Ireland: patient is recovering

[Mr. Big Dog 10,747]

Capital flows from countries with high tax rates to countries with low tax rates. Don't blame Ireland for doing the smart thing to attract foreign investment.

Ireland had low corporate tax rates for quite a while. That didn't help them at all during the recession. They were one of the countries hardest hit. And in somewhat of a delicate situation to boot. The sound European economies on the mainland weren't so keen on having to bail out the little island nation that worked as hard as it could to drain businesses away from the mainland with it's low-tax schemes to then find itself unable to weather the storm. Bottom line, low corporate tax rates couldn't save Ireland's #######. No, the countries that followed sounder fiscal policies had to come to it's rescue. Ireland is a really poor example when trying to celebrate low corporate tax rates.

Edited October 7, 2011 by Mr. Big Dog

[Captain Oates 911]

.

...and what makes me laugh about the right idolizing Ireland is that every time they send money there to avoid paying tax for the US Military, they sell the US dollar and buy EUROS - thus helping those socialist over there...

How patriotic is that ?

Yes Ireland is EUROS and pays money to the EC in Belgium ! aaahhgg horror.

No doubt the US company's tax bill there (low though it is), goes to subsidize Irish public health care !

Its getting worse !

In fact if I keep going then Perry will want to nuke Ireland

Summary: This Ireland thing is huge globule of hypocrisy by the right. I would US tax them on it whether they made the profits in Ireland or not. That would give support to the US dollar and bring trillions back to New York instead of having it in a bog over there.

Irish industry ? US computer/electronics companies attracted there by -- GOVERNMENT SUBSIDIES !

[Captain Oates 911]

WIKI: I KID YOU NOT ! ITS A SCAM

Causes

[edit] Tax

Many economists credit Ireland's growth to a low corporate taxation rate (10 to 12.5 percent throughout the late 1990s), and to net transfer payments from members of the European Union like Germany and France that were as high as 4% of gross national product. Since 1956, successive Irish governments have pursued low taxation policies.[15]

[edit] EU Aid

The EU aid was used to increase investment in the education system and physically helping infrastructure. The increased productive capacity of the Irish economy is sometimes attributed to these investments, which made Ireland more attractive to high-tech businesses,[16] though the libertarian Cato Institute has suggested that the EU transfer payments were economically inefficient and may have actually slowed growth.[17] The conservative Heritage Foundation also attributed transfer payments with no significant role in causing growth.[16] Ireland's membership in the European Union since 1973 helped the country gain access to Europe's large markets. Ireland's trade had previously been predominantly with the United Kingdom.[18]

[edit] Industrial Policies

In the 1990s, the provision of subsidies and investment capital by Irish state organisations (such as IDA Ireland) encouraged high-profile companies like Dell, Intel, and Microsoft to locate in Ireland. These companies were attracted to Ireland because of its European Union membership, relatively low wages, government grants and low tax rates. Enterprise Ireland,[19] a state agency, provides financial, technical and social support to start-up businesses.[20]

The building of the International Financial Services Centre in Dublin led to the creation of 14,000 high-value jobs in the accounting, legal and financial management sectors.

In July 2003 the government established the Science Foundation Ireland[21] on a statutory basis to promote education for highly-skilled careers, particularly in biotechnology and information&communications technology, with the additional purpose to invest in science initiatives that aim to further Ireland's knowledge economy.

[edit] Geography and De

[Póg mo 1,749]

Ireland is not recovering period. GDP may be recovering but much of the growth in GDP has more to do with multinational profits than anything in the domestic economy. Tax returns were above targets by 0.7% last month but when you exclude increases in revenue from the extra taxes such as the universal social charge and raids on private pensions, overall tax returns are below targets. The very idea that you can remove billions of Euro from an economy in the form of high mortgage payments, interest on national debt, higher taxes and then expect to see any meaningful economic growth is completely preposterous in view.

Ireland's economy is sitting a ledge at the moment waiting patiently for the markets to finish what they are doing to Greece etc to then come and push it over the ledge once again.

Hopefully, before this happens both the Germans and the French will have come to their senses and have decided to do the start thing and force their banks to write down some of the debt they're owed by peripheral European nations. 60% of something is always better than a 100% of nothing in my view.

Der spiegal outlines perfectly what needs to be done to avoid wrecking every bodies economy in the EU.

http://www.spiegel.de/international/germany/0,1518,788082,00.html

Robert Reich: Behind Europe's Debt Crisis Lurks Another Giant Bailout of Wall Street

http://www.huffingtonpost.com/robert-reich/europe-debt-crisis_b_996528.html

[웃 910]

What exactly does this data prove? 18 quarters shown. Germany grows nice and steady in 14 quarters. Has 1 tough patch during the recession where the economy shrank in 4 consistent quarters.

Ireland is all over the map. Up/down, but mostly down (11/18 periods of decline - that's fvcking scary, very frightening to think about!).

Somebody that is good at math. Take $1000 and start in period 1. Look at Germany's impressive growth. What is that $1000 worth after 18 periods (14 with growth).

Now take the same $1000 in Ireland. You have 6 quarters of growth, 11 quarters of a shrinking economy (absolutely frightening and pathetic), and 1 quarter flat.

What do the numbers say?

[mawilson 2,133]

What exactly does this data prove? 18 quarters shown. Germany grows nice and steady in 14 quarters.

Why are you comparing Germany to Ireland? Germany never had the kind of fiscal problems that Ireland had or their tough austerity measures. Of course Germany did better, duh.

The point is, Ireland was in the hole and now they are doing ok. Austerity and all.

Edited October 29, 2011 by mawilson

[Póg mo 1,749]

Why are you comparing Germany to Ireland? Germany never had the kind of fiscal problems that Ireland had or their tough austerity measures. Of course Germany did better, duh.

The point is, Ireland was in the hole and now they are doing ok. Austerity and all.

Ireland is still in a hole.

Irish insolvency is now less a matter of economics than of arithmetic. If everything goes according to plan, as it always does, Ireland’s government debt will top €190 billion by 2014, with another €45 billion in Nama and €35 billion in bank recapitalisation, for a total of €270 billion, plus whatever losses the Irish Central Bank has made on its emergency lending. Subtracting off the likely value of the banks and Nama assets, Namawinelake (by far the best source on the Irish economy) reckons our final debt will be about €220 billion, and I think it will be closer to €250 billion, but these differences are immaterial: either way we are talking of a Government debt that is more than €120,000 per worker, or 60 per cent larger than GNP.

Ireland's future depends on breaking free from bailout

[Póg mo 1,749]

Patient is recovering my ####.

Fiscal austerity isn't working - surprise, surprise.

The poor October exchequer returns, which showed that tax revenues were 0.7pc behind target for the first 10 months of the year, confirm anecdotal evidence of a renewed slowdown in the domestic economy following signs of a brief recovery earlier in the year.

The exchequer returns came only days after the most recent figures from the CSO showing a 0.6pc fall in retail sales for September.

What the exchequer returns and retail sales figures seem to confirm is that a slowdown in overseas markets, upon which we rely to sell our exports, is rapidly feeding through into the domestic economy.

Although overall tax revenue was up by 8pc to €26.7m for the first 10 months of year, this increase was exclusively due to the introduction of the universal social charge, the pension fund levy and changes to the tax bands announced in last December's budget.

It was a different story with VAT which, reflecting weak retail sales, was 4.5pc behind target while corporation tax was 4.2pc behind. These figures should make the Government reconsider its plans to increase the 21pc standard VAT rate by a further 1pc in next month's Budget.

As if the poor exchequer returns and retail sales figures weren't enough bad news to be getting on with, the turmoil in the international financial markets unleashed by the announcement that Greece is to hold a referendum on last month's EU/IMF bailout, threatens to further depress the global economy.

With exports providing the only stimulus to the chronically depressed Irish economy, it seems likely that the Government will have to significantly reduce its 2012 growth forecasts, which are due to be published on Friday.

If usually well-informed reports are to be believed the Government will slash its 2012 economic growth forecast from 2.5pc to just 1.5pc.

This in turn will translate into lower growth in tax revenues. With the Government already committed to raising taxes and cutting public spending by a total of at least €3.6bn in the Budget in order to meet the EU/IMF-imposed target of a 2012 deficit of no more than 8.6pc of GDP, lower economic growth next year could force Michael Noonan to take even more out of the economy on December 6 if he is to meet this target.

But would increasing the amount to be taken out of the economy in the Budget to €4bn or even more be a case of throwing the economic baby out with the fiscal bathwater?

Ireland has no chance of meeting the deficit-reduction targets agreed with the EU and the IMF unless we can find some way of reviving economic growth and boosting tax revenues.

Meanwhile, taking ever larger sums out of the economy is having the opposite effect, stifling economic growth and reducing tax revenues.

Mr Noonan is an unenviable position as he frames his first budget.

After eight months in office when he could rely on the goodwill of an electorate utterly disillusioned by the previous Fianna Fail-led government, he must now confront the contradictions that lie at the heart of Irish fiscal and economic policy.

The minister is, whether he realises it or not, damned if he does and damned if he doesn't.

Irish Independent

Edited November 4, 2011 by InKorea

[Póg mo 1,749]

These bailouts aren't democracy. What's worse, they aren't even a rescue

The idea that Italy's and Greece's new technocratic governments will be apolitical is nonsense. And it's becoming clear that, in Athens, austerity is already turning a crisis into a disaster

Investors are breathing a sigh of relief after a tumultuous week, with at least a semblance of stability restored to Italy and Greece. But the past seven days have also flipped the euro to reveal a new face – and it wasn't a pretty one.

The deeply undemocratic nature of the euro project had already been laid bare in Cannes by the European elite's outraged response to George Papandreou's announcement that he would hold a referendum on the latest "rescue" package for his country.

Papandreou may have had his own tactical reasons for demanding a vote. But given that the bailout package involves further hardship for an already restless populace, it didn't seem unreasonable that, in order to avoid the nation becoming ungovernable, he felt the need to ask for a fresh mandate.

Last week, it was Italy's turn to face intense pressure from financial markets – and, in turn, from its eurozone partners. As Berlusconi showed few signs of carrying out his promise to resign, France began openly calling for regime change in Rome. Now, there's no doubt that Silvio Berlusconi is both odious and ineffectual; but for Italy's neighbours to be demanding the departure of its democratically elected leader was hardly a shining moment for European democracy.

Of course, the fig leaf is that Berlusconi's Yale-trained successor, Mario Monti, will lead a "technocratic" government that will implement drastic spending cuts and necessary structural reforms to nurse the economy back to health. Exactly the same story is being told about ex-central banker Lucas Papademos in Greece. But there are two major flaws in this argument. First, there's no such thing as a harmless, neutral technocrat; and second, the plan they are toting won't work.

The recipe of privatisation, deregulation and welfare cuts that is being presented as the only solution to Italy's woes is a deeply contentious one. Decisions on how the professions should be regulated, how easy it should be to fire staff, and how much of the national infrastructure should be owned by the state, for example, will be fiercely contested, and have profound implications for the distribution of resources in society. Sir Mervyn King may be a fine monetary policymaker, but would you want him in charge of deciding how many Sure Start centres should be shut? He would say it wasn't the kind of decision he should make.

As Peter Chowla of the Bretton Woods Project, which monitors the work of the IMF, says: "You need an understanding of what these crises mean for different segments of the population."

Older British politicians remember the humiliation of having to answer to the IMF for the Treasury's spending plans after the UK's 1976 bailout. But the austerity-plus-reform package imposed on the bailed-out eurozone members reaches far deeper into national life.

In case there was any doubt that Italy faces joining Greece, Portugal and Ireland as closely monitored protectorates of Brussels, economic and monetary affairs commissioner Olli Rehn wrote to the Italian finance minister last week, demanding details about each one of the 39 reform measures Italy has promised to take.

And it won't have gone unnoticed among the eurozone's poor relations that Germany and France haven't themselves always embraced the reforms they are now recommending. In a paper for the pro-Europe Centre for European Reform last week, Simon Tilford and Philip Whyte said: "The punishing (and self-defeating) economic adjustments imposed on debtor countries contrasts with the self-righteous complacency shown in the creditor countries."

The second problem with "technocratic government" as detailed in an excellent new report by economists from Research on Money and Finance, austerity has been comprehensively proven to fail. Greece has offered up the scalps of 30,000 civil servants, raised taxes, cut public sector salaries and put a cornucopia of state assets up for sale. The result? A cumulative 10% decline in output through 2010 and 2011, and an unemployment rate of 18.4%. Greece's debt-to-GDP ratio has actually risen, not fallen, since the "rescue" package was implemented, and forecasts from the commission show debt hitting a Japanese-style 198% of GDP by 2013. On its own terms, the programme has been self-defeating.

Ireland is often touted as the success story among the bailed-out euro states, but critics point out that much of its growth has resulted from profits made by multinationals that base their headquarters in Ireland to take advantage of its rock-bottom corporation tax rate, but create few jobs. The Dublin government is predicting that unemployment will still be 11.6% by 2015.

As Stephen King at HSBC puts it: "Far from putting a firewall around Greece, the eurozone has instead ended up with a 'scorched earth' policy where contagion is threatening not just the periphery but the core too."

Italy is now being prescribed more of the same medicine, but with all of its euro partners tightening their belts at the same time, the end result is likely to be a long period of stagnation, high unemployment and political and social conflict over the painful reforms demanded, in what Brian Reading at Lombard Street Research refers to as "Merkozy's pound of flesh". He rightly insists that restoring growth must come before reforms: "Growth eases the passage of structural reforms that bring future benefits. Immediate and brutal retrenchment is medieval bloodletting in hope of a miraculous cure."

Barring such a miracle – or a large-scale intervention by the ECB, which still looks a long way off – there are two paths facing Italy and Greece. They could accept their penance, and effectively become protectorates of Berlin and Brussels. Or they could seize the opportunity already hinted at by hardline northern Europeans and start to plan for a new economic life outside the single currency. It would be a painful and messy business, involving debt default and capital controls, but at least the inevitable devaluation would hold out some plausible hope of growth.

The single currency began with lofty aims of cementing political unity and building a powerful economic bloc. But far from the hoped-for convergence, the ensuing two decades have exacerbated the competitiveness gap between the wealthy core and the struggling periphery, while reckless cut-price lending by the under-regulated banks helped to paper over the cracks. The tragedy now is that living in an economy strangled by remote-control austerity might cause a resurgence of nationalism.

These bailouts aren't democracy. What's worse, they aren't even a rescue