Why has public debt not fallen under the troika programme?

Heads the ball

View wrote: »

Politically speaking, the first and second statement would be viewed (by others) and would in practice almost certainly amount to the same thing.

The first after all is what the state gave back in October 08 for the banks, the second is what the state will, after recapitalizing the banks, largely end up having done.

Second, once such a guarantee were given, the whole debate here and elsewhere would be even more centred on populist calls to default and "let others pay the debts" to the bond holders (whether they be Irish or other). It massively increases the risk of it happening in other words.

OK well I have pointed out how they are different so if you want to show me how they are same I would be grateful.

They are different because:
1: the terms themselves would actually be written differently
2: the timings of cashflows under a guarantee are uncertain and indeed may not even happen (the ECB may never have to pay) whereas under a "full take on" of our debt the timing of cashflows would be certain and in accordance with the terms of our debt instruments and the ECB WOULD definitely have to pay.

So that is how they are different.

Re your second point that we would given in to populist calls for default. That risk would be hemmed in by the fact that a default would make it really really hard to get money from anyone ever again.

But again the riskof default is mitigated because we are in a program with long term objectives and presumably passes some economist's "is this long term sustainable" test

Heads the ball

golfwallah wrote: »

Don't know what kind of alternative universe you would like to live in - but that's the way the world I live in actually works.;)

But its not the world you live in - because the banks couldnt do so and your arguements of moral hazard and paying debts where they belong failed to convince the powers that be in 2008 - and still to this day with the paying of bondholders.

Heads the ball

Would it be better to move the last number of posts into a new thread entitled?

"Should the ECB guarantee Ireland debts and related matters"

Or would Mods be agreeable to continuing the discussion here as the current thread may have come to a natural end?

antoobrien

Heads the ball wrote: »

OK well I have pointed out how they are different so if you want to show me how they are same I would be grateful.

They are the same becuase it's not down to what you say, or even how you say it, it's down to what others hear.

What we said in 2008:
We are going to Guarantee the deposits (incl bondholders) of the 6 Irish owned banks (AIB, Anglo, BOI, EBS, IL&P, IN) totaling up to €400bn.

What the markets (and apparently the Irish public) heard in 2008:
The Irish taxpayer are going to pay €400bn.

What has actually happened since - we've committed to putting €64 bn in Capital into the banks and "bought" large portions of the commercial loanbooks off the banks (NAMA paid about €30bn for €70bn of 'assets'). We've actually paid in the region of €30bn.

What people think happened:
We've already paid in €64bn now & Nama has cost €70bn.

When people hear guarantee, they think responsibility to pay for. The details of what will happen don't matter, the perception of what could happen does.

View

Heads the ball wrote: »

OK well I have pointed out how they are different so if you want to show me how they are same I would be grateful.

They are different because:
1: the terms themselves would actually be written differently
2: the timings of cashflows under a guarantee are uncertain and indeed may not even happen (the ECB may never have to pay) whereas under a "full take on" of our debt the timing of cashflows would be certain and in accordance with the terms of our debt instruments and the ECB WOULD definitely have to pay.

So that is how they are different.

I specified politically speaking. Political decisions are shaped by events that have happened (e.g. The giving of a guarantee), since people frequently do re-act to those events and seek to use them to their advantage.

Heads the ball wrote: »

Re your second point that we would given in to populist calls for default. That risk would be hemmed in by the fact that a default would make it really really hard to get money from anyone ever again.

But again the riskof default is mitigated because we are in a program with long term objectives and presumably passes some economist's "is this long term sustainable" test

If you note, concerns about the long term don't feature in populists' rethoric - they want things to happen "now" and wave away questions about "And what happens after we default?" as it is.

The idea you seem to be suggesting is a political non-starter since no one will put themselves on the hook by giving a blank cheque guarantee to pick up the tab for a potential Irish default and, for that matter, we would be nuts to agree to it for the other states. It would take a lot of complicated rules, laws and cross-guarantees - which do not exist at the moment - for anyone to contemplate going down this road.

View

Heads the ball wrote: »

Would it be better to move the last number of posts into a new thread entitled?

"Should the ECB guarantee Ireland debts and related matters"

Or would Mods be agreeable to continuing the discussion here as the current thread may have come to a natural end?

From memory, I think the member states are the guarantors of the ECB's debts. I don't think they could be the guarantor of the member states' debts as a result.

Heads the ball

antoobrien wrote: »

They are the same becuase it's not down to what you say, or even how you say it, it's down to what others hear.

What we said in 2008:
We are going to Guarantee the deposits (incl bondholders) of the 6 Irish owned banks (AIB, Anglo, BOI, EBS, IL&P, IN) totaling up to €400bn.

What the markets (and apparently the Irish public) heard in 2008:
The Irish taxpayer are going to pay €400bn.

What has actually happened since - we've committed to putting €64 bn in Capital into the banks and "bought" large portions of the commercial loanbooks off the banks (NAMA paid about €30bn for €70bn of 'assets'). We've actually paid in the region of €30bn.

What people think happened:
We've already paid in €64bn now & Nama has cost €70bn.

When people hear guarantee, they think responsibility to pay for. The details of what will happen don't matter, the perception of what could happen does.

OK I think what you are saying is, they may not be the same in REALITY but its what others will PERCEIVE?

I would propose that the guarantee be explained properly to everyone (you'll note that was never done in relation to the bank bailout).

But my question back to you is: should we be held hostage to irrationality?

Page one of every economic textbook assumes "rational consumers" and presumably rational citizens. Im not sure any economic discussion is possible here if we can point to people behaving irrationality.

Heads the ball

View wrote: »

I specified politically speaking. Political decisions are shaped by events that have happened (e.g. The giving of a guarantee), since people frequently do re-act to those events and seek to use them to their advantage.



If you note, concerns about the long term don't feature in populists' rethoric - they want things to happen "now" and wave away questions about "And what happens after we default?" as it is.

The idea you seem to be suggesting is a political non-starter since no one will put themselves on the hook by giving a blank cheque guarantee to pick up the tab for a potential Irish default and, for that matter, we would be nuts to agree to it for the other states. It would take a lot of complicated rules, laws and cross-guarantees - which do not exist at the moment - for anyone to contemplate going down this road.

1 is it your position that they are the same or not?
2 maybe it is a political starter, if it was argued as being in the wider interests of stability

golfwallah

Heads the ball wrote: »

But its not the world you live in - because the banks couldnt do so and your arguements of moral hazard and paying debts where they belong failed to convince the powers that be in 2008 - and still to this day with the paying of bondholders.

The Irish government acting to guarantee the debts of its own banks and expecting those who fund ECB to guarantee all Eurozone debt are two different things.

The Irish Government had the power to take this course of action, simply because we were lucky enough to be in the EU and were bailed out under the terms of the EU / IMF Memorandum of Understanding, which required that we repay our loans.

I think this argument is about running its course. There are different views but you have to convince enough people if you want to have an alternative world where debts are picked up by others, when money is spent unwisely and doesn't produce the returns to enable loans to be repaid.

After all, the word "credit" comes from the Latin "credo" (translated "I believe"), that if I lend you a Euro, you will eventually pay it back.

Can't see many people jumping on board your bandwagon of getting others to pay your debts - "for the common good" or "in the interests of stability". Can't see what sort of stability this would bring, in fact, it would make things a whole lot worse.

But, hey, it's a free country, so good luck with your campaign.

antoobrien

Heads the ball wrote: »

OK I think what you are saying is, they may not be the same in REALITY but its what others will PERCEIVE?

And that should be the first lesson in economics 101.

Heads the ball wrote: »

I would propose that the guarantee be explained properly to everyone (you'll note that was never done in relation to the bank bailout).

We guaranteed to pay all deposits (including bonds) of the 6 banks in question in the event of their failure. The total in all 6 banks was €400bn.

What else is there to explain?

Heads the ball wrote: »

But my question back to you is: should we be held hostage to irrationality?

Page one of every economic textbook assumes "rational consumers" and presumably rational citizens. Im not sure any economic discussion is possible here if we can point to people behaving irrationality.

Again back to perception of rationality and irrationality. It might be irrational to you that actor a wants to take action z resulting in you losing money, however to actor a it might mean profit. Therefore that action is rational, not matter what damage it does to you and potentially the wider system.

The problem with the system is that it allows profits to be made on "losing" positions. That might seem to be irrational to you and me but it keeps the hedge funds (hence my pension investments) in the black.

Heads the ball

golfwallah wrote: »

The Irish government acting to guarantee the debts of its own banks and expecting those who fund ECB to guarantee all Eurozone debt are two different things.

Yes I agree they are different but they do have sufficient similarities and their relevant to this conversation is:

1: They involved a guarantee by one party of another party's debts
2: The bank guarantee was sufficiently recent
3: Both transactions would/are of fundamental importance to the Irish economy

golfwallah wrote: »

I think this argument is about running its course. There are different views but you have to convince enough people if you want to have an alternative world where debts are picked up by others, when money is spent unwisely and doesn't produce the returns to enable loans to be repaid.

OK Sorry you feel its run its course. Im not sure I have to convince anyone to have a discussion? Or that the discussion should be closed because you think i wouldnt get "enough" people to agree with me?

golfwallah wrote: »

Can't see many people jumping on board your bandwagon of getting others to pay your debts - "for the common good" or "in the interests of stability". Can't see what sort of stability this would bring, in fact, it would make things a whole lot worse.

Its not a bandwagon just a discussion. I suppose my only response was enough people got behind the bank guarantee which had similar "bad principles." The stability it would be bring would be lower interest rates and less fears that certain countries would default.

Again just for clarity, I have never said they should pay our debts

Heads the ball

antoobrien wrote: »

And that should be the first lesson in economics 101.



We guaranteed to pay all deposits (including bonds) of the 6 banks in question in the event of their failure. The total in all 6 banks was €400bn.

What else is there to explain?.

I was proposing that we explain that the transaction was not a payment of ireland debts just a guarantee. I was proposing that ini the context of the risk/fear you had that people may percieve this as being something that it was not.

antoobrien wrote: »

Again back to perception of rationality and irrationality. It might be irrational to you that actor a wants to take action z resulting in you losing money, however to actor a it might mean profit. Therefore that action is rational, not matter what damage it does to you and potentially the wider system.

The problem with the system is that it allows profits to be made on "losing" positions. That might seem to be irrational to you and me but it keeps the hedge funds (hence my pension investments) in the black.

I would not disagree with a word of this, in fact I agree fully with it.

antoobrien

Heads the ball wrote: »

I was proposing that we explain that the transaction was not a payment of ireland debts just a guarantee. I was proposing that ini the context of the risk/fear you had that people may percieve this as being something that it was not.

Anybody who has ever put up a guarantee for a loan (a great many of the adult population) shouldn't need this explained to them. It's the rampant idiocy of people (especially in the media), that made this into something that it was not.

Heads the ball

antoobrien wrote: »

Heads the ball wrote: »

I was proposing that we explain that the transaction was not a payment of ireland debts just a guarantee. I was proposing that ini the context of the risk/fear you had that people may percieve this as being something that it was not.

Anybody who has ever put up a guarantee for a loan (a great many of the adult population) shouldn't need this explained to them. It's the rampant idiocy of people (especially in the media), that made this into something that it was not.

Again i actually agree with some if the above. Especially the media part.

But i dont think we want to be hemmed in by irrationality.

I dont think my proposal can be dismissed because you fear it would be misunderstood.

I guess i hope that any politician i elect would do what is right firstly and have the moral courage to do so without fear of irrationality/negative media etc... And that he/she would do all possible to ensure people understand it secondly

sarumite

Heads the ball wrote: »

OK lets look at it like this:

The bank bailout (which I am opposed to) happened. And the argument of "its not our debt" didnt hold then, so why should it hold now.

Give it another way:

The "its not our debt" argument didnt work to avoid us having to bail out the banks (lets call that an "unfavourable" transaction) whereas it seems the "its not the ECBs debt" argument ought to work now (when a potentially "favourable" to us transaction is being considered).

But even if you still think I hold contradictory views:

I do.

1: I am asking for a guarantee, not a "taking over"/novation of our debt.

The same thing the government (the thing you are opposed to) gave the banks.

2: The black and white mantra of "its not our debt" cant be applied to my proposal as that (very sensible rule) has been abandoned already in the overall interests of stability etc

Strange you use 'black and white' while simultaneously opting for a very muddy grey analogy.

3: my opinion on the bank bailout is moot in that it has already occured. Lets say for argument "I am in favour of the bailout which has happened" - it doesnt really make my case for the ECB guarantee any stronger. So having an opinion that we should have done X, not Y, way back then should not hurt my argument now.

Though when your previous opinion is diametrically opposed to your current opinion, it does make me wonder which opinion I should trust.

antoobrien

Heads the ball wrote: »

Again i actually agree with some if the above. Especially the media part.

But i dont think we want to be hemmed in by irrationality.

I dont think my proposal can be dismissed because you fear it would be misunderstood.

I guess i hope that any politician i elect would do what is right firstly and have the moral courage to do so without fear of irrationality/negative media etc... And that he/she would do all possible to ensure people understand it secondly

I think the problem is that you're reading text books, where in the real world decisions are often trying to pick the best of a seemingly irrational lot.

Actually could you restate your proposal because it's gotten lost in all the shuffle.

Heads the ball

antoobrien wrote: »

I think the problem is that you're reading text books, where in the real world decisions are often trying to pick the best of a seemingly irrational lot.

Actually could you restate your proposal because it's gotten lost in all the shuffle.

Sure thing, the proposal is:

The ECB should guarantee Ireland's debt

antoobrien

Heads the ball wrote: »

Sure thing, the proposal is:

The ECB should guarantee Ireland's debt

Non runner, because it's (a) illegal and (b) it's immoral to expect somebody else to pick up the tab for us.

Whether or not we like it, we as a nation racked up these debts. Before anybody goes crying "but I didn't do a, b or c" etc, I don't have a mortgage and I pay off my credit card. But I still think that we should not ask the ECB to Guarantee the banks unless we are willing to offer the same support to Spain, Greece and others.

You can't just say change the law because it doesn't suit you, the laws have to be changed to suit everyone. And to be brutally honest, I don't like the idea of potentially having to pick up the tab for Greece or Spain any more than I like the idea of having to pick up the tab for Irish government spending and the banks. But that is the path we will go down if you open the door to the ECB guarantee of Irish debt because special cases don't exist in international finance without eventually becoming basket cases.

Heads the ball

antoobrien wrote: »

Heads the ball wrote: »

Sure thing, the proposal is:

The ECB should guarantee Ireland's debt

Non runner, because it's (a) illegal and (b) it's immoral to expect somebody else to pick up the tab for us.

Whether or not we like it, we as a nation racked up these debts. Before anybody goes crying "but I didn't do a, b or c" etc, I don't have a mortgage and I pay off my credit card. But I still think that we should not ask the ECB to Guarantee the banks unless we are willing to offer the same support to Spain, Greece and others.

You can't just say change the law because it doesn't suit you, the laws have to be changed to suit everyone. And to be brutally honest, I don't like the idea of potentially having to pick up the tab for Greece or Spain any more than I like the idea of having to pick up the tab for Irish government spending and the banks. But that is the path we will go down if you open the door to the ECB guarantee of Irish debt because special cases don't exist in international finance without eventually becoming basket cases.

Im not be smart but genuinely i addressed all these points ages ago.

I spoke about the illegality point. I spoke about the "others paying our debts point". And i distinguished between paying for debts and guaranteeing them.

antoobrien

Heads the ball wrote: »

Im not be smart but genuinely i addressed all these points ages ago.

I spoke about the illegality point. I spoke about the "others paying our debts point". And i distinguished between paying for debts and guaranteeing them.

Doesn't change the fact that your points are based on a false premise.

You realise the guarantee opens the door to us having to pay for Italy, Spain and Greece (especially likely) right?

Heads the ball

antoobrien wrote: »

You realise the guarantee opens the door to us having to pay for Italy, Spain and Greece (especially likely) right?

No, because it is remote that the ECB would actually need to pay.

Plus that logic was not deployed to stop the bank bailout (we better not bail out bank 1 because bank 2 will then have to be bailed out) or to stop country-bailouts (no one said dont bail Ireland out becuase that will mean we will have to bail out Greece etc) again Im sure I have posted on this several pages ago and this point was teased out.

In fact all the points you have raised so far (I believe) I addressed pages ago.

antoobrien

Heads the ball wrote: »

No, because it is remote that the ECB would actually need to pay.

Remote != none, so there is a chance. Plus the fact that they have o guarantee it would be bad news for the ECB.

Heads the ball wrote: »

Plus that logic was not deployed to stop the bank bailout (we better not bail out bank 1 because bank 2 will then have to be bailed out) or to stop country-bailouts (no one said dont bail Ireland out becuase that will mean we will have to bail out Greece etc) again Im sure I have posted on this several pages ago and this point was teased out.

You're confusing other counties "paying for our debts" with the bailout loans that they have given us to pay our debts. They are loans, we do have to pay them back. It's in their self interest to do so, as it lowers the possibility of their loans being called in.

Heads the ball

antoobrien wrote: »

Remote != none, so there is a chance. Plus the fact that they have o guarantee it would be bad news for the ECB.



You're confusing other counties "paying for our debts" with the bailout loans that they have given us to pay our debts. They are loans, we do have to pay them back. It's in their self interest to do so, as it lowers the possibility of their loans being called in.

Would you mind reading over my previous posts please? Im not being rude but I addressed earlier why it is remote. I didnt just invent it.

I am getting a pain in my wrist repeating myself!!

Scofflaw

Heads the ball wrote: »

Would you mind reading over my previous posts please? Im not being rude but I addressed earlier why it is remote. I didnt just invent it.

I am getting a pain in my wrist repeating myself!!

As is everyone else! The problem is that while you believe you have "addressed the points" being made - ie that an ECB guarantee of Irish debt is illegal and immoral - your claims are simply wrong. The ECB cannot do it, and that the Irish government loaded responsibility for the debts of Irish banks onto the Irish taxpayer provides no justification whatever for loading those debts onto the rest of Europe's taxpayers.

Two wrongs don't make a right, as I'm sure all our mammies told us.

cordially,
Scofflaw

antoobrien

Heads the ball wrote: »

Would you mind reading over my previous posts please? Im not being rude but I addressed earlier why it is remote. I didnt just invent it.

Ah yes this bit. You'll forgive me, but there are so many contradictory arguments in there that it's not funny. I'll just pick out one.

Heads the ball wrote: »

And who knows, maybe the markets will even like it and all of Europe benefits. So going back to my point, asking the ECB to guarantee our repayments would help us massively and it cannot be argued away as "thats unfair to ask another country to take on our debts" as (i) its not a country its an institution and (ii) they are only acting as guarantor and (iii) the likelihood of an intervention is remote.

asking the ECB to guarantee our repayments would help us massively and it cannot be argued away as "thats unfair to ask another country to take on our debts" as (i) its not a country its an institution

What you're saying is that because the ECB is a European institution, asking it to guarantee our repayments take on our debts is not the same as asking other countries to do so. I'm going to show you why this is wrong (I seriously hope somebody else has said this so as to beat it home, if not shame on the lot of you).

• The market perception is that a guarantee is the same thing as taking on debts (whether it is fatually true or not) - hence the problem that the ELG still gives us.
• The ECB is consisted of the 17 Eurozone central banks.
• IThe ECB is backed by the combined assets of said central banks.

Now logic dictates that asking the ECB to do anything is asking the 17 Euozone members to do it, as their central banks are the ones on the hook for it (in the way that ours is on the hook for IBRC). And as we have seen a guarantee will be seen as a taking on of the debt (whether or not it is factually true).

Heads the ball

antoobrien wrote: »

Heads the ball wrote: »

Would you mind reading over my previous posts please? Im not being rude but I addressed earlier why it is remote. I didnt just invent it.

Ah yes this bit. You'll forgive me, but there are so many contradictory arguments in there that it's not funny. I'll just pick out one.

Heads the ball wrote: »

And who knows, maybe the markets will even like it and all of Europe benefits. So going back to my point, asking the ECB to guarantee our repayments would help us massively and it cannot be argued away as "thats unfair to ask another country to take on our debts" as (i) its not a country its an institution and (ii) they are only acting as guarantor and (iii) the likelihood of an intervention is remote.

asking the ECB to guarantee our repayments would help us massively and it cannot be argued away as "thats unfair to ask another country to take on our debts" as (i) its not a country its an institution

What you're saying is that because the ECB is a European institution, asking it to guarantee our repayments take on our debts is not the same as asking other countries to do so. I'm going to show you why this is wrong (I seriously hope somebody else has said this so as to beat it home, if not shame on the lot of you).

• The market perception is that a guarantee is the same thing as taking on debts (whether it is fatually true or not) - hence the problem that the ELG still gives us.
• The ECB is consisted of the 17 Eurozone central banks.
• IThe ECB is backed by the combined assets of said central banks.

Now logic dictates that asking the ECB to do anything is asking the 17 Euozone members to do it, as their central banks are the ones on the hook for it (in the way that ours is on the hook for IBRC). And as we have seen a guarantee will be seen as a taking on of the debt (whether or not it is factually true).

Sorry but can you please point out exactly why they are contradictory please? And what other contradictory statements have I made?

As gar as i know there is no cost to member states if the ecb did quantitative easing

Heads the ball

Scofflaw wrote: »

Heads the ball wrote: »

Would you mind reading over my previous posts please? Im not being rude but I addressed earlier why it is remote. I didnt just invent it.

I am getting a pain in my wrist repeating myself!!

As is everyone else! The problem is that while you believe you have "addressed the points" being made - ie that an ECB guarantee of Irish debt is illegal and immoral - your claims are simply wrong. The ECB cannot do it, and that the Irish government loaded responsibility for the debts of Irish banks onto the Irish taxpayer provides no justification whatever for loading those debts onto the rest of Europe's taxpayers.

Two wrongs don't make a right, as I'm sure all our mammies told us.

cordially,
Scofflaw

I thought you said on a previous thread that you were favour of the bailout broadly on the basis that whilst we didnt owe these debts it was necessary because of the wider implications?

Would you mind including a "yes" or "no" to this question?

If you have answered "yes" then i dont think you can correctly classify that transaction as "wrong"

Scofflaw

Heads the ball wrote: »

I thought you said on a previous thread that you were favour of the bailout broadly on the basis that whilst we didnt owe these debts it was necessary because of the wider implications?

Would you mind including a "yes" or "no" to this question?

If you have answered "yes" then i dont think you can correctly classify that transaction as "wrong"

Did you never hear the phrase "a necessary evil", or indeed "the lesser of two evils"? I support the bank bailout on the basis that it was very probably better than the alternative, but that doesn't make a good thing.

cordially,
Scofflaw

Heads the ball

Scofflaw wrote: »

Heads the ball wrote: »

I thought you said on a previous thread that you were favour of the bailout broadly on the basis that whilst we didnt owe these debts it was necessary because of the wider implications?

Would you mind including a "yes" or "no" to this question?

If you have answered "yes" then i dont think you can correctly classify that transaction as "wrong"

Did you never hear the phrase "a necessary evil", or indeed "the lesser of two evils"? I support the bank bailout on the basis that it was very probably better than the alternative, but that doesn't make a good thing.

cordially,
Scofflaw

Well a guarantee could be rationalised in the same manner

golfwallah

Heads the ball wrote: »

Well a guarantee could be rationalised in the same manner

So you think it's a good idea that we should guarantee wasteful spending in the likes of Greece and Spain, just because we have guaranteed wasteful spending here at home in Ireland?

However bad we are, at least our roads and airports are being used - unlike Spain.

Personally, I'd prefer to see countries cleaning up their own mess (just like we are trying to do), rather than dumping the problem on everyone, as you are suggesting, which is a recipe for even more wasteful spending.

Nothing concentrates the mind more than have to fix your own problems.

A general guarantee by the ECB of all loans would provide politicians with a licence for more over-optimistic business plans as a way out of recession and as our own recent history and experience in Greece, Spain, etc. clearly demonstrate - these are not long term sustainable solutions.

antoobrien

Heads the ball wrote: »

Sorry but can you please point out exactly why they are contradictory please? And what other contradictory statements have I made?

At this stage it's pretty clear that you're so enamoured with your idea that you can't accept that there may be a flaw, so you're actively ignoring it - so it's not worth going through the bother of trying to explain it bleedin' obvious.

Heads the ball wrote: »

As gar as i know there is no cost to member states if the ecb did quantitative easing

A guarantee is not QE.

Sharing the debt is not QE.

Writing off the PNs would be QE as we created the money to fund them.

QE does have a cost - inflation.

noodler

So just for the OP.

National debt is outstanding debt.

Deficit is the difference between income and expenditure in as given year (negative if a deficit, positive if a surplus).

We have added to our debt substantially due to bank bailouts.

We also continue to add to our outstanding debt pile every year because we continue to run deficits, just because we slowly close our deficit each year does not mean we are not still borrowing each year to close the gap.

antoobrien

mariaalice wrote: »

If we are sticking to what the Troica wants how come out public debt has not come down.

The troika programme has nothing to do with reducing our debt levels - it's an attempt to reduce our deficit to the levels set out in the various EU treaties and agreements.

noodler

antoobrien wrote: »

The troika programme has nothing to do with reducing our debt levels - it's an attempt to reduce our deficit to the levels set out in the various EU treaties and agreements.

Well, in fairness, reducing your deficit does reduce your prospective debt.

Heads the ball

antoobrien wrote: »

At this stage it's pretty clear that you're so enamoured with your idea that you can't accept that there may be a flaw, so you're actively ignoring it - so it's not worth going through the bother of trying to explain it bleedin' obvious.

Not at all. I absolutely could wrong or there could well be a flaw. There is no obligation on you to explain how there was a "contradictory statement" on my part but your refusal to do so probably weakens your argument that I made any such a contradictory statement.

Anyway even if you wont show how my statements were contradictory maybe you could point to why my proposal wouldnt work (bearing in mind that we dealt with the illegal and immoral point already).

antoobrien wrote: »

A guarantee is not QE.

Sharing the debt is not QE.

Writing off the PNs would be QE as we created the money to fund them.

I never claimed that a guarantee or sharing (which I never asked for by the way) was QE. I simply said that IF the debt did have to be repaid (but I established that that would remote) and IF the payment was such that member states would have to contribute to boost the ECBs capital, this situtaion could be avoided by QEing instead of using existing reserves.

antoobrien wrote: »

QE does have a cost - inflation.

Eh, inflation may actually help our situation and may help the majority of European countries. But dont take my word for it. See the below:

http://www.davidmcwilliams.ie/2011/07/13/three-years-on-we-are-no-closer-to-solving-debt-crisis

antoobrien

noodler wrote: »

Well, in fairness, reducing your deficit does reduce your prospective debt.

Not necessarily, we are still borrowing money, so while we reduce the deficit, the overall debt is still rising.

Sorry, but your statement is only true if we don't borrow - you've seen the cuts in Greece when they were told "you can't have a much as you think you need." Could you imagine what would happen here if we had to cut SW, PS pay & health spending by 1/3 to balance the budget overnight?

noodler

Heads the ball wrote: »

I never claimed that a guarantee or sharing (which I never asked for by the way) was QE. I simply said that IF the debt did have to be repaid (but I established that that would remote) and IF the payment was such that member states would have to contribute to boost the ECBs capital, this situtaion could be avoided by QEing instead of using existing reserves.

Sorry, could you explain that a little clearer?

Heads the ball wrote: »

Eh, inflation may actually help our situation and may help the majority of European countries. But dont take my word for it. See the below:

http://www.davidmcwilliams.ie/2011/07/13/three-years-on-we-are-no-closer-to-solving-debt-crisis

Ah, thats pretty weak! Don't link to an article to make your point for you!

Inflation obviously helps countries in debt rather than countries who are owed money but keep in mind that households are already performing a tight balancing act as it is with their finances without serious inflation to worry about.

Also, inflation would be could for certain countries in Europe but it would hurt savers in Austria, Germany etc.

On not paying back our CBI, if every country thought this was possible then there would be pretty serious consequences - for inflation. I'd argue that is the ECB's biggest fear with individual CB's financing bank recapitalisations (or god forbid, budget deficits).

noodler

antoobrien wrote: »

Not necessarily, we are still borrowing money, so while we reduce the deficit, the overall debt is still rising.

Prospective debt - i.e. debt we would otherwise have incurred.

If we add 18 billion to our debt this year and make no adjustment then next year our debt will also increase by 18bn. But if we make an adjustment then our debt still increases, but to a level below what it would have increased to without an adjustment.

antoobrien wrote: »

Sorry, but your statement is only true if we don't borrow - you've seen the cuts in Greece when they were told "you can't have a much as you think you need." Could you imagine what would happen here if we had to cut SW, PS pay & health spending by 1/3 to balance the budget overnight?

Was that addressed at me?

Why???

antoobrien

noodler wrote: »

Prospective debt - i.e. debt we would otherwise have incurred.

When the troika came in we had two choices borrow or cut. If we couldn't borrow (and in Oct/Nov 2010 we couldn't), we had to cut. The G20 saw that as a bad thing, so they got the ECB, IMF and European commission to bail us out.

If that didn't happen there was no prospective debt, there was no extra €50bn over 3 years borrowed to find the exchequer because there was no source of funds.

See where I'm coming from?

noodler

antoobrien wrote: »

When the troika came in we had two choices borrow or cut. If we couldn't borrow (and in Oct/Nov 2010 we couldn't), we had to cut. The G20 saw that as a bad thing, so they got the ECB, IMF and European commission to bail us out.

If that didn't happen there was no prospective debt, there was no extra €50bn over 3 years borrowed to find the exchequer because there was no source of funds.

See where I'm coming from?

Oh, I do now. You are making the point that we didn't have anyone to borrow from in the first instance so we wouldn't have been able to finance the deficit.

I thought you were trying to convince me that the bailout was a good thing rather than cutting the tnire deficit in one year! (which obviously requires no argument).

But you know what I meant, reducing the deficit means less prospective debt (assuming you can finance such debt in the absence of an IMF programme).

Heads the ball

noodler wrote: »

Sorry, could you explain that a little clearer?

The point is I never claimed that a guarantee equated to QE

noodler wrote: »

Ah, thats pretty weak! Don't link to an article to make your point for you!

Inflation obviously helps countries in debt rather than countries who are owed money but keep in mind that households are already performing a tight balancing act as it is with their finances without serious inflation to worry about.

Also, inflation would be could for certain countries in Europe but it would hurt savers in Austria, Germany etc.

On not paying back our CBI, if every country thought this was possible then there would be pretty serious consequences - for inflation. I'd argue that is the ECB's biggest fear with individual CB's financing bank recapitalisations (or god forbid, budget deficits).

But of course, any economic measure will probably have "winners and losers" but McWilliams is saying in an overall macro context that "moderate inflation" is the answer." So to assert that inflation is bad is wrong.

theres nothing weak about that!

antoobrien

noodler wrote: »

Oh, I do now. You are making the point that we didn't have anyone to borrow from in the first instance so we wouldn't have been able to finance the deficit.

Bingo.

noodler wrote: »

I thought you were trying to convince me that the bailout was a good thing rather than cutting the tnire deficit in one year! (which obviously requires no argument).

Well I wasn't trying to convince you of it, but yes I do believe along those lines. However this is not really the place for that discussion (and it has kinda been done to death).

antoobrien

Heads the ball wrote: »

Not at all. I absolutely could wrong or there could well be a flaw. There is no obligation on you to explain how there was a "contradictory statement" on my part but your refusal to do so probably weakens your argument that I made any such a contradictory statement.

Anyway even if you wont show how my statements were contradictory maybe you could point to why my proposal wouldnt work (bearing in mind that we dealt with the illegal and immoral point already).

I've already shown you a contradiction. The rest of your statements are riddled with the same type of logic that only makes sense if your premise hold true - which it doesn't.

Heads the ball wrote: »

I never claimed that a guarantee or sharing (which I never asked for by the way) was QE.

Then stop introducing concepts in order to further confuse the situation.

Heads the ball wrote: »

I simply said that IF the debt did have to be repaid (but I established that that would remote) and IF the payment was such that member states would have to contribute to boost the ECBs capital, this situtaion could be avoided by QEing instead of using existing reserves.

The debt does have to be repaid - make no mistake about that. It doesn't have to be repaid immediately. That implication shows a fundamental ignorance of the problem from the market POV.

The problem from the perspective of the markets is not the notion that we'll have to stump €170bn (or whatever GGD is) in one go. That's absurd and they know it.

The problem is the combination of interest the interest we are paying (last year it was €3.95bn) and repayments or refiniancing that we'll have to make (there's €8bn due in 2014).

Heads the ball wrote: »

Eh, inflation may actually help our situation and may help the majority of European countries.

Sure, tell it to Zimbabwe.

Inflation means that you have less money in your pockets, and savings FTR - are worth less than you saved. Classic example is the prize bonds - no matter when you invested it it's still worth IR£5. A fiver now gets you less than it did 10 years ago.

Heads the ball wrote: »

But dont take my word for it. See the below:

http://www.davidmcwilliams.ie/2011/07/13/three-years-on-we-are-no-closer-to-solving-debt-crisis

After him trying to say "I didn't support the gaurantee" after calling for all assets to be guaranteed, he has absolutely no credibility.

noodler

Heads the ball wrote: »

The point is I never claimed that a guarantee equated to QE

Sure, I got that part - I just couldn't understand what you were advocating is all.

Something about losses in the ECB being shared between Euro countries?

Heads the ball wrote: »

But of course, any economic measure will probably have "winners and losers" but McWilliams is saying in an overall macro context that "moderate inflation" is the answer." So to assert that inflation is bad is wrong.

theres nothing weak about that!

Well, don't forget what proportion of the EZ economy we actually make up (well under 2%) so whats right for us maybe extremely wrong for the majority.




If the ECB at a central level were to undertake further QE programmes then that would be fine by me as an Irish citizen although it should be noted that, in the event there are losses, that each EZ countries takes a proportional share and this has to be taken into consideration.

The idea of individual Central Banks printing money is something the ECB clearly have issues with and for good reason.

Heads the ball

noodler wrote: »

Sure, I got that part - I just couldn't understand what you were advocating is all.

Something about losses in the ECB being shared between Euro countries?

Its documented on previous pages. I assumed you had read and understood my proposal before just jumping into the argument in mid stream.

noodler

Heads the ball wrote: »

Its documented on previous pages. I assumed you had read and understood my proposal before just jumping into the argument in mid stream.

I didn't.

In fairness, it would have been as easy for you to summarise rather than specifically post two replies ducking the question.

Whatever suits you though.

EDIT: Okay I have had a look but I still don't fully understand what you were trying to say.

Heads the ball

antoobrien wrote: »

I've already shown you a contradiction. The rest of your statements are riddled with the same type of logic that only makes sense if your premise hold true - which it doesn't.

But you havent. You quoted two statements by me which were very similar and said they were contradictory and when asked to show how they were you just said "its bleedin obvious" so you havent shown any contradictions and if there are any I would be anxious to clear them up.

antoobrien wrote: »

Then stop introducing concepts in order to further confuse the situation.

Im not sure why it is confusing you but its really simple. If they had to pay the debt and if that caused a material issue to their capital, then they could just QE instead of paying it from reserves. Simple.

I never said a guarantee = QE

antoobrien wrote: »

The debt does have to be repaid - make no mistake about that. It doesn't have to be repaid immediately. That implication shows a fundamental ignorance of the problem from the market POV.

Absolutely the debt has to be repaid. And it will be repaid by Ireland. Its just the ECB rubber stamps it; but it is unlike that the ECB will have to pay it. Thats probably close to ten times now Ive had to say that.

We pay the debt, the ECB guarantees the debt but the likelihood of them having to pay is remote.

antoobrien wrote: »

Sure, tell it to Zimbabwe.

Zimbabwe is not an appropriate example as their inflation is collosal. Way in excess of what would happen here. Your assertion that inflation would be a cost is not correct.

antoobrien wrote: »

After him trying to say "I didn't support the gaurantee" after calling for all assets to be guaranteed, he has absolutely no credibility.

With you perhaps. But thats a convenient thing to say when his opinion doesnt correspond to yours - you resort to attacking him.

In reality, all that does is damage your credibility

Heads the ball

noodler wrote: »

I didn't.

In fairness, it would have been as easy for you to summarise rather than specifically post two replies ducking the question.

Whatever suits you though.

I didnt duck two questions. You only told me one post ago that you hadnt read my proposal.

noodler

Heads the ball wrote: »

I didnt duck two questions. You only told me one post ago that you hadnt read my proposal.

I did ask twice if you could clarify.

I don't mean you any disrespect - it just seems a little unclear.

Heads the ball

noodler wrote: »

I did ask twice if you could clarify.

I don't mean you any disrespect - it just seems a little unclear.

The ECB should have guaranteed Irelands debt as we would have gotten a lower interest rate on it