German economy shows positive signs

[eurocrat]

A combination of giddiness ahead of this Summers' World Cup and at the popularity of new the new Bundeskanzlerin has perekd up the German popualtion no end.

The positivty is rubbing off on the countries Economics figures too (okay maybe its the other way around..)

German government lifts growth forecast

Busniess Week Report

Der Spiegel's English langauge site reports

GDP growth of 2006 is set to be double that of 2005 (0.9% to 1.8%) and over 100,000 workers were taken off the live register last month and unemployment is expected to contiue to drop slighty towards the years end.

[rockofcashel]

Uh ohhhhh.......

Bet lots of Irish people haven't a clue that there's a possible big train track heading towards them.

But just to make it relevant to Ireland, and its politics, what would a 1% rise in interest rates do to FF's election hopes ?

[eurocrat]

A stronger Germany economy would open up a bigger market for Irish firms. Also migrationary pressures would be eased as the Centeral Europeans could find work in Germany instead of making a long haul to Galway. Interest rates would increase. This would be excellent news for the Irish Economy as it would help inlfation and take some money out of a potentially over heating economy.

ROC, if people realise that interest rates are set in Frankfurt and not the FF headquaters than it should not be a political problem. Even for the few years before the Euro the Irish Centeral Bank was independant of the government, so people are well used to interest rate hikes being outside the controll of the Government of the day. Interest rates are not a General Election issue.

It may impact on the 'feel good factor' somewhat, but the SSIA's and contiuning Economic growth will off off set that.

[Libero]

Interest rates would increase. This would be excellent news for the Irish Economy as it would help inlfation and take some money out of a potentially over heating economy.

Cologne Inspector of Street Cleanliness: What with this war being on, we are having a terrible problem with litter. Now to top it all, the Allied air forces are coming to level the city.
Cologne citizen: Don't be so negative. The bombing will solve the litter problem.

Interest rates are not a General Election issue.

Please, eurocrat. General economic sentiment is well recognised as an indicator of satisfaction with the government.

It's more than a little reductionist to propose that Irish people will look past the immediate and very negative impact of interest rises, and give the government a free pass because sure aren't actual interest rates set in Frankfurt.

People don't work like that, not in Ireland and not anywhere.

Besides, it's easy to make the argument that the government has pursued all sorts of poor policies that leave us much more exposed to "wrong" moves in interest rates. Apart from general pro-cyclical macroeconomic policy, there's the matters of inadequate supervision of financial institutions, allowing our competitiveness wither away, lack of reforms that can only be made happen in economic good times, etc.

[rockofcashel]

See Eurocrat, even Libero agrees with me (to an extent).

So boo you

[Sidewinder]

Also migrationary pressures would be eased as the Centeral Europeans could find work in Germany instead of making a long haul to Galway. Interest rates would increase.

Oh dear. A fall-off in immigration from Central/Eastern Europe and 1% or more on interest rates over the next 2 years?

If demographic pressure eases (our own demographic bubble, what McWilliams calls "The Pope's Children", is already tailing off) and the cost of credit goes up, that's the two main drivers of the property boom gone. Just like that.

[Nils]

Also migrationary pressures would be eased as the Centeral Europeans could find work in Germany instead of making a long haul to Galway. Interest rates would increase.

But Germany still has not opened up its labour market to them, so they won't be finding work there in large numbers any time soon.

[eurocrat]

But Germany still has not opened up its labour market to them, so they won't be finding work there in large numbers any time soon.

Thats only true to an extent. While Germany's laws are not as liberal as Ireland, Poles, Czech and other new EU members can still work in Germany. For example most of the Spargel(Asparagus) farmres in Germany are Polish.

If there is a demand for Labour in Germany and Ireland I can see most opting for Germany given the physical closes.

Libero, I am puzzeled by your post. I ackowleged that acknowleged that an interest rate hike could have an impact on the 'feel good' factor - prempting that arguement prehaps. However I also argued that this would be offset by a combination of strong growth and the maturing of the SSIA's.

I refuse to accpet that people will directly punish FF for a hike in interest rates. Only if it came in conjuction with a serious economic downturn could I see it being an issue.

As for your little story: Do you not think that higher interest rates in Frankfurt would be positive for the Irish Economy by helping to dampen inflation and borrowing? Were rates set in Dublin, than we all acknowledge that they would be far higher than they are now. I certianly will welcome an increase in interest rates (you can probably tell I don't have a mortgage :wink even if some short term 'hardship' is endured by mortgages payers.

[rockofcashel]

But Germany still has not opened up its labour market to them, so they won't be finding work there in large numbers any time soon.

Thats only true to an extent. While Germany's laws are not as liberal as Ireland, Poles, Czech and other new EU members can still work in Germany. For example most of the Spargel(Asparagus) farmres in Germany are Polish.

If there is a demand for Labour in Germany and Ireland I can see most opting for Germany given the physical closes.

Libero, I am puzzeled by your post. I ackowleged that acknowleged that an interest rate hike could have an impact on the 'feel good' factor - prempting that arguement prehaps. However I also argued that this would be offset by a combination of strong growth and the maturing of the SSIA's.

I refuse to accpet that people will directly punish FF for a hike in interest rates. Only if it came in conjuction with a serious economic downturn could I see it being an issue.

As for your little story: Do you not think that higher interest rates in Frankfurt would be positive for the Irish Economy by helping to dampen inflation and borrowing? Were rates set in Dublin, than we all acknowledge that they would be far higher than they are now. I certianly will welcome an increase in interest rates (you can probably tell I don't have a mortgage :wink even if some short term 'hardship' is endured by mortgages payers.

Therein lies the dearth, and the death of your argument.

Fact is, most people don't know nor care where interest rates are set, or how. They simply know their house has become more expensive, and that their cost of living has risen. They will look for a scapegoat because of this, because thats easier than admitting they over-extended themselves by borrowing too much money. If you blame the ECB, they'll just punish those in government for being too close to the EU. Either way, pissed off home-owners will want someone to blame, and that will be the government. Because, the government gets the blame for everything,.

[Zhirkov]

But Germany still has not opened up its labour market to them, so they won't be finding work there in large numbers any time soon.

Thats only true to an extent. While Germany's laws are not as liberal as Ireland, Poles, Czech and other new EU members can still work in Germany. For example most of the Spargel(Asparagus) farmres in Germany are Polish.

If there is a demand for Labour in Germany and Ireland I can see most opting for Germany given the physical closes.

Libero, I am puzzeled by your post. I ackowleged that acknowleged that an interest rate hike could have an impact on the 'feel good' factor - prempting that arguement prehaps. However I also argued that this would be offset by a combination of strong growth and the maturing of the SSIA's.

I refuse to accpet that people will directly punish FF for a hike in interest rates. Only if it came in conjuction with a serious economic downturn could I see it being an issue.

As for your little story: Do you not think that higher interest rates in Frankfurt would be positive for the Irish Economy by helping to dampen inflation and borrowing? Were rates set in Dublin, than we all acknowledge that they would be far higher than they are now. I certianly will welcome an increase in interest rates (you can probably tell I don't have a mortgage :wink even if some short term 'hardship' is endured by mortgages payers.

Therein lies the dearth, and the death of your argument.

Fact is, most people don't know nor care where interest rates are set, or how. They simply know their house has become more expensive, and that their cost of living has risen. They will look for a scapegoat because of this, because thats easier than admitting they over-extended themselves by borrowing too much money. If you blame the ECB, they'll just punish those in government for being too close to the EU. Either way, pissed off home-owners will want someone to blame, and that will be the government. Because, the government gets the blame for everything,.

RoC, i know you are a self proclaimed expert on economics and the art of setting interest rates an' all, but I was wonderig if you'd finally finally got the hang of long division (153/3)?