Ireland Officially In Recession.

Clive,

Germany and France won't push it too hard, as they are the ones who have most to gain from a swift resolutions (reduction in contagion to other banks and sovereigns).

The simple fact of the matter is that the Ireland sovereign doesn't need the money immediately (I know the banks do, but that would mean the ECB lets them go which the EU won't want). I reckon that the only likely movement on corporate tax will be a commitment by Ireland to review it / bring it into line in the medium term.

Plus raising it might fuck the economy good and proper.

Ireland has a lot of other ways of increasing revenue that are likely to please the IMF, such as property tax, water tax, broadening of the tax base and increase in university fees and charges.
 
Last edited:
With perfect hindsight, was saving Anglo the right way to go? Any scholarly independent articles from non-gobshites on the topic? It seems to be accepted as a given by certain sectors that it was a catastrophic mistake and equally accepted as a given by others that there was no alternative. I haven't heard any reasonable arguement either way that I fully accepted or understood.
 
Last edited:
Germany and France won't push it too hard, as they are the ones who have most to gain from a swift resolutions (reduction in contagion to other banks and sovereigns).
Click to expand...

Bit hard to square that with your belief that AIB should have gone down though isnt it?

Can they really raise those other taxes without hitting the economy immdeiately very hard? Especially the property tax given the state of that market?

Raising corporation tax will have medium term implications more than immediate. Companies will not up sticks straight away.
 
AIB is not Anglo.

Property tax would not hit the economy really hard. It would piss off posh people like Melendez. Increasing taxes is always going to hurt the economy (I am a Keynesian) but corporate tax is odds on to be the one that would hurt it the most.

And I don't understand your first point. Genuinely.
 
Well, first point bit convoluted maybe. Not sure i do now either

But Corporation tax is definately medium term whereas water, property etc is surely short term? Thats the key now isnt it?

Surely consumer spending has to be kept up and some life breathed into the property market (which looks horrific from what i read this weeK)
 
Your point about medium termism is valid. I disagree with it, but it's valid.

There is fuck all chance of breathing life into the property market. It's got a way to go yet.

As an aside, I have always found it curious that people feel that higher house prices are a good thing. We don't want more expensive cars or tellies.
 
Cars and TV's always depreciate. Houses dont. The only difference really, but a big one all the same

But with taxes, they are going to have to service this frightening debt somehow and although I have no idea what taxes are in place, the targeting is going to be vital.
 
Last edited:
Reminds me of a very old cartoon of many planets holding hands as they skip around the event horizon of a black hole.

The rule is 'no-one must let go ..... ever!'

MR2
 
It's hard to debate a property tax without knowing what form it's going to take or what level it will be set at.

It's also important to know what the balance is like between housing stock and housing need. Is the tax merely there to raise revenue or as an instrument to encourage some types of housing over others?

It might be necessary, in order to avoid aggravating the mortgage default problem, to allow people to set off the net amount of any stamp duty they may have paid in say the last ten years, and there could be other hard cases that also deserve consideration.

But a properly applied tax could help to get the market turning over once more by encouraging households who ought to be thinking about downsizing, e.g. parents of grown-up families, to go ahead and do so.
 
When faced with huge, difficult problems one has to put aside fixed ideas, including political ideology, and think and act pragmatically. The guarantee of Anglo's debt was an understandable kneejerk reaction and in hindsight wrong. Protection for ordinary depositors definitely, part protection for preferred long term lenders maybe but not an absolute guarantee which put the country at risk.

In dealing with the resultant crisis just as in the case of personal debt one has two imperatives and in order of importance they are maximisation of income and reduction in all but essential costs. Easier said than done but there is a balance to be found. The effective substitution of expensive debt by cheaper debt helps and is a first step.

There is always the option of deciding not to repay debt, ie declaring the country bankrupt, however this is not the 1970's with wealthy nations ready to step in driven by political motives and the domino effect could result in a worse situation for Ireland and many other countries.

The onward path will be hard, unpleasant and an awful contrast to the recent boom. Unfortunately many of those that will suffer will not have seen much benefit from the boom. It will require capable and honest politicans (a rare commodity in any part of the world) to lead the country when internal tension will create many further problems. Beware the Messiah.
 
Last edited:
The effective substitution of expensive debt by cheaper debt helps and is a first step.
Click to expand...

There seems to be a question of replacing debt that had been recently borrowed by the Irish banks from the ECB @1.5%, by the "bailout" fund which will lend at about 5%.

Personally, I'm giving up trying to figure out what's going on or going to happen. The whole thing is an embarrasment. It's like watching some Irish guy getting drunk and making a fool of himself in an English pub. You know it's not your fault, but you can't help feeling somewhat tainted by it.

Cowen should have resigned last night. A general election is not required. Fianna Fail should agree to support a Fine Gael minority government until a suitable gap in the calendar occurs. Not that I'm a fan of them either. Fianna Fail have no credibility domestically or internationally. Lack of respect for them will make it harder to get anything past the unions and other interest groups, who should all now be pushovers.
 
Last edited:
I don't know what that means.

It's hard to see how this can pan out.

FF can't be led into the next election by Cowen. If he resigns now to give the "new" face some chance, FF don't have enough support in the Dail to have the new leader elected as Taoiseach.

You can't have a budget which is valid for the two weeks the government would be in power in 2011.

Surely Cowen has to call an election now? If he does though, do the IMF crowd have to sit twiddling their thumbs in the Merrion Hotel till we decide who they should talk to. Or do they go ahead, devise the budget themselves and hand it over to whoever is elected, for publication.

What a mess.
 
Lowry and Jackie Healy Ray have withdrawn support now. Labour calling for immediate election, it's up to Enda now - a vote of confidence has FF out.
 
Back
Top