(an email exchange)
> On Tue, Oct 14, 2008 at 12:30 PM, Karim wrote:
>
> BN 11:02 Lenihan Says Irish Economy to Contract Next Year by 0.75%
>
> BN 11:02 Ireland’s 1% Levy will apply to all incomes
>
> BN 11:01 Ireland’s 2% Income Levy will apply over 100,000 Euros
>
> Ireland raising income taxes to pay for bank bailouts; also
> raising VAT and fuel taxes.
>
> If others do same, will pressure ECB to cut rates further to offset economic impact.
>
Yes, but rate cuts won’t offset fiscal drag.
Instead, the budget deficit will rise due to falling revenues and rising transfer payments, and Ireland’s own credit rating and guarantee of bank deposits will lose credibility.
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