Notes on the Front

Welcome to the New Year, same as the old year – if commentary is anything to go by. And to get the year going Colm McCarthy has produced this gem:

‘The best stimulus package is resolute commitment to the budgetary targets set out in the four-year plan.’

To buy into this nonsense one has to plunge head first down a memory hole.

1) The €14 billion austerity programme over the last two years did anything but provide stimulus to the economy (but it did increase deficits, debts, unemployment and emigration, and borrowing costs to the point that we were kicked out of the international markets). It worked so well, in fact, we would have to be fools not to go for another €14 billion austerity package.

2) The Government has already admitted that the first tranche of the four-year austerity plan – the budget this year – will knock off between 1.5 and 2 percent off GDP growth. Extrapolate forward, and that means between 3.7 and 5 percent knocked off growth by 2014. Not even the Tories would call this ‘the best stimulus package.’

3) The ESRI has modelled the impact of spending cuts. Based on cutting public sector employment, public sector wages and capital spending they found that for every spending cut equivalent to 1 percent of GDP:

• GNP falls by 1 percent (a straight one-for-one fall)
• Consumer spending falls by 1 percent (that will do wonders for the liquidation industry)
• Employment falls by 15,500 jobs – resulting in higher unemployment and even higher emigration

Wow. What a stimulus. No doubt we will be celebrating the upcoming announcement that our weekly two-litre ration of beer is being increased to one litre.

Big Brother would have been impressed.