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April 14, 2009



Why don't we get coherent and bold initiatives from the constitutional left? Perhaps they are simply afraid of taking power at this stage. Perhaps they are right - even if the global economy ever recovers from financialisation and debt-based 'growth', there is peak oil and climate chaos looming in the wings, with no evidence the rulers and all but a small minority of the ruled have any taste for a rapid de-carbonisation of the material economy.

Labour, at least, is going have to grapple with the problem sooner rather than later. My suspicion is that FF are going to cement the NAMA in place and get the best deal possible for their banking and property developer constituency and then call an election (possibly after having 'won' a second Lisbon Treaty vote) leaving FG and Labour flounder around in their legacy. So Labour is trimming policy to post-election coalition, as always, and the trades union leadership seem unwilling to step outside a shrinking public sector reservation. Why no national strike yet? What are they getting out of 'partnership talks'?

I'm very interested to read what you have to say about NAMA. As far as I can see the fundamental problem is: a) We can't pull the plug on the banksters and still borrow to fund reflationary policies. b) Unless we pull the plug on the banksters there will be no money to fund reflationary policies.

I admire your efforts to propose workable Keynesian solutions, but I suspect we've gone beyond that stage in the current crisis in this country at least.


In Macroeconomic terms, we are no longer living in Ireland. We are living in Cuba where numbers are fudged, forecasts are semi-transparent and the state knows better than the workers as to what we deserve to keep in terms of the fruits of our labour

And all of this on a marginal tax rate of 41%! This gets interesting, though.

If we use Comrade Economist Gurdgiev's benchmark of a 41% top tax rate as "Cuba", and the US at 25% (at the beginning of the Irish tax bracket) as the Great White Hope of Capitalism, then where does that leave the UK at 40%...? As Venezuela, perhaps?

(That dictator Gordon Brown may need to be concerned about Libertas-linked Russian economists calling for his assassination...)


Michael, you might remember my call that we are no different, just early to the table. Well, latest assessment of Germany here:

Michael Taft

bogdodo - I'm afraid the trap is worse than you put it. We can't afford to pull the plug full stop. Even without the guarantee no state will let depositers go down the tube - and not just for political reasons; the economic consequences would be just too profound (hence, the phrase, 'too big too fail). And we can't afford not to have a reflationary package, unless we want to have a hollowed-out economy and society. I'm afraid this thing is getting worse by the day - a slow-moving train and we're chained to the tracks (and the on-lookers are actually waving the train on!). I've tried to address the NAMA problem in today's post but in truth everything is problematic, is risk. No getting away from that. No wonder so much of the Left and the trade union movement sticks to the safe ground (safe, that is, until they get into office).

EWI - at least if we lived in Cuba we'd have some good tunes, some sunshine and damned fine rum (but, then, there's that hurricane thing)

Liam - thanks for the link. The IMF is now saying that deterioration is slowing down (not ending, mind you) but other econmists have warned of a 'sucker's rally' whereby we experience a number of false dawns (apparently Wall Street experienced five upswings between 1930-1933, none of them to any effect). What makes this crisis so profound is that not only do we have a crisis in demand, but a financial crisis as well. A real perfect storm.

Germany is particularly vulnerable, relying so heavily on export markets. Japan, too, especially as they have a strong demographic (elderly) that don't spend and won't spend regardless of Government policy; still the Japanese Government is pumping in over a trillion yen.

I suspect a lot will hinge on the US. If they get going, China sells more goods and then starts buying German capital goods and Japanese consumer items - and so on. In the meantime, the rest of us will have to play to the few strengths we have (Ireland still has a large domestic sector that could use some stimulating), and hope the 'green shoots' won't rot in the fields.

Of course, it would really help if the ECB/EU took the bit between the teeth and started pumping. But with that ol' whacky inflation-hawk Trichet in charge, I doubt that will happen this side of the abyss. And on the other side it's too late.


Michael, You are so right in your last statement. If the Irish left can't convince people to jump aboard at some point in the next few years then I can't ever imagine it ever will. Great article.

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