Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : American Presidential Politics and foreign affairs -- Ignore unavailable to you. Want to Upgrade?

To: DuckTapeSunroof who wrote (43287)	5/18/2010 4:00:36 PM
From: TimF	Read Replies (1) \| Respond to of 71588

by massively withdrawing money from the economy (cutting current spending) they have added to the already massive reduction of liquidity that the Global Economic Crisis and subsequent Irish Recession had brought. That would be a more reasonable (but still highly debatable) claim had it been the US slashing spending, but Ireland's reduction of spending has a negligible impact on global liquidity. Of course Ireland's government's spending is more likely to have an effect in Ireland than say American spending, but this is extremely unlikely to be enough of a factor to cause Ireland's deficits to increase as spending is cut. Cutting government spending may, in the short run, in the middle of a severe downturn, decrease production, but not enough to cause revenue to go down faster than spending. 100% of the spending cut is a cut in spending, while on the revenue side, the cut in spending can help the economy and thus increase revenue, or hurt it and cut revenue, but even if every dollar cut by the government reduced production by two dollars (which is very unlikely even in the short run) national government's don't typically tax away 50% of the GDP so the budget balance would improve. (And if they do tax away 50% of the GDP, than they are creating a large problem themselves)