Irish Govt raises four-year austerity target to €15bn

[Idaho]

Just for the lulz...

George Osborne wants us to be more like Ireland

[Furunculus]

What has caused this Irish miracle, and how can we in Britain emulate it? Three lessons stand out.

First, Ireland’s education system is world-class. On various different rankings it is placed either third or fourth in the world. By contrast, Britain is ranked 33rd and our poor education performance is repeatedly identified by organisations such as the OECD as our greatest weakness. It is not difficult to see why. Staying ahead in a global economy will mean staying at the cutting edge of technological innovation, and using that to boost our productivity. To do that you need the best-educated workforce possible. It is telling that even limited education reform is proving such a struggle for the Prime Minister.

Secondly, the Irish understand that staying ahead in innovation requires world class research and development. Using the best R&D, businesses can grow and make the most of the huge opportunities that exist in the world. That is why it is shocking that the level of R&D spending actually fell in Britain last year. Ireland’s intellectual property laws give incentives for companies to innovate, and the tax system gives huge incentives to turn R&D into the finished article. No tax is paid on revenue from intellectual property where the underlying R&D work was carried out in Ireland. While the Treasury here fiddles with its complex R&D tax credit system, I want to examine whether we could not adopt elements of Ireland's simple and effective approach.

Thirdly, in a world where cheap, rapid communication means that investment decisions are made on a global basis, capital will go wherever investment is most attractive. Ireland’s business tax rates are only 12.5 per cent, while Britain's are becoming among the highest in the developed world.

i can't see that he is wrong.........

[gaelic cowboy]

He was right in what he said it's just no one here copped how much we had moved on from that state around 2005/2006.

Basically in an effort to prevent the economy going from 7-8% growth to a more normal 2-3% a year Bertie and his mates allowed tax incentives and all sorts of chicanery in the banks to inflate a property bubble. Around 2002/2003 the real economy lets call it started to account for less as construction and consumption accounted for more and more.

Once started it was impossible to stop due to low interest rates and hubris on the part of the Irish people once on the carousel you cant get off till it crashes.

Basically were returning to about 2002/2003 levels of growth and consumption here and we will be the better for it.

[Idaho]

i can't see that he is wrong.........

I thought you were all in favour of reducing the number of people in education?

[Furunculus]

I thought you were all in favour of reducing the number of people in education?

Q1. When have I stated that i favour reducing the numbers employed by the education sector?
A1. I haven't. Don't put words in my mouth.

Q2. Since when was numbers employed in education the only/overwhelming metric involved in educational outcome?
A2. It isn't. Don't create foolish arguments.

[rory_20_uk]

Best educated workforce doesn't require everyone to have a degree. It might indicate that the workforce is well educated by 16 or 18, not lumping everyone through a system until they're 21.

It doesn't speak of numbers, it speaks of world class R&D - so that would be the best and brightest supported fully, not sending droves of drones to achieve no R&D.

[gaelic cowboy]

Best educated workforce doesn't require everyone to have a degree. It might indicate that the workforce is well educated by 16 or 18, not lumping everyone through a system until they're 21.

It doesn't speak of numbers, it speaks of world class R&D - so that would be the best and brightest supported fully, not sending droves of drones to achieve no R&D.

Osbourne was talking about this really

Ireland’s intellectual property laws give incentives for companies to innovate, and the tax system gives huge incentives to turn R&D into the finished article. No tax is paid on revenue from intellectual property where the underlying R&D work was carried out in Ireland.

[Furunculus]

i'm still waiting for idaho to explain how osborne's three assertions about how we should emulate ireland are incorrect somehow..........?

[Idaho]

i'm still waiting for idaho to explain how osborne's three assertions about how we should emulate ireland are incorrect somehow..........?

None of them will happen here.

[Furunculus]

None of them will happen here.

so when you say:

"Just for the lulz... George Osborne wants us to be more like Ireland"

So what you really mean that it is somehow comical that a government with Osborne in it is incapable of creating; an education system that encourages commercial innovation, a regulatory system for enterprise that encourages R&D, and an business friendly low/simple tax regime?

With the obvious implication that someone else could achieve those ends better, rather than a rejection of those goals as desirable ends in themselves, do I get that right?

[rory_20_uk]

The other main party was incapable of doing so after 13 years and an unmatched (and unfunded) spending bonanza, so no one else appears able to.

Achieving change in the UK would require:

Sorting out the way GCSE and A level papers are set (different exam boards competing for business based on grades, not results)
Realignment of teachers and their powerful unions (improving moral and autonomy, helping and if required weeding out the dreadful teachers, remove blinkered focus on grades)
A reappraisal of what is the point of school in the first place.

As most MPs are going to send their children to good state schools or Private schools anyway, there is no incentive for sorting it out (unless they want increased competition for their own offspring).

[Beskar]

What makes this situation more amusing, Britain and other nations have to bail out Ireland, while Ireland are passing stupid budget decisions like giving everyone free cheese.

"Free Cheese for Everyone!" "But sir, we have no money?!" "Who cares? We will get free bail-out and free cheese!"

[Furunculus]

What makes this situation more amusing, Britain and other nations have to bail out Ireland, while Ireland are passing stupid budget decisions like giving everyone free cheese.

"Free Cheese for Everyone!" "But sir, we have no money?!" "Who cares? We will get free bail-out and free cheese!"

what makes this sad is that germany caused this situation by botching discussion of haircuts on future defaults and thus sparking speculation on irelands financial position, and then all the euro nations strong-arm ireland into accepting a bail-out they didn't need because that speculation was threatening the other peripheral members.

it took less than a week to make ireland a satrapy of brussels, and if that seems like hyperbole then i recommend you read your gladstone:

"The finance of the country is intimately associated with the liberties of the country. It is a powerful leverage by which English Liberty has been gradually acquired … It lies at the root of English Liberty, and if the House of Commons can by any possibility lose the power of the control of the grants of public money, depend upon it, your very liberty will be worth very little in comparison …That power can never be wrenched out of your hands… That powerful leverage has been what is commonly known as the power of the purse – the control of the House of Commons over public expenditure – your main guarantee for purity – the root of English liberty. No violence, no tyranny, whether of experiments or of such methods as are likely to be made in this country, could ever for a moment have a chance of prevailing against the energies of that great assembly. No, if these powers of the House of Commons come to be encroached upon, it will be by tacit and insidious methods, and therefore I say that public attention should be called to this."

[Louis VI the Fat]

How an innovative economic succes was betrayed by cronyism, corrupt politicians, and short-sightedness and greed of the Irish themselves. The fun Celtic Tiger had changed into a corrupt basket case, were taxation had been replaced by pyramid games.

The Irish boom saw a vast property bubble puffed up by appallingly managed banks with the complicity of idle regulators and political cronies. House prices between 1994 and 2006 rose by around 520%. The relationships between developers, their financiers and the officials who authorised the building spree were usually cosy, often corrupt. Towards the end of the growth years, the country's financial sector descended into full-blown mania. Banks doled out credit indiscriminately and borrowed on international capital markets on a scale that far exceeded the nation's economic output. When the bubble burst, the government stepped in to rescue the banks, but their debts were ultimately bigger than the state's capacity to raise revenue. Ireland started sliding towards insolvency. Hence, the bailout.

Not all of the boom was bogus. The initial expansion was driven by growth in exports. A young, well-educated, cheap labour force attracted investment. So did an aggressively competitive 12.5% corporate tax rate. Ireland positioned itself as a lean, buccaneering start-up economy, challenging Europe's unwieldy giants. Membership of the single currency gave seamless access to export and capital markets.

But there was a shift at the start of the 21st century. As success fed into higher disposable incomes and demand for houses, the returns on property investment soared. The government, in turn, became dependent on tax revenues – and in some cases bribes – from the building trade. Politicians kept consumer demand buoyant with generous public spending, while rewarding developer friends with public works contracts. Ireland's narrow elite ran the economy like a casino and awarded itself free chips. No one, save a few lonely economists, had much incentive to call time on the party. By 2007, around one in five Irish jobs depended in some way on the property market.

Unique to Ireland is that the incompetent politicians not only sank the ship, but also managed to sink the lifeboats afterwards - an aspect the Irish public refused to see as it descended into a mixture between Celtic melancholy and an 'ourselves alone' siege mentality. The masochistic willingness of the Irishman to endure any hardship has been painfully exploited by the Irish politicians, who first stripped the Irishman of everything he had, including his children's future, before simply facing the inevitable.

Ireland's unique misfortune is to have, in Brian Cowen's Fianna Fáil government, leaders who shipwrecked the economy and then capsized the lifeboats. The initial crisis response in 2008 was designed in such a way as effectively to absorb the doomed banking sector into the state, with no safeguards for taxpayers. While fitting as a kind of poetic commentary on what had happened in the boom years, as policy it was insane. Every cent of tax revenue disappeared down a black hole of debt; a ballooning budget deficit demanded brutal austerity measures – public sector cuts, tax rises – which drained any remaining cash out of the economy and prolonged recession.

Ireland is not bankrupt yet. The Treasury is forecast to run out of cash some time next spring. Finance minister Brian Lenihan had hoped to bring the deficit under control and appease nervous investors before then. But the country's eurozone partners are not waiting to see if domestic remedies work. They are forcing Ireland to take medicine prescribed by the European Central Bank and the International Monetary Fund. The exact shape of the package is not yet known, but it is likely to include tens of billions of euros in bailout money in exchange for more tax rises and spending cuts.

Other countries have seen booms burst, property bubbles implode, financial collapse. From Japan end 1980s to the LAtin American ans South East Asian collapses a decade ago. Non had an Euro. The Euro angle is vastly overdone by triumphant British nationalists.

Eurosceptics in Britain have been quick to weave a tale of Irish sovereignty surrendered to Brussels bureaucrats. Thus is the folly of the single currency proved, they argue.But on the question of sovereignty, the European angle is overplayed. It is debt that has deprived Dublin of budget autonomy. Countries that suffered financial crises ended up taking money and policy dictation from the IMF long before the euro was born. At least today, Ireland retains its political rights in EU institutions. Arguably, the fact that this is a pan-European rescue gives Dublin more clout than it would have in a lonely one-on-one fight with the bond market.

Besides, without access to ECB emergency finance, Irish banks would have collapsed last year, possibly taking the Irish state down with them. The ensuing panic would have infected the UK, regardless of its euro-aloofness.
The threat to Ireland now does not come from visiting European officials.
http://www.guardian.co.uk/commentisf...onomy-imf-euro

[gaelic cowboy]

Here is a PDF of the actual government plan to reduce government spending and so aid recovery

It all pretty standard and what I generally expected to happen.

[Louis VI the Fat]

Why are the Irish made to suffer for the greed of bankers, foreign investors, and the cronyism of their politicians? It feels like a return to 1848. Everybody somehow makes a profit out of the Emerald Isle, including the local overlords, yet, the Irish themselves are hurting, are told there will be no limit to their plight, but that it is somehow for the best if they just sit quiet and endure it.


Are the bailouts wrong? Should we (have bitten) bite the bullet? Market confidence is not restored, speculators are rewarded, and the bill is for the Irish and European taxpayer:

Most people know Swift as the author of “Gulliver’s Travels.” But recent events have me thinking of his 1729 essay “A Modest Proposal,” in which he observed the dire poverty of the Irish, and offered a solution: sell the children as food. “I grant this food will be somewhat dear,” he admitted, but this would make it “very proper for landlords, who, as they have already devoured most of the parents, seem to have the best title to the children.”

O.K., these days it’s not the landlords, it’s the bankers — and they’re just impoverishing the populace, not eating it. But only a satirist — and one with a very savage pen — could do justice to what’s happening to Ireland now.

Paul Krugman: http://www.nytimes.com/2010/11/26/op...ef=global-home

[gaelic cowboy]

The problem my dear fellow is the banks have pulled a fast one and the politicians have fell for it by falling for a theory quite simmilar to the Domino Theory except for debt.

Our politicians were too stupid to see our bankers codded them and sank the country into the IMF but the EU must take blame for letting this get to the point were Portugal/Spain are next.

We should all of us have burned both Senior bonholders and the Subodinated debt as bad investments just like if you and me opened a coffee shop Louis and ending up paying back them back say 20 cent in the euro for a liquidation firesale.

If we were not trying to extract value from these loans and trying to pay back all bonds like the ECB wants us too we would still have a bit of austerity on Ireland but were 2/3 yrs into it now we would probably be comng out now fact.

These debts were incurred, not to pay for public programs, but by private wheeler-dealers seeking nothing but their own profit. Yet ordinary Irish citizens are now bearing the burden of those debts.

Or to be more accurate, they’re bearing a burden much larger than the debt — because those spending cuts have caused a severe recession so that in addition to taking on the banks’ debts, the Irish are suffering from plunging incomes and high unemployment.

But there is no alternative, say the serious people: all of this is necessary to restore confidence.

As long as the ECB acts like it can ignore this reality and only looks to run the NICE bits of central banking and not the bad this will continue.

Your cry should be save the EU bin the bonds and we will see about the Euro later.

[Vladimir]

Why are the Irish made to suffer for the greed of bankers, foreign investors, and the cronyism of their politicians? It feels like a return to 1848. Everybody somehow makes a profit out of the Emerald Isle, including the local overlords, yet, the Irish themselves are hurting, are told there will be no limit to their plight, but that it is somehow for the best if they just sit quiet and endure it.


Are the bailouts wrong? Should we (have bitten) bite the bullet? Market confidence is not restored, speculators are rewarded, and the bill is for the Irish and European taxpayer:

Paul Krugman: http://www.nytimes.com/2010/11/26/op...ef=global-home

I believe the Irish are made to suffer because of greedy Irishmen! You can't keep passing it of to a segment of the population you don't like. Europe has tried to pass off their own greed to "Jewish" bankers for hundreds of years.

This isn't much different in America. The American people are suffering from greedy bankers, politicians, executives, service sector employees...who thought the gravy train of low interest rates would last forever. While some of them are fools the rest knew what "adjustable rate" meant when they secured the loan.

[gaelic cowboy]

I believe the Irish are made to suffer because of greedy Irishmen! You can't keep passing it of to a segment of the population you don't like. Europe has tried to pass off their own greed to "Jewish" bankers for hundreds of years.

I'm not passing it off thats for sure I have pointed out the solution, I am merely waiting for everyone else to arrive to where I am.

Still waiting 2 yrs in though hurry up.

[Vladimir]

I'm not passing it off thats for sure I have pointed out the solution, I am merely waiting for everyone else to arrive to where I am.

Still waiting 2 yrs in though hurry up.

That was more in response to Louis. I'm assuming he's in character but I may be in one of those moods.

[Fragony]

yay euro is at 1.32 dollar. Rasoforus, Ronin, Banquo, I want to have a word with YOU how could you do this to me.

Any Spanish and Italians here? And for the hispanics your essays don't impress me.

[gaelic cowboy]

That was more in response to Louis. I'm assuming he's in character but I may be in one of those moods.

I know you were but the problem is when I'm posting and talking about Bankersters and Bondholders etc it can seem a bit like I am trying to pass the buck (as if we had any left)

I was annoyed at Angela Merkel for saying what I have been saying all along which may seem strange, but basically the problem is not what she said or when it was the fact it merely eneded up being the death blow for our banks. ( the statements were meant to give indication of sorting the crisis they merely made it worse)

The major problem is one of an inability on the part of many of the major actors in this crisis of private capital to see that they should just reorganise the banks. If the banks were taken to task and we merely stiffed the lenders who stupidly gave money to our greedy banks to lend to idiots here we might already be out of recession.

Our government has already taken 14 billion out of public expenditure and still there accused by the "Markets" of not doing enough it is a boggle indeed. Take the repudiation on the bondmarkets for a few months who cares we had/have the money, we cut a few benefits and costs and give bondholder 10-20% of there value telling em to off. Why should they get off with a free lunch they were just as foolish as the people who bought expensive houses here, the reason is as I said the ECB is not acting like a real central bank instead it is acting like a political institution.

some points that must be answered

1 Why is the ECB not trying to reorganise the banks debt and to extend credit to Irish and other PIIGS banks in order to do so.

2 Why must the solution for each one of the PIIGS be the same in the end yet the problems in each are different.

3 Why is the solution even more debt.

4 Why is the IMF at loggerheads with the EU over sorting the bank debt in Ireland.

I imagine all the answers eventually come back to the same problem the Eurozone political class as a whole has trapped themselves in an ideological cul de sac.

[gaelic cowboy]

yay euro is at 1.32 dollar. Rasoforus, Ronin, Banquo, I want to have a word with YOU how could you do this to me.

Any Spanish and Italians here? And for the hispanics your essays don't impress me.

It's at 1.32 because no one wants to admit in the EU that Spain cannot be bailed out Fragony. The EU is trying to prevent it by bailouts instead of grasping a big stinging nettle.

[Louis VI the Fat]

I believe the Irish are made to suffer because of greedy Irishmen! You can't keep passing it of to a segment of the population you don't like. Europe has tried to pass off their own greed to "Jewish" bankers for hundreds of years.

This isn't much different in America. The American people are suffering from greedy bankers, politicians, executives, service sector employees...who thought the gravy train of low interest rates would last forever. While some of them are fools the rest knew what "adjustable rate" meant when they secured the loan.

It certainly isn't the ordinary Irishman who's making a killer profit here. The Irishman is...the Irishman of Europe, a beast of burden, there to be exploited by London or Washington in the 19th, and the city and Wall Street in the 21st century.

If it were up to me we would indeed kill the moneylenders and the usurers. Or, failing that, do something much more old-fashioned and too savage for today's world: make them suffer actual financial loss.
We're suddenly stuck in some bizarre world of 'private profit, socialised risk'. Forty years of turning Ireland from a poverty stricken backwater to an economic tiger, and it's all been for nought. The Irishman is reduced to destitution again, leaving the island again, while billionaires feast on its carcass and demand we bring them more blood.

As in the 18th century, it is only partly satire to suggest the Irish start offering their children next.

[gaelic cowboy]

It certainly isn't the ordinary Irishman who's making a killer profit here. The Irishman is...the Irishman of Europe, a beast of burden, there to be exploited by London or Washington in the 19th, and the city and Wall Street in the 21st century.

If it were up to me we would indeed kill the moneylenders and the usurers. Or, failing that, do something much more old-fashioned and too savage for today's world: make them suffer actual financial loss.
We're suddenly stuck in some bizarre world of 'private profit, socialised risk'. Forty years of turning Ireland from a poverty stricken backwater to an economic tiger, and it's all been for nought. The Irishman is reduced to destitution again, leaving the island again, while billionaires feast on its carcass and demand we bring them more blood.

As in the 18th century, it is only partly satire to suggest the Irish start offering their children next.

There is one interesting thing to note which links the 1840s and today we have again a political class that is ready to ignore the real solution to this/these problems.

In the 1840s any mention of interference of the market in order to actually feed people was taken as encouraging fecklessness on the part of the people. What a laugh those people were so poor they ate at least 20-25 pounds of potatoes a day they had no money for markets. The government of the day was convinced laissez-faire was the solution to a food crisis it was madness.

Today what we have is a political class who think rewarding bondholders in order not to cause a ripple in the markets can stop an attack on Spain. It will fail and fail utterly, markets may be cruel but they are correct the Euro must revalue the debt so some people will lose on there investment in banks.

The longer we ignore the reality the more we encourage the ceaseless attacks.

In Ireland the ERM disaster caused a devaluation of our currency we needed to track Britain instead we were tracking Germany that was wrong. The political class tried to ignore the reality of the situation for ages mainly from sheer embarrassment at not being seen as a serious country or some other such rubbish.
The people rejected the governments siren song and went in droves to the North to shop in the cheaper stores compared to here, eventually they saw sense and devalued and laid the foundations for the future prosperity.(before the bust)

[gaelic cowboy]

EU/IMF interest rate likely to be 6.7%

if that is the rate of interest on the EU portion of the bailout then were as well of just say it and letting the markets and bondholders have there way with Ireland.

[Ronin]

some points that must be answered

another one is why the ECB is lending money to the banks at 1% interest, that then turn around and lend to the countries at 6, 7% etc.
why can´t the ECB just lend to the countries directly????

[Banquo's Ghost]

yay euro is at 1.32 dollar. Rasoforus, Ronin, Banquo, I want to have a word with YOU how could you do this to me.

Don't blame me. I never dabbled in the property market.

I make all my money by following the fine example of our French overlords and bleeding the Netherlands dry for agricultural subsidies.

[Furunculus]

i am sat on the train returning from five days of work in nuremburg, so i just want to take the opportunity to thank our economically incompetent brusselsels overlords for driving their currency into the ground just in time for my xmas shopping.

p.s. taking an ice train along the rhine is awesome, millions of castles!

[Louis VI the Fat]

EU/IMF interest rate likely to be 6.7%

if that is the rate of interest on the EU portion of the bailout then were as well of just say it and letting the markets and bondholders have there way with Ireland.

My answer is the one the Irish tax haven barons have given to Europe all these years: We are just following market demand to create a competitive business environment.




Back to planting potatoes for the foreign big boys, paddy. Off you go.



Edit: And to think you 'handed over' your world cup ticket to us too!