Looking for how the financial problems are affecting everyday people and a discussion of the possible long-term outcome?
People are and are going to lose their jobs in the millions, we face tax rises and pay cuts all to pay for the mistakes of people who continue to make out like bandits.
And the Right are taking it as a Chicago School opportunity to mount an ideological attack on the Post War Welfare Settlement (in the UK).
I hope and trust things are going to get very, very ugly indeed when people start fighting back hard.
Obviously there are a lot of variables involved here, like what country you’re in, and what your circumstances were before this crisis began.
In Ireland, some of the major effects on people’s lives that spring to mind are:
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Unemployment has shot up. The official rate right now is 13.6%. This compares to 4.3% this time five years ago.
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Significant numbers of people are emigrating. This is obviously a factor keeping the unemployment rate from being even higher than it otherwise would be. It has a big psychological effect on the nation, I think, because during the boom years it became a point of pride that Ireland was no longer a country that people had to get away from, and now it is again. Obviously the psychological effect on families who are split up because of this is even greater.
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There is a recruitment embargo in the public services, so those that are operating at under-capacity are getting worse and worse. Examples of where this is manifesting itself include in the system of education grants, where students are waiting months and months and often being threatened with disenrolment if their fees don’t get paid; in the social welfare appeals unit, where applicants are waiting for over a year, unpaid, for their appeals to be decided; in the health services, which were a nightmare to begin with thanks to the right-wing ideology of the Minister, but we’re now talking about waiting lists of several years for many treatments - including really essential things like speech and language therapy for autistic children; and in primary education, where there aren’t enough ordinary teachers and particularly not enough teachers for educationally disadvantaged children and those who are there are struggling to cope with the numbers and the needs of the children they teach.
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A lot of people are having great difficulty making their mortgage repayments. So far there haven’t been a huge number of repossessions, but there have been some. Many people’s houses are in negative equity, which is a big problem for those who need to relocate in order to find work.
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Social welfare benefits are being reduced, and eligibility criteria are being tightened, so people who can’t work (either because they can’t find jobs, because they have a disability, or because they’re doing unpaid work eg care work) are getting screwed too.
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Even people who still have jobs are having their pay reduced. This has only been partially matched by consumer price decreases. Certain key expenses, such as medical fees (it costs about €60 just for a single GP visit here) aren’t going down at all.
And things are set to get worse and worse, because under the budget that’s going to be introduced next month, 90,000 more public sector jobs will be cut, the minimum wage will decrease, VAT will increase, personal income taxes will go up even for the lowest paid, regressive property taxes and service charges will be brought in, college registration fees will increase, the number of special needs and language support teachers will be reduced, social welfare benefits will be further reduced and even more stringent eligibility criteria will be brought in.
I heard one of the extremely well-paid political correspondents on the “national broadcaster” say the other day that “we haven’t seen any real pain yet”. Well, maybe he hasn’t. But pretty soon it’ll be impossible even for him to ignore (although I doubt he and his colleagues will be feeling much of it themselves).
The real question is what are the Irish people going to do about it. Unfortunately, I suspect the answer is “not much” 
Here in Germany the economy is looking good and growing again after the recession of the last two years. The effects of that were not felt that badly because of the Kurzarbeit system, where people work shorter hours and get part of the pay from the state if they’re doing training courses for work. This meant that unemployment didn’t rise much then, and now the companies still have all their experienced workers. Much better investment than paying unemployment coverage, and probably the most intelligent variant of stimulus payments.
Our export surplus is a big help; the reforms of the last ten years are helping to make us competitive there, along with the Euro which has a much lower exchange rate than the Mark would have right now because of the PIIGS trouble.
I still think this is a legitimate “devaluing” of currency, more justified than what the US and China are doing.
Therefore, it is in our interest to protect the Euro zone, but of course our people are not happy to pay everybody else’s debts, either. I hope the other economies get back on their feet again soon…
Here in Italy there’s strikes every other day over university pay — it’s hard to say whether these are connected to the current financial situation, though. Last week alone I walked past two large demonstrations by school and university staff and students marching down the main street in Bologna. My bosses in the university are currently on strike over pay and university reforms by the government (universities are essentially being run into the ground by the Berlusconi government as they are one of the last refuges of dissent left — IMO, the reforms that are currently being exercised have nothing to do with the current financial situation and are just one more step in a pattern of removing funding from higher education).
It may be all moot, though. The Berlusconi government is due to fall on December 14th, when they face a vote of no-confidence, and the reforms haven’t been put through parliament yet.
Various necessary cuts are taking place across the continent. The private sector has already been hit and there will be further pain for some in public services.
In the UK the students are trying to demonstrate about something or other but the usual thugs are hell bent on violence and destruction, therefore masking whatever point was trying to be made.
The usual political point scoring is going on with the opposition seeming to forget that they got us into this mess and have a knee jerk reaction to any suggestion for reducing our debt. (I think they are sooooooooo glad they didn’t win the election).
Their main beef seems to be the speed of the cuts although looking at other countries we aren’t doing anything outrageous. There just seems to be people unhappy that anything needs to be cut. Lots of moaning, not many alternative solutions as usual.
Spain and Portugal may well tank financially. It won’t be pretty as their population seem to more militant that the UK.
In the UK, we have seen a marked business contraction, people losing their jobs, government reining in spending, but so far it has not been obviously worse than other recessions. It feels similar to the one in the early 90s, and less severe than the early 80s recession. We shall see. Being outside the Euro certainly helps when it comes to having more macroeconomic levers that we can pull, but such measures are just coping mechanisms. They don’t eliminate the core problem, which is that our productivity lags and we borrow too much. Still, it’s nice to have these levers available to us, unlike Greece, Ireland et al.
In Spain, part of the problem was the much-belated burst of the construction bubble: Construction, and playing the housing market, had become a ridiculously-big part of our economy.
The previous crisis (late '80s to late '90s) saw my generation leaving the country, and many of us coming back when things got better. We couldn’t get jobs at home, so we went somewhere else and waited tables, worked as hotel receptionists, or got paid to get graduate degrees. This time, many of those countries have been hit as hard, so less locals are leaving; there are less new immigrants coming (family reunification hasn’t slowed down so much), and some have done what we did back then: take their savings and go home, where they hope to start their own businesses or use their newly-internationalized experience to land good jobs.
People are looking at types of credit they didn’t use to; the worst ones, some of which are relatively-new arrivals (payday loans) tend to be popular mostly with people in vulnerable positions (immigrants, retirees); others are actually pretty good deals (interest-free deferrals), vendors are seeing these get more use but they were already in place before.
Sometimes I get struck by how little those who work on these subjects seem to know. The media is trying to turn “some people owe more than their house is worth because the value of houses has gone down!!!” into a scandal, interviewing economists who explain that “this could never happen in the USA!” (bwah? what USA are those? Not the ones I know!) but lots of people are saying “so? They already owed more than their house was worth before the market went down! Those people are the people who got 120% loans!” I’ve seen someone start to moan about owing more than his house is worth, only to be hit by “ok, how much did you put down?” (Ahum, ahem, ahew, turns out he’d taken a 120% loan - dude, you can’t count? Your problem). There’s very little sympathy for those who are finding themselves “stranded” with two-three mortgages where the numbers above one are places they’d bought for resale. And yet, the amount of defaulted mortgages, the highest in over 50 years, is less than 0.5%.
At the same time, some people who hadn’t themselves screwed up are being hit badly. People here tend to have strong safety nets, people are being reminded of why it’s good to be a two-income family if you can, but it’s still a bitch to have to move in with your mother (or let her move in with you); there has been a loss of legal rights which goes to the core of our legal system in ways I’m not sure people understand (it used to be, you could not lower someone’s salary - but then the government did it, so suddenly the whole concept of “acquired rights” is looking a lot like Humpty Dumpty on the wall).
Denmark. The unemployment rate tripled to around 6%, it topped half a year ago and has been very slowly declining since. The housing market shadows the unemployment rate and prices have been slowly rising – also helped by very low interest rates, thanks to the meltdown in Greece and Ireland moving money to Danish bonds. Exports are in stellar shape, mostly driven by increased export to China and by exports to the booming economies in Germany and Sweden. Poland, another neighbor, is also doing surprisingly well. Denmark is very lucky with the geographic position. It also helps that a large part of Danish exports are little recession prone. Each year is another record foreign trade surplus. Deficit is rather bad, perhaps up to 4-5%, debt will soon hit 40%. Growth is anemic, around 1.4% (1.6% in 2011). The welfare state is ossified and need urgent reforms, but the population is in denial mode. Too many (50%) are not working, too many are working in the public sector and the tax rate is way too high. The problem everybody is talking about is that the productivity has been stagnant for a long time, but salaries rising much faster than neighboring economies – so that the Danish worker can no longer compete and jobs are being moved out.
Eh what?
The Irish health service has been in the absolute shits for years, and saw no reform for decades.
We still pay electricians to change lightbulbs FFS.
Not Harney’s fault at all - it was actually worse before her, it’s just when the population suddenly grew what was already about to collapse, collapsed.
Sweden just clocked in with a growth spurt of almost 7% Highest since 1973.
But, fighting back against whom? Not the state, I hope, since you don’t actually want to destroy it.
**Ruadh **covered the Irish situation succinctly. I’ll just add that I notice a huge amount of empty retail units in many towns and right in the heart of Dublin City. People are still Christmas shopping but it’s way more subdued than in years gone by.
You can substitute “government” for “Minister” in my post if you want. It’s not that big a difference really. But it is the case that plenty of health indicators, such as waiting lists and the unaffordability of primary care, have become far worse under Harney. Blaming it solely on the increased population ignores the fact that she has adopted exactly the wrong policies to address the increased population - in particular, diverting funds away from the public health system, to benefit her and her IBEC director husband’s friends in the private sector.
She increased public spending on health care, but you are correct that she expanded the private system to a degree, however, since most of the private beds in public hospitals were going (had the Tiger continued:rolleyes:) or had begun to be nationalised, the private health care system wasn’t going to grow by that much overall.
Harney actually expanded public services hugely in her tenure, through massive public spending, though now of course they are being shrunk again.
I don’t know about primary care, but I know that she actually, using the NTPF, managed to have the largest reduction in waiting lists in Irish history (even if it was a waste of money and a bit of a cheat).
I wouldn’t bat an eyelid if every director of every financial institution that got us into this mess, every involved senior decision-maker and every contributing City spiv was dragged into the street and hung from lamp-posts.
Failing that I’m happy to see this government forced from power in the unlikely event the Lib-Dems lose their stomach for the fight.
Yes, that’s the government’s response to everything. “But we’ve increased spending!” What they’ve done is gone from a massive underspend to somewhat less of an underspend - even at the height of the boom, Irish health spending was still significantly below the OECD average.
And of course spending alone isn’t enough, if you’re not properly allocating resources. How much of that increased spending has just been waste (PPARS, six figure salaries etc)?
The official waiting lists were reduced for the type of procedures the NTPF covers, although those figures need to be treated with caution because the NTPF’s measurements are different to the old Department measurements. It also wouldn’t be the only time the NTPF has fudged numbers to make itself look better; they tried to do this recently in an Oireachtas Committee meeting with regard to findings made by the Comptroller and Auditor General on the level of consultants’ self-referrals. The Comptroller is having none of it though.
Incidentally, here’s an interesting view by a consultant surgeon on the NTPF.
But it wasn’t really surgery I was thinking of - more things like therapies for autistic children, drug treatment, orthodontics, long-term illnesses. The waiting lists have grown so long for these that people have no option but to either go private for, or do without. And at the fees that private clinics are charging, plenty of people are just doing without.
I’m not sure what your point is about the private beds.
I’m in the U.K., and we’re well in the shit. There’s massive unemployment. The official figure is 2.5M, but there’s been massive fiddling of that figure over the past 30 years by governments of all hues. It would not surprise me if the true figure were nearer 4M. There’s fierce competition for even McJobs. Right now I’m feeling that it would have been better to have let the banks go bust.
Which puzzles me because I frequently still get job offers to work in the IT field in London and the surrounding area. The salary seems to be rather low compared to continental Europe though.
According to the agents to whom I speak, there’s several hundred people applying for every IT job. I’m guessing you have a rare or in-demand skill.