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Thread: OECD upbeat on Irish economy but warns on inflation

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    Default OECD upbeat on Irish economy but warns on inflation

    More reasonably positve news from Paris today (I get the feeliong we are the OECD's pet student sometimes)

    from ireland.com

    The Irish economy will grow at a steady rate of five per cent in the medium term but more domestic competition is needed to counter mounting inflation, according to the OECD.

    In its latest global economic outlook published today, the Paris-based think tank said the higher consumer spending fuelled by higher incomes and sustained government expenditure will be the engines of growth in Ireland.

    The OECD welcomed the proposal to repeal the Groceries Order and called for more competition in sheltered sectors starting with the professions and network industries.
    "Consistency is the last refuge of the unimaginative."
    Oscar Wilde

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    Mounting Inflation?

    Inflation has been rampant here for a decade.

    While we've all been watching the CPI, and wallowing in low interest rates, the money supply - aka Inflation - has been going through the roof.

    I think young McWilliams hit the nail on the headperfectly yesterday.

    Quote Originally Posted by David McWilliams
    When you touch down in Dublin after your winter break in the sun, the purchasing power of your euro drops considerably. What happens to debase the currency once you pass passport controls at Dublin, Cork or Shannon?

    Why does the price of a cup of coffee surge 180 per cent - from €1 in Barcelona to €2.80 in Dublin?

    The reason is simple: old-fashioned inflation. Although the official figures do not capture this, Ireland has been in the grip of an inflationary spiral for the past few years.

    The easiest way to see this is in the progressive fall in the value of your money in this country and the corresponding increase in the value of the same money when you leave the place.
    "Always do right. This will gratify some people and astonish the rest." Mark Twain

    “When a government is dependent upon bankers for money, they and not the leaders of the government control the situation, since the hand that gives is above the hand that takes. Money has no motherland; financiers are without patriotism and without decency; their sole object is gain.” Napoléon Bonaparte

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    Quote Originally Posted by SPN
    I think young McWilliams hit the nail on the headperfectly yesterday.
    Your right, it should be obvious to everyone when a bar of soap is twice the price in Galway as it is in Newry...

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    I tend to agree with the idea that official inflation is underestimating the overall rise in prices.

    But can anyone tell me how the CPI is failing us, or direct me to a website where this explained?

    I mean, is the basket of goods being rigged to give a lower inflation figure? How has this come about?

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    Anyone want to tell me what a network industries are? Neither wikipedia or google could elucidate me.
    Ich mag Steine!

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    Quote Originally Posted by SPN
    Mounting Inflation?

    Inflation has been rampant here for a decade.

    While we've all been watching the CPI, and wallowing in low interest rates, the money supply - aka Inflation - has been going through the roof.

    I think young McWilliams hit the nail on the headperfectly yesterday.
    I still dont see the problem. If wages are increasing then price increases should'nt make a huge difference.
    So your coffee in Barca is cheaper than in Dublin so what; you dont live in Barca.

    I would compare the Irish economy to a surfer.
    Do you crash out early before the wave hits the rocks or do you ride the wave as long as you can and hope to walk onto the beach. 8)

    Can you tell I'm not a economist.

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    enjoy

    http://www.cso.ie/statistics/consumpriceindex.htm

    Inflation is 3% this year, and our interest rate is 2%, some sloppy economics suggests a neutral interest rate for Ireland should be about 4%, add to that the growth rate of the economy which is around 5% and it all suggests our interest rate is way too low.
    that might not look dramatic but inflation and interest rates have been out of whack for the last 4/5 years and that is enought to cause problems that are irreversible in the short-term (7-8 years)

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    Quote Originally Posted by Hiker
    Can you tell I'm not a economist.
    Yep. You make sense! :twisted:

    Quote Originally Posted by Hiker
    So your coffee in Barca is cheaper than in Dublin so what; you dont live in Barca.
    Correct - however: If you are setting up a business where you buy a set of widgets and assemble them into a Gizmo, where would you locate your assembly operation, from a labour cost point of view, Ireland or Barca?

    What many people seem to forget is that the bulk of the money being spent on over priced Lattes (and everything else in this economy) is coming from the savings of German pensioners.

    We don't create wealth in Ireland, we borrow OPM in increasing amounts, and use it to outbid each other for seriously overpriced trophies.


    Quote Originally Posted by Libero
    But can anyone tell me how the CPI is failing us, or direct me to a website where this explained?

    I mean, is the basket of goods being rigged to give a lower inflation figure? How has this come about?
    Because CPI is not inflation, and Inflation is not CPI.

    If the Government increase taxes on cigarettes the CPI will rise.

    If the Government increase Civil Servant's salaries Inflation will rise.

    Have a read through McWilliams site. He did an article on this a couple of weeks ago IIRC.
    "Always do right. This will gratify some people and astonish the rest." Mark Twain

    “When a government is dependent upon bankers for money, they and not the leaders of the government control the situation, since the hand that gives is above the hand that takes. Money has no motherland; financiers are without patriotism and without decency; their sole object is gain.” Napoléon Bonaparte

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    Wow the report tells us were looking a 5% economic growth in teh medium term and the that house prices are likelys to hold. THey warn about one and thats all you guys can focus on.

    David McWilliams should have more sense. There are 101 reasons why the cup of coffee in Barcelona is cheaper than Dublin. To begin with they don't have a minum wage of 7.65.

    Personally I'd rather pay the extra few cents on my cup of coffee to know that the persion serving it is being paid properly.

    Anyways inflation is not nessesarlity a bad thing once it is below economic growth.
    "Consistency is the last refuge of the unimaginative."
    Oscar Wilde

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    Quote Originally Posted by eurocrat
    Wow the report tells us were looking a 5% economic growth in teh medium term and the that house prices are likelys to hold. THey warn about one and thats all you guys can focus on.

    David McWilliams should have more sense. There are 101 reasons why the cup of coffee in Barcelona is cheaper than Dublin. To begin with they don't have a minum wage of 7.65.
    Nail on the head. There is absolutely no sense in comparing the price of a cup of coffee in Dublin Airport, with Barca Airport. Compare the downtown prices (where there is a free-market) and you might have something worth talking about.

    Sometimes McWilliams gets a bit carried away with his populist style.

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