Two opinion pieces today in the NY Times and the Economist say that the way out of the current downturn is for governments to provide a fiscal stimulus.
The need for fiscal stimulus | The next front is fiscal | The Economist
http://www.nytimes.com/2008/10/31/op...ml?ref=opinion

Meanwhile, back in Ireland, we cut spending and tax consumers. Are we not on the wrong track?

We're not cutting (current) spending, that the frigging problem.

We're maintaining current spending at 2006/07 levels and financing it with borrowing and tax increases. The cuts arise because wage increment agreements have to be honoured which is transfering funds away from services to payroll.

Capital spending occurs in multi-annual envelopes, so its difficult to say whether it is being cut or not.

__________________
Countries than produce fewer total CO2 emissions than Ireland:

Bangladesh (Pop. 162m)
Ethiopia (Pop. 80m)
Peru (Pop.30m)


To view links or images in signatures your post count must be 10 or greater. You currently have 0 posts.

Wrong.

Sadly, Mr. Krugman just won the Nobel Prize, and people might just follow his advice on this issue, even though he's completely wrong.

The Keynesian view is that saving=bad (in all cases), booms and busts are caused by changes in 'animal spirits'. The increase in spending might work if the entire economy was retail. Unfortunately, the fact that Kruman et al have no cogent Capital theory to go by means their advice is absolutely rubbish.

__________________

To view links or images in signatures your post count must be 10 or greater. You currently have 0 posts.
¦
To view links or images in signatures your post count must be 10 or greater. You currently have 0 posts.

I think taxking consumers (though increase in VAT) was totally the wrong thing to do.

But cutting or increasing spending is a little too general. We should continue with spending on infrastructural projects and ensure that what we do spend is spent well, and that cuts made should be done so with careful attention to the effects they will cause. What's called for is a balanced approach. What we got, well...

So... Kensyian economics is Cookie's advocation. Which I agree with.

Had we done it right, we'd have spent conservatively through the boom, then spent liberally in the "period of negative economic growth".

__________________
Every one sees what you appear to be, few really know what you are, and those few dare not oppose themselves to the opinion of the many, who have the majesty of the state to defend them.

- Niccolò Machiavelli

Had we followed the true economics, there wouldn't have been an unsustainable boom in the first place...

__________________

To view links or images in signatures your post count must be 10 or greater. You currently have 0 posts.
¦
To view links or images in signatures your post count must be 10 or greater. You currently have 0 posts.

Aye, but it was great while it lasted.

__________________
Every one sees what you appear to be, few really know what you are, and those few dare not oppose themselves to the opinion of the many, who have the majesty of the state to defend them.

- Niccolò Machiavelli

Well not entirely, no. I think the need for infrastructure spending is more owing to the lack of it presently, rather than for reasons of economic stimulation, which I would view simply as a by-product of necessary infrastructural spending. Such measures will also improve the attractiveness of Ireland to businesses outside the state looking to locate here and improve the quality of the lives of the people.

Ah, that makes sense.

__________________
Every one sees what you appear to be, few really know what you are, and those few dare not oppose themselves to the opinion of the many, who have the majesty of the state to defend them.

- Niccolò Machiavelli

There are two problems with the world economy at present, a short term liquidity crisis, and and then a longer term issue in relation to inflation which is caused by oil and gas price increases.
Normally I believe in supply side economics(not Keynesian) but in this instance, the second problem, which can only be resolved using non-keynesian methods, needs the first problem to be resolved first, and the only way to do that is through keynesianism, which is what the laughably called bailout actually is. Keynesianism usually results in inflation, inflation is often caused by too much money in circulation, well during a liqwuidity crisis, there is too little money in circulation, so the inflationary pressure isnt there, so Keynesianism's biggest weakness is not a threat. Thats why its justified at the moment.
The problem usually associated with Keynesianism is that iot requires the government to gradually withdraw from the economy as things improve, if you have a left leaning government at the time when this is required, they are loathed to do that, if you have a right wing government then they will withdraw from the economy for ideological reasons and withdraw too much too soon, bringing a slump back on.
If the government is not riddled with the pox of ideology then the problem is often one of politics, no politician wants to be the one to annouce spending cuts, whicgh Keynesianism requires, and backbenchers pressure to ensure 'their' project goes ahead, causing the spiral to continue and inflation to kick in