Economic crisis: Sobering thought of the day… August 29, 2012Posted by WorldbyStorm in Economy, Irish Politics, The Left.
I’ll just post this up as a sobering thought of the day from CMK who wrote the following comment here (I’ve edited it down just a little).
My understanding is that the government will keep cutting/increasing taxes & charges until they reach the deficit target of 3% of GDP agreed with the Troika under the bailout. And, when they get there, they’ll then have to implement the Austerity Treaty (thanks, Labour) and keep cutting/taxing until we get to the .5% target under THAT treaty. Oh, and while we’re trying to get there we’ll have to start paying down the colossal national debt at a rate of 5% per year in a context where our GDP and GNP gap is about 23% and we have to use the resources of the smaller measure (GNP) to meet targets denominated against the much larger measure (GNP) (EDIT: CMK has amended that to read as follows: The debt reduction under the austerity treaty is, I think, a twentieth every year of the difference between the national debt and 60% of GDP. Not 5% of GDP as I stated in my comment. The gap between GNP and GDP was covered recently by the ILR). It’s a case of the application of the old maxim, on an entire advanced society, of “the beatings will increase until morale improves”.
Let’s assume it pans out exactly as CMK says, it might be interesting to start a discussion here as to what people think the limits of this as practical achievable politics actually are in terms of whether any government can implement that and what sort of resistance to it we might expect (whatever about he economics which seem absurd in terms of meeting targets)
Even the Irish Times admits that:
The forecast cut raises fresh doubts as to whether the economy can grow fast enough to service large debts. Ireland, which returned to long-term bond markets ahead of schedule last month, has avoided joining most of the euro zone in recession but needs growth to accelerate to tackle debt set to peak close to 120 per cent next year.
And what of this gem.
Looking ahead to 2014 and 2015 for the first time, the commission sees GDP growth of 2.5 per cent and 2.8 per cent respectively, similar to government projections as it predicts unemployment will fall to a still-high 13.1 per cent from 14.8 per cent this year.