Three cats finally popped out of the bag this week that cannot be ignored by public sector workers.  

·         Sustaining Public Sector Remuneration at 20% to 40% above Europe and the Irish Private Sector is impossible without huge job losses. 

In his letter to the troops, Peter McLoone, Chief of IMPACT trade union representing 65,000 public and services workers, has admitted that protecting public sector remuneration can’t be achieved without wide scale job losses. To put that into perspective, the Government target of €1.3 billion in pay cuts equates to a loss of 10% of the public sector labour force. From the outset I’ve been dead against redundancies and campaigned for cuts in the artificially high rates of pay and pensions instead. But the union’s prime objective is to protect pay of its members and that excludes unemployed former public sector workers. Despite their posturing in the Partnership Process, unions cannot and do not represent the unemployed. Will they now sacrifice 30,000 fellow workers to avoid reducing their pay to European levels?

·         The “Rich” are now defined and include a working married couple in the Public Sector, to be hit with tax, levies and higher PRSI that will gobble up at least 63% of earnings above 100k.

ICTU’s Narnian economics is finally revealed. The so-called “rich” aren’t rich at all, just middle income earners. That means two married teachers or Gardai will work for the Revenue Commissioners until 3pm each day for three months to four months of the year. This, of course is nuts. Income tax receipts are about to fall off the cliff again this month as incomes nosedived across the SME sector since last year. Adding a third tax rate will simply destroy tax receipts further, kill any incentive to work longer hours, shackle entrepreneurship and swell the black economy. Surely, for any free thinking public sector worker, this centrepiece proposal from ICTU exposes it as an ideologue shorn of any basic economic competency? 

·         Assets are to be attacked, especially “Trophy Homes” like Pat Kenny’s. 

Jack O’Connor may have apologised to Pat Kenny after RTE’s Frontline programme on Monday night but it doesn’t take away the fact that the former Sinn Fein member and current ICTU president believes that accumulated assets should be attacked by the State. So watch out folks because homes, farms, art and collectibles, pension funds, saving schemes, cash deposits and just about any asset you’ve got is back in the frame despite all the taxes you’ve already paid to get them. These ultra-left ideologues also want what amounts to confiscation of assets by selective targeting of Ireland’s ultra high net worth families, large employers like Dunnes and Michael O’Leary despite the constitutional questions it would raise. So get ready to wave Michael, his wealth and his business talents off at Dublin Airport which is precisely what you would do too if you were selectively targeted by the State.

Shortly the marching begins, but ordinary public sector workers now have to ask if they are cannon fodder in an ideological battle, following an agenda that can’t be won without destroying the lives of one in ten fellow workers or by destroying the Irish economy by swinging it to the far left? Surely it’s only commonsense as soon as it’s humanly possible to cut taxes not raise them and pursue the agenda that sparked the Celtic Tiger before the last Government destroyed it? Put aside your anger and frustration for a minute and ask yourself if it is right to let the democratically unelected ideologues that dominate Irish trade unions dictate how the State is to be governed by threatening to shut it down? If you march with these people you pursue their agenda of a return to the 1980’s; taxes on modest incomes way over 60%, a flight of foreign direct investment out of Ireland with massive job losses, a huge black economy and an anti-entrepreneur culture. Our talented kids will leave in droves and not come back – would you?

Setting: A private meeting between a Secretary General and a new junior; Got your emails Gerald, so what’s got you worried about pay?

Well, Secretary General the talk is that public sector pay is to go up 50% over the next few years, I’ve run the numbers and can’t understand how that’s possible.

Gerald, we won’t actually increase pay by that much at all.

So 50% is wrong?

No, 50% is about right, it just won’t appear that way.  We’ll put most of it through in allowances, overtime and “sick leave”.

But surely the politicians won’t wear it?  After all, it will openly challenge their running the country.

Gerald, you don’t seriously think we let politicians actually run anything?

We only let them think they run it.  Anyway we’re going to link politicians pay to upper grades in the Civil Service, even higher for ministers, plus lots of receipt-free expenses.  Meanwhile, public sector union chiefs have been, how do I say this delicately, persuaded of the wisdom of linking their own remuneration to similar scales as well.  That way, there’s a common incentive to solving problems of pay.

You mean self interest, but surely the private sector who’ll foot the bill will see through it after all it will lead a huge pay and pension gap opening up?

See through it?  Gerald, dear boy, the public sector is far too complicated for anyone to see through it and as for pension comparisons, well, they’ve no hope whatsoever – that’s why we use them to pay golden parachutes.  And we can always rely on our union partners to find some heart-softening stories about those on much lower pay having a real hard time.  That’ll deflect attention away from where the cream is being paid.  See, the public love their Gardai, teachers and the nurses, they really dig those nurses.  Very useful as a screen, along with low paid clerical grades in the Civil Service, thank heavens for them too.

But what happens when the increases are measured against value for money?

Oh we never actually use value for money to measure anything; it’s far too complicated for that.  We call it benchmarking instead, sounds much better, a great word that – benchmarking.

But what happens when they apply the benchmarks?

No we only call it benchmarking, in practice there’ll be no benchmarks.

But surely they’ll go abroad for comparisons then?

Yes, we’ve anticipated that so we’ve commissioned a report, a comparison against other economies with older ages, much higher health costs, bigger armies, more expensive pensions, that kind of thing.

But what happens if the report leads to calls for corrective action?

Oh no, I said we’ll commission a report.  But we never act on a report.

Reports, like tribunals, take lots of time and the public forgets.  Then when the report finally arrives we say circumstances have changed and we need to commission another report and so on.

So let me get this right.  We’ll hide, I mean overlay, the pay rises by using cash, sorry, allowances and expenses and more holidays, that is to say, sick leave.  Then we link pensions to grade increases and increments, tie in the politicians with similar deals, and get union chiefs to follow suit – and we can boost their personal earnings even further with appointments to state boards.  Finally, we cover it off by skewing the assumptions in comparative reports to give us the results we want?

All in the national interest Gerald.  That way there’ll be harmony paid for with bribes, I mean agreements, understandings, undertakings, a general knowledge, an unwritten contract, if you’d prefer, among people of influence.  About how things work.  At the top.  That’s our little lesson over Gerald and, remember, some day you can occupy this seat.  After all I’m just keeping it warm for the next fellow to get the big uplift in pension just before retirement age – provided, of course, he asks the right question.

The right question?

What I’d like to do after retirement.

You mean what boards, review groups and agencies you might be able to assist – in the national interest?

Excellent question, Gerald, truly excellent and deftly put.

Order the headstone now "Here lies Private Pensions, murdered by a bunch of clowns in an act of stupidity after a long struggle with markets RIP."  The programme for government proposes to reduce the incentive to avoid retirement poverty by saving in private pensions (AVCs, PRSAs and Personal Pensions).  The move will affect huge numbers of self employed workers, those not in company funded retirement schemes and contract workers.  The proposal is that you'll no longer get tax relief equivalent to the top rate you pay, instead you'll get hammered by income tax and levies at over 50% on your earnings (and your pension) but you'll only get 30% relief on any money you manage to save.

Even a child in a creche could work out that this is a very dodgy deal. But we're not talking about toddlers, we're talking about politicans who'd prefer to screw the disorganised and vulnerable backbone of the economy rather than introduce real reform. These chuckleheads think that by setting relief at 30% it will enourage low paid workers on standard rate tax to save even though they don't have the money! But its really a smokescreen to duck the real issue, the reform of public sector pensions. Already, in a previous act of cowardice they've hit anyone with taking more than €200k out as a tax free cash lump sum with tax. But guess what, that doesn't affect any public sector worker retiring on less than €133,000 taking up to €200,000 tax free and gettting a pension ecaslating with salary grade increases beginning at €66,000 and worth over €2 million in the private sector.

But the private sector worker is screwed with the tax on any part of his pot worth over €800,000, that means the tax comes in at a level 60% lower than fellow workers in the Public Sector. But what makes it all the more galling and reinforces the wall around the pensions ghetto is that all private sector workers already pay for pensions through tax transfers except they don't get a stitch from these pensions because they're paid to public sector workers. The real issue isn't the tax relief forgone by the Revenue to encourage private sector workers to save to avoid retirement poverty but the huge black hole from public sector pensions now topping €100 billion in future liabilities. To hammer one without first reforming the other is an extraordinary exercise in cowardice and self interest.

Leinster house with its own nose in the public sector pension pot and cowering before omnipotent public sector unions, can be relied upon to continue to shaft the private sector rather instigate real reform. This would require topping public sector pensions at about forty grand and introducing a universal pension into which all workers contribute capped at a modest level and supported by pension guarantees. Fat chance from the fatcats.

Public sector workers are right to feel pissed off that their pay and pensions are in the cross hairs, at a time when there has been nauseating gravy trains at the Ceann Comhairle’s office and at FAS while three quarters of State sector CEOs have failed to make voluntary pay cuts. But if there’s one thing that’s also pretty clear from programmes like RTE’s Frontline last week is that a substantial rump within the union movement are hiding pay and pensions segregation behind a curtain of indignation and anger. They call for leadership but show none themselves by engaging in the politics of denial and by shooting messengers.

They appear to live on the other side of the wardrobe, in a Narnian world where pay levels can’t go down, pensions can’t be capped and there is a golden printing press oozing cash. That the real economy is on a collision course with bankruptcy and social welfare recipients face savage cutbacks, matters little when you a segregationist. That’s for them out there, it’s their problem let them fix it, just say no. If that sounds familiar you heard it before from others that desperately fought to maintain segregated systems and the power that comes from them.

• Rather than accepting the recent results from the ESRI using standard international science in measuring rates of pay that expose a 20% gap in favour of the public sector, the segregationists insist the comparison is flawed because it relies on age, experience and education rather than job content. This is daft economics and is the language of denial.
• The quadrupled public sector pensions liability of €101 billion calculated by the Comptroller and Auditor General using actuarial science is dismissed by relying on this year’s cash payout from the pay- as- you- go system despite the fact this method of calculating pension liabilities is illegal in the private sector because it creates the dangerous mirage that future pensions can be afforded. Add pensions to the pay gap and it doubles to well over 40%. Economics call this an imbalance. I call it apartheid.
• Eurostat data shows the alarming degree we overpay public services but it’s ignored by claims that like for like comparisons to Ireland aren’t fair because it’s more expensive to live here! That prices have fallen by nearly 6% and that most domestic price inflation up to the bust corresponded with accelerating public pay hikes are ignored.
• Based on 2006 data, Teachers in Ireland averaged €52 grand, ( now €60k). That’s 44% higher than the Euroland average of €36k and well above big economies like Germany at €42k, Britain at €41k and France at €34k. Health and Social workers in Ireland averaged €46k that’s 45% above the Euroland average of €38k and well above high cost economies like Sweden at €35k. The averages for Germany and Britain were similar at €34k and €38k respectively. The gap on public administration salaries is lower, but at €46k Ireland’s is still 21% above the Euroland average. The gap for politicians pay and pensions remains unadjusted despite promises to benchmark down to similar economies.

Unless you live in Narnia, no matter where you turn these truths keep popping up. We’ve simply been overpaying ourselves and we can’t afford to do so any longer. This year’s deficit has worsened and is now heading towards €30 billion in the red. That means we’re now paying half our bills on the national credit card. Going on strike won’t make that fact go away, it will just make it worse by increasing our extra borrowing cost which is already running €400 million per year above what it should be. Pay has to be cut and pensions capped, that’s the ugly truth. Lower paid workers on less than the average industrial wage need to be protected but progressively higher pay cuts have to be implemented, ideally within a new framework that includes a national recovery strategy.

For Heaven’s sake, just go. Get Lisbon passed, NAMA through and the Budget cutbacks in place, then go. Go, just go.  Most of us are sick to our back teeth of listening to you.  All public patience has been exhausted and the prevailing mood, darkening by the deep realisation of the fiasco we face, is edging ever closer to boiling point. You can continue lying about how it’s all just a bit of misfortune brought about by Lehmann’s collapse last year but you fool nobody.  Don’t be so stupid, we get it. The events of the past week sum it all up.

• FAS, whose board contains public sector heavyweights was allowed to engage in a mockery of public finances and remain in place even in the face of economic collapse. Mary Coughlan’s handling of her brief has been a disaster. Just how ill-suited to a senior ministry do you have to be before you’re moved? How many gaffes are you allowed? She continued to let a board spending €1 billion of our money in place despite hard evidence of gross mismanagement. She then used a boost in pension and a lump sum, this time €1,400,000 to pay off its CEO as if somehow it wasn’t real money and sat back waiting for resignations! That’s our Mary.
• Meanwhile John O’Donoghue cast about as much sunlight on his runaway expenses as a bic lighter at a vampire convention while his senior party colleagues maintained a bat-like silence, perhaps sensing that a media trawl through their areas of spending could be equally as corrosive.  The Ceann Comhairle’s credibility is in the toilet but in the great tradition of zero accountability the only thing he’ll fall on is a hug from the party collective.
• Brian Cowen’s performance on the Late Late was his last chance to front up and admit that the last Government, ceded its power, abdicated  its responsibility and committed an act of treason by allowing Ireland to become captive to a developer and banking nexus on the one hand and a public sector labour cartel on the other - one fed by the revenue from the other.
• The result is the devastation of financial stability across the taxpaying middle classes, threatened cutbacks in social supports and the requirement now to wrestle power back in what will be a prolonged and bitter confrontation with public sector unions. But who can blame them when, as Newstalk has revealed, 75% of the leaders in State and Semi-State companies have turned a deaf ear to pleas from Government to cut back salaries.

So, we get it, there isn’t any leadership. The Government is on death row. It’s a bitter summary but it’s the truth. This is Ahern’s legacy and no senior Fianna Fail politician can escape it. No coded words, no propaganda, no obfuscation can hide the truth from the public. If you needed a license to be a politician, most of Ahern’s acolytes should be facing lifetime bans for bringing Ireland to the cusp of ruin. The best thing they can do now is to do no more harm, limp through Lisbon, NAMA and the budget, then go. Just head off with their pensions into the bosom of their most ardent support, play golf, ditch any thoughts of memoirs (we want to forget them as fast as humanly possible) and don’t come back. Ever.

1. It’s a set up. Your natural, lifelong paranoia is justified – the rest of the 27 member states are out to screw us and won’t implement the guarantees they’ve agreed to at the next accession treaty. So lets stick it to them first and their poxy inferior parliamentary democracies that have passed The Lisbon Treaty. Let’s save Europe from its sovereign Governments. What do they know about functioning democracies anyway?
2. The doubting Thomas crowd are right, before you know it we’ll be flooded with abortion clinics run by workers on a Euro an hour and facing conscription into a new European army that will force the Dept of Finance at gun point to raise our corporation taxes. Just you wait.
3. We can’t have EU directives on consumer rights, worker rights, environmental rights and financial stability. We’d be far better off relying on our own natural guile and cunning just like we did before we joined the EEC. Anyway the Oireachtas trumps Brussels for intellect, wisdom, resources, vision, long term planning and implementation. Just ask at any backbencher.
4. Ireland would be far better off on the edge of Europe anyway. We could lead a new slow track EU and join up with UK right wing nationalists to frustrate the work of the world’s largest economic block. They’d eventually pay us off just to get rid of us.
5. Sick of all those multi-nationals coming in here as a springboard to Europe, let them leave to other parts and take their jobs with them. We’re far better off relying on our own home-grown wealth creators, like developers. If that doesn’t work we can always rely on the old dodge, mass emigration, less mouths to feed.
6. You really do miss the punt, the only currency on the planet called after its banking profession. We could go alone again, just like Iceland. Interest rates would be sky high and the punt would get priced against occasionally but, hey, it would make Ireland really cheap for our much wealthier European neighbours to come visit, restoring the natural balance. After all relative poverty is good for the soul, just ask any dead bishop.
7. You’ve ex-US military brass as pals in business and they sure don’t want a more cohesive Europe in case it diminishes NATO. Having launched your proposed counter measures at a US foreign affairs think tank, you’re toying the idea of running a political campaign.
8. You’d love to see Caomhin as Taoiseach and Mary Lou as Minister for Finance. Based on the Sinn Fein general election manifesto they might know as much about economics as an aardvark knows about ipods, but, hey, they couldn’t do much worse could they?
9. Joe Higgins could do Enterprise Trade and Employment, transforming the world into a socialist nirvana, just like Cuba. In time, the world would come around to our way of thinking, you know self isolation, centralisation, bigger Government, that kind of thing.  
10. We can have a raft of new national holidays, one for Mao, one for Joe Stalin and eventually for one for Fidel. Christmas Day can even be replaced with a special holiday for Nicolae Ceausescu, shot in error by his own people on December 25th 1989. 

The Commission on Taxation Report is irrelevant. The patient is on the operating table right now getting full open heart surgery and, quite apart from the ongoing rows between surgeons on the best way to avoid death, along comes a report on how the patient could best prepare for a triathlon! The Commission on Taxation Report is about as welcome as a blood test at a funeral and equally as well timed. The report was envisaged and commissioned at the time of the Tiger with its working group established in February 2008. Sure, it contains many laudable goals and aspirations with plenty of specifics on how to disassemble our Swiss cheese tax system and make it more effective in driving an entrepreneurial culture.

But, hello, that was then, this is now. The biggest and most immediate task facing this country is to reduce the gap between tax revenues and spending to avoid bankruptcy – not how we should go about collecting the poxy taxes. The Minister for Finance would be nuts to attempt to introduce any sweeping tax reform this December. Instead, he should focus his full attention on reducing the public sector pay and pensions bubble, postponing tax major tax reform until next year at the earliest. To do otherwise risks killing the patient completely.

Don’t be fooled by claims that these changes would be tax neutral. In the long run that may be true, but you can’t stuff taxpayers who aren’t changing home for property tax and then tell them it’s neutral because the total received equals the old stamp duty take. Neither can you implement any serious tax changes, especially those that involve detailed means testing, when most of the population is on its knees struggling to survive. To do so risks serious unrest. The Irish public, especially in the most recession-vulnerable parts of the economy need to first see a steady hand on the tiller, leadership prepared to take the courageous and necessary actions to stabilise, the public finances. After that, with a fair wind from a global economic uplift, comes recovery and with it, the phased introduction of tax reform. Do it any other way and you may as well, put the notice in the paper, order the roses and ring the undertaker now. 

The Permanent TSB move to raise its variable rate is a taste of what is to come.  Margins are going to widen to whatever the customer can bear and fee income will be driven up.  You can take that to the bank.  Overwhelming arguments will be presented to boards and to the Department for Finance as to why prices have to rise regardless of the public outcry which will be calculated to wane in time.  Bust banks have to repair – and, in the absence of economic growth leading to new lending opportunities, just how do you think banks will grow profits?

Banking interest margins and fees are going to go through the roof – a stealth tax by another name.  Despite the guff about public interest directors and shape throwing by opposition politicians, what, in the absence of competition, do you think will be given primacy – consumer protection, keeping deals as cheap as possible or growing profits aggressively to repair capital?  The waxing or waning of competitive forces is what drives the market and, as we move from a fast growing confident economy to a retracting one uncertain of its future, banking competition is thinning, credit is tightening and prices will rise.

Remember banking margins in Ireland were sky high until foreign competition arrived.  The Bank of Scotland entry into the market forced a cut in home mortgage lending margins of 67% across the board as Irish banks and building societies were caught fleecing Irish customers.  Interest rates on term loans and credit cards were amongst the highest in Europe and ownership of money transmission system was used as a barrier to discourage foreign competition.

Once NAMA has hovered up the loans off the balance sheets of AIB and Bank of Ireland, the hiatus ends and the real action will start.  You can expect both banks to turn the screw on customers in arrears on anything not protected by the protocol agreed on defaulting home mortgages.  That means:

Taxpayers expecting an increase in bargaining power because public funds have been used to bail out banks will face bitter disappointment.  Bank pressure on distressed borrowers will be perceived, not as banking logic, but as an act of personal betrayal.  Calls will mount for political interference further down the chain from board representation. But ask yourself if the Government can’t be trusted to run its own house well, just what kind of a pig’s breakfast would come of TD’s lobbying within the banking system?

Ultimately the market will correct itself as economic growth returns, but, in the meantime, don’t bank on a return to the credit markets of yesterday with cheap mortgages and easy credit.  Even with NAMA’s surgery complete Irish banks will emerge cautious, pricey, highly selective and very aggressive on arrears.  Banks won’t be taking prisoners, and, when pushed, will argue with some warped justification that they are doing so to protect the common good – after all they have the State guarantee to safeguard!

Dear Brian,
Are your advisors nuts? It’s already proven that runaway public sector pay hit insane levels during the tenure of last Government. Like for like pay is at least 25% more than in the private sector. But switch to pensions and the contrast goes off the chart. That’s why talk among your civil servants of hitting private pensions, now that the ship of State is holed, threatens to take life jackets off passengers in steerage to give extra buoyancy to fellow guests in first class;

• Civil Servants, Teachers, Garda and High Court judges have pension pots that would require career-long contributions of 27%, 31%, 48% and 87% per annum respectively. The average contribution rate in the private sector is 11%. It’s not higher because people don’t have the money.
• Any worker retiring in the public sector on a salary at retirement of €60,000 has a pension pot worth over €1 million but 40% of the private work force have none and most that do have one that is wholly inadequate. This is retirement apartheid, plain and simple.
• Those that have none can’t afford them regardless of tax incentives. Those that do can’t afford to put in more. Now you cut tax relief and guess what happens next – you’ll swell the retirement ghetto.
• Public sector pension pots that pay 150% tax free cash and 50% pensions are worth between 15 and 18 times the salary paid at retirement. How many private pensions do you reckon will ever come with an asses roar of these staggering numbers? Just who do you think will be the comfortably retired in the future and who, having paid for it, will be writing begging letters to relatives?
• Private pensions are hugely exposed to investment losses and the unaffordable cost of buying a pension. Nobody in the public sector is because we, taxpayers, guarantee them and pay for most of them.
• We are already paying €2.3 billion in pensions to retired public sector workers but what’s building up on the clock in the background is a further €5.4 billion per year. That’s excluding the €1.7 billion that goes into the National Pension Reserve Fund.
• Do the math and the total capitalised value of the public sector pensions bill is running at €60 billion over the years ahead.
• In the private sector 90% of employers who are trying to guarantee pensions to their staff have schemes that are underfunded and are in deficit, meanwhile €1.2 billion of deficits from state agencies have already been transferred into the public sector pot. FAS was one such scheme, transferring with a €216 million black hole. 
  Minister, that’s why talk of slashing into private pensions will set fire to the smouldering anger already in the private sector. Whatever way you do it, you’ll simply make things worse;
• You cut tax relief on contributions and you’ll destroy the incentive to save. People aren’t stupid -why get reduced tax relief on the way in to be mugged by the full force of income tax on the way out.
• You tax lump sums at retirement today and you’ll be kicking people in the teeth – remember their retirement lump sums are already down 40% while those in the Public Sector are rising with increments.

There’s a simple principle to follow. Sort out the Public Sector first. Cut pay instead of social welfare and reform pensions. Equalise treatment and you come back to the private sector with your scalpel in clean hands. Do it any other way and you’ll destroy this window to make fair what has become unfair, to treat workers in both public and private sectors equally and to restore power to the Oireachtas.

Politics is local so they say, which explains why domestic events dominate our news, but the real story of recovery will first happen elsewhere. What's happening in US shopping malls has a direct bearing on the level and length of pain we are to experience and it's pretty easy to understand why. Exports account for over 80% of Irish GDP, that´s three times France's and over two and a half times Britain's dependency on demand from economies outside their own borders. Despite the surge in the importance of non-OECD economies like China, India and Brazil, the USA still remains the dominant world consumer. That's why the US remains the key to the lock.

Ireland is hugely leveraged to a global recovery, more so than any other economy in the world and similar to other very open, global traders like Singapore and Taiwan. While these are also experiencing above par economic contractions estimated at-5% this year compared to ours at -8%, neither is also dealing with a property burst created by reckless Government policies- the so-called structural deficit that Brian Cowen rejects as a spawn of Fianna Fail's political loins.

There's still very significant forces dragging against a global recovery and to underestimate them would be a folly but we are in far better shape than we were coming into this year:

The Big Threats

• Business defaults and consumer bankruptcy will create a vicious feedback loop in banking, magnifying losses.
• Rising unemployment will depress consumer demand
• Increased commodity prices, especially oil, will act like a tax on recovery from oil producing nations.
• Once the effect of the stimulus wears off, another downturn will begin.
• Government borrowing costs spike especially for the USA and interest rates rise, killing off any recovery

The Big Pluses

• US manufacturing has stopped falling.
• Credit is loosening.
• Economic growth forecasts for the USA and China are improving.
• Business and consumer confidence is rising as hope replaces despondency
• Huge excesses created by the recession should keep inflation down throughout next year

A global recovery, beginning in the second half of this year, can only be sustained into next year by an improvement in US housing and a return to spending rather than saving by US households. That hasn't changed. Governments may need to step in with new stimulus like car scrappage schemes, tax rebates and green initiatives to push consumers out shopping and avoid a second slump. Still the betting looks good for continuing strength from Asian economies where China and India are expected to grow 9% and 7% respectively next year while forecasts for the US have been upgraded by some major players like Bank of America from 1.8% to 2.6%. Europe, which is expected to contract at double the US rate this year, will be slower to recover next year due to much lower stimulus spending.

So it's early and it's fragile but it's time for hope. I prefer to see the glass half full - the strength and speed of the US economic recovery could yet defy sceptics and doomsayers and Ireland may begin to feel the fresh winds of economic recovery a lot quicker than it feels at the moment. That doesn't translate into fast growth, far from it. Next year would still feel like a recession with growth hardly above zero, but at least we'd stop contracting.

Tip: I can't really see how the ECB can seriously look at raising interest rates again until the back end of next year. That leaves about a year to repay as much lifestyle debt as you can, before the next cycle of rising rates creates runaway costs. So don't idle your cash on deposit for too long, get rid of those toxic loans left over from the big party 1994 to 2006. RIP.