Thursday, Sep 23, 2010
Double Dip Anyone?
Daily Telegraph: Irish economy suffers shock contraction, fuels fears of a double-dip recession
Ireland's struggling economy suffered a fresh blow after growth contracted in the second quarter, heigthening the risk that the indebted nation could suffer a double-dip recession.
Posted by need-a-crash @ 02:21 PM (1758 views) Add Comment
25 Comments
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1. mark wadsworth said...
Yup, and US house prices have continued their five year long merry downward slide, despite massive "QE" (aka paper shuffling) and despite Freddie & Fannie being subsidised to n-th degree (they account for ninety per cent of new mortgage lending or something insane) and despite new construction in USA being, pro rata, no higher than in the NIMBY-infested UK.
2. mark said...
MW
what do you think, next stage of the copy of the great depression?
3. mark wadsworth said...
Mark, somewhere between the Great Depression and Japan since 1990.
4. mark said...
Which is better Great Dep or Japan, I would prefer to see the great dep, crash burn start over.
5. techieman said...
i was going to post but i dont have "mark" in my username... so i will just sulk instead :). Actually not really much to add to MWs comments.
The only question i would have would be to ask flash if he were around what the probability was of a UK double dip now. I think like mark i always thought it was quite a high probability - although we havent had one here yet, but i remember the flash starting at 20% and then going up to i think 40%.
6. mark wadsworth said...
Mark, the GD lasted about twenty years, from mid 1920s to mid 1940s. Crashing and burning is the last thing on politicians' minds.
7. estrader said...
Mark W,
World War 1 was renamed only after we had World War 2. Historians may eventually be calling this one THE Great Depression and the other, smaller one, The FIRST Great Depression.
8. uncle tom said...
MW,
The Great Depression (or First Great Depression, if you prefer..) kicked off in October 1929 (Black Tuesday), and was effectively ended by the attack on Pearl Harbor in Dec 1941 (the sudden need for troops and munitions created huge employment) - so was more like twelve years than twenty.
As for this one, well these Irish figures are a very bitter pill for the Brussels optimists. The current logic behind the survival plan for the eurozone relies heavily on the premise that economic growth in the PIIGS will enable them to demolish their budget deficits in an orderly fashion.
Falling GDP means falling tax revenues, and as most taxation is drawn from the cream of a nation's economy, economic contraction has a severe and disproportionate effect on revenues.
How long will it be before people wake up to the reality that these nations cannot recover while their currency is overvalued?
9. mark said...
Funny how smugdog has vanished now all this bad news is appearing..
10. mark wadsworth said...
UT, the Americans put the date as xxx 1929, big deal. And they put the start of the "recovery" at 1941 as well, which was just Keynesian spending.
There had been a traditional 18-year property price crash in the USA (largely airbrushed out of history by the Home-Owner-Ists)-cum banking crises-cum- bond crisis a few years earlier (1926?), and the whole of Europe was in a mess after The Great War (General Strike etc). It's Europe and the UK I'm interested in. Yer average Brit didn't see things picking up until they got rid of rationing in 1950 (or whenever it was).
11. mark wadsworth said...
UT: "Falling GDP means falling tax revenues, and as most taxation is drawn from the cream of a nation's economy, economic contraction has a severe and disproportionate effect on revenues."
I'm surprised you fall for this Nulab claptrap. Tax revenues have fallen approx in line with GDP contraction, five per cent or something. The whole was particularly big with banking, but banking was only ten per cent of total tax revenues (a quarter of corp tax revenues = i.e. £10 billion out of £40 billion but absolutely ZERO PER CENT of VAT revenues of £80 billion).
The main reason for the deficits is GOVT SPENDING OUT OF CONTROL and not fall in tax revenues or the extra £5 or £10 billion we need to spend on unemployment benefit.
12. uncle tom said...
"I'm surprised you fall for this Nulab claptrap"
Check the numbers Mark - yes, spending under Labour continued to climb steadily, despite the recession; but the sudden and dramatic budget deficit was largely down to an implosion in tax receipts, well in excess of the amount you would expect; were the collection of tax revenues proportionate to GDP.
13. mark wadsworth said...
UT, according to HM Treasury's Public Sector Finances Databank (a href=http://www.hm-treasury.gov.uk/d/public_finances_databank.xls>EXCEL), total tax receipts were:
2007-08 £516.0 billion
2008-09 £508.0 billion
2009-10 £479.7 billion
That's a reduction of seven per cent, a tad more than the fall in GDP but as we were unnecessarily reliant on banking sector and Stamp Duty Land Tax, that is hardly surprising - the fall in banking sector corporation tax revenues and SDLT revenues accounts for about half the overall fall.
14. mark wadsworth said...
To wit, I don't just say these things. I check the numbers FIRST and then I say things.
15. mark wadsworth said...
And that seven per cent fall in tax revenues can be compared to the six per cent fall in GDP since the start of the recession according to The Guardian.
16. uncle tom said...
Mark,
When I get a mo' I'll go through this one again - previously I took the published data for expenditure, took into account the contraction in GDP and the pre-crunch deficit, and came up with a predictive deficit that was far smaller than the one we ended up with..
Either I referenced some duff data, or there was some creative accounting going on in the Treasury..
17. mark wadsworth said...
UT, I'd take the HMT figures at face value, proving those to be right or wrong is nigh impossible. But politicians appear to have a magic insight that completely contradicts their own published data. There has been a bit of a spending splurge since 2008.
18. crash bandicoot said...
I've heard that if we make too large cuts in spending we'll have a double dip recession. However if we carry on spending money that we don't have we'll have .... No I can't work it out. Is it a happy ending? Is it related to self-cert Japanese gold easing?
19. mark said...
The euro is stopping ireland getting out of the turd it is in..
i say now is the time to scrap the euro, the only people who want it is the mafia
20. tom101 said...
There are benefits of a single currency. You just can't trust the individuals in power to govern without corruption. There is simply still no trust within Europe due to old generational mentalities.
Accountability has to be brought into politics (and the workplace for that matter). If you do a bad job or fiddle the system you should be sacked/jailed.
21. mark said...
Tom101 on a commercial level what benefits are there? only cheaper accounting and banking, most companies benefit more from movements in currency especially supermarkets hence why they are looking further afield for our food.. Potatoes from Egypt, yet europe is perfect for growing them, they prefer to grow them in desert without a good water supply, damage the local environment, pollute the underground water supply, etc why? because there is more profit even with shipping from there to the UK, bit like independence day with the aliens who wanted to rape our world..
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