UCD Professor: Ireland heading for debt default

[cd27]

Telling it as it is,

Full article:

http://www.irishtimes.com/newspaper/...248898663.html

Prof Ray Kinsella:

“Government expenditure for 2009 is estimated to come in at about €60 billion. Revenue is projected at about €34 billion. We have to borrow some €26 billion to keep the show on the road; and this adds to our stock of debt. It pushes our debt -gross domestic product (GDP) ratio northwards.

Now assume that existing trends will continue by, say, five years which is the normal term of office of a government. Assume Government expenditure rises by 5 per cent (compounded) over the next five years. That is conservative; it leaves out, for example, the escalating costs of social welfare payments and rising debt service commitments as well as “rolling recapitalisation” related costs. By year five, expenditure would amount to €77 billion“.

The implication of the article is that Ireland is heading for default on its debts.

“A failure to support what is intrinsically an innovative economy, and to demonstrate a values-based politics, raises the spectre of sovereign default. It’s not pleasant to name, but it’s priced into the financial markets’ forward-looking evaluation of Ireland. This could incubate a political contagion – the counterpart of the virus-like financial contagion which has infected the global financial system – across the wider EU. If our political parties and institutions do not respond with courage, then responsibility will pass out of our hands – to external agencies and to market forces.

Government is too big. In the 10 years up to 2008, the total population grew by a very robust 10 per cent. Total employment in the public sector (including health but excluding commercial semi-State bodies) rose by almost 30 per cent, from 234,000 to 332,000. This extraordinary growth in the size of the public sector, representing as it does a fixed overhead that has to be funded by business, has left the economy vulnerable to the full force of the economic crisis“.

[Factorem]

I've my saving out of this country so I couldn't give a ********************e.

[Libero]

I've my saving out of this country so I couldn't give a ********************e.

If you think that shifting your savings out of the country will protect you from the effects of sovereign debt default, then your surprise on the day will act as some consolation to the rest of us.

[Wendy]

Whatever about big government, this country is coming down with economic experts. Off the top of my head and in addition to this guy I can think of the following names from the universities: Morgan Kelly, Moore McDowell, Brian Lucey, Karl Whelan, Jim O'Leary, Patrick Honohan, Alan Ahearne, Brendan Walsh, Colm McCarthy...

Then you have the media performers: David McWilliams, Dan O'Brien, Brendan Keenan, Colm Rapple, Marc Coleman, Jim Power... And George Lee.

I've never been to an economics class in my life and would be hard pressed to name any mavens in any other discipline - health or education, say. And still we're mired in the worst economic crisis in the eurozone. How extraordinary.

[Clanrickard]

Government is too big. In the 10 years up to 2008, the total population grew by a very robust 10 per cent. Total employment in the public sector (including health but excluding commercial semi-State bodies) rose by almost 30 per cent, from 234,000 to 332,000. This extraordinary growth in the size of the public sector, representing as it does a fixed overhead that has to be funded by business, has left the economy vulnerable to the full force of the economic crisis[/I]“.

The solution to this is obvious but with the lefties winning a few seats recently they'll be reacting hysterically if it is suggested by any political party.

[JCSkinner]

Time to sack 7/8ths of HSE administration, 9/10ths of Dept of Health staff, at least half of the Dept of Education staff, and reduce foreign missions by a third.
Then reduce pension entitlements across the board from top to bottom, introducing legislation if necessary to do so.
Then time-limit the dole to six months, end entitlements to child benefit for children not located in the country, reduce all welfare payments by a third to a half.
Scrap the NTPF and hasten the work of An Bord Snip by demanding a list of 60 quangos to cull by Friday. Then cull them immediately.
And then start praying you can still borrow what's required to pay for schools, hospitals, police and the rest of the state apparatus without the IMF coming in.

[cd27]

The numbers don't lie alright, the scary thing is lefties think public spending isn't high enough! value for money means nothing to them.

[HarshBuzz]

Time to sack 7/8ths of HSE administration, 9/10ths of Dept of Health staff, at least half of the Dept of Education staff, and reduce foreign missions by a third.
Then reduce pension entitlements across the board from top to bottom, introducing legislation if necessary to do so.
Then time-limit the dole to six months, end entitlements to child benefit for children not located in the country, reduce all welfare payments by a third to a half.
Scrap the NTPF and hasten the work of An Bord Snip by demanding a list of 60 quangos to cull by Friday. Then cull them immediately.
And then start praying you can still borrow what's required to pay for schools, hospitals, police and the rest of the state apparatus without the IMF coming in.

^^^

realism

scary, isn't it?

[cactusflower]

The size of the public sector isn't the problem, its the cost of it, and its very uneven efficiency.

At the moment sacking people is just putting them on the dole. There has to be a strategy for increasing productive jobs and tourism. It should be, after trying to douse out the banking inferno, our number one priority.

[cactusflower]

The numbers don't lie alright, the scary thing is lefties think public spending isn't high enough! value for money means nothing to them.

cd27, it isn't "the lefties" who've run up unpayable debts of tens of billions.
That's tens of thousands of millions.. It wasn't the lefties who fuelled the bubble with tax hand outs, or used the public purse as a slush fund to buy votes.

jc - are you working for the IMF ?

Do you have any strategy getting us out of deflation, rather than adding to it?