absolutely none at all. there is no consolation. what would you like me to say to them?
oh, if the basic level of maths i've seen displayed by the young people currently studying a chemistry degree is anything to go by, then i'm not at all shocked they find it nigh on impossible to get a job.
and yes, things do right themselves eventually. or do we never come out of recessions?

what was it you said about cutting benefits will increase crime or something, sound a lot like paying people not to rob us to me. it's one step further that cameron's 'hug a hoodie' nonsense.


of course it wasn't your suggestion, you need a 'working brain' to have one of those, or maybe not when you actually, y'know, think about any consequences. you seemed quite enthusiastic at first, yet now you're starting to distance yourself from it? are you actually a tory policy maker or something?

obviously, you're entirely right if i'm missing all these home insulators swanning round in their bentleys with more work than they can shake a stick at. oh, and doing it for no charge as my parents discovered a couple of weeks ago.

absolutely none at all. there is no consolation. what would you like me to say to them?
oh, if the basic level of maths i've seen displayed by the young people currently studying a chemistry degree is anything to go by, then i'm not at all shocked they find it nigh on impossible to get a job.
and yes, things do right themselves eventually. or do we never come out of recessions?

what was it you said about cutting benefits will increase crime or something, sound a lot like paying people not to rob us to me. it's one step further that cameron's 'hug a hoodie' nonsense.


of course it wasn't your suggestion, you need a 'working brain' to have one of those, or maybe not when you actually, y'know, think about any consequences. you seemed quite enthusiastic at first, yet now you're starting to distance yourself from it? are you actually a tory policy maker or something?

obviously, you're entirely right if i'm missing all these home insulators swanning round in their bentleys with more work than they can shake a stick at. oh, and doing it for no charge as my parents discovered a couple of weeks ago.

On a par with your literacy levels, dear?

You do know that proper nouns exist, for instance?



No, dear. I didn't say that. 'Sounds a lot like' ('sound' requires an 's' at the end! by the way) is not a synonym for 'said'.



Oh dear, oh dear, oh dear.

Scooter Nik wrote: 1) Yes they did. Quite correct. Now show us any time where any party was in power where this hasn't happened. You can't. Erm....Labour from 97 till 2001 maybe? Scooter Nik wrote: 3) Brown claimed to have ended the Tory 'boom and bust' policies, i.e. the Labour party wouldn't be following them. I'm sure even someone of your limited political knowledge will appreciate that he can do nothing about Conservative policy when they come into power. Erm.... http://www.youtube.com/watch?v=FUY9ewD1Jls 'No retun to boom and bust' - Where is the word Tory? Incidentally, well done on finding the Telegraph link showing what the benefit of hindsight are.[/quote]

Scooter Nik wrote: 1) Yes they did. Quite correct. Now show us any time where any party was in power where this hasn't happened. You can't. Erm....Labour from 97 till 2001 maybe? Scooter Nik wrote: 3) Brown claimed to have ended the Tory 'boom and bust' policies, i.e. the Labour party wouldn't be following them. I'm sure even someone of your limited political knowledge will appreciate that he can do nothing about Conservative policy when they come into power. Erm.... http://www.youtube.com/watch?v=FUY9ewD1Jls 'No retun to boom and bust' - Where is the word Tory? Incidentally, well done on finding the Telegraph link showing what the benefit of hindsight are.[/quote]

Dear lovin' H Christ.

Resorting to grammar and spelling attacks when someone challenges your warped views.

Not seen that tactic before.... Oh dear indeed

It looks like even the Irish low corporation tax rate is no guarantee of fair play Starbucks pay €35k in taxes since 2005

It looks like even the Irish low corporation tax rate is no guarantee of fair play Starbucks pay €35k in taxes since 2005

If someone is going to condemn the standard of other peoples' numeracy/maths, then they should make sure that their own posts are perfect or as near as.

It's that simple.

And it's so good to see you responding in an eloquent and intelligent way to, say, Sally's posts about economics and how governments in general behave.

Well done.

In response to your question about why Ireland and Spain, having run budget surpluses in the run up to 2008, ended up in a worse situation than we did:

Ireland suffered the same problem we did: a bursting property bubble leading to collapsing property prices leading to debt defaults leading to a banking crisis. But with Ireland this was much more magnified due to the size of the property crash and the size of the banking system relative to their small economy. Ireland had succeeded in using its low taxes to attract in foreign investment in the years before the crash but this investment was not going into building the infrastructure and productive capacity of the Irish economy, it was going into property because investors saw this as a way to get quick speculative returns. Of course they knew the bubble would bust but as long as they got out close enough to the turning point of prices they could still make a big gain. This is the how speculation distorts the market - in a free market funds for investment get directed to the projects that have the highest returns, that is the 'efficient' use of resources. But over a short time frame the highest returns may be to jump on a property bandwagon, make gains and sell, and that is not a socially efficient use of funds as it doesn't finance anything productive.

When the property market crashed in Ireland, a lot of banks found they were very exposed to losses because of debtors in the real estate sector that had borrowed to finance large property building/development projects that would now be worthless. When banks become exposed to losses they become very worried about their "liquidity" - ie their cash reserves, because all banks have obligations to savers that they have to meet with cash. Usually any short term cash flow problems can be easily resolved because the banks lend to each other when they know they can use their assets as collateral to the loan (the LIBOR rate is the rate at which banks lend to each other). But when they all fear running out of cash they won't lend to each other so they are reliant on hoarding their cash in fear. When banks make loans, it is cash they lend (as businesses/mortgage borrowers need cash in the account to make purchases) so when they are worried about their cash stocks then they won't lend to anyone and potentially productive businesses can't get funds for investment to start up, or expand, or be helped out through a sticky patch where they have cash flow problems themselves. This is the credit crunch.

The above paragraph is no different to what happened to UK banks, but there is a very significant reason why it's magnified in Ireland compared to the UK: Ireland is in the Euro and the UK isn't. When the downturn hit in the UK, and investors started pulling their money out of property and other falling UK assets, they sell those assets and get paid cash in UK pounds. You can only spend UK pounds in the UK, so either those investors had to use the pounds to purchase other UK assets, or they sold their pounds as foreign exchange and someone else ended up spending those pounds on UK assets. Either way, the overall stock of cash in the UK is unchanged. The stock of cash is important when you have a credit crunch situation where there is a big premium on having cash available, whether you are a business or bank with potential cash flow problems.

In Ireland however, when investors started pulling their money out of property and other falling Irish assets, they sold their assets and got Euros. They didn't have to spend those Euros back in Ireland. They could go off and use them to buy German or French assets instead. So that withdrew money from the Irish economy and meant the overall stock of cash going round was less. That is disastrous in a credit crunch situation.

But also, in the UK the Bank of England can print pounds and it did so to provide banks with more cash. This is what quantitative easing is, the Bank of England offered to buy huge quantities of government bonds from banks and pay for them with cash. So this meant even if banks weren't willing to provide cash for each other, they could always convert their stock of bonds into cash from the Bank of England when they had payments due (think about the practicalities of being a bank in terms of cash flow, if you are Shell's bank, and Shell's corporate tax is due at the end of the month, assuming they pay it(!), you might need to carry out a transaction of several million pounds to HMRC of cash. If you don't have that cash then the bank is insolvent.)

In Ireland, there is no central bank, all Euros are controlled by the European Central Bank and that doesn't just print money at the behest of the Irish government to provide liquidity to its banks. Ireland had to beg the Euro institutions for bail out funds to solve its cash flow issues and these came with many strings attached.

Also being in the Euro meant that Ireland missed out on some of the automatic stabilisers that the UK benefited from. When the UK prints money it pushes down the value of the pound (because pounds are more readily available) and also puts upward pressure on inflation. The depreciating exchange rate increases UK exports as it makes our goods cheaper, and also because inflation drives down the real value of wages, UK businesses become more competitive with foreign rivals relatively quickly which helps our exports rise. In a Eurozone country like Ireland though, the exchange rate of the Euro won't just depend on what's going on in Ireland, so in order to get the same effect on making Irish business more competitive they need to effect quite brutal measures to slash wages - which is what happened in Ireland with workers taking huge pay cuts.

As for the Spanish situation - I don't know enough about it to describe in detail however it was also based on a failure of the banking system and they had the same problems for being in the Euro.

The key points about this all are:
- The reason these countries got into crisis was not because of excess government spending leading up to the crash, it was because of a bursting property bubble and failure of the banking system. The UK got into crisis for the same reason.
- The UK was saved from some of the worst effects because we retain our own currency, Ireland and Spain copped it much worse as they are in the Euro.