future of ireland

THE FUTURE OF IRELAND

What Next ???

Background In the six decades since the end of the

second world war, there has been a broad movement around the world toward a model of market-based economics, public investment and global integration.

BackgroundWith that move came enormous

economic progress in industrial countries, including the recovery of war-torn Europe and Japan and, as time went on, in various developing countries.

Source: Newsweek Magazine

Change ? The evidence, in other words, strongly

suggests that a market-based model is still the best way forward, or is it?

Substantial change must be made however in many key areas.

Even before the recession hit, our current model had displayed major shortcomings that markets by their nature, won’t address and that need to be met through public policy.

Solutions ?The broader point here is that the

market-based model must be combined with strong and effective government, nationally and transnationally.

This is to deal with critical challenges that markets won’t adequately address.

Source: Newsweek Robert E. Rubin 2010Former Secretary of the US Treasury (1995-1999)

Solutions ?We collectively must also address the

immediate need to strengthen the economy via good Government, create jobs, and protect people affected by the economic crisis.

Ireland’s Situation In 2009 Ireland was spending €70

million a day!!The National Debt is now almost

€12 billion higher than previous years, as the tax take sinks by 19%

Tax Revenue has fallen by an unprecedented €7.7 billion

Source: Irish Times / RTE

Ireland’s Situation The reason for the €11.9 billion year-on-year

deterioration in the exchequer balance is in the main, though only in part, the €4 billion payment to bail out Anglo-Irish bank.

At the end of 2009 the budget deficit stood at a soaring €24.6 billion – almost €25 billion, compared with €12.7 billion deficit at the end of the previous year.

Source: Irish Times / RTE

Exchequer Balance2007 Tax Revenue:

€47 billion

Public Spending:€48 billion

Deficit:€1.6 billion

2009 Tax Revenue:

€33 billion

Public Spending:€56 billion

Deficit:€24.6 billion

Source: RTE NEWS

European Debt / Population UK - €800 billion Belgium - €309 bn France - €1.3 trillion Germany - €1.6 tn Italy - €1.6 trillion Denmark - €78 bn Austria - €176 bn Greece - €237 bn Netherlands -

€346bn

61.3 million 10.7 million 64.1 million 82.1 million 59.8 million 5.4 million 8.3 million 11.2 million 16.4 million

Source: Reuters

IrelandNational

Debt:€75 billion

€17,045 each (per head)

owed by every man woman and child

Population:4.4 million

Ireland €54 billion set aside for NAMA – not included in

the previous figures and will not appear on the exchequer’s balance.

NAMA – National Asset Management Agency.

It is the set up of a “bad bank” – to manage the big bank’s bad loans…some regard this as a further “bail-out” of the banks if the loans are not repaid.

The United States

Deft handling of economic policies by the Federal Reserve and the Treasury Department under both Bush and the new Obama administration prevented the crisis from degenerating into a 1930s – style meltdown.

It is still the worst financial crisis since the 1930s however.

The United States US Deficit stands at $1.4 trillion for 2009 $825 billion stimulus package has been

introduced by President Obama. The Strategy to stem the downturn in the

economy is: To inject extra funds to stimulate the country in the

hope that this will help the US economy in the longer term.

The Budget deficit will be 10% of national income.

The United StatesThe Strategy in the US is:

Use the money for middle – class assistance.

Infrastructure Development Direct aid to American States. Jobs Programme Green Energy Projects Nuclear Energy Projects.

Global Economy Although unemployment remains intolerably

high, signs of recovery abound, and confidence is returning both to consumers and businesses in the States.

Globally the recovery has been even faster, with China, South Korea, Brazil and others enjoying an amazing rebound in exports.

The World Situation BUT HOLD THE APPLAUSE !!

Even the good news isn’t all good. In an odd way, the recovery may have come too soon – since it’s meant that the crisis never got bad enough to force the kind of lasting solutions the United States, and the world , badly needed.Source: Newsweek Francis Fukuyama

(Bernard L. Schwartz Professor of International Political Economy)

The 1930s During the great depression, when

panicked governments erected trade barriers, devalued currencies, and thereby deepened and prolonged the suffering.

In doing so, they paved the way for Stalin’s collectivisation and Hitler and the Nazi Party.

Source: Newsweek

The Current SituationMost nations have avoided the beggar-

thy-neighbour protectionist policies of the 1930s.

We are not out of the woods yet – far from it!

The Current Situation There has been some serious income-

distribution problems around the world. Income has become more heavily distributed

toward the most affluent. In India and China, although great numbers of

people have risen out of poverty, substantial portions of their populations remain very poor, while a very small group has developed immense wealth.

Source: Newsweek

The Current Situation Other issues the market based model has not

successfully addressed include serious, ongoing global trade and financial imbalances, climate change and poverty.

Ireland must also address the immediate need to strengthen the economy, create jobs and protect people affected by the crisis.

This is Ireland’s position in a global context.

IrelandPublic investments and other policy

measures should aim to deal with areas that are absolutely critical to growth and widespread income participation that markets will not adequately address, such as:

The Future ??? Education Health-Care Hospitals Renewable Energy Nuclear Energy ? Infrastructure

Projects

Fair Labour Markets Basic Research Equipping the Poor

to enter the economic mainstream

And much else.

What does the future hold in store for Ireland ?

What steps can Ireland take to make the future better for us all ?

What direction should Ireland steer a course for ?