Sunday, 28 November 2010
The story keeps shifting
Slí Eile: 28 November we are told (1) 'Without this external support, the State would not be able to raise the funds required to pay for key public services for our citizens and to provide a functioning banking system to support economic activity' and (2) 'The Council has today extended the time frame by 1 year to 2015'. Last Wednesday we were told that there was no alternative to 2014 (it had been 2013). The goal posts keep changing as deflationary policy impacts negatively on domestic growth. And 10 days ago we were told that we were fully funded up to mid-2011. What story next? Nobody really believed 2013 (and then 2014). It may be 2020 before the public deficit is down to 3% of GDP and possibly longer if the current deflationary strategy of flogging the half-dead horse is continued.
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3 comments:
and Paul Krugman is not impressed
http://krugman.blogs.nytimes.com/2010/11/28/the-irish-non-bailout/?src=twt&twt=NytimesKrugman#preview
wonder what the markets will think tomorrow morning? Pray hard.
Not sure where to post this, but wondering if Paula, or any others here are aware of this paper:
http://mpra.ub.uni-muenchen.de/15892/1/MPRA_paper_15892.pdf
It's concerned with a comparison of economic forecasting models described and used by those (few) who forecast the 'bust' & those who didn't. An 'Accounting, flow-of-funds' model versus the establishment 'equilibrium' model. The latter, which failed dismally, appears to be in universal use by those organisations which have virtually monopoly in policy making circles. (OECD, IMF, EC etc)
To my, admittedly untrained, eyes it looks like it draws some very interesting conclusions. Ones which might better inform not just how we got here, but how we might yet get some sanity into a proper resolution, stop things getting worse & prevent a recurrence in the future.
I believe it also adds weight to the idea that the huge debt & debt service burden will further destroy Ireland's 'real' economy growth prospects. (And that of other country's facing similar circumstances.)
Thanks for that reference, Mike.
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