Economists turning party-pooper again on 'historic' deal
Economists have a long-standing reputation as pessimists and party-poopers, dating back to the days of Malthus and the dismal science.
For every "give-away Budget", economists are there to point out that it's someone else's money being given away -- for every free lunch, someone hasn't been paid.
And since the Government came back from Europe talking about historic debt deals -- Eamon Gilmore stated in the warm afterglow that this "massive breakthrough" would "allow the country to recover much faster" -- economists have been party-pooping again.
John McHale, of NUIG and the Fiscal Council, has warned that we should not think that all or even a significant part of the €60bn+ pumped into banks will be written off and that instead we should limit our expectations to things like promissory notes, a much smaller potential windfall.
I'd like to party-poop in a different way. In particular, I'd like to take on the point made by An Tanaiste, that the deal will allow Ireland to recover much faster. It's hard to see how.
The millstone around the Irish economy's neck is not banking debt -- it is a combination of the government deficit and high levels of indebtedness among private households.
We can't expect any of the next five Budgets to be any easier just because there's been a deal on banking debt. In relation to debt, Ireland's principal problem is that its Government spends €67bn but only takes in €51bn in revenues.
Even leaving aside capital spending -- which should increase future growth and thus pay for itself -- there remains €10bn of a gap to close. No heroics by Government in Europe can change this maths.