Determining the way early on
Read more about: Economy, Fianna Fail 
In the end the latter half of 2008 was worse than expected, certainly so if you were a member of the government that didn’t see bad times coming until July. Today we get a look at the end of year exchequer figures. That single set of numbers are likely to determine so much this year. The government will spend all year – and more besides – trying to address it. With Cowen hinting at an €8 billion deficit and five years of remedial work, the news is high-impact.
There are three separate elections next year; local, European and Lisbon. Three different chances for the public to give government a good kicking for cuts to services and venting spleen over bank bailouts.
Whatever government say, the difference between yes and no last June was trust in the people running the place.The percentage of people who didn’t claim to have sufficient knowledge to vote yes by far outweighed all other concerns and the unwillingness to vote based on trust alone is telling – and may prove more so in 2009.
Those figures set the agenda for the year. In less than four months the deficit went from a projected six billion to god knows where. The cuts have to come, that’s while we find ten billion for banks. Those calculations that government must make place all three elections in jeopardy. The Budget in October now looks like a busted flush, the projected deficit of E4.6 billion on the current side set to be decimated by the January figures.
The thing is we all know it’s coming and are steeling ourselves for a year or more of misery and bad news. The failure on government’s part has not been expectation – the mangement of expectation is now irrelevant to almost every worker now facing the propsect of losing their jobs. Instead people have been waiting for some sort of solid idea, a programme, a body of ideas that might ground this issue and look at resolving it.
Politicians are not going to be able to get ahead of the crisis in real terms, there will always be a next bank, factory or manufacturer on the brink of collapse until the NPRF runs out of cash or the government say stop. Instead they can get ahead of the game at a political level – the level of ideas, impression and eventually policy. It is a little limp wristed but the influence of confidence is not to be discounted in turning things around. They thought they had it with the VC announcement (the only real announcment in a turgid plan for economic recovery, named in a manner Stalin would have approved of) but that was over a month old and communication is now so poor that government seem incapable of transmitting confidence to the people.
The National Debt balooned by E13 billion last year alone, our balance of trade is all over the shop and Google are pulling out of basing in Ireland because of low quality graduates. So here we are, and here we go – if they continue to stay behind the curve and below expectations, they are out on their ear. We have 3 or more elections before 2012 and the place goes to pot. Asking for five years is all well and good but to ask with no purpose or vision is not going to swing.
One sign of the problems is that there is no clear media strategy for dealing with the recession, and for the masters of spin like FF, that is a strange situation. But Cowen alternates between doom and gloom (his weekend mentioning of the possibility of three day weeks was particularly bizarre) and what’s meant to be an uplifting prediction that we’ll be better placed once the crisis is over. Nothing is being done to put a limit on the decline in confidence, and as a result consumption spending is in freefall. Perhaps the speed of decline has caught everyone out and made it foolish to try to sound like they know what is going on. On the practical side, I think we need a Dail sitting as soon as possible to pin down some specifics and get things out of newspaper speculation (e.g. is the National Wage Agreement dead?).
What I find extraordinary about the proposed solution to this crisis is the suggestion of wage cuts. This will mean less tax-take so presumably we are entering a downward cycle of wages and tax-takings.
It has also been said that lower wages will mean more competativeness and therefore greater prosperity. Surely this is a contradiction. And as regards competativeness how do you compete in markets where the glut of products is the cause of the problem in the first place.
I see in last nights news that the Germans are going to pour more money into the system. This will add to inflation when we are talking about higher personal debt and lower wages.
EddieL if wage cuts mean that more people are in work as opposed to on the dole then I think its the correct action.Although nothing can condone the ridiculous decisions this government has taken, a lesser intake on Income Tax revenue would be better than having to pump more into Social Welfare payments.
The country needs as many people working as possible, not just the top brass paying their 2% and 3% levies with the rest of standing in the dole queue. In fact, enforcing wage cuts on the non-elected social partners is in my opinion the number one objective for this government right now.
Malore: “if wage cuts mean that more people are in work as opposed to on the dole then I think its the correct action.” How much pain do think people should suffer for the sake of being employed?
It astonishes me that so many people today fall for the line that just because employers say they cannot afford to pay then they should get what they want with no consideration for others and even then expect you to believe that they are doing you a favour. I hope you will forgive me if I don’t subscribe to this type of charity.
When the price of houses were going through the roof there wasn’t much sign of charity from those in a position to do something about it.
I would suggest that you look around you and you will see that employers have been doing everything in their power to put those who are now on the dole out of work in order to employ the cheapest and most exploitable labour possible.
As with everything in life the time eventually comes when a halt has to be called.
EddieL I completely agree with you, the sheer greed shown by many employers through the “Boom” years and the hypocrisy coming out of them now is pretty darn disgusting.
The bottom line, whether we like it or not, is that the country cannot afford the current national wage put together last year by the unelected Social Partners. However, minimum wage workers/low paid workers should not be touched when Cowen and Co sit down for talks with the Social Partners over the next few weeks.
Am I not trying to argue on behalf of employers or against workers rights (or condone the blatant abuse by certain employers of them in this country). Just saying that people who can afford to take a pay cut should be probably take one for Ireland Inc. From a personal point of view Id rather take a pay cut than be on the dole – not that Im much above the breadline meself.I guess there are a lot of people out there who feel the same way. Not a massive fan of the current system myself or the fact that employers always seem to have us by the balls in boom and bust, but this is the situation we are in.
May I just add that our politicians should be the ones first in line to take the pay cut, followed by our heroic bankers.