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 Post subject: Re: The National Debt
PostPosted: Mon Jul 16, 2018 11:47 am 
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Paying down debt Vs. spending on public services.
It's not an either or proposition. You can do both.

Consider the knock on effects.
Pumped up house prices = pumped up public/health services wages. People have to live somewhere. It's a vicious circle.

Right now, we're threading water paying the interest. Meanwhile the principle is still hanging there until the next crash.
It's the effect of this compound interest working in reverse that we should be thinking about.
The borrower is always servant to the lender.


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 Post subject: Re: The National Debt
PostPosted: Mon Jul 16, 2018 12:25 pm 
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snaps wrote:
Paying down debt Vs. spending on public services.
It's not an either or proposition. You can do both.

Consider the knock on effects.
Pumped up house prices = pumped up public/health services wages. People have to live somewhere. It's a vicious circle.

Right now, we're threading water paying the interest. Meanwhile the principle is still hanging there until the next crash.
It's the effect of this compound interest working in reverse that we should be thinking about.
The borrower is always servant to the lender.


Problem is that for our parish pump governments intend on buying votes

Buying Votes (Getting re-elected) >>> Paying off debt (and avoiding the long term consequences)

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 Post subject: Re: The National Debt
PostPosted: Mon Jul 16, 2018 2:50 pm 
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sorehead wrote:
The reason the debt went to 40B was because the government were unsustainably but delightedly taking in 10s of billions a year.....

Nooooooo! The €40bn was the debt from Haughey and Fitzgeralds governments that was incurred in the 1980s and never paid off during the celtic tiger era.

However solvent AAA rated Ireland was paying interest rates of around 4-5% on that small debt in the late 2000s

The Draghi legacy means less solvent and less AAA rated Ireland was issuing 10 year paper at 0.8% interest only last week.

In other words the servicing costs have tanked and we can service €200bn for not vastly more than we spent servicing €40bn 10 years back.

I do agree with Snaps that such low rates will not last forever and putting a proper dinge in that €200bn would be a great idea. But right now our DEBT/GDP ratio is around that of Germany and coming down faster and the premium for Irish debt over bunds is a small one now. Absent a major upheaval around Brexit time, we are finally safe.

However after 2020 (which will be funded in just over a year by the NTMA BTW) we only have around €10bn coming up for refinancing in any given year and higher interest rates will apply to that not to the whole pile of €200bn .

The long term legacy after 2020 is that we will spend €4.7-5bn servicing debt and that we spent €1.7-2bn before the crisis doing that.

€3bn net worse off every year, 1% of current GDP, unless we actually pay some of the debt off now and then.

Coulda been worse, thank fuck for Mario Draghi. :)

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 Post subject: Re: The National Debt
PostPosted: Mon Jul 16, 2018 2:59 pm 
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2Pack wrote:
sorehead wrote:
The reason the debt went to 40B was because the government were unsustainably but delightedly taking in 10s of billions a year.....

Nooooooo! The €40bn was the debt from Haughey and Fitzgeralds governments that was incurred in the 1980s and never paid off during the celtic tiger era.


Fact.

http://www.ntma.ie/business-areas/fundi ... ical-debt/


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 Post subject: Re: The National Debt
PostPosted: Mon Jul 16, 2018 3:10 pm 
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Braighni wrote:
2Pack wrote:
sorehead wrote:
The reason the debt went to 40B was because the government were unsustainably but delightedly taking in 10s of billions a year.....

Nooooooo! The €40bn was the debt from Haughey and Fitzgeralds governments that was incurred in the 1980s and never paid off during the celtic tiger era.


Fact.

http://www.ntma.ie/business-areas/fundi ... ical-debt/


Look at the LEFT hand column for Gods sake, it was the same €40bn rolling over year to year from 1996 to 2006 incl. :D

It was the infamous 1980s debt which finally stopped going up around 1994 (IIRC), we spend 15 years rolling it over thereafter. We paid nothing off during the celtic tiger era but we borrowed nothing either.

We paid well over 7% interest in 1994 on IR30bn or €36bn of debt and over 8% in 1992

https://www.oireachtas.ie/en/debates/de ... B5%5D=debt

Quote:
The estimate as published in the 1994 White Paper of receipts and expenditure for servicing the national debt, including provision for sinking funds and expenses of issuing debt, in 1994 is £2,229 million. The corresponding servicing costs for 1991, 1992 and 1993 were as follows: 1993, £2,390 million; 1992, £2,355 million; 1991, £2,353 million.


Thats €3bn a year back then and will be €5bn from 2021 onwards.

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 Post subject: Re: The National Debt
PostPosted: Mon Jul 16, 2018 3:41 pm 
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I was looking at that NTMA table, as far as I could see the NPRF wasn't included, presumably as it was FF-guaranteed to only be used for pensions. https://www.rte.ie/news/business/2007/0 ... 0-pension/

The NPRF ended up just being cash and other assets for the NTMA.

E.G in 2007 the NPRF was valued at 21B, so net debt would have been (37.6B - 21B) = 16.6B.

FF were simultaneously reducing debt, adding to the NPRF, and increasing spending massively (mainly on salaries). Sadly, as things turned out, the fundamentals weren't sound and it didn't work out well in the end.


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 Post subject: Re: The National Debt
PostPosted: Mon Jul 16, 2018 3:47 pm 
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The NPRF was mainly emptied to buy the zombie banks (rather than nationalise them with IMF debt etc) rather than fund current expenditure. You are correct on the net debt being under €20bn once the NPRF was netted off.

The new NPRF is the ISIF which has around €20bn in assets.

http://isif.ie/portfolio/performance/overview/

Quote:
The Directed Portfolio (public policy investments in Allied Irish Banks, Bank of Ireland and the Strategic Banking Corporation of Ireland made at the direction of the Minister for Finance) was valued at €11.2 billion at 30 June 2017.
Quote:

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 Post subject: Re: The National Debt
PostPosted: Tue Jul 17, 2018 12:14 pm 
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2Pack wrote:
Braighni wrote:
2Pack wrote:
Nooooooo! The €40bn was the debt from Haughey and Fitzgeralds governments that was incurred in the 1980s and never paid off during the celtic tiger era.

Fact.
http://www.ntma.ie/business-areas/fundi ... ical-debt/

Look at the LEFT hand column for Gods sake, it was the same €40bn rolling over year to year from 1996 to 2006 incl. :D

I wasn't arguing with you. Was backing you up.


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 Post subject: Re: The National Debt
PostPosted: Tue Jul 17, 2018 2:43 pm 
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Braighni wrote:
2Pack wrote:
Look at the LEFT hand column for Gods sake, it was the same €40bn rolling over year to year from 1996 to 2006 incl. :D

I wasn't arguing with you. Was backing you up.

2Pack wrote:
You are correct on the net debt being under €20bn once the NPRF was netted off.

Though now as we've seen the net debt was in fact reduced to around 16.6B. I remember optimistic projections that we were a year or two away from zero net debt.

Ireland's books were like Anglo's, anyone looking just at the provided figures could have thought everything was rosy.


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 Post subject: Re: The National Debt
PostPosted: Tue Jul 17, 2018 2:57 pm 
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Two icebergs on the horizon from the crow's nest of the Titanic:

Obviously a movement to a true interest rate. The Fed is already on the up and up.

Massive dependance on the Paye taxpayer, with erosion of that tax base in the next decade through further offshoring, automation and robotics.


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 Post subject: Re: The National Debt
PostPosted: Tue Jul 17, 2018 4:20 pm 
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Epicurus wrote:
Two icebergs on the horizon from the crow's nest of the Titanic:

Obviously a movement to a true interest rate. The Fed is already on the up and up.

Massive dependance on the Paye taxpayer, with erosion of that tax base in the next decade through further offshoring, automation and robotics.


Massive dependence on a subsection of the workforce by constantly removing people from the tax net and singing about it from the roof tops. Everyone should pay income related tax, even a minuscule amount, keeps them invested more in the country and its governance. Thing is when either iceberg hits the government are probably going to have to bring them back into the tax net anyways.

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 Post subject: Re: The National Debt
PostPosted: Wed Jul 18, 2018 11:27 pm 
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Epicurus wrote:
Two icebergs on the horizon from the crow's nest of the Titanic:

Obviously a movement to a true interest rate. The Fed is already on the up and up.

There is no sign of that in the Eurozone yet and we will have financed the last remaining rump ( c. €30bn of it) of our 5-6% debt at the current c. 1% rates if things last as they are for another year and a half. Borrowing as much as possible in 2018 is actually a good idea.

Oddly we have no repayments coming up in 2021 and thereafter its around €10bn a year or so. No large spikes anyway.

From mid 2021 onwards we move to refinancing €10bn a year(ish) and the marginal rate could be higher on that €10bn as we borrow anew to roll it over, a lot is Euro programme debt or sovereign borrowed since 2014 at low rates This starts to add up after a few years for sure but that is an issue for around 2025 or so more than the near future.

Relatively few dollops of cash are expected that could be used to pay off a years worth of bonds, selling the banks off is one and the other is the Apple fine if we are 'forced' to take it off them in the ECJ. That would require a surplus is run of around 0.6% of GDP, every single year and that this €2bn surplus is protected from the clusterfuck that is the HSE.

Combined they only add up to €20bn of the €200bn debt, I do think that we need to get the overall debt down to €100bn and 30% of GDP (whichever comes first) over the long term and that can only be done by borrowing less than comes up for repayment, year upon year, for many years.

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 Post subject: Re: The National Debt
PostPosted: Fri Jul 27, 2018 12:41 pm 
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Quote:
Central Bank chief urges Government to target bigger fiscal surplus

Central Bank Governor Philip Lane has advised the Government to target more ambitious fiscal surpluses for the next three years to ensure the rapidly growing economy does not tip into an "unsustainable overheating phase".
"In view of the prospect of further economic expansion during 2019-2021, a revision in the budget balance targets for 2019-2021 may be in order if a cyclically appropriate policy stance is to be attained," Philip Lane said.
"In particular, the projection of a general government deficit of €350m in 2019 is not sufficiently ambitious, given the cyclical conditions," he added.

Professor Lane made his comments at the MacGill Summer School in Glenties, Co Donegal today.
Discussing the longer-term economic challenges, Governor Lane said the debate about long-term priorities should focus on achieving the optimal mix of developmental policies. 
He said these policies must deliver sustainable growth, while recognising the financial constraints imposed by the legacy of high debt levels. 
They must aso factor in the implications of an ageing population and a successful transition to a low-carbon global economy, he stated. 

"From a policy perspective, it is clearly important to reduce vulnerability to crises by refraining from adverse macro-financial patterns such as persistently-excessive credit growth or unsustainable fiscal imbalances," Professor Lane said. 
"In addition, especially since crises can arise even if domestic credit and fiscal conditions are in reasonable shape, it is also important to ensure the macro-financial system is resilient even in the event of severe external shocks," he added. 


Can't say they weren't warned anyway.


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 Post subject: Re: The National Debt
PostPosted: Fri Jul 27, 2018 3:29 pm 
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Epicurus wrote:
Quote:
Central Bank chief urges Government to target bigger fiscal surplus

Central Bank Governor Philip Lane has advised the Government to target more ambitious fiscal surpluses for the next three years to ensure the rapidly growing economy does not tip into an "unsustainable overheating phase".
"In view of the prospect of further economic expansion during 2019-2021, a revision in the budget balance targets for 2019-2021 may be in order if a cyclically appropriate policy stance is to be attained," Philip Lane said.
"In particular, the projection of a general government deficit of €350m in 2019 is not sufficiently ambitious, given the cyclical conditions," he added.

Professor Lane made his comments at the MacGill Summer School in Glenties, Co Donegal today.
Discussing the longer-term economic challenges, Governor Lane said the debate about long-term priorities should focus on achieving the optimal mix of developmental policies. 
He said these policies must deliver sustainable growth, while recognising the financial constraints imposed by the legacy of high debt levels. 
They must aso factor in the implications of an ageing population and a successful transition to a low-carbon global economy, he stated. 

"From a policy perspective, it is clearly important to reduce vulnerability to crises by refraining from adverse macro-financial patterns such as persistently-excessive credit growth or unsustainable fiscal imbalances," Professor Lane said. 
"In addition, especially since crises can arise even if domestic credit and fiscal conditions are in reasonable shape, it is also important to ensure the macro-financial system is resilient even in the event of severe external shocks," he added. 


Can't say they weren't warned anyway.


Prob get the updated PC version along the lines of the response of "moaning and cribbing from the sidelines....."

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 Post subject: Re: The National Debt
PostPosted: Mon Sep 03, 2018 12:52 pm 
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Irish public debt third highest in the developed world

https://www.rte.ie/news/business/2018/0 ... t-deficit/

Quote:
Speaking on Today with Sean O'Rourke, Minister Donohoe said the public debt currently stands at around €201 billion.

On a per capita basis, the country's public debt is the third highest in the developed world and amounts to €42,000 for every person resident in the State.


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