How much can we borrow?

Geuze

Deseras wrote: »

Europe is printing money due to Covid soon there will be hyper inflation

QE started in October 2014.

https://www.ecb.europa.eu/mopo/implement/app/html/index.en.html

That is 6.5 years ago.

2.9 trillion of extra money has been created, already.

This excludes the more recent PEPP.

Has all the extra money caused consumer price inflation?

Not yet.

mcsean2163

listermint wrote: »

Finland are paying for our banks.

That's a new one. Go on.. I'm intrigued.

Are you kidding? The EU bailed out our banks. We're part of a common currency union. We keep borrowing and never paying it back. The fiscally responsible states are supporting us. We're probably the biggest beggars in Europe since 2008, likely worse than the Greeks.

Pauliedragon

Governments should spend their way through a recession to keep people in jobs and paying tax. Then when things get better take a few extra quid off people in tax to pay for the next downturn but they wont do that because increasing taxes costs votes and winning the next election is more important.

View

mcsean2163 wrote: »

Are you kidding? The EU bailed out our banks. We're part of a common currency union. We keep borrowing and never paying it back. The fiscally responsible states are supporting us. We're probably the biggest beggars in Europe since 2008, likely worse than the Greeks.

That’s not correct. We “bailed out” our banks largely using money we borrowed on the international bond markets.

The money that was subsequently loaned by the Troika after the above was already a fait accompli was used to cover normal budgetary expenditures (ie paying for public services such as schools, hospitals, social welfare etc with, at its peak, us paying for roughly 1 in every 4 Euro we were spending on such public services using money borrowed from the Troika).

mcsean2163

View wrote: »

That’s not correct. We “bailed out” our banks largely using money we borrowed on the international bond markets.

The money that was subsequently loaned by the Troika after the above was already a fait accompli was used to cover normal budgetary expenditures (ie paying for public services such as schools, hospitals, social welfare etc with, at its peak, us paying for roughly 1 in every 4 Euro we were spending on such public services using money borrowed from the Troika).

Yes. I used banks as a catch all. It was initially the banks that sprung the leake but the public sector borrowing sunk us.

Without dwelling on it, this is not a what happened in Ireland during GFC thread, the fiscally responsible countries such as Finland have been bailing us out for a long time. Every year we take their food and don't pay it back.

If every country in EU responded as we did for covid19 the EU would be even more worse off. So surely countries like Finland must look at our relatively low numbers, pup etc and say wtf are they doing? Why are we paying for it?

Just responding to listermint...

Brussels Sprout

mcsean2163 wrote: »

Without dwelling on it, this is not a what happened in Ireland during GFC thread, the fiscally responsible countries such as Finland have been bailing us out for a long time. Every year we take their food and don't pay it back.

If every country in EU responded as we did for covid19 the EU would be even more worse off. So surely countries like Finland must look at our relatively low numbers, pup etc and say wtf are they doing? Why are we paying for it?
.

Just so you're aware Finland haven't balanced their own budget since 2008. Personally I don't have a problem with that, but since the basis for your entire argument seems to be that governments should only spend what they take in, you should probably look for a different nation to put up on that pedestal.

[Deleted User]

mcsean2163 wrote: »

Are you kidding? The EU bailed out our banks. We're part of a common currency union. We keep borrowing and never paying it back. The fiscally responsible states are supporting us. We're probably the biggest beggars in Europe since 2008, likely worse than the Greeks.

You don’t understand the basics of macro economics.

We weren’t bailed out. We got a loan at extremely high interest rates.

And in fact by saving the banks we probably subsidised other countries in the EU.

For every borrower there’s a lender. By bailing out the Irish banks the Irish government stopped the contagion from spreading to the lender banks (hence the burn the bond holders marches).

Ireland’s recent deficit, like other deficits in EU countries, is due to covid. Once again we are obligated to pay it back. Most countries are in deficit — look at the US — and borrowing and paying back is not begging.

[Deleted User]

mcsean2163 wrote: »

the fiscally responsible countries such as Finland have been bailing us out for a long time. Every year we take their food and don't pay it back..

This is amongst the dumbest things I have ever read. We export food as a surplus. We don’t borrow from Finland at all. Our deficit has nothing to do with their surplus, but they don’t even have a surplus. And we pay back loans (which isn’t food to Finland).

pioneerpro

mcsean2163 wrote: »

I'm just going to ignore your name calling. You're obviously some sort of untermensch and don't want to turn this into a personal attack thread.

##Mod Note##

Don't just post memes please.

Brussels Sprout

For anyone interested in some of the concerns and questions voiced in this thread today's episode of the David McWilliam's podcast should be of interest. He has Stephanie Kelton on as a guest to discuss topics such as :

• The current US stimulus package
• National Debt
• Currency Issuers
• Inflation
• Interest Rates
• The limits of Monetary Policy without Fiscal Policy

You can listen to it here

mcsean2163

Ok, just to say by food I was thinking Oscar Wilde's earnest friend, i.e. not food in a literal sense.

Greece had a debt haircut in2012 which we stupidly avoided.

https://countryeconomy.com/national-debt/greece

I was surprised by Finland, (I got that wrong) but they're doing significantly better than us per capita.

eire4

FreudianSlippers wrote: »

Please stop thinking about national debt like you think about personal debt. This populist approach to government expenditure is why we have such awful infrastructure.

There is no such thing as too much debt as long as we can service it.



Why? IMF already has multi-currency reserve. The USD has historically been one of the most stable currencies and nothing has changed there. US debt is largely short-term, so we'd need to see a massive depression in the US which didn't materially impact other countries to see a realistic reason to move away from the USD as the main currency reserve; but as I said, there are already other reserve currencies.

If we're talking hypothetical in the longer term, maybe crypto could potentially be a new reserve... that's about as realistic as a massive move away from USD in the foreseeable future.

Very important point about not looking at national debt in the same way a person can look at their own personal or family debt. It simply is apples to oranges.

Arthur Daley

An argument that's generally put forward by people who have no intention of spending a brass farthing on capital expenditure.

Massive debts run up over the last 15 years, yet at the same time the EU gets all the credit for building the roads.

mcsean2163

eire4 wrote: »

Very important point about not looking at national debt in the same way a person can look at their own personal or family debt. It simply is apples to oranges.

Said Mugabe's advisors.

The deficit myth assumes that the US operates in a vacuum. Do you think that if it issued $100 trillion the US would still function as normal? That it could still import from China at the same prices?

What would happen if China sold all its US bonds and said a dollar is now worth a tenth of its previous value against yuan?

If you listened to McWilliams podcast bear in mind that the dude lives in an extremely expensive house in dalkey and has s holiday home in Croatia and is completely insulated to ponder and experiment.

We are part of the EU and are at the mercy of the other states. With more borrowing we surrender our ability to determine our future or get ever closer to bankruptcy.

Low Energy Eng

I would normally argue for fiscal responsibility and it always disappointed me how badly the coffers are managed in Ireland.

However, if some Asian country or the ecb are willing to take a bond at near 0% interest rates, give us money today, while the central banks are hell bent on creating inflation, then why wouldn't we let someone else absorb the loss at our gain?

I would add, as long as the money we receive isn't spent on increasing long term liabilities.

mcsean2163

The bonds must be renewed. We're the most indebted per capita in Europe. When we go back to the ECB, they may say, you've been spending a lot. You need to abide by EU fiscal treaty rules of 3% at exactly the time when we need it. If we're in a bad way the market say no thanks. To put it in context, Greek GDP is still at 2003 levels.

https://tradingeconomics.com/greece/gdp

Our GDP is over double 2003 levels.

There's a long way to fall and the more we borrow the more exposed we are.

Larbre34

The ECB won't be saying that, not now, not for a decade.

Post Brexit, post Covid EU will be stimulating like World War 3 just ended. All nations, all sectors that do big infrastructure and employ big numbers.

Its Covid bond Christmas boys and girls, if its not nailed down, sell it. If it is nailed down, leverage against it. Its a bonanza for the long term and there's nothing wrong with that.

10000maniacs

You know it is only a matter of time before the government start sniffing around peoples savings as a way of plugging the shortfall.
I'm sure a few in the government have being looking at this as an un-tapped opportunity.
DIRT tax hasn't produced anything in 5 years. And people who are working haven't been spending an awful lot of their savings in the last couple of years for obvious reasons.

Arthur Daley

Or pension levies. It would be naive to think this will continue without consequences.

mcsean2163

People losing patience with tax haven Ireland.

https://euobserver.com/opinion/151169#:~:text=Ireland%20is%20a%20tax%20haven&text=The%20standard%20corporate%20income%20tax,expenditure%20by%20the%20international%20corporations.

Wanderer78

mcsean2163 wrote:

People losing patience with tax haven Ireland.

Ah get in the queue, it 'll rumble on for many more years, we 'll protect it till the end

Geuze

mcsean2163 wrote: »

People losing patience with tax haven Ireland.

https://euobserver.com/opinion/151169#:~:text=Ireland%20is%20a%20tax%20haven&text=The%20standard%20corporate%20income%20tax,expenditure%20by%20the%20international%20corporations.

Note that if that is true, then we would see MNCs here, from many countries, taking advantage of our tax haven status.

We don't.

What we do see are mainly MNC from the USA generating huge profits here.

So the issue is with the tax laws of the USA.

http://economic-incentives.blogspot.com/2021/03/why-exaggerate-when-reality-is-bizarre.html

Wanderer78

Geuze wrote:

So the issue is with the tax laws of the USA.

There's clearly issues with our tax rates, we 're clearly a tax haven for mnc's, and it's always important to bare in mind, our sme's are in fact our biggest employer, but pay far higher tax rates than these mnc's

View

mcsean2163 wrote: »

People losing patience with tax haven Ireland.

https://euobserver.com/opinion/151169#:~:text=Ireland%20is%20a%20tax%20haven&text=The%20standard%20corporate%20income%20tax,expenditure%20by%20the%20international%20corporations.

There’s a simple solution to this, namely raise the CT rate to, let’s say, 15% and “ring fence” the additional monies raised. These would be in a fund to be spent, with joint input from the MNC, either on infrastructure that would directly benefit the MNC (eg roads near its offices) or on joint university-MNC R&D programmes with the university and MNC getting to split the profits (somehow) on the fruits of any successful R&D. In both cases the MNC gains a benefit for itself from the additional taxes it would pay.

Wanderer78

View wrote: »

There’s a simple solution to this, namely raise the CT rate to, let’s say, 15% and “ring fence” the additional monies raised. These would be in a fund to be spent, with joint input from the MNC, either on infrastructure that would directly benefit the MNC (eg roads near its offices) or on joint university-MNC R&D programmes with the university and MNC getting to split the profits (somehow) on the fruits of any successful R&D. In both cases the MNC gains a benefit for itself from the additional taxes it would pay.

yup, i think 15 is a very good starting point, but id take the new difference in stocks and shares, and use sovereign wealth funds from there to put it to work, for all, including for future fdi

moon2

Wanderer78 wrote: »

There's clearly issues with our tax rates, we 're clearly a tax haven for mnc's, and it's always important to bare in mind, our sme's are in fact our biggest employer, but pay far higher tax rates than these mnc's

Out of curiosity did you head the article linked by the comment you responded to? It goes to great lengths to provide actual data which refutes the position you're taking.

Do you have data to prove your point?

Wanderer78

moon2 wrote: »

Out of curiosity did you head the article linked by the comment you responded to? It goes to great lengths to provide actual data which refutes the position you're taking.

Do you have data to prove your point?

sorry im not sure what you re asking?

mcsean2163

View wrote: »

There’s a simple solution to this, namely raise the CT rate to, let’s say, 15% and “ring fence” the additional monies raised. These would be in a fund to be spent, with joint input from the MNC, either on infrastructure that would directly benefit the MNC (eg roads near its offices) or on joint university-MNC R&D programmes with the university and MNC getting to split the profits (somehow) on the fruits of any successful R&D. In both cases the MNC gains a benefit for itself from the additional taxes it would pay.

Agree. Anything at all would be good, 0.5% to 13%. It would be a move in the right direction and placate our EU neighbors a bit.

View

Wanderer78 wrote: »

yup, i think 15 is a very good starting point, but id take the new difference in stocks and shares, and use sovereign wealth funds from there to put it to work, for all, including for future fdi

What I was trying to get at is that the extra monies raised in taxes would be spent on stuff that it would be beneficial for the MNCs. Better infrastructure helps them do business more easily. Better university/industry research in areas that they are interested in could benefit them directly and massively boost our post-grad research profile.

Wanderer78

View wrote:

What I was trying to get at is that the extra monies raised in taxes would be spent on stuff that it would be beneficial for the MNCs. Better infrastructure helps them do business more easily. Better university/industry research in areas that they are interested in could benefit them directly and massively boost our post-grad research profile.

You could of course do that, but a sovereign wealth fund would probably be worth far more in the long run, and could be used to create further investment, such investments funds are used globally, with great success. Scandinavia countries have been doing so for many years, it is believed to be one of their main reasons why. Such funds become an asset of the state and can be used for many things, including raising funds via bond markets for such investments. A significant proportion of wealth in mnc's is in such assets, not only is it important to gain access to more of the wealth created via profits, but also via the wealth of their assets