Baby, You ain't seen nutin' yet

€275 billion debt to service on income of €132 billion and €9 billion of interest to pay per annum.

External debt -> cso.ie/releasespublications/ … aldebt.pdf

Quarterly national accounts (GDP/GNP) -> cso.ie/releasespublications/ … nt/qna.pdf

If that’s all it is, Boyracer, it isn’t too bad… so long as we don’t keep adding to it :blush:

Sure that’s only 2 x household income. :wink:

The situation is actually much much worse that this. Every thing he said is true, but he only talks about national government debt. The amount of money borrowed from foreigners by our banks and then lent out to Irish people, for mortgages, credit cards etc. adds enormously to the external debt, and the amount of interest that has to be payed.

There will be 8 → 9 billion of interest being payed on the national debt, but the same if not greater number on personal debt ( I don’t have the exact figures at hand. )

From a national economic point of view, what is important is the total external debt to GNP ratio. If the interest on the total external debt exceeds the expected long term GNP growth rate, then the game is over XX - The country can’t ever expect to gro sufficiently to repay its debts - End-game.

I’m afraid that if someone described to him just how screwed we actually are, his blood pressure would increase to terminal levels :stuck_out_tongue:

Shhh don’t tell anyone, Brian is having a nap (doesn’t matter which one).

Only if you keep adding to the debt. It is not enough that we get to a 3% deficit, we need to get to a surplus and use that surplus to actively reduce debt.

I was shocked to read this BarCap report ( irisheconomy.ie/BARCAPIRELANDnov192010.pdf ) (Courtesy of Mr. Lane on IE dot ie), not just because of the poor quality of it, but because the baseline scenario is to get to a 74% debt:GDP level by 2050. I view the report as being wildly optimistic in places (due to the usual caveats), so it is shocking to see this timeline.

Debt will greatly hamper the ability of the economy to grow, 80% is considered the point at which things start to go bad (hence its inclusion as the Maastricht level). Inflation isn’t going to help us, not least because our salaries are uncompetitive as it is, so the required level of inflation to add impetus is already quite high, but also because inflation isn’t going to be high in the eurozone. Partly because of demographics, partly because of desire.

Reducing the deficit quickly is the second most important thing we can do.

The most important is, of course, to secure cheap funding…
(The banks are already baked in…).

Agreed. The way I see it, there are three problems that must be tackled in order.

Immediate problem ( < 3 months time frame) Get access to a supply of money. There are only a few months working cash available. Once this runs out, it is check bouncing time. Check bouncing must be avoided at almost any cost. The thought of the government bouncing pay checks, welfare etc. is too scary to contemplate.

Medium term problem ( Time frame of a year or two) The national deficit must be reduced to zero as quick as possible - not over five or six years, but now! The reasons are two fold: Firstly, the debt to GNP ratio is dangerously high, almost certainly fatally high already. The country is bleeding to death, and the bleeding needs to be stopped as early as possible, before anything else can be done. Secondly, we can’t restructure the existing debt until the deficit is taken into account. Which brings me onto the third priority.

More long term. ( less than five years at most ) The external debt level is at fatal levels. This needs to be addressed. The external debt is so high, that it is more than a drag on the country’s economy, it will destroy the country. The debt is so high that it is impossible to pay it all back, or even to service the debt long term. Most people already know this; the bond holders need to be made aware of this. But there is also a simple reality of life, it just can’t happen, a situation where we go into a meeting with the bond market first thing in the morning and tell them we are defaulting, and then after lunch go back to the same meeting and ask for a loan. Before the debt is restructured, a coherent and plausible plan to reduce the deficit to zero must have begun. Once the deficit reduction plan is well on its way to being fully implemented, then is the time to do a restructuring of the debt. Where by restructuring I mean essentially, a negotiated default. The external bond holders and the irish state come to some type of agreement, whereby officially the country does not default, but the bond holders get burned.

But of course, this is not going to happen. We instead are going to be stuck with long drawn-out death march over the next decade, by which time things will have got so bad there is nothing left to rescue XX .

But it’s not about paying it back.

Nobody expects Iceland to pay off their debt - people pretend they do - but the real expectation is they get worn down by the perception of never-ending penury and then accept the selling of their natural resources as a kindness.

Ireland Inc. indeed.

Whose game do you wanna play?

“Sell it for buttons!” Out now from Hasbeen?
“Fuck you Mr. Bondmarket!” Coming soon from Activated…

The Finns managed it. I believe it is possible. Cheap money will make it probable.

The trick is to set up a load of firesales of bank assets. Make the first load really attractive and have someone make a whacking profit after two years. Pretty soon it’ll be “there’s a firesale in Ireland, you can’t go wrong”. Atomise the banks assets and sell them off on ebay. Every sucker in the shop will flock to them… :neutral_face:

if the debt and interest are remotely near the figures mentioned above just foget it default is the only sensible option. €9bn in interest FFS

It is a moot point.

“Give me the right to issue and control a nation’s money and I care not who governs the country.” Meyer Amschal Rothschild, International banker.

People with hard nothern accents make me want to check under my cars for bombs :confused:

The only bomb here is under the economy, and it’s a big one! :sick:

Papers this morning suggesting the following:

120bn loan/bailout/contingency/…
E500 house tax
Income tax increases
Banks merging
Social welfare cuts of 5%
water rates

I can’t wait to see how this plays out
120 bn. Fucking hell…

The situation may be slightly worse, because because I believe that it is usually considered that if the interest on the debt exceeds the GNP growth rate + the inflation rate, then the debt becomes unsustainable ( assuming that as YM explains that you don’t keep adding to the debt). However, in Ireland, deflation has been prevalent over the last 2 years and given the possible government cutbacks, will continue. This would imply that the net effect may be to increase the debt in the short term without having the benefit of borrowing. This would be truly unsustainable until eventually, inflation kicks in to reduce the absolute value of the loans.

As an aside, maybe somebody can help me with this please, as I am not an economist.

I believe that most of the money loaned was created using fractional reserve banking. This money didn’t exist until it was loaned out. The repayment of this money was dependent on its creation in the future by economic growth and inflationary factors reducing the ‘real value’ of the loan. If this is the case then lending is like the futures market, the future in this case being economic growth and inflation. This model has held sway for 50 years without problem, but is now coming to the end of its natural life (in Ireland anyway, but I suspect elsewhere also).
If most of this money doesn’t actually exist (as it has been created by the central banks and the federal reserve), surely can’t it be revalued at a rate of 5 to 1 or some other such ratio.

For example if a company worth 50 million borrowes 100 million from a bank, the bank has 10 million on deposit and using fractional reserve banking at 10%, is given 90 million by the central bank and subsequently lends the whole 100 million to the company (which is now worth 150 million). (figures for example only)

Now world economic growth slows, inflation becomes deflation and the company (whose assets are decreasing in value), although profitable, is unable to meet its loan repayments. Why is is not possible for the central bank to revalue its loan (which it has created out of nothing) at 5 to 1. It says to the bank that 90 million is now only 18 million, the bank says to the company that the 100 million is now only 28 million and the company is worth only 78 million?

If central banks can create money out of thin air, then it can evaporate into thin air.

Exactly. While the immediately pressing issues of concern at the moment relate to day to day survival over the coming few months, the real issue underscoring everything that has taken place is the power of the financial system, and the banks in particular.

There is absolutely no reason in moral terms why people should be beholden to these entites in order not to starve. They effectively create money (which we are legally obliged to spend our lives working in order to repay) from thin air. It only manifests itself through the issuance of debt. The concept is so ridiculous that most people cannot understand it.

Without the debt-based system there is no global ponzi scheme and there is no debt-induced penury. The entire system is based on hierarchy and control. Debt, including or especially that for home ownership, is meant to ensure that people are plugged into the system at an early age and never therefore get around to questioning it.

It is not a road to enlightenment or advancement. It is merely a means of keeping us controlled from above. We are no better than farm animals as it stands living in our little boxes on the hill.

Look at what Bernanke (with the backing of Trichet) has to say about the Chinese who are running a current account surplus ffs…

ft.com/cms/s/0/58602aa0-f370 … z15upBDetL

In other words, by applying their own (Bernanke and Trichet’s) bullshit mantras regarding the establishment of competitive advantage and economic Darwinism, the Chinese are apparently causing an unbalancing of the global economic system - and thats just not cricket.

As Cantona says, Kill the banks and their buddies. Step back. Dont take part. None of it exists except through their false concepts of money as debt and the legal enforcement of same. Without our compliance they have no system. Similarly, unless we continue to strive for their bullshit concepts surrounding the accumulation of non-required material tat they are and have nothing.

Easy peasy and no guns required.

*Among the ideas thought to be under consideration by the Irish government, which is taking advice from investment bankers at Rothschild, is to merge Anglo Irish Bank and building society Irish Nationwide and using the new entity as a conduit for troubled loans from other banks.
*

guardian.co.uk/business/2010 … osts-climb

Conflict of interest or what.