Well, I did a mammoth post throwing out most recent figures on every economic indicator I could find… then my charger fell out. Breaking Bad finale is soon, so I’ll keep it brief.
[N.B. These are the combined Google searches of an amateur, hastily put together. Any “positives” do not indicate relief of on the ground human suffering, but are just statistics. It is also dependent on the new global slowdown being short term]
No we’re not the darling of the markets, we’re still in mega sh*t. Our rates only went down because the ECB started illegally buying our bonds directly[EDIT: lo and behold our rates increased by nearly a full percent so far this week]. Some lights are actually green though. However the red lights are all massive in scale and pretty much out of our immediate control.
Capitalist economic indicators for 2012 in English.
Interest rates, inflation – – stable low inflation and interest rates(likely to be lowered soon).
Retail – – Bottomed out, set to rise half a percent.
Tourism – – 2, 3 years from pre-recession peak.
Agriculture – – Global food prices booming(and for foreseeable future)
Balance of Payments/Trade positive – – Caveat: unknown how much is repatriated abroad
GDP & GNP growth – – Both positive and should continue to be so before igniting in mid 2013
Banks/Lending – – Fully recapitalized, [I]should[/I] be functional for first time since 2007.
Stocks – – Currently bottomed out at ~2,600 from year beginning 2,900 and early 2007 peak of 10,100
Capital Formation – – At 1997/8 levels but bottomed out and growing.
Energy – – On course to surpass target of 40 percent renewable energy by 2020 – valuable commodity for likes of Poland who will struggle to meet their target.
Employment – – Statistically speaking. Bottomed out unemployment level/ counterbalanced by continued mass emigration. Wages down(12 percent overall 5 percent in 2010), productivity up(well above EU average). Unemployment peaked, though most of it longterm. Statistically steady at 14.4 per cent if emigration at 60k per year keeps up. 3 biggest drivers of employment have(at best) no plans to hire in medium term: state, construction, menial retail
Manufacturing & Services – – Neutral at best for the year after suffering contraction in 2nd half of year.
Government debt – – Massive and unmanageable
IMF – Will be required until 2014, but new EU economic gov means we’ll never get those powers back.
Threat of Default – – Debt needs to be heavily restructured by Jan 2013 or October Ireland 2012 will look like October Greece 2011
Global Recession/Weak Growth – – Hopefully just a statistical dip before resuming weak growth in 2012(end of stimulus, start of uniform austerity)
Cuts – – FGLab’s tunnel vision means what they undertake will be especially deep and vicious.
Budget Deficit – – Not due to turn neutral or positive by 2017/18.
Property – – Should fall for another 12-18 months/10-15 percent but growth from there will remain flat until late in the decade due to ban of upward only rents and property taxes.
NAMA – – What are the implications of that for NAMA? It needed to grow 10 percent from Q4 2009 prices by 2019 to be cost neutral I remember hearing. In 2010 prices fell a further 14 percent, the same again is expected for this year and slightly less for next. By my back-of-envelope calculations that means 2014 prices will need to rise about 80 percent in the 5 years between then and 2019. Assuming 5 percent property price increases in those years, we would still fall short by 40 percent and would only reach that point after a decade of uninterrupted 5 percent growth per year in 2025. ([U]definitely[/U] needs a check).
Household debt – – Massive and will lag recovery until it is reduced by half. Household debt is said to harm an economy once it reaches 90 percent of GDP, we are currently at over twice that.
Infrastructure – – Will creak and crumble due to zero investment
Fianna Fail took nearly 4 painful years to remove 20 billion from the budget, all of the “low-hanging fruit” has been picked… and we are under orders to remove a further 15 billion.
Next year will feel a lot like this year on the surface. The policy of “Internal devaluation” has reached its limit – it cannot resolve any of the negatives that remain and will exacerbate some further. The only tools left in FGLab’s imagination are emigration, “structural reforms”, widening the tax base and charges. At best, they will hoover up the fruits of any economic growth to send back to the IMF. Not much will change in practical terms, but the bonuses of having a functioning banking system for the first time in nearly 5 years should be eliminated by the slowing economy of our trade partners and the latest budget. As privatisation commences, expect trade union militancy to finally reemerge, with or without the leadership.
A (jobless) recovery should start to take place from mid 2013, though that is to say any fresh pain or weakness in the economy will be due to self-infliction. That is based on the premise that some solution is found(ie eurobonds and massive haircuts) for the unsustainable debt repayments/bonds from Jan 2013. Unless a solution is found well in time, expect next October 2012 in Ireland to look a lot like Greece in October 2011.
The next election – if the current gov miraculously lasts full term of 5 years – will take place in the context of 3 percent budget deficit, unemployment of slightly under 9 percent, and national debt down to around 95 percent of GDP(needs to be below 60 per cent). Whoever wins that election will be able to ride the “good times are back” narrative come 2017/2018 if there is anybody left by then or a state left to run. Of course those “good times” won’t actually feel very good at all due to the reforms and disciplines enacted to that point.
Which is just about the time the next economic collapse should be coming around..!
The deficit needs to be 3 percent of GDP or under.
Wikipedia seems to think that GDP at the end of last year was 165 billion dollars, which converts to about 125 billion euros. The deficit for 2010 was 11.5ish percent I believe, which when rounded up equated to oft-touted figure of a 15 billion euro deficit.
If growth is set to be 1.2 percent of GDP for the year and the target is 10.6 percent deficit – which apparently we will beat – then what will the deficit be in euros this year?
GDP for 2011 to be around 127 billion then, with a deficit of 13 billion euro (10.3 percent). We are allowed a deficit of 3.8 billion.
What if we just concentrate on growing the deficit into insignificance and neither raise spending nor implement cuts?
GDP growth is expected to be 2 percent next year which would leave us at 130 billion euro GDP. We would then be allowed a deficit of 3.9 billion euro. The target for next year will be 8.6 percent, meaning an actual deficit of 11.2 billion euro. So start with an 11.2 billion deficit every year.
I would expect growth to be fairly robust from 2013 on. Let’s say growth is 3 percent. That will leave us with a GDP of 134 billion and allowing us a deficit of 4.02 billion.
2013 – 134 billion (3 per cent growth) – allowable 4.02 billion deficit – 7 billion over limit
2014 – 140 billion(4percent growth?) – allowable 4.2 billion deficit. – 7 billion over
2015 – 146 billion(same) – allowable 4.4 billion deficit – 6.8 billion over
2016 – 152 billion(same) – allowable 4.6 billion deficit – 6.6 billion over
2017 – 158 billion(same) – allowable 4.75 billion deficit – 6.45 billion over
2018 – 164 billion(same) – allowable 5 billion deficit – 6.2 billion over
2019 – 171 billion (same) – allowable 5.12 billion deficit – 6 billion over
2020 – 178 billion (same) – allowable 5.4 billion deficit – 5.8 billion over
Now, its reasonable to assume that unemployment will come down during this period of rapid growth resulting in lower in social welfare expenditure.
Approximately 25.2 percent of our 20.8 billion Social Welfare spending is spent on Jobseekers which equates to 5.2 billion when unemployment was 14 percent. Earlier I guessed that unemployment would be just under 9 percent in 2016(2015?) with cuts. It would be fair to assume that without further cuts employment would be higher at that point. Let’s guess just over 7 percent, over half of what it is now. That would mean an immediate halving of that 5.2 billion, shaving 2.6 billion off the deficit. I’m guessing additional welfare that would naturally come down would take that saving to 3 billion.
So the 6.6 billion over-the-limit annual deficit for 2016 would be reduced to 3.6 billion. I think it would actually be a bit lower due to the indirect benefits of high employment, growth and inflation, so say 3.2 billion.
(That, combined with the allowable 4.6 billion deficit – 7.8 billion – is what I [I]think[/I] is what is called the structural deficit.)
Total deficit would be 5.1 percent/7.8billion, or 3.2 billion more than allowed.
2020 is very far out, but say with higher employment than 2016, with uninterrupted growth we could assume full employment of say 4.5 percent that the dole bill would be down to 1.6 billion, a saving of more than a billion. This would mean an annual over-the-limit deficit of just over 2 billion and deficit of less than 4.2percent.
To conclude, after this budget, if we actually just don’t adjust the budget then the deficit would fall to 5.1 percent in the year of the next election, with growth of 4 percent and unemployment of just over 7 percent. Beyond that – all things remaining the same – in 2020 we would have attained full employment and the deficit would be 4.2 percent.
The current plan envisages a 2.8 percent deficit by the end of 2015. So, to compare versus our 2016 figure, we can guess that the deficit will be less than 1.5 percent(with 9 percent unemployment) versus our 5.1 percent(with 7 percent unemployment). The zero-cuts approach would mean we would be spending 3.2 billion more than we are allowed in 2016 as opposed to over 7 billion today.
So, if zero-cuts means that we will be spending 3.2 billion more than we are allowed in 2016, how can we fix that?
Firstly, to put that in context, this year we are spending more than 10 billion more than we are allowed and have implemented “cuts” of 20 billion so far.
3.2 billion doesn’t sound too bad does it?
“Irish Budget 2010: Interest payments on the national debt will increase by €2bn to €4.6bn in 2010”
Elsewhere he states “Public debt as a percentage of GDP will exceed 100% in the coming 2 years and while Ireland will be paying 20% of its tax revenues in interest compared with 28% in 1991”. I think tax revenues amount to 37 billion euro for 2010 and are likely to increase a bit meaning 20 percent of tax revenues would be more than 8 billion euros from 2013 on current trajectory.
It appears that the extra money we are spending is more than made up by our recent increase in interest payments on the state’s debts.
Remember, before the recession our national debt was 20 percent of GDP. It is now on its way to 120 percent due entirely to the crisis. It is the banks debts that are to blame for the rise from 2 billion per annum interest rate payments to 8 billion euro from 2013. Even if we allowed for the increased debt as a result of budgetary deficit spending, we will still be spending nearly 5 billion on interest in 2010 that we shouldn’t be – without which our deficit would be 10 billion or about 8 percent come 31/12/2011. The budget problem would naturally disappear by the next election.
Solution? Do nothing more and a) dump the banks or b)refinance debt with eurobonds.
Its looking like these big scary massive numbers that are thrown at us are just a smokescreen for a massive attack on the welfare state and the population/capital versus labour. If we actually had zero cuts from after the upcoming budget, the economy would revert to a very healthy state by the next election. I did not expect to come to this conclusion. I was actually ready to come up with a big stimulus package and alternative budget!
Basically what we are witnessing is the total transformation of the modern state. The state as we know it exists to redistribute the excess wealth to maintain a cohesive society. Now, the state is being stripped of all its service providing, any meaningful welfare provisions or wealth redistribution and being turned into an entity who’s only function is to gather tax revenue raised from the poor and hand it over to the wealthy, banks and financiers.
The finance economy ran on imaginary money burst and is a black hole sucking real money out of the real economy, being multiples larger than it. We are moving in the surreal direction where the two economies are passing each other by. The finance economy is getting stuffed with real cash and draining it all out of the real economy where it is being replaced by debt, that is to say imaginary money. To control the real economy/world, you just have to control the debt then. Who controls debt but credit institutions?
When you look at the bigger picture, this has actually been a flawless coup for the banks, finance and capital. Neoliberalism is not, as you would think, on its deathbed, its about to declare its final victory. Here in Ireland, we’re just the vanguard of global capital and it’s desires so we’ll always be an indicator of how it is developing globally.
These charts here, though deserving a thread of their own, pretty much confirm this masterful showing of dominance by capital –