Is Ireland going to go bankrupt?

nesf

jdivision wrote: »

To the people who think our debt is low, within two years ours will be at the percentage level of France without any of the services they have.

The thing is our debt right now is low. The problem is the budget deficit is so enormous. If we don't correct our budget deficit we'll soon find ourselves back at 1980s' debt levels.

daveirl

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heyjude

The issue isn't really whether Ireland is going to go bankrupt, the s*** will hit the fan a long time before that. Things will come to a head when other countries(overseas investors etc) refuse to lend us any more money. It doesn't matter whether out national debt is higher than Iceland, Latvia or any other country, what does matter is whether anyone will continue to lend to us and if so, at what price(interest rate).

The government is currently borrowing over €55m+ a day to keep the country running and if for any reason we could no longer borrow that, then they would immediately need to find over €1700m a month or else they wouldn't have enough cash to pay all the public sector wages, social welfare and other commitments. The pension levy wouldn't produce this much in a year, so imagine the measures that would be needed to account for that sum EVERY month. The problem is that most tax raising/ cost cutting measures take time to implement and at that stage, we'd have run out of time.

nesf

daveirl wrote: »

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We're lucky really, the bond market is going to force our Government to start getting its act together before it gets us up to Italy style 100%+ of GDP debt levels. Given our track history I wouldn't trust them to do it on their own steam.

daveirl

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nesf

daveirl wrote: »

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Just look at what a lack of market signals has done to the US.

10000maniacs

Ireland were lucky in that we had the breathing space to attempt to put it right. And we were slap in the middle of the European single currency. Iceland wern't so lucky. And now they will have to sell a lot of haddock to get out of that mess. €300,000 per head of capita is insurmountable by any set of calculations. Lets hope their Nordic friends aren't fair weather.
I'm surprised nobody in Iceland saw their banking pyramid scheme for what it was.

nesf

10000maniacs wrote: »

I'm surprised nobody in Iceland saw their banking pyramid scheme for what it was.

I remember Iceland being referred to as one giant hedge fund long before this happens. Normally in contrast to the UK which looked similar but at nothing close to the same scale.

Run_to_da_hills

Watching Telifis Eireann News to night, The Dole fund is rapidly drying up.

Shiny

Saw that also. She didn't look too concerned about it either.

thebman

No her logic was its always been like that except recently. Right so going backwards isn't a problem then :P

declanx

A number of questions to the economic people:1) Are there defined stages to a ression?2) What stage are we at?3) What should we do at each stage?Also will we get a repeat of CJ's 1987 banjaxed speech by our leader?

nesf

declanx wrote: »

A number of questions to the economic people:1) Are there defined stages to a ression?2) What stage are we at?3) What should we do at each stage?Also will we get a repeat of CJ's 1987 banjaxed speech by our leader?

http://en.wikipedia.org/wiki/Recession

It's a pretty accessible overview. There aren't really stages to a recession, it's more that you're in one or you aren't.

What to do is something that's very much up for debate. Keynesians would recommend a big Government stimulus package like Obama is doing, those of a more "supply side" bent would recommend tax cuts as a form of stimulus. You've then got monetary theories on increasing the money supply and cutting interest rates in an attempt to avoid deflation/encourage mild inflation.


In our situation we can neither do a big stimulus nor cut taxes because we're facing an enormous budget deficit that needs to be closed (we won't be loaned 20 billion a year when taxes only bring in 40 billion right now). So the Government will be forced to take deflationary actions like raising taxes and cutting spending which while painful are unfortunately necessary. We need to sort out the fiscal situation before we can recover from the recession.

10000maniacs

declanx wrote: »

Also will we get a repeat of CJ's 1987 banjaxed speech by our leader?

You mean the January 9, 1980 speech in which we were ordered to tighten our belts by CJH in his £2000 shirt paid for by the taxpayer?:D

"we will just have to reorganise government spending so that we can only undertake those things we can afford" CJH 09/01/80

jimbojones123

Interesting post. My view is that fiscal stimulus is small pickings when we have no monetary policy to lift us out of the situation. We are the sickboys of Europe at the moment and we can't devalue our currency to reflect this.

I just wrote an article related to this. If you could take the time to read and comment that would be wonderful.

[modedit] Do not pimp your blog on here, add it to your signature[/modedit]

Cheers

SkepticOne

jimbojones123 wrote: »

Interesting post. My view is that fiscal stimulus is small pickings when we have no monetary policy to lift us out of the situation.

Except of course we're not doing fiscal stimulus since we can't raise the money to do that.

jimbojones123

Yes so we lose on both sides. No monetary and no fiscal. Just tax cuts so ease the bleeding.

Useless as a long term policy on its own.

SkepticOne

jimbojones123 wrote: »

Just tax cuts so ease the bleeding.

The plan is to raise taxes not cut them.

BostonB

I think we're in trouble because the Govt is still only paying lip service to the issue. They are still on massive salaries and still flying around on trips for Paddys. If they were serious they'd be cutting back on everything trying to balance the books. Its almost like they are expecting a sudden upsurge to remove the need to make serious cuts.

jimbojones123

SkepticOne wrote: »

The plan is to raise taxes not cut them.

Apologies, thats what I meant....

up512=

I've carefully followed Radio/TV/Net/daily paper debates on the parlous state of the Irish State and Banking System for the last several months. I've found the general level of debate to be very poor, unserious, and very frustrating. At a time when the population requires top notch analysis, advice, and governmental honesty about the depth and causes of the crisis, all that has been forthcoming from the government is panic, and obfuscation, and from both the media and government : the message that "we" the Irish population, must all share the pain, although the vast majority of the Irish population had no responsibility in creating this almighty mess. The dearth of intelligent, honest, insightful, hardhitting commentary from the media, combined with an incompetent government, corrupt banking and business environment, and ineffective trade union leadership, have all combined to leave the Irish nation sleep-walking to the edge of an economic and social precepice. My belief is that finances of the Irish banking system, and the Irish state, are in very grave danger of total collapse.

This link gives a brutally honest update on Ireland's economic march to disaster :

http://wsws.org/articles/2009/mar2009/irel-m16.shtml

If a high level of honesty and intelligence were made available to the Irish population by the Media, Governnment, Big Business, Banking elite, and Trade Union leadership, then the present crises would have been managed properly and prevented from getting out of control.

Diarmuid

up512= wrote: »

If a high level of honesty and intelligence were made available to the Irish population by the Media, Governnment, Big Business, Banking elite, and Trade Union leadership, then the present crises would have been managed properly and prevented from getting out of control.

I think you are wrong. The information is all out there and readily available. However most people don't want to admit the truth and instead latch on/ listen to whoever peddles their favourite version of the situation, whether it's the Labour Party,SF, FF, SIPTU, Gerry Ryan, the Daily Mail etc....

thebman

Diarmuid wrote: »

I think you are wrong. The information is all out there and readily available. However most people don't want to admit the truth and instead latch on/ listen to whoever peddles their favourite version of the situation, whether it's the Labour Party,SF, FF, SIPTU, Gerry Ryan, the Daily Mail etc....

Yes people are ignoring facts because they choose to not because they aren't presented to them.

They want someone else to take the pain seems to be the general message from the public. Extra taxes are fine as long as they don't affect me attitude which just isn't good enough IMO.

wspolzielnia

Conversely any foreign assets held by Irish banks, Irish pension funds, private individuals etc would count against the above loans when calculating net external debt. So an Irish bank might borrow money from abroad and then invest it abroad for instance which would net out the original loan amount.

So, in essence, it's all one big "borrowing train"? A lends to B, B lends that money to C, C lends that money to D, D goes bankrupt and is unable to pay C back the money (and its interest), thereby affecting all concerned? Isn't that called a pyramid scheme?

AlekSmart

I think Diarmud has it about right......

I think you are wrong. The information is all out there and readily available. However most people don't want to admit the truth and instead latch on/ listen to whoever peddles their favourite version of the situation, whether it's the Labour Party,SF, FF, SIPTU, Gerry Ryan, the Daily Mail etc....

The rather gigantic Pink Elephant sitting in a pile of its own poo at the far corner is the astronomical Social Welfare bill.....particularly the extent and scale of claims by entire Social Sectors who have never paid a Cent INTO the system.

There is little wrong with those who are forced to claim benefits after establishing a contribution history,but the System as it stands cannot now support continuing long term claims from individuals who have no such contribution history.

I suspect that few really understand the extent of monies being disbursed throughout the system to such claimants.
There is a rather gigantic basic flaw in Increasing Base Taxation rates if that increase is only to be used in order to keep shovelling money into the DSFA furnace.......

Barname

BostonB wrote: »

I think we're in trouble because the Govt is still only paying lip service to the issue. They are still on massive salaries and still flying around on trips for Paddys. If they were serious they'd be cutting back on everything trying to balance the books. Its almost like they are expecting a sudden upsurge to remove the need to make serious cuts.

Your analysis could be very true.

The Gombeenarchy running government have such a poor grasp on things that they are expecting another construction boom to save them.

Its never going to happen. 500,000 will be on the dole by years end.

FF allowed all other domestic industries to decline during the building boom.

Nouveau riche lotto winner like attitude.

Class, you cannot buy it. Its why I admire the real multi generation wealthy, they know how to preserve wealth and pass it on unlike our squandering slobs of excess.

Most muppets like FF blow it on Mercedes, Jets, Helicopters, Haircuts, extravagant government buildings and personal McMansions.

Even now they sit on their hands, paralysed, ineffective. All they hint at are tax increases, yet HSE mangagement are receiving record bonuses!!!

FF refuse to tackle current expenditure, its why politicians should never be let near the purse strings. TAX TAX TAX is their solution!

What about public service reform? Brian has not got the balls.

No recession has EVER been reverted by increasing taxation. Are the Genii of FF about to prove us wrong? Or are they intent on destroying Ireland?

BostonB

Barname wrote: »

...
FF allowed all other domestic industries to decline during the building boom.

Thats a point thats missed by many.

Barname wrote: »

Nouveau riche lotto winner like attitude.

Class, you cannot buy it. Its why I admire the real multi generation wealthy, they know how to preserve wealth and pass it on unlike our squandering slobs of excess.

I don't think its about class. Just they have more experience in dealing with Money. Though theres an element of luck involved. Just as many loose it over generations.

If you look at the program that looks as celebs family history, often there been money generated in the family, through some unique opportunity, and the right skills to grasp it at that time. In time the market changes and the business fails and the money fades away. That seems to be very common.

Flamed Diving

AlekSmart wrote: »

There is a rather gigantic basic flaw in Increasing Base Taxation rates if that increase is only to be used in order to keep shovelling money into the DSFA furnace.......

Unless of course they both increase rates and lower welfare allowances.

Flamed Diving

Barname wrote: »

No recession has EVER been reverted by increasing taxation. Are the Genii of FF about to prove us wrong? Or are they intent on destroying Ireland?

What do you propose we do, in our situation?

Barname

Flamed Diving wrote: »

What do you propose we do, in our situation?

We cannot deflate our currency so we need to address public/civil sector wages.

PS/CS wages above €25,000 need to be slashed by 30% - 50%

Our PS/CS is living way beyond our means.

Examine other comparable EU countries and you will glean it for yourself.

Social Welfare and Rent allowance need to be slashed too.

The PS CS wages are too large a burden for the rest of the economy to bear. This makes us uncompetitive.