Global economic downturn

You know, I would be interested in hearing the communities view on the global economic downturn.

As many will know, I'm Irish, and here in Ireland things get worse by the day, we are facing tax increases, public spending cuts etc., by the day.  Five years ago, I was happily living in Switzerland and I was dragged home kicking and screaming to form a new business. 

In the beginning everything went well, we employed people, bought houses and generally contributed to the economy, but from day one things didn't appear right!  If Ireland had suddenly become a global economic powerhouse I wondered, then where were the accroutements of wealth?  Slowly but surely, I realised it was an illusion, sure, some had become very wealthy, but the vast majority were mired back at 1980's salary levels and had seen very little of the "economic growth".

Now of course it is obvious that this so called economic growth was a myth, just like AIG, Lehmann brothers etc, and it makes me wonder.

In a taxi a couple of weeks ago I asked a Parisian taxi driver what had happened in France and his answer was "same old same old", nothing had changed!

Therefore, was it just the Irish who fell for the economic miracle or was it as I now hope most of the global economy who have been duped?

Well, I can tell you that the economic crisis sparked a great interest in me to learn about economics! I dove right into the wide world of economic theory and I suggest everyone do the same. It will certainly be both enlightening and extremely depressing to learn how this all came about...as it was for me.

I live in Canada, and the situation in Canada is much like the rest of the world. Although fortunately our prime minister managed to stall any massive government spending up until this point...so we don't have it as bad as a lot of other countries who's government decided it wanted to subsidize/nationalize every business who came calling.

Interesting comment!

You guys still have global "free" health care though?  How have you managed to keep financing that, if that's a fair question?

Oh healthcare is always a hot topic here, I think something like half the government budget goes toward keeping our healthcare system operating. Nobody here is too worried about all that yet, the big deal will be when all the baby boomers retire and the shrinking tax-base is left to foot the bill to a whole host of aging boomers who want their free medicine. The **** will hit the fan for the Canadian healthcare system in 10-15 years.

 Some might think we have the same problem(s) looming in the not too distant future.  However, the U.S. determined (discovered) that money magically reproduces itself just by wishing it were true.  I actually studied economics in college (minor), own and operate a business, and am waiting for my stimulus payment.  Will get it about the time I break a 2000 rating.  I must go now and feed my unicorn herd.   

bahahaha!!!

Too true sir, too true.

interesting reading. thanks

Healthcare here operates on two levels, the private and the public. All workers pay for the public, yet a sizable proportion operate private.   Having said that we also operate a "risk equalisation" scheme which means all adults pay the same rate!  Basically, the young subsidise the old.  Having said that, although I have health insurance, I still have to pay 90% of my family's health bills as we just aren't sick enough to breach the thresholds, so this has become one of my discretionary spends that I am considering discontinuing!  Is it the same in Canada under the one fits all policy?

Well, in Canada all "essential" healthcare is fully paid for through taxes. Things like hospital procedures and doctors visits. Drugs that are considered "essential" are also paid for, or sold very cheaply. Of course anything not considered "essential" you are paying a premium for.

If you don't mind me asking, what is the basic income tax structure for the average joe in employed labour type positions?

Interesting times. I'm reading a book that called "Mean Markets and Lizard Brains". It was published in 2005 and predicted the housing crash and eluded to the credit crunch and sub-prime mess we have here in the states now. I have an MBA, read a lot of finance and economics books along the way ... but this book really put it all together for me. Highly recommended even if its a few years old.

Oh boy! Income taxes!

Well, I'm still a student so I'm not very well versed on the horrors of the Canadian income tax system. Ours is a system of "tax brackets" like most other countries. Basically anyone making $30,000 or less will pay next to nothing, and someone making $100,000+ will be forking out close to half their income to the government every year.

I'm sure this is all very familiar, if you want more specifics just ask.

Looks like an interesting book, I'm reading something sort of similar right now, although less focused on economics and a great deal older.

http://www.amazon.com/Extraordinary-Popular-Delusions-Madness-Crowds/dp/051788433X

I personally believe that the concept of the economy is a pathetic fallacy. No, not like that, like this -

http://en.wikipedia.org/wiki/Pathetic_fallacy

I say that because the economy is only driven by the flow of money; NOT how many people are making a profit. If money is flowing really fast, it gives the illusion of growth; if it stops (people or companies stop spending) then it gives the illusion of failure. The economy was only conceptualized by humans as a scapegoat, to explain good and bad times (in the sense of the pathetic fallacy as stated above). It's really just as simple as how fast money is cycling between people and companies, nothing else really matters.

 I do a fair amount of bankruptcy work.  I always wondered how it was profitable for, e.g., Countrywide Mtg. to finance $150,000 on a house trailer and 1 acre in very rural southern Indiana; or a lender to lend 120% of a piece of real estate's value; or send preapproved credit cards to people with low income/sporadic work histories.  I just assumed I did not understand the world of high finance.

I guess I did understand and/or they did not.

Well the example I used recently concerned directly where I live.  Basically if I buy farm land then €50k per acre, but if I want to build a house on the same land then €2m per acre, so what is the true value of that land?

Makes you wonder about the asset value held by Irish banks!

The stupid thing with the US is that 80% of the proposed stimulus package will just be used for government spending rather than trying to put money back into circulation.

 there are so much income taxes here in Canada. Health care is very expensive too.

We are getting off track now!

If I understand correctly "stimulus packages" are used to build main infrastructure, thus employing people!  Assuming most of the people thereby employed are American, how can you complain?

Yeah, but what sort of percentages are we talking about?