Deflation, the low paid, and expansion of the tax base

Here are some statistics (taken from the SBP) showing that contrary to assertions that the ‘rich don’t pay enough tax’ that in fact they pay more than anybody else. Half of all tax income is paid by the top 6.5% of workers. So about 1/15th contribute 50%. One third of all tax collected comes from the top 2.5% of workers, thus 1/40th are paying 33%. It means that things such as the new 2% levy are merely punishing those who already contribute the most! I wrote about this before when talking about the Laffer Curve and how Ireland may be driving high earners out of its jurisdiction.

Sources have said that the Irish tax base is too dependent on a small number of people, so what would happen if we were to drive them out? The implications are severe.

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Irish Government bonds, what is happening?

Governments often have to raise money to achieve their objectives over the short and medium term, in Ireland we do this by raising bonds which is basically where a buyer (private or institutional) acts as the ‘bank’ for the state. The creditworthiness of our nation is currently the lowest in the Eurozone, below that of countries like Greece and Portugal. This means that we have to pay more interest to attract a buyer.

Today Moody’s (a rating agency) has put Ireland on watch for a debt rating downgrade (it means our debt will be considered less secure), and that means that we will have to pay even more in order to attract new investors for bonds. How this trickles down to the person on the street is simple, we’ll have to foot the bill eventually because the ultimate guarantor of state borrowing are the people in that country. The tools to achieve this with are higher taxes and less public spending, both equally unpopular.

For now we …

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Generic overview of the market 2009: by sector

I was asked by a colleague in the UK to provide an overview of the Irish mortgage market, he has often advised the Bank of England in the past on the UK buy to let market, however this time it is in relation to a talk he was due to give to an international financial services group on the Irish economy. Below are the contents of my correspondence which is a no holds barred view of the mortgage market in 2009.

Remortgage: This area is finally starting to see some life again, the rate drops are filtering through and many of the people on fixed rates taken out in 2005/2006/2007  are shopping around, as always new business attracts better rates than existing customers so there is once again an argument for switching.

However, the many people who took out trackers are basically out of the market in the long term as every single lender has removed tracker mortgages from the market, in fact, if you know of a lender willing …

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Bill Gross of Pimco talks about the deficit in the USA

Bill Gross, known as ‘Mr. Bond’ runs the largest bond fund in the world, in this video he talks about many of the issues facing the economy under the new Obama presidency. Bill Gross is a fascinating character who started his careers as a professional gambler I always enjoy listening to his views on the market which he does with an intersting mix of macro/micro/common sense views.

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'Thrift' and why it will be the next fashionable trend

If the Celtic Tiger brought the fashion of consumption and SUV’s then certainly the polar opposite will come true in a downturn, and that will be the emergence of ‘Thrift’ as a way of doing things. Today we will look at some popular thrift websites, as well as how recycling will come into play in the way we do things for the coming years.

The older generation must be secretly laughing at us, they were frugal and appreciated the value of money, I have heard this said on radio, the television, and even on the streets. I suppose it never hit me too much personally because I’m not a flash type of guy, I own a car but I cycle to work (partly due to my feelings on environmental responsibility and party because its faster than sitting in traffic), I could afford nicer clothes but I don’t feel the need to be impressive in that department so my banged up civvies will suffice (as far as I’m concerned). …

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‘Thrift’ and why it will be the next fashionable trend

If the Celtic Tiger brought the fashion of consumption and SUV’s then certainly the polar opposite will come true in a downturn, and that will be the emergence of ‘Thrift’ as a way of doing things. Today we will look at some popular thrift websites, as well as how recycling will come into play in the way we do things for the coming years.

The older generation must be secretly laughing at us, they were frugal and appreciated the value of money, I have heard this said on radio, the television, and even on the streets. I suppose it never hit me too much personally because I’m not a flash type of guy, I own a car but I cycle to work (partly due to my feelings on environmental responsibility and party because its faster than sitting in traffic), I could afford nicer clothes but I don’t feel the need to be impressive in that department so my banged up civvies will suffice (as far as I’m concerned). …

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