing emissions with renewables is a great way to do this, reducing energy imports), 2: Suppress imports with increased taxes, 3: Boost exports (but this is a 'beggar-thy-neighbour' zero-sum game in a global slowdown so isn't the desired option), 4: Increase local economic efficiency (e.g. through infrastructural investments), decreasing the cost of producing exports and reducing use of imports, 5: Encourage domestic saving instead of spending on imports (government bonds given to citizens instead of finance markets are good for this).

There are a lot of things I could continue listing there, and you're correct that being an open economy is an important consideration - but none of that changes the goal of permanent Full Employment being achievable, sustainable and the primary concern - it only changes the configuration of policy options we need to get there, which may indeed be a bit stricter versus what a stronger economy like the US (or EU/Euro) can manage.

Again though, I advocate a JG under the Euro - even if I'm very critical of the faults in the Euro.

Wanderer78 · 14-12-2020 8:20am

Job garantee programs are great, but creating these jobs is only an element of what would need to be done, the root causes of long term unemployment are deeply complex, the individuals would more than likely require professional psychological supports, some probably long term, in order to enter the work force, creating the jobs alone, probably wouldn't work.

KyussB · 15-12-2020 2:34am

I think that just involves expanding our idea of what useful work is - we're all predisposed to thinking of stuff that turns a profit, or other less-direct economic benefit (like infrastructure), as being the main useful thing - but (while we want most of the work to be economically beneficial in the JG, for macroeconomic reasons) work that is socially beneficial counts as well, as being worthwhile.

If someone's not cut out for regular work, for whatever reasons, we can tailer work to them on a case-by-case basis, depending on their difficulties. People with bad enough difficulties don't necessarily need to enter the private workforce at all.

Wanderer78 · 15-12-2020 6:34am

KyussB wrote:

If someone's not cut out for regular work, for whatever reasons, we can tailer work to them on a case-by-case basis, depending on their difficulties. People with bad enough difficulties don't necessarily need to enter the private workforce at all.

I appreciate that, but I do feel their psychological needs still wouldn't actually be met, you d be surprised of the amount of damage long term unemployment causes, and all its complexities, it actually costs society a significant amount, and not just financially, by not attending to these needs, I feel it would need to be also integrated into the process, to increase its potential to succeed

Geuze · 17-12-2020 2:39am

ESRI publishes QEC.

https://www.esri.ie/publications/quarterly-economic-commentary-winter-2020

This Commentary highlights a significant recovery in the Irish economy in Q3 coinciding with the easing of restrictions over this period. Exports continued to perform very strongly in Q3, propped up by an ongoing strong performance in medicinal and pharmaceutical products and computer services. Consumption and Investment were also significantly improved relative to Q2 but are expected to be lower for the full year. As a result of the strong export performance in particular, our GDP forecast for 2020 has been revised up and we now expect the Irish economy to grow by 3.4 per cent this year.

!!!!!!!

No recession after all!!!!!

Geuze · 17-12-2020 2:42am

https://www.esri.ie/system/files/publications/QEC2020WIN_0.pdf

Both GDP and GNP expected to rise in 2020....................!!!!!!!

This means labour productivity must have soared????

As GDP and GNP are forecast to rise, according to the ESRI, and as employment has fallen, therefore mathematically, GDP per worker will rise.

That measure of labour productivity will rise.

KyussB · 17-12-2020 4:12am

Wanderer78 wrote: »

I appreciate that, but I do feel their psychological needs still wouldn't actually be met, you d be surprised of the amount of damage long term unemployment causes, and all its complexities, it actually costs society a significant amount, and not just financially, by not attending to these needs, I feel it would need to be also integrated into the process, to increase its potential to succeed

Absolutely, I agree with all of that - and it would be essential to have all of that built into the JG program.

I personally view it not merely as a means of providing a job, but of providing a way of giving a hand up for all economically vulnerable people in the economy, who get left behind in todays style of economy (many of them left behind in society overall, partly due to this) - and while the JG would greatly lower the level of difficulty in getting work (eliminating it for almost everyone) - some people will still have complex difficulties, and it will require a lot of additional support and being extremely creative and generous in defining what counts as useful/socially-beneficial work.

That should be one of the no.1 priorities of the government and social/health support services. I don't think it's right to leave even a single person behind, where they can be given a hand up.

Wanderer78 · 17-12-2020 7:57am

Geuze wrote:

This means labour productivity must have soared????

I seriously doubt that, productivity is a funny one, we ve probably maxed out on this one, in most sectors, I suspect we ve actually surpassed our capabilities in many sectors and this is now inducing complex psychological issues in many

Geuze wrote:

Huge fiscal deficit, huge public borrowing

Again, nothing to be worrying about, thank god we still have this ability to do so, or we d be in serious trouble, i suspect early 21 is gonna be bad but when the vaccine kicks in, there could be a significant up turn, as confidence should rise significantly, unfortunately some businesses probably won't make it though

Timing belt · 17-12-2020 4:31pm

Geuze wrote: »

ESRI publishes QEC.

https://www.esri.ie/publications/quarterly-economic-commentary-winter-2020

This Commentary highlights a significant recovery in the Irish economy in Q3 coinciding with the easing of restrictions over this period. Exports continued to perform very strongly in Q3, propped up by an ongoing strong performance in medicinal and pharmaceutical products and computer services. Consumption and Investment were also significantly improved relative to Q2 but are expected to be lower for the full year. As a result of the strong export performance in particular, our GDP forecast for 2020 has been revised up and we now expect the Irish economy to grow by 3.4 per cent this year.

!!!!!!!

No recession after all!!!!!

It’s hard to believe but is good news. Although there may be no technical recession there are still sectors very badly damaged.

Geuze · 18-12-2020 10:52am

Timing belt wrote: »

It’s hard to believe but is good news. Although there may be no technical recession there are still sectors very badly damaged.

As GDP/GNP fell during Q1 and Q2, doesn't that meet the definition of a technical recession?

AlmightyCushion · 18-12-2020 11:23am

Geuze wrote: »

As GDP/GNP fell during Q1 and Q2, doesn't that meet the definition of a technical recession?

Depends on the definition, some say 2 quarters of negative growth some say a few months. Using either definition we had a recession.

salonfire · 20-12-2020 2:34pm

Wanderer78 wrote: »

I seriously doubt that, productivity is a funny one, we ve probably maxed out on this one, in most sectors, I suspect we ve actually surpassed our capabilities in many sectors and this is now inducing complex psychological issues in many

Can I get a source for that claim please?

All that wealth generated in this country over the last 30 years, how terrible it is!!

Pussyhands · 26-03-2021 10:48am

So far you would have to say there has been no recession. PUP payments are propping up the whole thing.

Insane amount of money spent in my opinion. It will have to be paid back, but I think the plan is to let inflation run up to make the debt disappear.

Widdensushi · 26-03-2021 11:24am

Pussyhands wrote: »

So far you would have to say there has been no recession. PUP payments are propping up the whole thing.

Insane amount of money spent in my opinion. It will have to be paid back, but I think the plan is to let inflation run up to make the debt disappear.

Inflation is a factor of course, but there are tough budgets ahead, that will cause a recession, at the moment it is about keeping covid under control.

Zenify · 26-03-2021 12:21pm

Pussyhands wrote: »

So far you would have to say there has been no recession. PUP payments are propping up the whole thing.

Insane amount of money spent in my opinion. It will have to be paid back, but I think the plan is to let inflation run up to make the debt disappear.

At what percent will inflation make our debts disappear?

Pussyhands · 26-03-2021 12:25pm

Zenify wrote: »

At what percent will inflation make our debts disappear?

Won't make it disappear but will make the true value of it much smaller than it is now.

I can't think of any regulation introduced by government that reduces the price of things. Alcohol - price increases. Cars from UK - price increases. Sugary drinks - price increases.

Then they'll raise the minimum wage and prices will go up again and the cycle goes on.

Recession predictions

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