The Increasingly Depressing Financial Crisis Thread

baby astrolab

almostnever wrote: »

Well, yeah. Because I don't know the full contents of the budget, so I'm open to all possibilities as far as what it will contain is concerned.

By "it" I assumed you meant the reduction in minimum wage not the budget itself (considering you said "in the context of the budget")

sock puppet

baby astrolab wrote: »

Certainly sounded like you were open to the possibility that it could somehow encourage work.



Then it is the cutting of social welfare that makes it more attractive to work, not the cutting of the minimum wage. That's like saying increasing the price of bottled water will make it more attractive to buy bottled water (in the context of putting a huge price on tap water)

Depends what you mean by encourage work. It clearly won't encourage more people to seek work. But it will encourage companies to employ more people.

almostnever

baby astrolab wrote: »

By "it" I assumed you meant the reduction in minimum wage not the budget itself (considering you said "in the context of the budget")

Nah, I meant the budget. Especially because

Defending the measures, the Government insisted its intention was to reform the welfare system so as to “incentivise work and eliminate unemployment traps”.

So I want to see how exactly they incentivise work and eliminate unemployment traps while reducing the minimum wage. It'll either be genius or absolutely hilarious when they backtrack :pac:

Namlub

baby astrolab wrote: »

Certainly sounded like you were open to the possibility that it could somehow encourage work.



Then it is the cutting of social welfare that makes it more attractive to work, not the cutting of the minimum wage. That's like saying increasing the price of bottled water will make it more attractive to buy bottled water (in the context of putting a huge price on tap water)

Oh, so you were just being obtuse then? The budget isn't a series of completely unrelated measures, things have knock-on effects on each other, again, within the context

sock puppet

Lol. Blair Horan on Primetime saying that if we had our own currency and devalued it then the poor would be protected. Why are idiots like this guy given air time?

jumpguy

sock puppet wrote: »

Lol. Blair Horan on Primetime saying that if we had our own currency and devalued it then the poor would be protected. Why are idiots like this guy given air time?

Really? If we had our own currency we'd all be back to barter.

sock puppet

jumpguy wrote: »

Really? If we had our own currency we'd all be back to barter.

Don't know what he meant really. I was a little surprised as he's a supporter of the EU and campaigned for Lisbon.

Good plan, fair measures, the only thing that may be slightly unfair is lowering the grant while increasing the student contribution fee, since the banks aren't likely to give out student loans.

It's harsh on public sector workers but I'd take the point that many private sector workers have taken paycuts or lost their jobs.
Although, my family is absolutely screwed. Has to be done.

Wolfe Tone

almostnever wrote: »

You do law, right? It's so bad that I read your post and instantly thought "Ryan v Attorney General!"

I can't wait to see the actual budget now, it'll be interesting to see exactly what happens to the pensions. I'm a bit dubious about the cut in the minimum wage too, but if that somehow works out in the context of the budget to encourage work then it's grand.

LOL! I was actually studying that today!

amacachi

Deleted User wrote: »

Good plan, fair measures, the only thing that may be slightly unfair is lowering the grant while increasing the student contribution fee, since the banks aren't likely to give out student loans.

It's harsh on public sector workers but I'd take the point that many private sector workers have taken paycuts or lost their jobs.
Although, my family is absolutely screwed. Has to be done.

It's ok, the banks are going to recapitalised, they'll be lending loads again within weeks!

How is it tough on the public sector? New teachers are going to be screwed to keep the older ones at their inflated rates and it's only new public sector workers will be starting at 10% lower than before. There's word of allowances paid for qualifications not being paid anymore to teachers (rightly so) but I've not seen if that's just for new ones again or not.
These cuts aren't enough. I don't think any cuts would be enough with the loan that state is getting, I'm disgusted with the government.

amacachi

amacachi wrote: »

It's ok, the banks are going to recapitalised, they'll be lending loads again within weeks!

How is it tough on the public sector? New teachers are going to be screwed to keep the older ones at their inflated rates and it's only new public sector workers will be starting at 10% lower than before. There's word of allowances paid for qualifications not being paid anymore to teachers (rightly so) but I've not seen if that's just for new ones again or not.
These cuts aren't enough. I don't think any cuts would be enough with the loan that state is getting, I'm disgusted with the government.

Oh, they'll definitely start lending again. Recent past experience shows this. :rolleyes:
Nah, I am slightly optimistic about the banks.

13,200 more staff reductions in the civil service. Existing pensions lower by at least 6%. They shouldn't have had those pensions in the first place, but for people who've been counting on getting the higher amount, it's a blow.

The tiered system of teaching salaries should be dumped, surely, but I wouldn't agree with you that these cuts aren't enough.
After all, the IMF and the ECB gave their stamp of approval.

amacachi

Deleted User wrote: »

Oh, they'll definitely start lending again. Recent past experience shows this. :rolleyes:
Nah, I am slightly optimistic about the banks.

13,200 more staff reductions in the civil service. Existing pensions lower by at least 6%. They shouldn't have had those pensions in the first place, but for people who've been counting on getting the higher amount, it's a blow.

The tiered system of teaching salaries should be dumped, surely, but I wouldn't agree with you that these cuts aren't enough.
After all, the IMF and the ECB gave their stamp of approval.

The staff reductions will just be natural wastage though, no-one is going to be fired. Which is bloody stupid.

For the teachers the pay scale is ridiculous. I'm sure you know of a certain maths teacher who teaches anything from 50-90% more than some other teachers in the same school yet is only paid more if she's been there longer. She's also left with far less time for grinds in order to supplement her income. It's beyond stupid.

As for the banks, **** them. All their debt is now your debt and my debt. It'll never be paid off. The IMF and EU are talking out of their arses, we're going to have to somehow pay interest of anything from 5-15 billion per year just to maintain the loan we're getting from them. They're just trying to secure the banks in the short-term and hopes it works out while crippling the Irish state.
This is why I'm Libertarian in economic terms, what kind of constitution allows a state to transfer a few hundred billion euros of debt onto its population without their say-so and with dubious benefits?

amacachi

amacachi wrote: »

This is why I'm Libertarian in economic terms, what kind of constitution allows a state to transfer a few hundred billion euros of debt onto its population without their say-so and with dubious benefits?

One which sets out a system of Government in which Government is given a mandate by the people for a certain number of years. A common form of democracy. You can say that the plan is bad, that the Government made bad decisions, but you can't say that it's undemocratic.
Not exactly sure if that was what you were saying, but I couldn't think of what else you could have meant.

The point is that we need our banks to lend money to business in order to create or keep jobs. They can't do this if they can't pay back their existing debts.
Admittedly, they don't look like doing this even if we stuff them full of money.

And yes, we will be stuck paying out about 10% of our tax take to the IMF. It's ****ed, but at this late stage, it's the best option we've got.

amacachi

Deleted User wrote: »

One which sets out a system of Government in which Government is given a mandate by the people for a certain number of years. A common form of democracy. You can say that the plan is bad, that the Government made bad decisions, but you can't say that it's undemocratic.
Not exactly sure if that was what you were saying, but I couldn't think of what else you could have meant.

The point is that we need our banks to lend money to business in order to create or keep jobs. They can't do this if they can't pay back their existing debts.
Admittedly, they don't look like doing this even if we stuff them full of money.

And yes, we will be stuck paying out about 10% of our tax take to the IMF. It's ****ed, but at this late stage, it's the best option we've got.

What I was saying is that government power needs to be massively limited. I don't see how it can be right for a state to be allowed to borrow about 50k on every single citizen for political reasons. It's a bit like religion, can you imagine trying to explain this to an alien without them thinking you're insane? Though our ideas of economics are probably completely mental to them. :pac:
Also, fcuk the banks. The bailout is for the Germans and Brits themselves. Most of the money "our" banks owe is to them, pension funds etc., they took the risks and they should pay. Instead they're hoping to make an extra profit on having made a mistake with their investment. The loan is going to come from them and go immediately back to them to cover their earlier losses, then we'll gradually pay them back the loan they gave us to pay what we already owed. :pac:
Also, had we just let the banks go to **** in the first place it would've been disastrous for 6-12 months, but things have a tendency to recover quickly after a big shock that leaves no after-effects. Instead we've been at the top of a sink of water for around 3 years and a year ago the plug was pulled and we're swirling more and more quickly to the bottom. The economy and the state will never recover from this if we follow what we're already doing. Unless we strike oil or,... no wait, we'd probably just give it away. :pac:

amacachi

amacachi wrote: »

What I was saying is that government power needs to be massively limited. I don't see how it can be right for a state to be allowed to borrow about 50k on every single citizen for political reasons. It's a bit like religion, can you imagine trying to explain this to an alien without them thinking you're insane? Though our ideas of economics are probably completely mental to them. :pac:
Also, fcuk the banks. The bailout is for the Germans and Brits themselves. Most of the money "our" banks owe is to them, pension funds etc., they took the risks and they should pay. Instead they're hoping to make an extra profit on having made a mistake with their investment. The loan is going to come from them and go immediately back to them to cover their earlier losses, then we'll gradually pay them back the loan they gave us to pay what we already owed. :pac:
Also, had we just let the banks go to **** in the first place it would've been disastrous for 6-12 months, but things have a tendency to recover quickly after a big shock that leaves no after-effects. Instead we've been at the top of a sink of water for around 3 years and a year ago the plug was pulled and we're swirling more and more quickly to the bottom. The economy and the state will never recover from this if we follow what we're already doing. Unless we strike oil or,... no wait, we'd probably just give it away. :pac:

The banks certainly should pay for the risks they took, but we need banks to give businesses capital. It'd all be far easier if we could have left the banks to flounder, but we couldn't.

And the difference between this being a loan of 50k on every citizen is that we're allowed to go to Germany, Britain or France and work there, without having to pay this debt. :pac:

amacachi

Deleted User wrote: »

The banks certainly should pay for the risks they took, but we need banks to give businesses capital. It'd all be far easier if we could have left the banks to flounder, but we couldn't.

Again, why not? Businesses and the rest of us would've been screwed in the short-term, but you do realise where all our wealth for the next 40 years will be going if we can somehow manage to not default?

And the difference between this being a loan of 50k on every citizen is that we're allowed to go to Germany, Britain or France and work there, without having to pay this debt. :pac:

Fcuk them too. It's pressure from them that made the government take on this debt for the state as far as I can see. I've always been massively pro-EU but making states take the burden of debt from private companies is completely wrong.

amacachi

amacachi wrote: »

Fcuk them too. It's pressure from them that made the government take on this debt for the state as far as I can see. I've always been massively pro-EU but making states take the burden of debt from private companies is completely wrong.

No, it wasn't. Most of the EU finance ministers advised against NAMA.

amacachi

Deleted User wrote: »

No, it wasn't. Most of the EU finance ministers advised against NAMA.

Different issue completely to nationalising the banks.

sock puppet

amacachi wrote: »

The economy and the state will never recover from this if we follow what we're already doing. Unless we strike oil or,... no wait, we'd probably just give it away. :pac:

Hyperbole much? The budget will eventually be balanced one way or another.

As for the oil comment, I thought you were a libertarian:pac:

edit:

amacachi wrote: »

but you do realise where all our wealth for the next 40 years will be going if we can somehow manage to not default?

Where are you getting 40 years from?

amacachi

sock puppet wrote: »

Hyperbole much? The budget will eventually be balanced one way or another.

As for the oil comment, I thought you were a libertarian:pac:

Hyperbole? We're what, 15 billion a year in the red and have to get to about 8 billion a year in the black to pay off the loan in the timeframe being bandied around. That's a difference of 23 billion a year on where we are now. There's no way that is possible. Some politicians and the EU and IMF (who are just stalling for something, not sure what) claim it'll all work out, not many independent economists I've come across share those views.

I am a libertarian, but if a state is going to place a huge debt on my shoulders they sure as fcuk should pay it off if given the opportunity. :pac:

amacachi

sock puppet wrote: »

Where are you getting 40 years from?

200billion over 20 years would cost 20 billion a year to pay back. Not going to happen. Over 40 years at the same interest rate (I'm not a mathematician so it's a very rough estimate) would cost around 14 billion a year to pay back. Ah, turns out it's even worse than what I said in the above post. :pac:

sock puppet

amacachi wrote: »

200billion over 20 years would cost 20 billion a year to pay back. Not going to happen. Over 40 years at the same interest rate (I'm not a mathematician so it's a very rough estimate) would cost around 14 billion a year to pay back. Ah, turns out it's even worse than what I said in the above post. :pac:

I doubt we'll be paying it off as such. More like we'll roll over on it and a combination of inflation and economic growth will reduce the burden it places on our society (if we don't default as you say). Of course that's also dependent on the interest rate being at an acceptable level...

amacachi

sock puppet wrote: »

I doubt we'll be paying it off as such. More like we'll roll over on it and a combination of inflation and economic growth will reduce the burden it places on our society (if we don't default as you say). Of course that's also dependent on the interest rate being at an acceptable level...

They'll have to pay the interest at least surely? That's still 8 billion a year.

randylonghorn

Noel2k9 wrote: »

So there's going to be a 5% decrease in grants, and a 33% hike on fees..

Well done, government. Well done.

5% cut in non-pay grants to colleges from the govt. is what has been announced, not a 5% cut in student grants.

Not, mind you, that I'm guaranteeing that that won't happen as well, but it hasn't been mentioned as yet.

amacachi wrote: »

There's word of allowances paid for qualifications not being paid anymore to teachers (rightly so) ...

The problem with that is that it disincentivises teachers from further / higher study, doing Masters, PhDs etc.

If you're going to be paid the same whether you have a BA / BSc or a PhD, why bother?

amacachi wrote: »

I'm sure you know of a certain maths teacher who teaches anything from 50-90% more than some other teachers in the same school yet is only paid more if she's been there longer.

How is that happening? There is a set maximum number of teaching hours for each grade, i.e. teacher, assistant principals, deputy principals, etc. If someone is teaching 50% - 90% more than her colleagues on the same grade, she's being screwed, and normally if its to that extent the unions will kick up whether the teacher asks them to or not.

Deleted User wrote: »

One which sets out a system of Government in which Government is given a mandate by the people for a certain number of years. A common form of democracy. You can say that the plan is bad, that the Government made bad decisions, but you can't say that it's undemocratic.

Actually, Conor, I can ... it is a normal part of our democratic process that a government that screws up badly resigns and goes to the country, regardless of whether they are full-term or not ... hell, governments have fallen over the appointment of an attorney-general.

Normally they would be put under severe pressure from the opposition to do so if they didn't go voluntarily. The difference here is that underneath their bluster the last thing FG / Labour want is to be thrown in at the deep end to fix this. Their attitude is "FF got us into this mess, let them take the hard decisions and bear the backlash, we'll come in on our white chargers then and tell people how our hands are tied by the shower before us!"

amacachi wrote: »

Fcuk them too. It's pressure from them that made the government take on this debt for the state as far as I can see. I've always been massively pro-EU but making states take the burden of debt from private companies is completely wrong.

I'm a little confused at this stage ... I initially thought the pressure was probably mostly from countries like Germany and the other countries whose banks / investment organs were bondholders, as they didn't want the backlash to hit their home turf.

But then Angela Merkel comes out and says the bondholders need to share the pain ... and she's dead right, of course! They took the risk, just like anyone else who invests ... the value of your investment may go up or down, etc. That's what interest is the payment for ... risk. The higher the perceived risk, the higher the interest, and vice versa.

So now I'm thinking it's more the ECB putting on the pressure than the individual countries.

amacachi

randylonghorn wrote: »

How is that happening? There is a set maximum number of teaching hours for each grade, i.e. teacher, assistant principals, deputy principals, etc. If someone is teaching 50% - 90% more than her colleagues on the same grade, she's being screwed, and normally if its to that extent the unions will kick up whether the teacher asks them to or not.

I don't know how it comes to happen. In my old school there were 42 fulltime teachers and in one year 24 classes which works out as each teacher doing about 57% of class periods on average while I saw a couple of teachers' timetables with ~40 classes out of 45 per week marked in.

I'm a little confused at this stage ... I initially thought the pressure was probably mostly from countries like Germany and the other countries whose banks / investment organs were bondholders, as they didn't want the backlash to hit their home turf.

But then Angela Merkel comes out and says the bondholders need to share the pain ... and she's dead right, of course! They took the risk, just like anyone else who invests ... the value of your investment may go up or down, etc. That's what interest is the payment for ... risk. The higher the perceived risk, the higher the interest, and vice versa.

So now I'm thinking it's more the ECB putting on the pressure than the individual countries.

Merkel says that bondholders need to take some of the pain, bond prices continue to go up, Ireland has even less choice but to take the loan. Herself and a couple of the others have really been taking the piss the last few weeks with their manipulation.

sock puppet

amacachi wrote: »

They'll have to pay the interest at least surely? That's still 8 billion a year.

They will. But what you're not considering is that whatever the government debt stablises at won't be considered a large sum of money as time goes on. For example if we had growth rates of 3% then our GDP would double in 23 years.

randylonghorn

amacachi wrote: »

I don't know how it comes to happen. In my old school there were 42 fulltime teachers and in one year 24 classes which works out as each teacher doing about 57% of class periods on average ...

That "on average" as a calculation is pretty meaningless though. Most schools these days are large enough that the principal has no allocated teaching hours; in a school of the size you describe I would assume there would be at least one deputy principal, if not more, with either no teaching hours or a very small number. Assistant principals (A-post holders under the old system) would also have reduced teaching hours in lieu of the fact that they have taken on certain administrative duties within the school.

"Ordinary" teachers (i.e. without posts of responsiblilty) are expected to teach 22 hours per week. Assuming teaching periods of 40 minutes that works out at 33 such periods. Add in a couple of periods supervision ... probably 35 / 36 periods on average?

amacachi wrote: »

Merkel says that bondholders need to take some of the pain, bond prices continue to go up, Ireland has even less choice but to take the loan. Herself and a couple of the others have really been taking the piss the last few weeks with their manipulation.

I meant pressure to pay the bondholders in full, though, rather than pressure to take a loan from the central contingency fund or whatever they are calling it.

I'm not sure that taking that loan is the biggest problem ... at least it's likely to be at a more favourable rate than the money markets are likely to offer us from here on in, and it provides some stability. It means a loss of face certainly, but it may be the right course of action.

The bigger issue is the size of the loan, and that to a great extent is determined by the size of the debt which the Irish banks have entered into, and which the Irish government has apparently decided to not alone assume on their behalf but to honour to the last red cent. Surely there must be pressure coming from somewhere to take that course?

The Irish banks have had to take a "haircut", through NAMA in particular, and rightly so .... they took incredibly stupid risks, and it blew up in their face. But the international bondholders / investors also took a risk in providing capital to them, and they did so with their eyes wide open. Why are they immune from the consequences of their bad decisions?

Merkel is right in saying that the bondholders need to share the pain. It might not have been the best-timed comment from our point of view; hard to know if it was deliberately manipulative though. She seems to have drawn back somewhat under internal pressure in Germany and on seeing that her remarks had caused a minor panic in the markets. But while I was surprised she was that blunt, I agree completely with her, and welcome the fact that the leader of a (the?) major European power has put it out there.

sock puppet

randylonghorn wrote: »

The Irish banks have had to take a "haircut", through NAMA in particular, and rightly so .... they took incredibly stupid risks, and it blew up in their face. But the international bondholders / investors also took a risk in providing capital to them, and they did so with their eyes wide open. Why are they immune from the consequences of their bad decisions?

Merkel is right in saying that the bondholders need to share the pain. It might not have been the best-timed comment from our point of view; hard to know if it was deliberately manipulative though. She seems to have drawn back somewhat under internal pressure in Germany and on seeing that her remarks had caused a minor panic in the markets. But while I was surprised she was that blunt, I agree completely with her, and welcome the fact that the leader of a (the?) major European power has put it out there.

Not that I disagree but bondholders are not all professional investors. Bondholders also include other Irish and European banks. There's also the issue that senior bondholders and depositors have the same seniority.

randylonghorn

randylonghorn wrote: »

Actually, Conor, I can ... it is a normal part of our democratic process that a government that screws up badly resigns and goes to the country, regardless of whether they are full-term or not ... hell, governments have fallen over the appointment of an attorney-general.

Indeed they have, but staying in isn't undemocratic. That is the point. It is allowed by the democratic system we have (as evidenced by the fact that they are still here now), and therefore, it is, by definition, democratic.

randylonghorn

sock puppet wrote: »

Not that I disagree but bondholders are not all professional investors. Bondholders also include other Irish and European banks.

Oh, I know, including some big European banks, which is why I said above that "I initially thought the pressure was probably mostly from countries like Germany and the other countries whose banks / investment organs were bondholders, as they didn't want the backlash to hit their home turf."

But most of them are in a far better situation to absorb the loss, especially spread out among them, than our banks and our government is.

And it's only fair ... they took the risk in anticipation of profit, it backfired, they should share the pain.

You know ... the way we as citizens are constantly being urged to do?

Nor am I advocating total default btw ... rather a 'haircut' of about one third. The Irish banks are essentially bankrupt, and in those circumstances, paying creditors €2 in every €3 is far from a bad deal for them. Instead of which, we're bankrupting the country as well to pay the full amount.

That kind of a 'haircut' wouldn't take us out of trouble by any means, but at least it would take us out of hell and into purgatory, with some hope for salvation before your grand-kids are in college!

sock puppet wrote: »

There's also the issue that senior bondholders and depositors have the same seniority.

Small(er) depositors should be completely protected under a revised guarantee scheme. And by smaller I'd be thinking up to a million on an individual and 5 million on an institutional basis. After that, let them negotiate the best terms they can get with the individual bank.

Deleted User wrote: »

Indeed they have, but staying in isn't undemocratic. That is the point. It is allowed by the democratic system we have (as evidenced by the fact that they are still here now), and therefore, it is, by definition, democratic.

What is allowed by a weakness in the system isn't by definition democratic ... what it rather points to is that the system is not fit-for-purpose.

Just as when someone commits a crime but gets away with it on a technicality in court, that doesn't make the original action moral.