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Left Ireland for Australia, left keys in door

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    #332
    by the seaside
    Registered Users Posts: 389 ✭✭by the seaside


    There are lots of issues. The new currency and debasement approach makes the water less boiling by inflating away the debt (and of course the savings of those who have taken the cash is king approach). And it restores competitiveness by lowering wage costs against other currencies.


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    #333
    gaius c
    Registered Users Posts: 3,528 ✭✭✭gaius c


    by the seaside wrote: »
    There are lots of issues. The new currency and debasement approach makes the water less boiling by inflating away the debt (and of course the savings of those who have taken the cash is king approach). And it restores competitiveness by lowering wage costs against other currencies.

    Not true. Imports will become more expensive and inflating debt away only works if two things happen together:
    -devalue the currency
    -wages increase so that debt becomes manageable

    However, those two together will cancel out the cost reduction of messing with exchange rates.


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    #334
    by the seaside
    Registered Users Posts: 389 ✭✭by the seaside


    gaius c wrote: »
    Not true. Imports will become more expensive and inflating debt away only works if two things happen together:
    -devalue the currency
    -wages increase so that debt becomes manageable

    However, those two together will cancel out the cost reduction of messing with exchange rates.

    Imports becoming more expensive is part of being more competitive.

    The new currency would sink like a stone, so no need to worry there, particularly as that is a key objective so in the unlikely event that it doesn't you lower interest rates and print money until it does. Wages don't need to increase to make the debt more manageable because the debt is redenominated in the new currency - which along with inflation creates a soft default.

    Look how Iceland's currency has fared.

    http://www.xe.com/currencycharts/?from=ISK&to=EUR&view=10Y


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    #335
    gaius c
    Registered Users Posts: 3,528 ✭✭✭gaius c


    by the seaside wrote: »
    Imports becoming more expensive is part of being more competitive.

    The new currency would sink like a stone, so no need to worry there, particularly as that is a key objective so in the unlikely event that it doesn't you lower interest rates and print money until it does. Wages don't need to increase to make the debt more manageable because the debt is redenominated in the new currency - which along with inflation creates a soft default.

    Look how Iceland's currency has fared.

    http://www.xe.com/currencycharts/?from=ISK&to=EUR&view=10Y

    Oh great more voodoo economics...
    The debt won't be redenominated in the new currency because the folks we owe it to work in euros and they'll want to be paid back in euros since that's what they loaned us.

    And the wages do need to increase relative to the debt, otherwise we can't shrink it.

    We're an open economy and a small one with limited natural resources at that. Increase the cost of our imports and as sure as night follows day, our cost of exports will increase too.

    Now your next step is default and I kind of agree with that one but for entirely different reasons to you. Firstly, I have no interest in burning the entire economy to save 7% of households who over-borrowed. I do however have an interest in saving the sovereign state that is living way beyond it's means.

    However, default means 30% public sector paycuts as we'll have to close the budget gap to zero overnight. I'm okay with that but I suspect that a lot of folk won't be.

    Forget the New Beginnings-type BS. Iceland is still a basket-case with capital controls in place to stop money leaving the economy.

    Just pay your mortgages folks and stop demanding that the entire state runs economic policy to suit you. You're a minority of Irish people, an extremely vocal one but a minority nonetheless.


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    #336
    by the seaside
    Registered Users Posts: 389 ✭✭by the seaside


    gaius c wrote: »
    Oh great more voodoo economics...
    The debt won't be redenominated in the new currency because the folks we owe it to work in euros and they'll want to be paid back in euros since that's what they loaned us.

    And the wages do need to increase relative to the debt, otherwise we can't shrink it.

    We're an open economy and a small one with limited natural resources at that. Increase the cost of our imports and as sure as night follows day, our cost of exports will increase too.

    Now your next step is default and I kind of agree with that one but for entirely different reasons to you. Firstly, I have no interest in burning the entire economy to save 7% of households who over-borrowed. I do however have an interest in saving the sovereign state that is living way beyond it's means.

    However, default means 30% public sector paycuts as we'll have to close the budget gap to zero overnight. I'm okay with that but I suspect that a lot of folk won't be.

    Forget the New Beginnings-type BS. Iceland is still a basket-case with capital controls in place to stop money leaving the economy.

    Just pay your mortgages folks and stop demanding that the entire state runs economic policy to suit you. You're a minority of Irish people, an extremely vocal one but a minority nonetheless.

    Pass a law to redenominate debt and guess what? It's law!

    If overseas imports are more expensive them home produced goods are more competitive.

    This is not voodoo economics but the inevitable end game.

    What is nonsensical economics is the belief that a sovereign state can be part of a currency union without a fiscal union.


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    #337
    The Corinthian
    Closed Accounts Posts: 19,777 ✭✭✭✭The Corinthian


    by the seaside wrote: »
    Pass a law to redenominate debt and guess what? It's law!
    So we get to repay other nations in our 'new' currency and whatever value we set it at?

    That ends well...


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    #338
    by the seaside
    Registered Users Posts: 389 ✭✭by the seaside


    The Corinthian wrote: »
    So we get to repay other nations in our 'new' currency and whatever value we set it at?

    That ends well...

    That's defaulting for you. But there really is no alternative.


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    #339
    The Corinthian
    Closed Accounts Posts: 19,777 ✭✭✭✭The Corinthian


    by the seaside wrote: »
    That's defaulting for you. But there really is no alternative.
    If you'd demonstrated in this discussion that there isn't, I might take that seriously. Instead, defaulting on international debts is one of the most stupid ideas I've heard in years.


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    #340
    gaius c
    Registered Users Posts: 3,528 ✭✭✭gaius c


    by the seaside wrote: »
    Pass a law to redenominate debt and guess what? It's law!

    If overseas imports are more expensive them home produced goods are more competitive.

    This is not voodoo economics but the inevitable end game.

    What is nonsensical economics is the belief that a sovereign state can be part of a currency union without a fiscal union.

    Just so that you know, this was the type of economic thinking that 19th century laissez faire economists thought would pull Ireland out of the Great Famine.

    Home produced goods can only be competitive if we have the capability to manufacture them in the first place. We strangled what was left of our manufacturing industry during the bubble years. Aside from agricultural produce, there is shag all indigenous produce coming out of our economy and if we leave the euro, the MNC's will be gone too.

    Stop the dishonesty please. You have no interest in default for the wider economy's sake. You just want to get off the hook for your own debts by any means necessary.


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    #341
    by the seaside
    Registered Users Posts: 389 ✭✭by the seaside


    The Corinthian wrote: »
    If you'd demonstrated in this discussion that there isn't, I might take that seriously. Instead, defaulting on international debts is one of the most stupid ideas I've heard in years.

    Then let's catch up in a few years, perhaps a little more courteously. Presumably you think the Euro will still be going strong.

    The most stupid idea was bailing out the banks' bond holders.


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    #342
    The Corinthian
    Closed Accounts Posts: 19,777 ✭✭✭✭The Corinthian


    by the seaside wrote: »
    Then let's catch up in a few years, perhaps a little more courteously. Presumably you think the Euro will still be going strong.
    I made no comment on the Euro being around or not. I questioned the sanity of Ireland unilaterally defaulting on international debts. If in a few years you're capable of making such distinctions and understanding how economics and international politics work, I've no doubt that our discourse will be more courteous.


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    #343
    MagnusDamm
    Banned (with Prison Access) Posts: 69 ✭✭MagnusDamm


    Seems like I'm not the only one with a problem! I'm on the same boat it would appear only not so far away!


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    #344
    jmayo
    Registered Users Posts: 13,186 ✭✭✭✭jmayo


    by the seaside wrote: »
    Pass a law to redenominate debt and guess what? It's law!

    So let me get this straight ?
    Larry the mortgage defaulter, who owes €300,000, goes to his bank and tells Paddy the banker he will now pay him Punt Nua 300,000 (which btw is worth €30,000) and Paddy the banker says fine Larry, good man.
    Then Paddy the banker goes to Helmut in the ECB and tells him he will give him Punt Nua rather than euro.
    Of course Paddy now has only Punt Nua 300,000 or €30,000 to repay Helmut the €300,000 he owes him.
    Am I the only one that sees and issue with this ??
    by the seaside wrote: »
    If overseas imports are more expensive them home produced goods are more competitive.

    Do you have any idea how little we manufacture here or for that matter how little of the fruit, veg, foodstuffs we eat on a daily basis we grow here ?
    BTW have you discovered a major source of oil ?

    Oh and stop reading or believeing in the codswollop spouted by Dev.
    by the seaside wrote: »
    This is not voodoo economics but the inevitable end game.

    What is nonsensical economics is the belief that a sovereign state can be part of a currency union without a fiscal union.

    True for a currency union there needs to be a strict fiscal policy across the members to ensure that states all are headed in the same direction.

    I am not allowed discuss …



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    #345
    The Corinthian
    Closed Accounts Posts: 19,777 ✭✭✭✭The Corinthian


    jmayo wrote: »
    m I the only one that sees and issue with this ??
    No, I'd imagine that anyone with an IQ above room temperature would. Giving international creditors the finger is a dangerous game. To begin with, you'll be locked out of the international financial markets. Secondly, you will end up with significant, if not prohibitory, barriers against any kind of international trade. Then, of course, there is the political dimension too; our diplomatic influence would end up, well, gone.

    Argentina followed the default route over ten years ago. What followed was a 20% drop in GDP, depreciation of it's currency by 70% and unemployment levels of 25%. It still hasn't recovered and will take a very long time to do so. And Argentina, before we forget, is a significantly larger economy than Ireland, with more and more varied resources than Ireland - we actually can't be self-sufficient. Not a hope.

    And if history has taught us anything, it's that the self-sufficiency road is not a pleasant one. We largely tried it and as a result were effectively a second-World nation up until we liberalized. The only other historical examples that come to mind of 'self-sufficient' economies are North Korea and communist Albania; need I say more?

    Defaulting on our international debts so as to avoid the economic pain of those debts is a bit like suicide to avoid being sent to prison. Dumb.

    Then again, my experience is that those who advocate it tend to be those who do so more for eurosceptic reasons than anything to do with the debts themselves. They'd happily see us all in an even bigger financial pile of excrement if it got us out of the EU.
    True for a currency union there needs to be a strict fiscal policy across the members to ensure that states all are headed in the same direction.
    To an extent; countries such as the US and Switzerland allow for fiscal autonomy and are able to maintain a currency union without imposing draconian central fiscal control.

    Of course, that's not to say that how the Euro was launched was foresighted; it effectively had no fiscal rules; just a few hypothetical targets that were ignored whenever anyone felt like it.


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    #346
    gaius c
    Registered Users Posts: 3,528 ✭✭✭gaius c


    Argentina had post-default problems because they defaulted but then messed around doing a deal with their creditors. Default was the correct option for them but they implemented it very badly. Russia defaulted and notwithstanding other post-communism problems that they've had, they did recover significantly from the catastrophes of the Yeltsin years.

    Lativia should be our model for a "how to" on default. They did a deal quickly, efficiently and then they stuck to it. Some of the stuff they did:
    • A 20% cut in the average public sector salary in the 2009 budget followed by a further 5% reduction in the 2010 budget

    • A reduction in the number of government agencies from 76 to 39

    • A reduction in the number of hospitals from 59 to 42

    • An increase in the main VAT rate from 18% to 21%

    Nothing about burning depositors in there!

    As to whether we should default, I'd much prefer to discuss it in a place where the discussion won't be hijacked by desperate insolvents hoping to get somebody else to pay for their debts but the quick answer is that I think it's too late now and we gave away our chips back in 2009.


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    #347
    skyfall2012
    Registered Users Posts: 409 ✭✭skyfall2012


    gaius c wrote: »
    As to whether we should default, I'd much prefer to discuss it in a place where the discussion won't be hijacked by desperate insolvents hoping to get somebody else to pay for their debts but the quick answer is that I think it's too late now and we gave away our chips back in 2009.

    http://www.independent.ie/irish-news/top-prof-tells-the-banks-ill-blame-you-for-suicides-29418331.html

    These desperate insolvents had intended on paying their own debts until 'THE BANKS' knowingly destroyed the economy.


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    #348
    The Corinthian
    Closed Accounts Posts: 19,777 ✭✭✭✭The Corinthian


    skyfall2012 wrote: »
    These desperate insolvents had intended on paying their own debts until 'THE BANKS' knowingly destroyed the economy.
    How noble of them...

    ...no doubt many of the more irresponsible bankers had intended on lending responsibly too, until they realized that less responsible bankers weren't.

    If you look for a moral justification for the immoral long enough, you'll always find it.


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    #349
    Zambia
    Closed Accounts Posts: 7,333 ✭✭✭Zambia


    skyfall2012 wrote: »
    http://www.independent.ie/irish-news/top-prof-tells-the-banks-ill-blame-you-for-suicides-29418331.html

    These desperate insolvents had intended on paying their own debts until 'THE BANKS' knowingly destroyed the economy.
    Hang on is this bloke saying that the banks are not allowed chase people for the money they are owed because they may commit suicide.

    The whole principal of a mortgage is if you don't keep up the re-payments the bank take the house.

    How do you propose the banks get their money?


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    #350
    skyfall2012
    Registered Users Posts: 409 ✭✭skyfall2012


    Zambia wrote: »
    Hang on is this bloke saying that the banks are not allowed chase people for the money they are owed because they may commit suicide.

    The whole principal of a mortgage is if you don't keep up the re-payments the bank take the house.

    How do you propose the banks get their money?

    The banks are getting plenty of money out of us, they want the tax payer to pay their debts caused by themselves (refer to anglo tapes) and they also want people to pay their mortgages, even though the banks caused the economy to crash. You must work for a bank.


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    #351
    Zambia
    Closed Accounts Posts: 7,333 ✭✭✭Zambia


    skyfall2012 wrote: »
    The banks are getting plenty of money out of us, they want the tax payer to pay their debts caused by themselves (refer to anglo tapes) and they also want people to pay their mortgages, even though the banks caused the economy to crash. You must work for a bank.
    A is currently not paying his mortgage to bank B.

    How does B get their money?


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    #352
    the_syco
    Registered Users Posts: 37,301 ✭✭✭✭the_syco


    skyfall2012 wrote: »
    The banks are getting plenty of money out of us, they want the tax payer to pay their debts caused by themselves (refer to anglo tapes) and they also want people to pay their mortgages, even though the banks caused the economy to crash. You must work for a bank.
    So, if someone were to get a loan for €750,000 they don't have to pay it back, as they may commit suicide? You must work for a bank be a communist.


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    #353
    No Pants
    Closed Accounts Posts: 3,347 ✭✭✭No Pants


    If mortgage protection pays out in cases of self harm, then it's in the bank's interest for the homeowner to commit suicide, or is my understanding flawed?


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    #354
    Ray Palmer
    Registered Users Posts: 8,394 ✭✭✭Ray Palmer


    skyfall2012 wrote: »
    http://www.independent.ie/irish-news/top-prof-tells-the-banks-ill-blame-you-for-suicides-29418331.html

    These desperate insolvents had intended on paying their own debts until 'THE BANKS' knowingly destroyed the economy.


    I think the doctor here appears to be failing his patients. He should be helping them deal with reality not changing reality to suit them. He can't change reality like somebody's past or a death in the family but he is trying to change their financial reality.


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    #355
    dickfinger
    Registered Users Posts: 4 ✭dickfinger


    If it was a couple of billion worth of property there wouldnt be an issue don't look back best of luck to ya


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    #356
    godtabh
    Moderators, Science, Health & Environment Moderators Posts: 23,218 Mod ✭✭✭✭godtabh


    Zambia wrote: »

    The whole principal of a mortgage is if you don't keep up the re-payments the bank take the house.

    I think most people would be happy with that. The fact that the debt isn't satisfied even if the house is taken off you is what a lot of people have issue with.

    A lot of people would be happy to walk away from their house but as the market was inflated negative equity means the banks would be after you for the balance. In a genuine case of someone who cant pay their debts this could easily lead to suicide.


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    #357
    eyescreamcone
    Banned (with Prison Access) Posts: 2,562 ✭✭✭eyescreamcone


    No Pants wrote: »
    If mortgage protection pays out in cases of self harm, then it's in the bank's interest for the homeowner to commit suicide, or is my understanding flawed?

    ..or would it be in the banks interest to hire a squad of hitmen to assasinate all the defaulters...???
    The life insurance policies would then pay out and clear the mortgages

    And people were wondering why the murder rate has increased so much lately...:eek:


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    #358
    Zambia
    Closed Accounts Posts: 7,333 ✭✭✭Zambia


    godtabh wrote: »
    I think most people would be happy with that. The fact that the debt isn't satisfied even if the house is taken off you is what a lot of people have issue with.

    A lot of people would be happy to walk away from their house but as the market was inflated negative equity means the banks would be after you for the balance. In a genuine case of someone who cant pay their debts this could easily lead to suicide.
    It could indeed no denying that.


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    #359
    Ray Palmer
    Registered Users Posts: 8,394 ✭✭✭Ray Palmer


    godtabh wrote: »
    I think most people would be happy with that. The fact that the debt isn't satisfied even if the house is taken off you is what a lot of people have issue with.

    A lot of people would be happy to walk away from their house but as the market was inflated negative equity means the banks would be after you for the balance. In a genuine case of someone who cant pay their debts this could easily lead to suicide.


    It could also lead to a heart attack. Are we going to forgive debts because somebody has an underlying condition. You then just get into a situation where such people will be denied mortgages based on a loop hole they could use to avoiding paying back debts. Further stigmatising people with certain illnesses

    I know my mortgage protection disallows depression as a illness to claim for.

    Linking your debt to what you borrowed rather than what you bought with it actually seems fair. I do think the banks could take a certain hit but no more than half.


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    #360
    No Pants
    Closed Accounts Posts: 3,347 ✭✭✭No Pants


    eyescreamcone wrote: »
    ..or would it be in the banks interest to hire a squad of hitmen to assasinate all the defaulters...???
    The life insurance policies would then pay out and clear the mortgages

    And people were wondering why the murder rate has increased so much lately...:eek:
    I don't think they'd actively pursue such a course, rather pointing out that the doctor's letter conflicts with their interests in more ways than one.


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    #361
    godtabh
    Moderators, Science, Health & Environment Moderators Posts: 23,218 Mod ✭✭✭✭godtabh


    Ray Palmer wrote: »
    It could also lead to a heart attack. Are we going to forgive debts because somebody has an underlying condition. You then just get into a situation where such people will be denied mortgages based on a loop hole they could use to avoiding paying back debts. Further stigmatising people with certain illnesses

    I know my mortgage protection disallows depression as a illness to claim for.

    Linking your debt to what you borrowed rather than what you bought with it actually seems fair. I do think the banks could take a certain hit but no more than half.

    not once did i mention debt forgiveness


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