The National Debt


#341

What’s 4 Billion between Central Bankers? A rounding error. And most of this debt is not banking related. It’s the accumulation of decades of deficit spending.

The government can increase social spending now mainly because the cost of debt servicing has been cut in half, thanks to the ECB (not that anyone in Ireland will say go raibh maith agaibh).

That dynamic is about to be reversed and we will feel the pinch. Paschal Donohoe is absolutely right to remind people of this reality but everyone else around the Cabinet table wants more spending on their own projects.

Of course, if we were the US of A we could just keep printing dollars.


#342

Ireland is a state of Europe effectively.
No difference.
The EU has been printing, just like US of A.


#343

It has been ‘around’ €200bn for 4 years or even 5 years already, not going up or down. The economy has grown by around 20% in that time excluding the leprechaun leap pf 25% in 2015.

As Ireland will only be a heavy issuer of debt (all of it replacing old debt) for the next 18 months all these interest rates gotta do is stay well down until around March 2020. So far things look OK.


#344

The ECB started QE only when it looked like the Euro would collapse i.e. in 2012. They didn’t do QE for Greece or Ireland, no more than the Fed will bail out Illinois or Arkansas. The NTMA is doing its best to lock in the current near-zero rates but the tide is turning. Remember that time we told everyone we were fully funded for the next 18 months? Two weeks later, the Troika were in Dublin. :angry:

india.com/business/us-dollar … e-3296865/


#345

**Chance to cut debt is being squandered **
by Colm McCarthy
independent.ie/opinion/columnists/colm-mccarthy/chance-to-cut-debt-is-being-squandered-37296984.html

article paywalled


#346

At a guess the difference could be gross and net debt, i.e. excluding cash and cash equivalents

ntma.ie/business-areas/fundi … ical-debt/


#347

More likely an interest payment.


#348

The national debt clock page is just an estimate.

From the site

Clearly that’s not the way the national debt changes in reality.


#349

Tomorrow they will auction a 10 year 0.9% Treasury Bond 2028 , c€1.2bn.

I predict bids for this paper will cover this issue around 1.8 to 2.5 times. Plenty of demand in other words.

Sometime next year, around June or so, they will retire a c.5-10 year issue on which the interest payable is 5% or so. All the 2018 redemptions were funded by April this year. The blended interest rate is now below 3% on the total pile , EG under €6bn annual servicing, that was nearer €8bn some time ago.

The blended interest rate will drop in the next 2 years and will then stabilise long term around 2.2-2.4%

The blended interest rate on debt issued in 2018 only will end up around 1%.


#350

irishtimes.com/business/eco … -1.3625800


#351

Yes but we have strong fundamentals XX


#352

Ireland’s not even in the top 20 in GDP terms the US No.1 with Japan No.3 (formerly No.2 until out-clipped by China which has the geographical and population size advantage). We seem to feature in the mid 30’s or mid 40’s depending on what charts you look at. This kind of well “we’re not as bad as them so it could be worse”, means in real terms to my way of seeing things, yea it’s worse. So yea fundamentally speaking… XX


#353

The Department of Finance 2018 annual report on Ireland public debt uses modified GNI for the first time and it sends a strong warning about the risks to our debt sustainability.

Ireland’s GDP overstates the capacity of our government to service our debt i.e. to run a primary surplus large enough to meet our debt obligations. We simply can’t increase the level of tax that we collect from the multinationals who contribute so much to our GDP. The Economist EIU reports today that it is unclear whether the necessary measures are politically feasible.

merrionstreet.ie/en/News-Room/Re … _2018.html


#354

The fundamentals certainly *sound *strong, but only because the CB is determined to boost inflatulation


#355

It’s all good and well publishing these reports now but we are so far down the road at this stage its too late. We really should have been looking at this 5 years ago. For a country that was basically bankrupt 8 years ago you’d think debt sustainability and debt reduction would be at the forefront of everyone in powers minds but no, more important was welfare increases, public sector pay increases and tax cuts, all operational expenditure based on windfall taxes (corporation tax) while we were (and are) still running a budget deficit. It is absolutely nuts and just shows that nothing was learned from the last clusterfcuk. When the balloon pops next time, and it will at some stage, we are as badly positioned as were 10 years ago but we have a humongous national debt already this time. Its gonna be nasty but I’m resigned to it at this stage and am trying to best insulate myself from it when it happens. Someone please contradict me and cheer me up.


#356

Can’t contradict any of the above, sorry. But saying about the balloon ‘and it will at some stage’ indicates a belief that the popping is still a long way off, when many indicators are showing it’s already upon us, the sonic boom just hasn’t arrived yet, sorry not to be more cheerful


#357

At least mortgage lending is muted this time and the banks have not been able to go out and ramp up their lending figures.

Because few can genuinely afford to buy at these prices.
So the CBI rules and lack of fresh capital into the banks for new lending is the circuit breaker saving us this time.


#358

Oh I agree, its gonna pop sooner rather than later, I’d give it 18 months maximum.


#359

It may save our banks, may, but it won’t save the huge gap in current expenditure v income that will develop pretty quickly if our tax take drops.


#360

Where is the breathing space to allow countercyclical loosening in the next downturn? We don’t control our interest rates directly.

Perhaps govt should be adding a tax on mortgage payments to act as a brake on the economy.