Economic crisis blogburst 2: Not an overnight crisis…

Okay, the news is coming thick and fast so here’s a slice of today’s comment, bloggish and otherwise:

– Ronan has a piece pointing out that whilst other periphery countries have their budgets in the public domain, Brian Lenihan is having to work with the most unbearable public scrutiny and an EU Commissioner taking in everything he does over his shoulder: Is this the crux of that economic sovereignty issue we keep hearing about:

…no-one in Europe wins if, for reasons of economic illiteracy, Ireland is forced to double its corporate tax rates. Ireland’s government deficit will worsen: capital is mobile and, without a large domestic market, Ireland will attract less capital here than otherwise. The wider Irish economy will lose out, with fewer jobs for Irish people living here and fewer jobs to attract skilled migrants to here… and the government finances lose out yet again through lost income tax and VAT receipts.

–  Gavin who’s been across a lot of the detail during much of this crisis lays on the ‘we told you so’ with a massive trowel (and lots of unmissable detail):

We questioned just how much nonsense Finance Minister Brian Lenihan spoke in September 2009, where he argued that Ireland had neared the floor in the housing market. Of course, NAMA set its floor in November 2009, and prices have fallen ever since – leading to yet more losses for the taxpayer.

P O’Neill at A Fistful of Euros on Ireland’s two stories, one for domestic consumption (ie, we’ve been bad people, must embrace new austerity); and one for the markets, Sovereign Debt, good, Bank debt BAAADDDD…. He winds up with his own series of questions:

…why the fixations with having an Irish-owned banking sector and avoidance of restructuring of insolvent banks; why the assumption that the 2007 total level of tax revenue is gone forever, and most of all, why the assumption that an unreformed political economy (i.e. the constellation of institutions and interest groups) is still somehow fit for purpose in getting the economy out of its current mess?

– And thinking about how recovery will come, Michael Taft sounds a warning on the largely postive balance of trade story currently being offered as government’s garlic and crucifix combo to ward off the nasty markets:

…production increases and jobs are lost. Of course, we shouldn’t expect this pattern to continue. There is considerable slack in these sectors. Ramping up production may not immediately generate jobs but as production continues to climb, jobs should come on-stream. That’s the theory.

But the main driver is the modern sector, in particular the chemical/pharmaceutical sector. These are capital-intensive. Job creation will be minimal compared to what is needed.

The recession was not caused by a collapse in external demand; our net exports have held up reasonable well. So we shouldn’t fall into the trap of ‘export-led recovery’ thinking. This sector will not lead the recovery. That will come from domestic sectors.

– Rob Kitchen at After Nama on the idiocy of running an economy where mass emigration is a key element of survival:

The next budget and the four year plan are partly predicated on emigration (40,000 in 2011, 100,000 over the next 4 years).  Instead of trying to retain of best and brightest, our policy is to hope they leave!  And they go disillusioned and resentful, feeling that they are not only paying the price for other people’s mistakes but if they stayed that they are expected to carry the burden of debt and woes into the future; hardly the best sentiments for encouraging later return.

Constantin deconstructs the contagion problem now consuming Ireland’s EU partners…

– Gekko says flirting with ‘mortgage forgiveness’ will only force more taxpayer’s Euros down another bottomless Nama like flue

More tomorrow…

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