Where has all the money gone?

Daithinski

SkepticOne wrote: »

Where has the money gone? A lot of it was never really there in the first place. ...

Where has all the money gone?

The billions that were lost are still somewhere. They still exist.

Every Euro that somebody lost on a property deal / stock / whatever didn't just evaporate.

At the peak of the property bubble when commercial sites were being sold for astronomical prices, who were the recipients of this money, presumably they still have it?


It went to an individual (somebody who sold up at the top of the bubble)

Or a company (for example, who got the 25 EUR per share when thats what the AIB shares were worth?). The individual who sold their share at this price. (who in theory could still have it)


We should remember that in any pyramid scheme that the money just doesn't vanish, the individuals who timed it right make a lot of money.

At the moment this select group of people are not asking themselves "wheres all the money gone" because its in their bank accounts.

I'm a bit confused over how it all left our economy.

I presume a lot went over to eastern europe via the hundreds of thousands of migrant workers (which is fair enough, they earned it).

I presume a lot was spent on foreign property.

I presume a lot of money was lost from our economy by investors on the world stock market.

For our economy to recover, would we not have to get some of this pool of money back?

The governents actions seem to confirm that this money is not coming back, theres less money in Irelands kitty, so their idea is to cut spending.

This seems like damage limitation.

Is our economy just totally screwed now?

cavedave

I sell you my tulip bulb for a billion. I am now a billionaire
You sell me your tulip bulb for a billion. I now have a billion in assets as do you.
we both go to the bank with our billion euro plants as collatoral and buy a huge number of bulbs also at imaginary prices.

Johnboy Mac

Daithinski wrote: »

Where has all the money gone?

The billions that were lost are still somewhere. They still exist.

Every Euro that somebody lost on a property deal / stock / whatever didn't just evaporate.

At the peak of the property bubble when commercial sites were being sold for astronomical prices, who were the recipients of this money, presumably they still have it?


It went to an individual (somebody who sold up at the top of the bubble)

Or a company (for example, who got the 25 EUR per share when thats what the AIB shares were worth?). The individual who sold their share at this price. (who in theory could still have it)


We should remember that in any pyramid scheme that the money just doesn't vanish, the individuals who timed it right make a lot of money.

At the moment this select group of people are not asking themselves "wheres all the money gone" because its in their bank accounts.

I'm a bit confused over how it all left our economy.

I presume a lot went over to eastern europe via the hundreds of thousands of migrant workers (which is fair enough, they earned it).

I presume a lot was spent on foreign property.

I presume a lot of money was lost from our economy by investors on the world stock market.

For our economy to recover, would we not have to get some of this pool of money back?

The governents actions seem to confirm that this money is not coming back, theres less money in Irelands kitty, so their idea is to cut spending.

This seems like damage limitation.

Is our economy just totally screwed now?

That's a very good question.

I'm uncertain to the exact answer bar the obvious.

What I would like to see is people spending the money they saved etc or a reasonable proportion of it, which should aid the recession. As it seems to me this money is the only money we really control.

God, it's going to a long road to 'recovery'.

Naz_st

It's not that simple. For example, think of all the people who bought a house in the early 90s, let's say for 100k and at the height of the boom it was worth 1.5m. So they were millionaires. Now it's worth 750k. That's 750k they just "lost". Multiple that by a couple of hundred thousand people and you have a combined asset loss of of Billions in Ireland. (Without actually having any material "cash" loss though).

So a vast proportion of the "money" didn't "go" anywhere, it just never existed in the first place (paper money). This wouldn't be so big a problem if people hadn't borrowed so much "real" cash on the back of the overinflated "asset value" of their property/shares/etc.

SkepticOne

Daithinski wrote: »

Where has all the money gone?

The billions that were lost are still somewhere. They still exist.

Every Euro that somebody lost on a property deal / stock / whatever didn't just evaporate.

At the peak of the property bubble when commercial sites were being sold for astronomical prices, who were the recipients of this money, presumably they still have it?


It went to an individual (somebody who sold up at the top of the bubble)

Or a company (for example, who got the 25 EUR per share when thats what the AIB shares were worth?). The individual who sold their share at this price. (who in theory could still have it)


We should remember that in any pyramid scheme that the money just doesn't vanish, the individuals who timed it right make a lot of money

Some people do make money by getting out at the right time but for the most part the money simply evaporates.

Consider this. I sell you my house for one million and likewise you sell me yours for the same amount. Neither of us has had to generate any money for this transaction yet all of a sudden our houses are valued at one million.

The bubble bursts and we now sell each other the same houses but at the more reasonable figure of 250,000. 750,000 has been wiped off the value of our houses. No one gains 750,000 since in a sense that money never really existed in the first place.

The problem with Irish governments is that the people who get into power don't really know that much about the areas they're supposed to be governing. Add to this, their lack of training in Finance and Budgeting. All sectors within Ireland from Health to Education consistently fail to manage the funds allocated to them efficiently. Massive wastage occurs from supplies right through to the wages to staff. Personally i believe its the lack of accountability that encourages the government & politicians to spend so recklessly without looking for the cheaper or more cost effective option. They're responsible, and yet nothing will ever happen to them if/when they fail at their jobs.

Case in point would the aspect of the Health service. The modernisation of the Health service is occuring, and yet they retained all the management of the old service and even most of the department. So we had hundreds of people getting paid to do essentially nothing. Another example would be the VEC for education. For the most part schools get their funding directly from the Department of Education, however the VEC is from the older days when the money would go through them before being allocated. Currently the VEC has a few schools still under their juristiction in every county, but there's no reason for them to exist beyond the desire to keep "certain" people employed. Then I could point out the unions of every sector demanding pay rises for everyone not considering where the money would come from.

Personally, I believe the money has disappeared because we failed to manage ourselves properly. We've never been good with money even at the worst of times, and when we had loads we just made more mistakes and errors (some intentional). Greed and corruption in local government is also a major factor in all of this.

There is also the common belief that Ireland is entitled to live like any powerful economic nation despite that our country has few resources. So money was thrown around left, right, and centre to give Ireland the image that it was powerful, and highly successful. And yet, we're not such a country, and mnost of that money was wasted on a false image.

dsmythy

Where has all the money gone?

I'd imagine a lot of rich people are sitting on it. (what real money still actually exists that is).

Daithinski

dsmythy wrote: »

Where has all the money gone?

I'd imagine a lot of rich people are sitting on it. (what real money still actually exists that is).

That would seem to be the case...

Heres a snip from David McWilliams's site

Ireland has close to €300 billion in deposits. We have loads of money. Let’s just raise a national recovery bond and invite our pension funds to participate. We could make it much more tax efficient to invest in the recovery bond than foreign equity.

yoshytoshy

Daithinski wrote: »

That would seem to be the case...

Heres a snip from David McWilliams's site

I brought this up aswell ,but seemingly banks don't hold deposits ,maybe only 5% of deposits are held by banks. The rest is invested in the financial markets.

Someone posted a reply a while back ,saying that money is only a concept. Which is pretty much bang on ,do we hold 300Billion in printed notes in ireland in banks ?

~Edit : - linky

Martyr

ireland doesn't have €400 billion in gold deposits, so is the "wealth" and the paper money just an illusion?

the banks have the money.

when the banks "lose" money, they expect the taxpayer to work it off..its a win-win situation for the bankers and a double negative for the people who have to pay it back..strange way to live.

oscarBravo

Daithinski wrote: »

Where has all the money gone?

Where did it come from?

irish_bob

Deleted User wrote: »

The problem with Irish governments is that the people who get into power don't really know that much about the areas they're supposed to be governing. Add to this, their lack of training in Finance and Budgeting. All sectors within Ireland from Health to Education consistently fail to manage the funds allocated to them efficiently. Massive wastage occurs from supplies right through to the wages to staff. Personally i believe its the lack of accountability that encourages the government & politicians to spend so recklessly without looking for the cheaper or more cost effective option. They're responsible, and yet nothing will ever happen to them if/when they fail at their jobs.

Case in point would the aspect of the Health service. The modernisation of the Health service is occuring, and yet they retained all the management of the old service and even most of the department. So we had hundreds of people getting paid to do essentially nothing. Another example would be the VEC for education. For the most part schools get their funding directly from the Department of Education, however the VEC is from the older days when the money would go through them before being allocated. Currently the VEC has a few schools still under their juristiction in every county, but there's no reason for them to exist beyond the desire to keep "certain" people employed. Then I could point out the unions of every sector demanding pay rises for everyone not considering where the money would come from.

Personally, I believe the money has disappeared because we failed to manage ourselves properly. We've never been good with money even at the worst of times, and when we had loads we just made more mistakes and errors (some intentional). Greed and corruption in local government is also a major factor in all of this.

There is also the common belief that Ireland is entitled to live like any powerful economic nation despite that our country has few resources. So money was thrown around left, right, and centre to give Ireland the image that it was powerful, and highly successful. And yet, we're not such a country, and mnost of that money was wasted on a false image.

superb post

thier is a belief out there that were are entitled to live like economic powerhouses , so it goes with the public sector , we were never any richer a country than the uk , netherlands , belguim , germany yet our teachers , nurses , police , consultants etc are paid vastly higher wages than thier counterparts in europe