These exchequer statements are great for the real anoraks.
http://www.finance.gov.ie/documents/exchequerstatements/2011/exstatejunefinal.pdf
The deficit to the half year is actually €2bn worse than last year but it includes a promissory note to the banks of €3bn, so the true deficit is €1bn better than this time last year.
This improvement is pretty much coming from additional income taxes.
Spending is broadly unchanged but this disguises reductions in capital expenditure offset by increases in social welfare payments.
There has been an inevitable massive increase in social welfare, and with all the extra borrowing to fund the banks and the deficit the cost of servicing our debt will now increase.
Without really significant cuts to social welfare and public pay, the deficit is not going to go anywhere fast but the dilemma is whether these cuts can be absorbed by a very weak economy right now.
This deficit figure includes some of the bank recapitalisation costs - which are once off payments (we hope!).
What is the deficit when payments to banks are excluded? - this is the real deficit - the gap between public income and expenditure on public services.
Why are the banks still not lending into our economy and given that the aren't why aren't they being forced to play their role of credit provider, the role they were supposed bailed out for?
To be honest a lot of this economic mumbo-jumbo baffles me.
We have been hit hard for 3 yrs so far and apparently the austerity measures in Ireland have been among the toughest ever imposed, anywhere. And they will continue.
We have also been told that we are doing well, and things are improving.
Yet others come on shows like Prime Time etc and say that its only a matter of time before Ireland defaults as well.
So one side is going to be wrong. Is one side fooling us to keep us as happy as possible, or is the other just trying to create panic for a good story?
The money markets, however, are very fickle and volatile. .
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