US:Obama quadrupling of deficit is Crazonomics- a recipe for disaster

In President Obama's first year in office the deficit is expected to reach $1.75 trillion. In President Bush's last year in office, 2008, the deficit reached $459 billion. So Obama is quadrupling the deficit. This is voodoo economics at its best. Oh certainly Obama has bought change to America but it is change for the worse.

In addition he is endeavouring to introduce a healthcare plan, which is financially unsustainable. Meanwhile inflation is set to take off. Taxation must rise to fund this Crazonomics. China has begun to question the size of the deficit and is no longer prepared to sign a blank cheque.
America may have a slight upturn but the long-term prognosis for the US economy is frightening unless the deficit is tackled immediately. Being master of the teleprompter is no substitute for economic expertise.

America has the worst of all worlds now. A big spending-economically illiterate Democratic President and big spending Democrat controlled Congress, which is addicted to pork barrel spending.

Thankfully the Republican Party has begun to learn the lesson that there is no such thing as a free lunch and is now preaching fiscal rectitude. It has begun to go back to basics.
Once Obama passes the 24 month period in office he will be in the run in to the 2012 presidential election. It is safe to argue that if he fails to tackle the deficit within the next 12 months, nothing will be done in 2011 and 2012. Of course foreign lenders may force his hand and refuse to fund the deficit. Then the US economy will bomb.

Should Ireland leave the Euro and devalue as suggested by economist David McWilliams?

Figures published by the Central Statistics Office show that the number of people signing onto the Live Register increased by 16,300 to 293,500 in December 2008. The unemployment rate rose to 8.3% in December from 7.8% in November. Exchequer figures for 2008 show that spending overshot Government income by €12.7 billion during the year. The deficit for 2009 could hit €20 billion.


Economist David McWilliams has suggested that Ireland should leave the Euro and then devalue its currency. He argues that no small country like Ireland has ever solved its problems without currency devaluation. It is incontestable that many Irish firms have been priced out of the UK market by the appreciation of the Euro against Sterling, which has suffered a massive devaluation as the Bank of England reduced interest rates. Similarly the Euro has risen in value against the Dollar.

The Euro is now overvalued against both Sterling and the Dollar. The Euro as a currency should be devalued by a slashing of Euro interest rates over a very short period of time. This is the route forward. The Irish government must administer the harsh medicine required and improve competitiveness.

David McWilliams suggestion that Ireland should leave the Euro is fraught with difficulty. Because the fundamentals of the Irish economy are so weak the Irish pound as a small currency would suffer a massive drop in value. Once it was floated it would go into freefall. This would trigger a massive rise in interest rates to protect the pound. The last state would be worse than the first.

Ireland:Government plans public sector pay cuts-5% reduction likely with further cuts to follow

2008 Exchequer figures released yesterday confirm a 12.7 billion euro deficit in the public finances after the tax take came in 8.1 billion euro less than what was predicted for the year. Last year's tax revenues fell to levels last seen in 2005. At the height of the construction and property boom in 2006, the Government took in €10bn on property-related taxes, almost a quarter of all tax revenues. The government allowed public expenditure to grow by 25% in 2006 and 2007. This rate of public expenditure growth was patently unsustainable. However it helped FF to return to power in the 2007 general election. FG Finance Spokesman Richard Bruton in 2006 and 2007 warned the government of the likely consequences of this policy. These dire consequences have come to pass. Unfortunately the property boom on which this public expenditure splurge was based could not be expected to continue forever.

The crash in Irish building and construction has decimated property taxes. Unemployment is heading for the 300,000 mark further straining government finances. The rise in the value of the euro is increasing pressure on Irish exporters whilst the international recession is further depressing the economy. In 2009 it is likely that Ireland will have a negative growth rate of around -4%. Ireland is now caught between its own internal economic problems and the international recession.

It is anticipated that the deficit could reach 21 billion euro in 2009 without further remedial action. A public sector pay cut is a certainty. 5% is regularly mentioned as a likely figure. It is more likely to be at least 10% in the longer term. Finance Minister Brian Lenihan and Taoiseach Brian Cowen intend to consult with the social partners. Decoded this means a public sector pay cut with the blessing of the unions.

Ireland:Unemployment up 16,900 in November-What are the prospects for 09?

Irish unemployment has risen by 16,900 in November. This is an increase of 106,684 in 12 months . The latest figures represent the highest monthly rise since January 1975. The seasonally adjusted figures consist of an increase of 13,600 males and an increase of 3,300 females.
The unemployment rate now stands at 7.8% .
It is important to remember that the live register also includes part-time, seasonal and casual workers who are entitled to benefit.
Unfortunately there is no relief in sight. With economies such as the US, Germany and UK in recession the prospects for Irish exporters are not good for 2009. It is likely that new house completions will only reach 20,000 next year. Consumer sentiment and confidence is at low ebb. In the short term it is unlikely that a consumer led recovery can take place.
Further depressants include record levels of credit card debt. The collapse in house and share prices has also dented confidence. A relatively strong Euro has also increased pressure on exporters. In addition the credit squeeze is unlikely to ease sufficiently to save many small businesses.
The potential for a government led reflation of the economy is non-existent. Indeed a serious deflationary spiral could easily set in.The 2009 current deficit is likely to come in at around €8 billion. Further government cut backs are necessary to bring the deficit under control. These may further exacerbate the situation.
On a positive note falling oil prices and lower EU interest rates should help.
Nevertheless it is probable that 2009 will be another annus horribilis for unemployment.

Ireland – Tax Revenue shortfall for 2008 to reach €8 billion plus (The 2009 current deficit is likely to come in at around €8 billion)

Figures released show a massive shortfall of close to €7.5 billion in the amount of tax revenue collected by the Government during the first 11 months of the year. Already revenue projections in the October budget are seriously out of line. The October budget forecast a total tax shortfall for 2008 of €6.5 billion. It is now probable that the shortfall for the year could exceed €8 billion. Tax revenue is 16 per cent behind projections made at the start of the year. VAT is €2.1 billion below expectations, capital gains tax is down €1.7 billion and stamp duty is €1 billion below target.

The 2009 Exchequer deficit appears headed for €16.5 billion and the associated General Government Deficit is likely to be 8% instead of the 6.5% projected in the recent Budget. The 2009 current deficit is likely to come in at around €8 billion.
These are horrific figures, which rule out the possibility of a financial injection by the government to reflate the economy. The government has absolutely no leeway. The over expansionary budgets in 2006 and 2007 by the FF/PD government led to an increase in public expenditure of 25% and also fuelled inflation. This was tantamount to pouring petrol on the raging fires of economic growth at a time when it was necessary douse the flames. This spending was supported by revenue from an unsustainable property boom.

The government is now trapped. It lacks the financial wherewithal to boost the economy. Internal revenue sources are shrinking. The property bubble has burst. Unemployment has reached 251,000 and will continue to rise sharply.

The FF/Green government will endeavour to tackle the problem by a combination of further public expenditure cuts and a reduction of public service numbers. It may also target public service pay. In a doomsday situation a 10% pay cut could not be ruled out.

Obama’s reckless comments on deficit –in CBS “60 Minutes” interview

"We shouldn't worry about the deficit next year or even the year after," Obama said in an interview broadcast Sunday on CBS' "60 Minutes." "The most important thing is that we avoid a deepening recession."
Amazingly these comments have merited little discussion so far. To say the least his references to the deficit are reckless. It is now glaringly obvious that he has no real intention of attempting to balance the budget during his tenure as president. Any president with even a rudimentary level of economic knowledge would attempt to wrestle with borrowing and wasteful spending. An expenditure freeze is a sine qua non. Such a policy would engender economic confidence. There is no easy way out of the economic crisis. Harsh measures are necessary. A recession is unavoidable. Some cold turkey is necessary.

If Obama fails to tackle the problem in the first two years of his presidency, he most certainly will not attempt major corrective action in the last two years of office. He will then be on the run in to the next presidential election. Re election will be a major priority. It seems safe to assume that excessive government borrowing is likely to continue over the next four years. Borrowing is deferred taxation. The private sector and taxpayers will carry an increasingly heavy burden.

With a Democrat controlled Congress the portents are not good. It is likely that money will be thrown at most problems. The dollar is likely to decline in value and the US will gradually lose its pre eminence as the worlds major economic super power. Increasingly it is in hock to the rest of the world. China will gradually supplant the US.

FF support crashes in Irish Times /TNS mrbi poll.

• Fianna Fail 27 (-15)
• Fine Gael 34 (+11)
• Labour 14 (-1)
• Sinn Fein 8 (+0)
• Greens 4 (-1)
• Independents 13 (+7)

"The level of dissatisfaction with the Government is now a massive 76 per cent, while 61 per cent of people are dissatisfied with the way Mr Cowen is doing his job.Satisfaction with the Government is now just 18 per cent, a drop of 28 points since the last Irish Times poll in June, while satisfaction with Taoiseach Brian Cowen has fallen to 26 per cent, a drop of 21 points." The poll puts Fine Gael ahead of Fianna Fáil for the first time ever in an Irish Times opinion survey.

Source: Irish Times

Whilst all polls are just a snapshot in time this particularly survey is sure to shock even the most ardent FF and Green Party supporters. Unpopular government decisions on the medical card for over 70s and severe education and agricultural cutbacks have sapped popular support for the government. Unemployment in Ireland has reached a 10 year high of 6.7 percent and has grown by 60 percent over the past year to more than 250,000. The decision to defer the cervical cancer vaccination programme for young girls has further angered voters.

With a deficit projected at 7% more unpopular cutbacks and rises in unemployment are in the offing. Can the government withstand the inevitable outcry, which will ensue? The next general election is not due until 2012. Ireland faces at least two very difficult years on the economic front. Next year it is anticipated that unemployment may reach 350,000. This will further strain government financial resources whilst efforts must continue to bring the deficit down below the 3% level required by the EU.

In any general election situation FF support would quickly rise to 40%. Much of the support lost to FG would probably return. FF supporters have an amazing capacity to rally behind their party.

FG has benefited strongly in this poll. However the party must learn to consolidate this rise in support. Richard Bruton -FG spokesman on finance- has starred in the economic debates and the party has benefited accordingly.

Labour Party support is also well up on its general election showing in 2007.

The poll is a warning to the Green Party that its support has begun to wane. Indeed the Greens may become the new PDs. The PDs acted as FFs mudguard and have now voted themselves out of existence. The Green Party is trapped. If it pulls down the Government the electorate will hammer it in any ensuing election. If it remains in government it must tolerate more unpalatable measures. FG and Labour can now mop up Green Party support.

Whither the Republican Party-Obama victory a pyrrhic victory? Cosmetic politics wins the day

There is no denying the scale of Barrack Obamas victory in terms of Electoral College votes. However his share of the popular vote is 52%. It is hardly a wringing endorsement. McCain/Palin secured 46% in the teeth of an economic tsunami, which struck their campaign in September. In addition McCain /Palin had to fight against efforts to tie them to the unpopular Bush presidency. Sarah Palin was subjected to a vicious campaign by Democrats and their acolytes in the liberal media. Her appearance, her dress sense, her character, and her family were shredded in one of the ugliest witch-hunts ever witnessed in American politics. 70% of media coverage was favourable to Obama. CNN, CBS, ABC, NBC,MSNBC favoured Obama/Biden.

John McCain was painted by Democrats as out of touch. His age and health were called into question. Obama spent 600 million dollars to secure his election-a spending splurge unparalleled in US presidential history. The Obama campaign registered millions of Hispanics and African Americans. It pushed early voting to the limits.

Obama continuously emphasized a middle income tax cut. Each speech was peppered with references to change. All very nebulous, all very soothing. Music to the ears of young voters. And yet he barely broke 50%- driven by a favourable gale of political circumstances. The McCain/Palin performance is amazing in the teeth of such unfavourable circumstances.

The message is clear. The GOP is defeated but unbroken. The internal contradictions in Obama's policy positions will come back to haunt him. His promises of a middle income tax cuts cannot be fulfilled by rational economic means. Of course he can increase the deficit to fund tax cuts. Any such decision will court an economic catastrophe. He will of course increase capital gains and dividend taxes. Businesses face a tax hike. This is a recipe for disaster.
In addition he is beholden to workers in states such as Michigan, Illinois, Pennsylvania et al. He has promised to renegotiate NAFTA. He has promised increased protectionism. He has neatly conveyed the message to workers in old declining industries that he is their saviour. Such workers will soon become disillusioned as Obama’s promises fail to deliver.

The GOP must fiercely oppose increased spending plans of Obama and the Socialist/Liberal Democrat controlled Congress. Republicans must go back to basics and defend taxpayers. They must virulently oppose pork barrel projects. Bailouts must cease. They must learn from the organizational efforts of Obama. Efforts must be made to win back Hispanic voters.
By 2010 Democrats will have controlled Congress for four years. The electorate will vent its spleen on the big spenders.
By 2012 it is likely that the Democrats will have controlled Congress for six years whilst a Democrat will have held the presidency for four years. Obama and his friends in Congress will have no place to hide.
The GOP has excellent presidential material coming through. Sarah Palin, Mitt Romney, Mike Huckabee, Bobby Jindal amongst others are likely to seek a presidential nomination.

Ireland-Exchequer deficit is €5.65bn for first six months as recession looms.

The Exchequer returns show a deficit of almost €5.65bn for the first half of the year (2.75% of GDP). Tax Receipts at €19.127 billion are €1.45bn lower than anticipated for the first six months of the year. The lower tax receipts are due mainly to the poor performance of VAT and capital gains tax. The tax shortfall for the full year is expected to come in at €3bn. The collapse in the house-building sector has impacted strongly on tax receipts. Only 40,000-45,000 new houses will be built this year. The folly of over reliance on this sector is plain for all to see.

Total current receipts in the first half of 2008 were €19.525 billion compared to receipts of €21.124 billion for the same period in 2007.
Non-tax revenue in the first six months of 2008 was €398 million. This compares to €310 million for the same period last year.

Brian Cowen’s Government must administer some harsh medicine. The country faces swingeing public expenditure cuts and huge rises in stealth taxes as Finance Minister Brian Lenihan attempts to grapple with the problem. Increased exchequer borrowing will also help plug the gap. In addition interest rates will remain high as the European Central Bank grapples with inflation. Increasing interest rates at this time is economic lunacy and will serve to strengthen the Euro further. This will reduce exports from the Euro zone. Irish exports have begun to lag. Much of the Euro inflation has resulted from higher oil prices. So it is arguable that interest rates should not be increased.
Tightening of lending policies by the banks will hinder investment.

Pay rises below the rate of inflation will take further steam out of the economy. There is a danger of stagflation if public expenditure cuts are too severe.
In addition unemployment has risen rapidly in recent months. It broke the 200,000 barrier last month and currently stands at c207,000. Where is the purchasing power to come from if the consumer lacks sufficient disposable income?

In recent tears public expenditure has galloped out of control. It rose by 13% in 2007 in the run in to the General Election and by 50% over four years. Huge tax receipts from the then booming building sector funded much of this. The FF/PD Government erred in not restraining public expenditure. Excessive public expenditure fuelled inflation in an economy that was already growing strongly.
It threw petrol on the fires of economic growth. Restraints in public expenditure in good times would have provided the Government with some leeway.

There has been a tendency to dump on economists who warned that this scenario would unfold. David McWilliams, Alan Aherne and George Lee in particular have come in for strong criticism. Richard Bruton FG Spokesman on Finance has long criticised Government policy. Critics were accused of talking down the economy. Of course this is utter nonsense
Interestingly George Lee was referred to today on an RTE programme as George Gloom. Attack the messenger when you do not like the message. What utter nonsense. It is time for realism.
Some debate has cantered on the dreaded “R” word. The country is either in recession or about to enter a recession. It can weather the storm.

Latest ESRI report paints gloomy picture on the economy:Ireland is now in recession

According to The Economic and Social Research Institute (ESRI) in its latest Quarterly Economic Commentary the economy will experience a recession this year for the first time since 1983, and a return to net emigration in 2009. Ireland of the Celtic Tiger is no more.

It expects that the economy will contract in size by 0.4% this year. The ESRI calculates that the volume of domestic spending this year will fall by 2.6 %. Investment spending is expected to fall by 14.9%. Real consumer spending growth in 2008 is expected to reach just 1%.
The ESRI predicts an economic growth of 1.9% for 2009.
It expects that net emigration will reach 20,000 in 2009.

The unemployment rate is forecast to rise from 4.5% in 2007 to 6% this year and 7.1% in 2009. The Government had a budget surplus of €5.2 billion in 2006. It will have a budget deficit of €7.4 billion in 2009 according to the ESRI. This represents a deterioration of more than €12.5 billion in the space of three years.
The ESRI predicts an inflation rate of 4.5 % for 2008.

Quite frankly many of the problems were foreseeable three years ago. In the run in to the 2007 General Election the FF/PD Government ramped up public expenditure. It rose by 13% alone in 2007. It undoubtedly helped FF win the General Election. However the flood of taxes into the Government coffers-which supported this splurge- stemmed mainly from an unsustainable property boom. Now the bubble has burst with house construction down from 90,000 three years ago to 40,000-45,000 this year.

The economy was growing strongly in 2005, 2006 and 2007. It did not need a huge injection of public expenditure, which just fuelled inflation. Richard Bruton FG spokesman on Finance railed strongly against this approach as did some economists such Dr. Alan Ahearne , David McWilliams and George Lee. Dr Alan Ahearne warned about the dangers of a crash in house prices. More recently Jim Power has been critical.
Unfortunately many economists were swept along on the tide of boom and bloom.
Critics were painted as prophets of doom who were talking down the economy.

A more prudent approach to Government spending from 2005-2007 would have allowed the Government some leeway. Now the cupboard is bare. There are precedents for the inadvisability of the budgetary strategy adopted by FF/PDs in 2006 and 2007.
The boom bust approach was adopted by FF in 1977-81. Its 1977 Manifesto was a winner with the electorate promising no rates and no car tax. FF inherited an economy, which had come out of recession and was growing solidly. The Lynch and Haughey Governments pump primed public expenditure –much of it funded by borrowing. By 1981-82 the economy was in serious trouble. The hardship of the 80s had its genesis in this irresponsible Manifesto.

In the run in to the 2002 General Election the FF/PD Government let public expenditure rip. Once more Charlie McCreevy slammed on the brakes in the wake of the 2002 General Election.
The FF/PD/Green Government is now facing a double whammy. Internally tax revenue is way below expectations, the housing sector is in free fall, inflation is close to 5%, and unemployment has risen by 48,000 in the last twelve months. Externally rising fuel prices and higher interest rates have impinged strongly on the Irish economy.

The ESRI expects the general government balance to show a deficit of 2.8 % of gross domestic product this year after a 0.3 percent surplus in 2007 and worsen to a 3.9 % deficit in 2009.
"On the face of it, a breach of the 3 % ... (EU Stability and Growth Pact) guideline in a single year does not signal the death knell of fiscal prudence and given our very low debt levels could well be afforded," it said in the survey.

This advice from the ESRI should be binned immediately. The country cannot buy its way out of the mess. Unfortunately hard decisions on public expenditure are necessary. The advice from the ESRI would return Ireland to the failed policies of the late 70s and 80s.
It is likely that the real tax burden will rise. This will be supplemented by increases in stealth taxes such as local authority charges, and by large public expenditure cuts. All in all not a pretty picture.

Ireland- Live Register breaks 200,000 for first time this decade-Unemployment rate now 5.4%

The number of people signing on the dole for unemployment rose by 47,746 in the 12 months to the end of May. This is the highest level since January 1999.

New CSO figures just issued show that when adjusted for seasonal factors, the register rose to 207,300 in May. That's up 7,600 on figures for April and over 47,000 higher than May 2007. These figures indicate a massive 30% increase in one year as Ireland dips into recession. Job losses are now spread across the whole economy, not just the housing sector.
Ireland’s unemployment rate now stands at 5.4% - a half percentage point higher than at the start of the year.

The May Exchequer Return figures show that Ireland is headed for a €3 billion shortfall in taxes - on top of an already planned-for €5 billion Government deficit this year.
There has been a €10 billion reversal in our public finances. Ireland had a €2 billion surplus in 2006. Over the last two years the Government has increased its day-to-day spending by 65%. It must attempt to curb the increase in public expenditure at a time when unemployment has breached the psychologically important 200,000 barrier. It now has the worst of all worlds. Planned cuts will be painful and will trigger a backlash.


The massive increase in public expenditure contributed to the feel good factor, which helped to propel FF to election success in 2007. It is now time for retrenchment.
The 2007 General Election was the election to lose. FG and Labour politicians will thank their lucky stars.

Ireland: House construction nose-dives

In 2006 approx 93,000 new houses were built. In 2007 this dropped to 78,000. The prognosis for 2008 is bleak with forecasts generally in the range of 40,000 to 45,000 house completions. The estimate for 2009 is even bleaker with suggestions that figures could drop to 37,000. In 2007, 20,000 construction workers were laid off
Clearly the bubble has burst.

There are a number of reasons for the slow down:

(1) The 2% rise in EU interest rates is a contributory factor.

(2) Uncertainty on the Stamp Duty issue contributed to the instability.

(3) Excessive house price inflation has priced houses out of the reach of many in the middle class.

(4) The Government tax takes is too high.

(5) The 5% general inflation rate has weakened purchasing power.

(6) Up to 200,000 houses remain unsold.

A major reduction in EU interest rates will not be sufficient to return the house building sector to health. Further reductions in VAT and Stamp Duty are required. The 200,000 overhang in unsold houses must be substantially cleared. A further substantial reduction in house prices is required. General inflation must fall substantially.

The implications for Government finances are quite severe. There was an Exchequer surplus of €2.3 billion in 2006. A deficit of €4.9 billion is projected for this year.
Tax receipts for January and February are 684 million lower than for the corresponding period in 2007 . VAT receipts for January and February are 7.3% lower than anticipated whilst Stamp Duty receipts are down 44% on the first two months of 2007. The unemployment hate has risen to 5.2%. A rocky road lies ahead for the economy.

Ireland-Exchequer Deficit Blues

Ireland will have a deficit of €1.62 billion this year, compared with an Oct. 2 forecast of €1 billion, according to the Department of Finance. This contrasts with a budget surplus of €4 billion just a year ago.

The Government must bear much of the responsibility for the deterioration in the public finances. In 2007 there has been a 13% growth in the rate of public expenditure as FF and the PDs wooed the electorate. This paid political dividends as the FF/PD government duly returned to power with the support of the Greens and Independents. Already many of the FF election promises have been binned. Prior to the 2002 General Election the FF/PD government allowed public expenditure to escalate out of control. In the immediate aftermath of the 2002 General Election FF Finance Minister Charlie McCreevy set about reigning in public expenditure and introduced a raft of stealth taxes. He failed to index income tax allowances thereby pushing large numbers of PAYE tax payers onto the higher tax rate. Prior to the 2002 Election FF and PD Ministers denied that there would be public expenditure cuts.

A similar scenario to 2002 has now unfolded in 2007. The Government will once more cut public expenditure and introduce stealth taxes. Over the next 2/3 years it will build up a a financial war chest. As the anticipated 2012 General Election approaches public expenditure will once more mushroom. Brian Cowen and Dermot Ahern -during the 2007 election campaign -strongly berated Richard Bruton(FG) Finance Spokesman when Bruton drew attention to both waste and rocketing government expenditure. He can now claim retrospective vindication. Many in the media have spoken of Cowen in messianic terms.

In less than two years the ECB has raised Euro interest rates by 2%. This has knocked some of the fizz out of the housing market. Stamp Duty receipts have slumped and lay offs in the building industry are increasing rapidly. This crisis has been exacerbated by the failure of the Government to reform stamp duty. House prices are falling and negative equity looms on the horizon. Mortgage debt in Ireland is now €136 billion. There is also an astronomical level of credit card debt.

New house starts may fall to c 55,000 in 2008. The huge slump in property tax receipts looks set to continue in 2008. In addition a tightening up of bank/building society lending policies will further restrict the amount of credit available to house buyers. For too long the government has been over reliant on taxes from the property market to boost public expenditure. One eighth of the workforce is employed in construction. 20% of private sector workforce depends on construction.

Rising energy costs will reduce economic growth.This has implications for unemployment which is already rising. Rising unemployment will further depress tax receipts and damage consumer confidence.

For FG and Labour this was the election to lose.

Ireland-Uncertain economic outlook

Since the General Election there has been a growing realisation that the economic picture -as painted by the Government during the election campaign- is none too rosy.
In the course of the 2002 General Election campaign Charlie McCreevy denied claims from the opposition that cutbacks were inevitable. No sooner was the election over than massive cut backs and stealth taxes were introduced.
Roll on 2007 and we have a carbon copy of 2002. There is likely to be a €1bn shortfall in property taxes for the full year. There are predictions of a €1.5bn deficit for the central Government Exchequer this year. Election promises have been quietly shelved and cutbacks introduced. The Government has decided to slash up to €12 million worth of funding for rural roads as part of its programme of post-election cutbacks. The HSE is introducing cutbacks in an already underfunded Health Service. Patient care will suffer.
More cutbacks and stealth taxes are inevitable.
In 2002 the introduction of massive cutbacks and stealth taxes allowed the Government to accumulate sufficient financial resources to loosen the purse strings for a two year period prior to the 2007 General Election.
We can expect the same approach from the FF-PD-Green Coalition. Savage stealth taxes and cutbacks introduced in 2007 will allow the Government to accumulate sufficient financial wherewithal to produce a feel good factor for the two years prior to the 2012 General Election. The electorate has short memories.

The Irish economy is floating on a sea of credit. Rises in interest rates are hitting disposable income.
There was a significantly higher deficit of €3,271m on the current account of the Balance of Payments in the first quarter of 2007 compared to one of €2,325m for the same period in 2006.
The economy has been over reliant on building and construction.
Manufacturing industry is gravitating towards low cost economies. Much nonsense is spoken about Ireland's supposed advantages such as the English language and education system.
In India there has been a huge output of skilled graduates who are particularly attractive to Multinational Companies. The country with the largest number of English language speakers in the world is India. There is much waffle in Ireland about upskilling. There is an assumption that there is no upskilling in places such as India Hong King and Singapore.

When Government Ministers berated the opposition- in the election debates -they failed to address the issues that really matter.
The economic road ahead appears quite rocky. Brian Cowen will probably introduce a harsh budget in 2007.