Wednesday 17 January 2018

Country will survive more or less intact


Predictions come in pairs from two-handed economists, so there must be two scenarios.

The Benign Outcome

The euro weakens, boosting exports. The European Central Bank takes the Road to Damascus, acknowledging that there is a European banking crisis! They hair-cut bond-holders. The Irish Government cuts the budget deficit quickly at the insistence of RTE and the Irish Times.

The Seanad is abolished by referendum in a landslide, with only two hundred and twenty-seven Irish Times columnists voting 'No'.

The gardai pre-emptively detain the royal visit protesters and all goes smoothly, resulting in a tourism boom.

The people of Mayo applaud Shell executives openly in the streets and offer their daughters in marriage.

Metro North gets cancelled.

Bankers voluntarily apologise. Twenty bond traders get crushed to death in a stampede at the first Irish Government bond auction of 2012. Pigs take to the air nationwide.

The Way it Works

With a little bit of luck the country is facing a five-year muddle-through. Bad luck or bad policy could make that eight or 10 years.

There will be more tax increases for sure, accompanied by half-hearted expenditure cuts, endless taskforces and the Seanad gets 'reformed'.

Europe avoids any sovereign defaults through rescheduling of peripheral country sovereign debt and the bond markets agree not to notice. Unfortunately most of the damage is done but a little extra cost is incurred.

There is a period of heavy emigration, poor foreign investment in-flows and increased popularity for head-the-ball political parties. But the country survives more or less intact, there is an economic recovery for a while and economists get to be ignored as the public rediscover their interests in harmless pursuits like hurling and electoral politics.

The next macro-economic disaster is deferred to some date around 2030.

Sunday Independent

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