The Irish people (a group which includes several members of my family and my wife's family) have had a rough old time of it lately. Following the implosion of their economy with an even bigger bang than the UK's a couple of years back, they have got locked into an ever-decreasing circle of emergency budget cuts, falls in investment, falls in output, another hole in the budget and hence more budget cuts. The "Celtic tiger" seems more like a lemming falling off the cliff these days.
Now they're being threatened with a €25,000 fine for blasphemy - defined as "publishing or uttering matter that is grossly abusive or insulting in relation to matters sacred by any religion, thereby intentionally causing outrage among a substantial number of adherents of that religion, with some defences permitted".
This is lunacy, just plain lunacy. Why do religious people need legal protection from a verbal or written challenge to their beliefs? In fact, why does anybody with a strongly held belief need protection from verbal or written attack? If your belief is well-founded enough then you should be able to stand up to insults. And if it isn't... maybe you need to get yourself another belief.
Fortunately Atheist Ireland (who I think are the Irish equivalent of the British Humanist Association) are making a direct challenge to the law by posting 25 anti-religious quotations on their website. They are going to challenge the law through the courts (maybe at the European Court of Human Rights? I'm no expert so I'm not sure what the challenge would be).
This is a brave and important action on behalf of anyone who wants the freedom to voice an opinion without being prosecuted - whether they be religious, atheist or whatever. Best of luck to AI on this one.
One last thought on this topic (for now): the current Irish government is a coalition of Fianna Fail and the Green Party. I can well believe that FF are a bunch of reactionary religious nutters but what the hell were the Green Party thinking? Where's the environmental benefit in making criminals out of people for voicing their opinion? Utterly contemptible and a slur on the reputation of the environmentalist movement.
Showing posts with label Ireland. Show all posts
Showing posts with label Ireland. Show all posts
02 January 2010
23 July 2009
Getting it very wrong on debt
On some previous occasions in this blog I have referred positively to Ambrose Evans-Pritchard of the Daily Telegraph as a rare journalist with half a clue about what is actually going on in financial markets. This is because his tendency to say that the financial crisis is much worse even than it appears now chimes in with my gut instincts about what is going on at the moment.
However, in his latest article "Fiscal ruin of the Western world beckons", Evans-Pritchard has delivered a real turkey, showing a worrying low understanding of basic macroeconomics.
It's clear that something is very wrong from the start of this article. I quote:
This illustrates the fallacy of the conventional IMF approach to macroeconomics. As long as public spending and services are cut enough, the deficit will be eliminated and then everything will be OK.
Whereas in fact, in the current economic situation, the deficit is the key thing keeping the Irish economy from being in an even worse state. The emergency budgets have depressed demand for goods and services, depressing tax receipts and making the deficit wider - leading to calls for another emergency budget. And so on, presumably until the last Irish civil servant has left the building, and the country is in a state of anarchy.
Ireland is of course in more of a bind than the UK for two reasons: (1) it took a larger economic hit from the credit crunch (and hence has a bigger deficit as a proportion of GDP) and (2) it's in the Euro so it can't set its own interest rates and can't use quantitative easing to stimulate the economy (although as previously noted in this blog, it is still far from clear whether QE actually works or not).
Rather than engaging in an endless cycle economic self-harm to satisfy the IMF and footloose international capital, Ireland's best way out of the crisis would have been withdrawal from the Euro (and if necessary from the EU), and a combination of deficit spending to plug the cyclical gap and tax increases to plug the structural deficit. I'm amazed that there hasn't been a revolution in Ireland, given the cuts to public spending and benefits which have taken place. If Ireland was in South America the government would have already fallen. Maybe it's time to arm the workers out there.
Nomura's Richard Koo, who is referenced disparagingly by Pritchard, seems to have the right idea when he calls for a huge deficit spending boost to counter the recession. I have yet to read his book The Holy Grail of Macroeconomics (about Japan's "lost 20 years") but it is one of the next things on my list.
Of course it is essential that once growth resumes, countries run surpluses instead of deficits, to reduce the burden of debt interest - and this is where New Labour went badly wrong, because they had a structural deficit - but to call for huge spending reductions now is insanity. It would just turn the worst recession since 1929 into the worst depression OF ALL TIME and probably lead to the complete collapse of Western democracy and its replacement with fascist states under the control of people like the BNP.
Is that really what Ambrose Evans-Pritchard wants to see?
However, in his latest article "Fiscal ruin of the Western world beckons", Evans-Pritchard has delivered a real turkey, showing a worrying low understanding of basic macroeconomics.
It's clear that something is very wrong from the start of this article. I quote:
For a glimpse of what awaits Britain, Europe, and America as budget deficits spiral to war-time levels, look at what is happening to the Irish welfare state.
Events have already forced Premier Brian Cowen to carry out the harshest assault yet seen on the public services of a modern Western state. He has passed two emergency budgets to stop the deficit soaring to 15pc of GDP. They have not been enough. The expert An Bord Snip report said last week that Dublin must cut deeper, or risk a disastrous debt compound trap.
This illustrates the fallacy of the conventional IMF approach to macroeconomics. As long as public spending and services are cut enough, the deficit will be eliminated and then everything will be OK.
Whereas in fact, in the current economic situation, the deficit is the key thing keeping the Irish economy from being in an even worse state. The emergency budgets have depressed demand for goods and services, depressing tax receipts and making the deficit wider - leading to calls for another emergency budget. And so on, presumably until the last Irish civil servant has left the building, and the country is in a state of anarchy.
Ireland is of course in more of a bind than the UK for two reasons: (1) it took a larger economic hit from the credit crunch (and hence has a bigger deficit as a proportion of GDP) and (2) it's in the Euro so it can't set its own interest rates and can't use quantitative easing to stimulate the economy (although as previously noted in this blog, it is still far from clear whether QE actually works or not).
Rather than engaging in an endless cycle economic self-harm to satisfy the IMF and footloose international capital, Ireland's best way out of the crisis would have been withdrawal from the Euro (and if necessary from the EU), and a combination of deficit spending to plug the cyclical gap and tax increases to plug the structural deficit. I'm amazed that there hasn't been a revolution in Ireland, given the cuts to public spending and benefits which have taken place. If Ireland was in South America the government would have already fallen. Maybe it's time to arm the workers out there.
Nomura's Richard Koo, who is referenced disparagingly by Pritchard, seems to have the right idea when he calls for a huge deficit spending boost to counter the recession. I have yet to read his book The Holy Grail of Macroeconomics (about Japan's "lost 20 years") but it is one of the next things on my list.
Of course it is essential that once growth resumes, countries run surpluses instead of deficits, to reduce the burden of debt interest - and this is where New Labour went badly wrong, because they had a structural deficit - but to call for huge spending reductions now is insanity. It would just turn the worst recession since 1929 into the worst depression OF ALL TIME and probably lead to the complete collapse of Western democracy and its replacement with fascist states under the control of people like the BNP.
Is that really what Ambrose Evans-Pritchard wants to see?
21 January 2009
If we really are broke, avoid the IMF at all costs (literally!)
As promised, I'm picking up on one of the points which Paul Mason raised yesterday: that Ireland may be on the verge of calling in the IMF for emergency loan funding because the economic situation there has got so bad. The exact quote is from a Forbes article - the crucial paragraph reads:
In the interests of balance, I should point out that most of the rest of the Forbes article is devoted to making the case that the Irish situation isn't that bad - yet. But the main point is: does the IMF really think that mass dismissals of public sector employees (or alternatively huge wage cuts) is the way forward for economic policy in a slump? That would depress economic activity still further, increasing the risk of a vicious deflationary spiral, with mass unemployment.
Keynesian economic theory suggests precisely the opposite course of action: increase public sector hiring and net wages, funded by borrowing. Ireland can cut back when growth has been restored. To do so now would be economic suicide.
Joe Stiglitz has already done the best possible expose of the right-wing lunatics who run the IMF so I will refer you to his book Globalization and its Discontents if you haven't read it already. Suffice to say that these guys are still living in a 1980s Thatcherite fantasy, which has been responsible for a huge amount of economic hardship for the poorest and most vulnerable people in the world for several decades now.
In the wake of the appalling losses announced by RBS on Monday and the continuing fall in the share prices of the three major UK-based banks, commentators' thoughts are turning increasingly to the thought that the UK may be pushed into a situation where it can't borrow at reasonable rates on the international credit markets any more, and the IMF has to be called in. Ambrose Evans-Pritchard in the Telegraph offers probably the most factual and least hysterical analysis of the current situation that I've seen so far.
What should policymakers do if the UK really is insolvent - if the banking losses are so large, and/or the recession so severe in its impact on the public finances, that the UK's credit risk gets downgraded to the point where it becomes another Iceland - no longer able to raise sufficient borrowings to meet its liabilities? Two obvious options present themselves. One, calling in the IMF for emergency assistance. I think this would be a terrible course to take. The IMF do not understand basic economic theory and would decimate living standards and destroy social cohesion in their bid to 'balance the books'. It would make the 1976 IMF package look like a tea-party. This has to be avoided AT ALL COSTS.
A second option would be to "do an Iceland" - default on the UK banks' debts. This could trigger the collapse of the entire global banking system. Even the most patriotic commentators out there don't recommend that, fortunately.
Which leaves only one course - using 'quantitative easing' ("printing money") as a substitute for borrowing. Essentially the UK government would fund expenditure by expanding the money supply. This is a very, very dangerous course of action - in normal circumstances (i.e. not an economic depression) it would run the risk of triggering runaway inflation (look at Zimbabwe for an extreme case). When the economy is suffering a deep depression that's not necessarily the case because (a) the price level may actually be falling, and (b) there are huge reserves of unemployed people and physical capital which can be brought into play by expanding government spending - without increasing inflation. But this is damn risky business and should only be tried as an absolute last resort. However, despite the risks, it's still LESS risky than getting the IMF idiots in to run things.
As I say, hopefully the situation is not that bad, and we will look back on this talk of defaults and IMF emergencies with some amusement in - say - 12 months' time. But it's beginning to look worryingly real - as the lead singer in Spinal Tap might say, "a bit too much f***in' perspective".
Prime Minister Brian Cowen, while at an investment conference in Tokyo on Wednesday, was reported to have endorsed the view of an Irish union leader that the parlous state of Ireland's public finances could lead to the IMF ordering mass dismissals of public sector workers. Dan Murphy, the general secretary of the Public Service Executive Union, had previously told his branch members that the Fund could intervene if public spending was not curtailed, according to the Irish Times.
In the interests of balance, I should point out that most of the rest of the Forbes article is devoted to making the case that the Irish situation isn't that bad - yet. But the main point is: does the IMF really think that mass dismissals of public sector employees (or alternatively huge wage cuts) is the way forward for economic policy in a slump? That would depress economic activity still further, increasing the risk of a vicious deflationary spiral, with mass unemployment.
Keynesian economic theory suggests precisely the opposite course of action: increase public sector hiring and net wages, funded by borrowing. Ireland can cut back when growth has been restored. To do so now would be economic suicide.
Joe Stiglitz has already done the best possible expose of the right-wing lunatics who run the IMF so I will refer you to his book Globalization and its Discontents if you haven't read it already. Suffice to say that these guys are still living in a 1980s Thatcherite fantasy, which has been responsible for a huge amount of economic hardship for the poorest and most vulnerable people in the world for several decades now.
In the wake of the appalling losses announced by RBS on Monday and the continuing fall in the share prices of the three major UK-based banks, commentators' thoughts are turning increasingly to the thought that the UK may be pushed into a situation where it can't borrow at reasonable rates on the international credit markets any more, and the IMF has to be called in. Ambrose Evans-Pritchard in the Telegraph offers probably the most factual and least hysterical analysis of the current situation that I've seen so far.
What should policymakers do if the UK really is insolvent - if the banking losses are so large, and/or the recession so severe in its impact on the public finances, that the UK's credit risk gets downgraded to the point where it becomes another Iceland - no longer able to raise sufficient borrowings to meet its liabilities? Two obvious options present themselves. One, calling in the IMF for emergency assistance. I think this would be a terrible course to take. The IMF do not understand basic economic theory and would decimate living standards and destroy social cohesion in their bid to 'balance the books'. It would make the 1976 IMF package look like a tea-party. This has to be avoided AT ALL COSTS.
A second option would be to "do an Iceland" - default on the UK banks' debts. This could trigger the collapse of the entire global banking system. Even the most patriotic commentators out there don't recommend that, fortunately.
Which leaves only one course - using 'quantitative easing' ("printing money") as a substitute for borrowing. Essentially the UK government would fund expenditure by expanding the money supply. This is a very, very dangerous course of action - in normal circumstances (i.e. not an economic depression) it would run the risk of triggering runaway inflation (look at Zimbabwe for an extreme case). When the economy is suffering a deep depression that's not necessarily the case because (a) the price level may actually be falling, and (b) there are huge reserves of unemployed people and physical capital which can be brought into play by expanding government spending - without increasing inflation. But this is damn risky business and should only be tried as an absolute last resort. However, despite the risks, it's still LESS risky than getting the IMF idiots in to run things.
As I say, hopefully the situation is not that bad, and we will look back on this talk of defaults and IMF emergencies with some amusement in - say - 12 months' time. But it's beginning to look worryingly real - as the lead singer in Spinal Tap might say, "a bit too much f***in' perspective".
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