Slugger’s Daily Blogburst…

Kicking off, as interest rates inside the EU fall now to 2% and the Republic’s inflation hits 1.1%, some think it bodes well… But Michael notes the apocalypical calls for cuts in the Republic in particular IBEC’s shout for the immediate dissolving of 70,000 public sector jobs (a hard sell, but this government may cut to any port given the diminutive size of the boat, and the fierce openness of the economic oceans that are pushing it around)… Michael concludes:

…the call for wage reductions as a way back to competitiveness is just another quick-fix solution – of the type that Homer Simpson excels in; y’know, taking an axe or hammer to anything he can’t figure out how to work. What’s more, such policies will reduce business activity even further, resulting in more unemployment, less tax revenue (resulting in a worsening of the budget deficit) and, of course, even more demands for wage cuts.

– (BTW, anyone notice just how calm Northern Ireland seems in comparison? It’s the magical protection we get from that “Somebody Else’s Problem Field…“)

– Gerard is less than impressed with the lack of response from the economists at the Responding to the Crisis seminar in Dublin earlier in the week. Abbreviated notes from Stephen here

– In the US Charlie Cray notes three problems in the US Treasury’s handling of the rescue package:

First: A poorly-managed bailout (TARP),

Second: A stimulus package that most economists agree will not be enough to revive the economy and, with a good portion going out in the form of corporate tax breaks instead of shovel-ready projects, may not even be enough to stop the hemorrhaging of jobs.

Thirdly, and perhaps most importantly: The absence of any serious debate over financial regulatory reform.

Whitehall 1212 reports Tory optimism that they finally have the tided turned against Gordon by tying the long term (baby) debt problem around Gordon’s neck…

– Closer to home Chris Gaskin provides his own thoughts on the future of Sinn Fein

– Latest SF entrant to the blogosphere is Niall O Donnghaile, who argues for the removal of Mountpottinger PSNI station

– O’Neill detects tensions amongst the Tory party in Wales

– Our singly legislated for Presbyterian Mutual Society may not be long for this temporal world

– And Dan has a suggestion for post Credit Crunch journalism:

The short-term is grim but one solution is to go back to the future and have journalists run their own newspaper; an Independent Mark II. This may have to be post-credit crunch, but it would be an important voice in the media once there is financing available out there for such a venture.

– Staff at Bobballs are certain there is postive progress for governments in Israel and Sri Lanka, but the means by which that progress has been made is questionable to say the least:

This is difficult stuff, and we’re not expert on the local politics. Artillery and fast jets are appropriate in battle plans but surely not in built up areas where civilians cannot vacate the ‘battlefield’.

– And finally, here’s a treat. Food blogger and chef Niall Harbinson has served up Irish Blog Awards (call for judges now on) impresario Damien Mulley unplugged and on video… Damien tells us he’s been blogging on his site for 8 years; which presumably means he began, at the latest, by January 2001. That would place him firmly within the first (tiny – and for which read elite) tranche of bloggers anywhere in the world; although his current archives only take us back to July 2003

  • Kensei

    Kicking off, as interest rates inside the EU fall now to 2% and the Republic’s inflation hits 1.1%, some think it bodes well…

    Surley it indicates the terror of deflation is a big risk?

  • … deflation is a big risk?

    A very big risk. While shoppers may like it, they are ignorant of its real economic impact.

    … interest rates inside the EU fall now to 2% …

    Strictly speaking, Mick, interest rates ‘within the EU’ have already dropped well below 2% in EU Member State UK. You meant, I presume, that Eurozone rates have fallen to 2%?

  • Mick Fealty

    And the rest…

  • Taft does the business yet again.

  • Nomad

    Taft’s whole argument about ‘Ireland’ having low paid workers is a nonsense though, undermining the rest of his discussion.

    This sort of fact is in pretty easy reach for example: “The average wage, if you divide GDP by population in Ireland, is around $50,000 (€37,000) whereas in Poland, it is $11,000.”

    Taken from The Observer. http://www.guardian.co.uk/world/2009/jan/11/ireland-economy-world-news

    [And I’ll happily take that debate to same]

  • ulsterfan

    Can we not by pass all recessions, great depressions and go directly to the stone age.
    I am fed up fighting the inevitable.
    Who can we believe?—not politicians, economists, bankers or journalists.
    The man who owns the corner shop could probably do a good job, or is there any chance Margaret Thatcher could be brought back even with her degree of dementia she could still save the planet better than these clowns.

  • Dave

    Nomad, agreed. This has comedic value: “There is a good reason why cutting wages will have little impact – Ireland is already a low-waged economy. This has been canvassed so many times the facts don’t need to be repeated.”

    In fact, Ireland has the second highest minimum wage (€8.65 per hour) in the EU (only Luxembourg is higher). Our minimum wage is 13 times higher than Romania and 14 times higher than Bulgaria, so we are way out of the game in terms of wage competiveness within the EU. Also, the average industrial wage is 5 times higher in Ireland than it is in Poland (where Dell moved). The minimum wage in Ireland is €1,462 per month compared with, outside the EU, the US at €696 per month. When the minimum wage was first introduced in 2000, it was €4.40 per hour but it has almost doubled in less than a decade due to government indulgence of the greedy demands of the ‘social partners’ with the result that Ireland has become a high wage, uncompetitive economy and no place for labour intensive businesses to locate or start up.

    Taft’s argument that cutting pay to public sector workers (and cutting the number of public sector workers) would have negligible impact on the public finances is asinine. It is true, of course, that public sector workers pay taxes to the state that would not be paid if they were not employed by the state and it is also true that there would be a cost to the state in paying unemployment benefit to public sector workers if they were made redundant, but neither argument means that the state should not save taxpayers’ money by dismissing those public sector workers whose services are not required by the state. To argue that the state should not save, say, 12 billion by job cuts because the actual saving would only be, say, 8 billion fails to convince that the 8 billion is not money saved. Indeed, if his Keynesian approach was valid, the state should simply employ the whole nation to dig ditches and fill them back in again.

  • niall

    Dave,

    Those figures are not unexpected but nonetheless frightening when we consider that lending has been at multiples of these higher wages. Cuts in wages will cause further defaults at the banks?

    In fairness this will be less than the bad debts piled up by out and out meltdown.

    It aint good but a country which has sold itself on it’s great education system and innovative workforce will quickly extricate itself and then explain the new economics……. hmm, ok maybe not.

  • To follow on from Dave’s point – the minimum wage in Ontario, Canada will rise to C$9.50 on Mar 31 – which sounds good until you convert: EUR5.76

    Certainly the minimum wage must be frozen at the very least, with an widening of the conditions for paying sub-minimum rates contemplated to get young people employed. The employment schemes for students etc. rolled back in the good times have to be reinstated NOW, not a little at a time while unemployment is heading for 20%. Full employment’s dead and gone, it’s with O’Leary in the grave…