A friend of mine, who happens to be a County Councillor, said to be tonight "where the f**k are we headed? What are they going to come up with?.. the Country is f**ked, and none of 'em seem to have a clue!.." How right he was. Mind you, from the reading of the Sunday papers, it seems that Brian Cowen is veering away from pay cuts. For once, and I'm scared to my bone marrow to hear myself say this .. but I believe he's right.
Pay Cuts won't get us out of this mess - in fact they will make it worse for the Ordinary Joe. Here's why.. if you take Ordinary Joe, with an 'average' mortgage, he's got a few quid more in his pocket over the last few months, thanks to the interest rate changes. If he drives a car, the cost of a tank of petrol has fallen by at least a tenner.. Both of those reductions have put a couple of hundred yoyos a month back into Ordinary Joe's pocket.
With me so far? OK..
Now, unless I've had my head in a bucket for the past six months, every second purveyor of Goods and Services in this Country is bemoaning the fact that people are not spending money. Now, take Ordinary Joe, with say €250 a month extra in his pocket.. it's only simple logic, is it not, to assume that he might spend some of it - €20 here.. €30 there.. €50 somewhere else.. even if he spent half of it.. that's €125 put back into the economy.
Now, as they say.. do the math..
If we assume that there are two million or so people working.. don't argue its a nice round figure and I like them.. then, by my calculation, that's €250 MILLION a month gone straight back into the economy. In a year, that's Three Billion. That, in any mans language, will support an awful lot of jobs.
However, if the Turlough O'Sullivans of this World have their way, Ordinary Joe will have his wages cut. The few bob he got back from lower interest rates, etc. will be gone.. and with it, his little bit of increased spending power!
Surely it's a no brainer?
By all means, lets have a pay freeze.. lets even cancel the National Wage deal for a year.. even eighteen months.. but for goodness sake, lets not cut pay. It might make Accounting Sense.. but it makes no Common Sense at all! It seems that Brian Cowen is baulking on pay cuts.
Baulk, Biffo, Baulk! ..
I don't think I'll be making a habit of it.. because no doubt you'll have me tearing my hair out over something else.. but on pay cuts, Taoiseach, we are agreed..
That actually makes sense. Why do we have an idiot like Lenihan as finance minister when we could have you.
ReplyDeleteI think there is some sense in pay cuts, certainly not across the board though it will need to be targeted. I think there can be no argument with pay freezes in the public sector while public borrowings and spending are so far out of whack. I'd be cautious about encouraging public spending too much as the last thing that needs to happen is that inflation increases.
ReplyDeleteThe banking system needs massive overhaul with far more stringent controls and finance bills directing the way in which domestic business is conducted. The culture of premature bonuses and payouts based on churning needs to be stamped out. This can only be done by enforcing existing financial fraud legislation along with new legislation to tackle undesirable practices like shorting and many hedging practices along with other artificial financial instruments all of which simply don't have a sound financial basis. Given that taxpayers are now carrying the weight of stops for the banks there also needs to be a social aspect to the overhaul - family dwellings with mortgages need to be taken out of risk from repossession. However, I'd say leave the developers to handle the consequences of their greed - lessons need to be learned.
Despite the lack of money available there still needs to be capital investment as the current monoculture that considers only the Pale needs to be addressed with decentralisation across the board. That means developing businesses preferentially beyond the pale and ensuring that the necessary physical and technical infrastructure is brought up to standard.
Wow, I'm an opinionated so and so, better leave it there :)