Exchequer figures 09

spadder

What happens in 09 if revenue from vat, CT, stamp duty, prsi, paye etc completely dry up, as is predicted?



Can we run to the EU or world bank for handouts or do we go the way of Iceland? How much of an overdraft can we run up?

Économiste Monétaire

We issue more bonds.

gurramok

IMF?

Bankruptcy?

spadder

gurramok wrote: »

IMF?

Bankruptcy?

??

What you say issue bonds,is this Joe public investing in bonds?

the public have to have confidence in a government to buy bonds, if they are not willing to part with their cash thinking that the government is on an economic kamikazi run, then what?

Économiste Monétaire

It's anyone who wishes to invest in the bonds at the determined rate, that's how we finance our debts, for the most part. It's slightly dramatic to say the government is on a kamikaze run. The rate increases with the risk premium attached to government borrowing and other market conditions like interest rates, et cetera. We issued a 4 billion bond last month, next year we're likely to have a debt issuance of something near 20 billion.

Government bonds:
http://www.ntma.ie/GovernmentBonds/bondOutstanding.php

The majority of bond holders are foreign investors, not Irish Joe Public:
http://www.ntma.ie/GovernmentBonds/bondHoldings.php

spadder

Thanks for explaining.

BenjAii

Interestingly the cost of credit default swaps (which prices the risk investors see in the government defaulting) has increased 7 fold for Ireland since mid-September.

http://www.reuters.com/article/bondsNews/idUSL262883620081202

This is priced at 66.4 basis points for the US, 106.4 for the UK, 161.5 for Italy, and 213.4 for Ireland.

I wonder how much the blanket bank deposit guarantee had on this.

gurramok

spadder wrote: »

??

What you say issue bonds,is this Joe public investing in bonds?

the public have to have confidence in a government to buy bonds, if they are not willing to part with their cash thinking that the government is on an economic kamikazi run, then what?

The banks need the dosh too hence foreign money is whats needed

Irelands debt status worsens, it ain't pretty
http://www.tribune.ie/business/markets/article/2008/dec/07/market-watch-irelands-debt-status-worsens/

Everyone knows only the bravest of souls are buying Irish bank stocks, but not too many people are queuing up to buy Ireland Inc either. While IDA-supported foreign direct investment is holding up relatively well, bond dealers and traders in credit default swaps (CDS) are betting that the Irish economy is in for a serious lurch downward that could last at least two years, possibly longer.
Ireland's banks have had to pay a significant premium to get their bonds away and the most recent bond issue by the National Treasury Management Agency (NTMA) involved Ireland having to cough up a spread of 25 basis points above market norms to get a €4bn bond deal away.
By next week it's possible Ireland's CDSs– instruments bought to insure against a country defaulting on its bond debts – may creep towards 250 basis points, new territory that will unnerve those paid to worry about Ireland's diminishing status on the debt markets.
By next week Ireland's risk of credit default- as measured by the CDS market – could exceed that of Saudi Arabia and possibly Greece. Already the CDS market is putting heavily indebted Italy below Ireland in terms of the risk of bond default. Ireland last week was trading at 225.4 basis points, meaning it cost €225,400 to insure €10m of Irish government bonds