Capiche

This blog is like a broken record at this stage and that is why I’m finishing it up with  a couple of interesting clips.

This country, with the right leadership can get back on track. That’s it, finito, capiche!

Budget

The Financial Times editorial on Ireland’s budget is worth a look here. It totally ignores the banking crisis though. They sum up our problem quite succinctly,

“As the recession bit in 2008, the price of goods was 27 per cent higher in Ireland than the average for the European Union, and gross wages were 40 per cent more generous. Ireland went through the equivalent of a 20 per cent exchange rate appreciation.

The scale of the bust has matched the pomp of the boom. Output is 7.3 per cent lower than it was a year ago. The inflation rate has fallen as low as minus three per cent. The fiscal deficit has exploded to 12 per cent of output.”

If the budget holds, it is step 1 on the long road to reality and recovery. A small reason to be optimistic, maybe.

The B word

Finally after more than a year of near total inaction by the government, the first step in a long drawn out process of cuts in public expenditure will be taking place. The appalling legacy of the government that got us here is well and explained by economist Ronan Lyons, that and what the budget needs to do.

Five things to remember when judging Budget 2010 – Ronan Lyons

Eddie Hobbs also lays out a few pointers for the gormless politicians. He talks of the need to restructure the debt of those young public servants who bought houses at the peak of the boom. Surely a sensible move, but one that should apply in the private sector where the real pain is being felt.

Ten things Brian must get right – Eddie Hobbs

The scandal of this budget is that public sector pensions will be untouched, this is storing up a future fiscal problem that is just as reckless as the government’s past conduct. It’s also worth remembering that the taxpayers are now working for the banks.

Cowen denies Anglo bailout – The Irish Times

And that the world trade situation requires taking on China to avert disaster.

Why China’s exchange rate policy concerns us – FT Economist’s Forum

This crisis, in Ireland and abroad, is nowhere near over, but we can see the way out. It is within our grasp…if only the politicians would get out of the way. Ireland is in much deeper trouble and if anything, we should be cutting deeper now, especially if we want to avoid being dragged down by Greece.

Who blinks first? Ireland, Greece, the ECB, and the bank guarantee

Once this budget is passed, it is absolutely essential for recovery that a general election is held in the spring.

Just get on with it

Budget day finally beckons after spending most of the year letting spending and borrowing get out of control and after introducing zero public sector reform.

Case for average public pay cut of 5 to 7% is compelling – The Irish Times

All fudge, no bottle – Eddie Hobbs blog

I predict that, as a result of the inaction of the government and the lateness of taking any real action, that tomorrow’s budget will mean Ireland’s economy will not reach bottom in 2010 and that the depression is going to be prolonged as a direct result of our useless government.

Tamiflu

“Review published in British Medical Journal accuses flu drug manufacturer Roche of withholding evidence from trials“

Doctors query ability of Tamiflu to stop severe illness – Guardian

Sounds like a good way to get rich, sell a drug whose effects have not been scientifically verified to governments after a massive media scaremongering. Reminds me of how the Iraq war was sold!

Hitting back

Make no mistake, China has started a trade war by devaluing its currency to such a huge extent, it is now time for the US to fight back, and put an end to the trade imbalances that are causing massive damage to the US economy. People think China is all powerful, well not yet it isn’t. The US is still much more powerful.

Tarriffs can persuade Beijing to free its currency – FT

“Americans have been patient – too patient – in accepting the loss of several million US manufacturing jobs because of China’s determined pursuit of mindless mercantilist policies. The absurdity of the current situation is that China’s currency protectionism has more of an impact on American manufacturing employment than US fiscal policy.

The US can help China make the necessary adjustments toward a reduction in imbalances by adopting a uniform tariff of 10 per cent on all Chinese imports, based on their values when they enter the US. Six months after the establishment of this tariff, the rate would increase by one percentage point a month until the Chinese trade surplus with the US declines to $5bn a month.

The precedent is clear. In August 1971 the US adopted a 10 per cent tariff on dutiable imports to induce Japan and several European countries to allow their currencies to float. The measure quickly accomplished its goal – the European countries stopped pegging their currencies immediately and the Japanese allowed the yen to float a week later. The tariff was eliminated after a few months.”

Time for action Mr Obama.

Religion as science

Christopher Booker in yesterday’s Sunday Telegraph here.

Update: The cost of the new religion

The city

Will Hutton has an excellent article in The Observer on finance and banks in the UK and the need to shrink the size of said industry in relation to the UK economy if dire risks are to be avoided.

Cutting the City down to size

“The City of London is now too big and too risky for a country our size. It is not just that bailing it out has cost £850bn, as the National Audit Office reported, and that the recession it imposed has led to the biggest ever increase in peacetime public borrowing. For years it has crowded out exporters and manufacturers…

The starting point is that Britain can no longer bet its future on an ever-growing City of London. Andrew Haldane, executive director of the Bank of England, presents a devastating analysis of the risks Britain now runs with its huge banking sector – and the danger of being caught in what he calls a “doom loop”…

What worries – terrifies – Haldane is that the bail-out has been so successful that bankers see no reason not to redouble their efforts, aided by taxpayer guarantees and safe in the knowledge that if things go wrong they will be bailed out again. It is a feedback loop, working in a perverse way.

What spells economic doom is that when, as is certain, another financial panic erupts, this next bigger crisis will swamp the state and the economy; hence his phrase, the doom loop. Britain would suffer a Weimar-style hyperinflation or slump.”

If this mess is not sorted out soon…