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Austerity - More than a method to frighten adults.
So let me get this out and see why people have a problem with the concept.
1. We raise income via Taxes
2. We spend money via services (Public Pay, Social Welfare, Capital Projects etc, Bank Bailouts!!!).
3. 1 - 2 = Either a surplus or deficit.
4. If Surplus then we are effectively spending less money that we are making.
5. If Deficit then we are effectively spending more money that we are making.
If 4 above then we either send that money to the Pension Fund / Invest via NTMA OR use the money for Projects!
If 5 above then we need to fund the deficit via borrowing from Markets/Troika.
Normally loans are made available on the basis we can afford to repay.
Since we are running a very large deficit at the moment we need to do the following.
Increase our Income and/or Decrease our Spending...
This is now being looked on a Austerity...
What the heck is wrong with that because every one seems to speaking of Austerity like it is a dirty word, we are all engaged in Austerity, the problem is that the same people who do not want to increase income (via Taxes) also do not want to decrease spending (via prioritisation of services, wage reductions etc)...
At some point people will stop lending to us becuase no one will believe our ability to repay.
BTW: Restructuring is important but while our Income <= Spending (excluding Bank Bailout) then we are rightly screwed anyway.
Am I being too simplistic here becuase I have a question for the No and Yes brigades... Where are the loans going to come from post 2013?
This message has been edited - 14-may-2012 @ 16:44
Just listen to that Gilmore guy last night and he going on about how if we vote NO then there won't be any money to pay the nurses, gardai, teachers etc.
But not a mention of how there won't be any money to pay politicians.
...I wonder why?
Originally posted by JohnDillon:
.Am I being too simplistic here becuase I have a question for the No and Yes brigades... Where are the loans going to come from post 2013?
What you say is correct. Coalition determined to limp on to 2013 with tax increases and cutting non payroll costs.
In 2014, Croke Park agreement expires and they can slash and burn on payroll. Essentially, approx 80% of the health and education budgets are protected under Croke Park. You can only achieve so much in savings by cutting staff numbers without affecting services.
Bank bailouts aside, we are living beyond our means so can increase taxes (but probably at or close point of diminishing returns) or decrease costs.
I foresee 2014-2015 being the era of strikes, work to rules and walkouts.
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