Irish borrowing rates climb to new euro-era high

rumour

Joyiously this week I thought our problems were over, we had loan sharks queing up to lend us money at a measily 6~%....isn't that great, job done. We can simply just not talk about when it needs to be paid back. Problem solved!!!

Now, I've just read this;

http://www.google.com/hostednews/ap/article/ALeqM5g5A01HJHTO0CXly3U0Z9daWdQGvgD9IDLE580

Why do they insist on talking about it, how will the problem ever go away?

I'm off to talk to my Union about this

wobbles-grogan

Woot woot!

Seriously tho, this is a joke. How could they get so high? When will this end? Not soon, i imagine.

liammur

rumour wrote: »

Joyiously this week I thought our problems were over, we had lone sharks queing up to lend us money at a measily 6~%....isn't that great, job done. We can simply just not talk about when it needs to be paid back. Problem solved!!!

Now, I've just read this;

http://www.google.com/hostednews/ap/article/ALeqM5g5A01HJHTO0CXly3U0Z9daWdQGvgD9IDLE580

Why do they insist on talking about it, how will the problem ever go away?

I'm off to talk to my Union about this

How on earth could you have assumed our problems were over? They are just starting.

irishconvert

rumour wrote: »

Joyiously this week I thought our problems were over, we had loan sharks queing up to lend us money at a measily 6~%....isn't that great, job done. We can simply just not talk about when it needs to be paid back. Problem solved!!!

Now, I've just read this;

http://www.google.com/hostednews/ap/article/ALeqM5g5A01HJHTO0CXly3U0Z9daWdQGvgD9IDLE580

Why do they insist on talking about it, how will the problem ever go away?

Not talking about the elephant in the room that was the housing bubble is what got us into this mess in the first place. How do you think ignoring the problems will make them go away now?

rumour

liammur wrote: »

How on earth could you have assumed our problems were over? They are just starting.

Really:eek: Here was I thinking loan sharks being the jolly cahps that they are will just keep giving us money forever.

Seriously it's worse than just starting, things are fubar, we are so far down the path that any sensible country or even person would avoid and yet when listening to the media this week you would have thought 'everythings grand'.

FUBAR

liammur

rumour wrote: »

Really:eek: Here was I thinking loan sharks being the jolly cahps that they are will just keep giving us money forever.

Seriously it's worse than just starting, things are fubar, we are so far down the path that any sensible country or even person would avoid and yet when listening to the media this week you would have thought 'everythings grand'.

FUBAR

Our financial shares are in freefall as we speak. Foreign investors have no confidence in the country. The worst is yet to come imo.

MrDarcy

wobbles-grogan

rumour wrote: »

Really:eek: Here was I thinking loan sharks being the jolly cahps that they are will just keep giving us money forever.

Seriously it's worse than just starting, things are fubar, we are so far down the path that any sensible country or even person would avoid and yet when listening to the media this week you would have thought 'everythings grand'.

FUBAR

Really? Any sensible person would avoid? Then why is a whole load of people in this country in huge negative equity? Why didn't anyone listen to those economists back in 2006-7-8 when they were saying that "this is all going to end, be careful".

Oh yeah, "sensible". That's right....

bamboozle

as far as i can see the concerns and volatility of these rates will continue until 2 things happen, govt gives a final price on Anglo (hope you're enjoying your newfound wealth Mrs. Seanie) and the budget is announced with at least the mooted 3 billion in cuts.

liammur

bamboozle wrote: »

as far as i can see the concerns and volatility of these rates will continue until 2 things happen, govt gives a final price on Anglo (hope you're enjoying your newfound wealth Mrs. Seanie) and the budget is announced with at least the mooted 3 billion in cuts.

The problem is far more serious than that i'm afraid. Cuts have to be well above 3bn and silly projects like metros need to be axed, along with pay cuts, redundancies, etc, etc.

waitingforBB

Croke park agreement needs to be reviewed. Clause referencing unforseen budgetary deterioration has to be relied upon. We're in the sh*t and sorry PS, but Croke Park agreement should never have happened. Now that it has at least there is a viable exit clause.

RichardAnd

waitingforBB wrote: »

Croke park agreement needs to be reviewed. Clause referencing unforseen budgetary deterioration has to be relied upon. We're in the sh*t and sorry PS, but Croke Park agreement should never have happened. Now that it has at least there is a viable exit clause.

The croke park deal never should have been entered into at all and now that it seems very possible it will be thrown away, the whole thing just seems like a total waste of time. Larger Pay cuts should have been made and strikes tolerated. The government could have solved large scale industrial unrest by taking the following steps:

1. PS workers will not be paid whilst on strike.
2. If any sector of the PS strikes, pay should be stopped for ALL public servants until the offending parties return to work.
3. Work to Rule should be regarded as striking in the fullest sense of the term.

I don't like to bash PS workers but the state does need to discipline its staff because some public servants behave like spoilt children.

blue_steel

RichardAnd wrote: »

The croke park deal never should have been entered into at all and now that it seems very possible it will be thrown away, the whole thing just seems like a total waste of time. Pay cuts should have been made and strikes tolerated.

What planet are you on? Paycuts were made! 15% for most ps workers.
More than anywhere else on the planet. Try taking a paycut of that magnitude when you are a grownup (ie have kids, a mortgage and bills).

I don't like to bash PS workers but

LOL You are like one of those football managers who say "I don't want to blame the ref but..."

RichardAnd

blue_steel wrote: »

What planet are you on? Paycuts were made! 15% for most ps workers.
More than anywhere else on the planet. Try taking a paycut of that magnitude when you are a grownup (ie have kids, a mortgage and bills).



LOL You are like one of those football managers who say "I don't want to blame the ref but..."

I'm on the same cash strapped little island as you. My post wasn't clear, I should have said "further cuts" whilst I actually implied no cuts were made. It's cleared up so I apologise.

And no, I'm not a foot ball fan who blames the ref for a teams mistakes but I am a realist who believes that paying public servants with money we don't really have isn't going to work. Alot of my family are civil servants, my own parents are too and I have been one myself in the past but that doesn't change the fact that we don't have the money to pay wages at 2004 levels (which is where, I understand, PS wages are right now).

Thus, we need to roll back wage costs to a level we CAN afford and if that means my mother's pay must take a 30% cut then that must happen.

KindOfIrish

wobbles-grogan wrote: »

Then why is a whole load of people in this country in huge negative equity

Education is cr..p in this country. Majority people do not know what they are doing. Only idiots can think that a sh..t built house can cost 350000euro. There is no house in this country which cost more than 100,000 euro. But greedy capitalists will do anything to keep things as they are.

MrDarcy

There's a lot of Twittering going on today on this subject, David Mc Williams has just tweeted that the 10 year bond rate today is 6.9% and if it goes above 7% it's basically game over for Ireland...

Mr Benevolent

MrDarcy wrote: »

There's a lot of Twittering going on today on this subject, David Mc Williams has just tweeted that the 10 year bond rate today is 6.9% and if it goes above 7% it's basically game over for Ireland...

How? Has he plucked the number out of thin air?

irishconvert

MrDarcy wrote: »

There's a lot of Twittering going on today on this subject, David Mc Williams has just tweeted that the 10 year bond rate today is 6.9% and if it goes above 7% it's basically game over for Ireland...

Worrying

davidmcw: Irish bond yields touching 7%, 6.99% actually. Once they break 7, its curtains

davidmcw: means the bond market will shut to Ireland in coming days. we will go to European Bailout fund but wait the for EU's stringent conditions!

davidmcw: EU's conditions for money could be a pale shadow of IMF. Yet, also time for Germany to air grievances about our corporate tax rate? Maybe?

irishconvert

Confab wrote: »

How? Has he plucked the number out of thin air?

RTE News at One just said they touched 6.8% this morning.

http://www.rte.ie/business/2010/0928/anglo.html

The premium demanded by investors to lend to Ireland over Germany has narrowed slightly after reports that the European Central Bank has been buying Irish Government bonds in the market.

Bond markets remain on edge ahead of the Government's expected announcement of the final cost of bailing out Anglo Irish Bank.

The interest rate demanded by investors to lend money to Ireland for 10 years was just under 7% by lunchtime. The gap, or spread, between this rate and the equivalent German rate dropped to 4.7 percentage points from a euro lifetime high of 4.75 points earlier in the day. The cost of borrowing for Portugal also surged this morning.

ei.sdraob

irishconvert wrote: »

RTE News at One just said they touched 6.8% this morning.

http://www.rte.ie/business/2010/0928/anglo.html

yep

rumour

irishconvert wrote: »

RTE News at One just said they touched 6.8% this morning.

http://www.rte.ie/business/2010/0928/anglo.html

http://nbyslog.blogspot.com/2010/09/eu-meltdown-exclusive-ireland-is.html

Info posted by a Hoplite in Irish Times this morning. This is the first time we start seeing the unimaginable being mentioned publically abroad. Time s up.

Hard times ahead, anyone with savings should be careful the government will probably try and have a share of these in the budget.

Mr Benevolent

I mean what happens at 7%? I know we're way above the rate we'd get from the EU/IMF funds, but is this really that bad?

http://nbyslog.blogspot.com/2010/09/...reland-is.html

That blog is the usual UK anti-EU crap. At least they can use quantitative easing. Not that it worked.

irishconvert

Confab wrote: »

I mean what happens at 7%? I know we're way above the rate we'd get from the EU/IMF funds, but is this really that bad?

I don't fully understand but from what I can gather it would be less expensive to take a bail out from Europe and IMF at this stage. However there would be very strict rules attached which would result in very severe cutbacks. Also our reputation would be in tatters.

southsiderosie

I remember reading somewhere that there was basically a 6% rule on sovereign debt - if the interest rates went over this point, it was pretty much game over and the IMF gets called in. Don't know why 7% is the new 6%, but regardless, the current situation is unsustainable. The government has got to get Anglo off the books.

Mr Benevolent

irishconvert wrote: »

I don't fully understand but from what I can gather it would be less expensive to take a bail out from Europe and IMF at this stage. However there would be very strict rules attached which would result in very severe cutbacks. Also our reputation would be in tatters.

Isn't all the worry about the bond rate going to drive it higher still?

MrDarcy

irishconvert wrote: »

I don't fully understand but from what I can gather it would be less expensive to take a bail out from Europe and IMF at this stage. However there would be very strict rules attached which would result in very severe cutbacks. Also our reputation would be in tatters.

The thing is, the cut backs need to be made! I see it posted on here regularly enough that Irish people are gloating at the worsening economic situation, almost wallowing in it, you'd have to ask why people are doing that???

They are doing it because the private sector has already experienced default, look at all the businesses closing, behind every CRO number is a litany of people/employees who get shifted onto an immediate diet of poverty, 196 Euro a week, relationship problems that stem from all of this, huge depression, possible suicide, loss of hope and expectation, etc.

Why should 500,000 people in the private sector, the hardest working people on this island, be exposed to this, while a whole congregation of people in the public sector get guaranteed jobs, a Croke Park deal that further enforces the notion of selfish entitlement and protectionism, with all the antiquated work practices carefully allowed to stay in place for fear that we might upset someone???

We need redundancies in the public sector and we need a 30% salary "haircut" for those who get to keep their jobs...

Scarab80

Confab wrote: »

I mean what happens at 7%? I know we're way above the rate we'd get from the EU/IMF funds, but is this really that bad?

http://nbyslog.blogspot.com/2010/09/...reland-is.html

That blog is the usual UK anti-EU crap. At least they can use quantitative easing. Not that it worked.

7% is used because that is the rate at which Greece withdrew from the markets.

Mr Benevolent

MrDarcy wrote: »

The thing is, the cut backs need to be made! I see it posted on here regularly enough that Irish people are gloating at the worsening economic situation, almost wallowing in it, you'd have to ask why people are doing that???

They are doing it because the private sector has already experienced default, look at all the businesses closing, behind every CRO number is a litany of people/employees who get shifted onto an immediate diet of poverty, 196 Euro a week, relationship problems that stem from all of this, huge depression, possible suicide, loss of hope and expectation, etc.

Why should 500,000 people in the private sector, the hardest working people on this island, be exposed to this, while a whole congregation of people in the public sector get guaranteed jobs, a Croke Park deal that further enforces the notion of selfish entitlement and protectionism, with all the antiquated work practices carefully allowed to stay in place for fear that we might upset someone???

We need redundancies in the public sector and we need a 30% salary "haircut" for those who get to keep their jobs...

Fine, yes, but that won't stop us defaulting. Articles popping up all over the world in the last hour about Ireland's bond rates.

Shit.

irishconvert

Confab wrote: »

Isn't all the worry about the bond rate going to drive it higher still?

No, it's the international market's concern about our finances which drives it higher. The more they think we do not have the ability to pay our debts the higher the rate goes.

GSF

Confab wrote: »

That blog is the usual UK anti-EU crap. At least they can use quantitative easing. Not that it worked.

The cost of UK borrowing at 3% would suggest that perhaps it did work.

irishconvert

RTÉ seem to be almost reporting this in a blasé fashion. The top story on their website is "Taoiseach Brian Cowen has launched a five-year overseas investment plan aimed at generating up to 300,000 jobs". Perhaps they are trying not to panic everyone. Does anyone else have a deep feeling of dread?

Mr Benevolent

irishconvert wrote: »

Does anyone else have a deep feeling of dread?

Same here.

irishconvert

GSF wrote: »

The cost of UK borrowing at 3% would suggest that perhaps it did work.

It just prolonged the so-called recovery in the UK. UK are in very bad shape also. To me it feels like Ireland did 3 years ago. They are just beginning to talk about a soft landing now as house prices begin to dip again. Watch this space.

kippy

Hmmmmm.
This is worrying. I was under the impression we had risen enough funding to cover us until July next year - obviously not.
So this 7% is **** or bust time for us financially........
Shows ya how pointless it was to pander to the "markets" in the first place and cover their losses in the private banks.
Now as well as having covered their losses we're gonna have to tap into the EU fund, taking on more debt in the process and ensuring that the nation remain in the toilet for decades to come but so long as the markets didnt make a massive loss no one cares.

MrDarcy

Confab wrote: »

Fine, yes, but that won't stop us defaulting. Articles popping up all over the world in the last hour about Ireland.

Shit.

Defaulting will be a positive thing for us here ultimately. We need to go right back to the drawing board now I think, anything less and it's like sending a cancer patient home with a bit of a tumour still in his brain.

There is no way on this earth that we can continue protecting highly overpaid public servants who are still embracing antiquated working practices, while half a million people are unemployed. This is madness, and if this madness brings us to default and forces us to face up to the reality of our situation, both in terms of the unsustainable strategy of throwing money at failed banks and also throwing money at unaffordable public servants, then it can only be what is ultimately required I think.

Mr Benevolent

kippy wrote: »

Hmmmmm.
This is worrying. I was under the impression we had risen enough funding to cover us until July next year - obviously not

Yes we have, but we won't be able to borrow anything after that if 7% is hit. That's my interpretation anyway.

southsiderosie

MrDarcy wrote: »

The thing is, the cut backs need to be made! I see it posted on here regularly enough that Irish people are gloating at the worsening economic situation, almost wallowing in it, you'd have to ask why people are doing that???

They are doing it because the private sector has already experienced default, look at all the businesses closing, behind every CRO number is a litany of people/employees who get shifted onto an immediate diet of poverty, 196 Euro a week, relationship problems that stem from all of this, huge depression, possible suicide, loss of hope and expectation, etc.

Why should 500,000 people in the private sector, the hardest working people on this island, be exposed to this, while a whole congregation of people in the public sector get guaranteed jobs, a Croke Park deal that further enforces the notion of selfish entitlement and protectionism, with all the antiquated work practices carefully allowed to stay in place for fear that we might upset someone???

We need redundancies in the public sector and we need a 30% salary "haircut" for those who get to keep their jobs...

Hm, I might have agreed with this a few months ago, but not now. The Irish cuts have been so deep, it's hard to see how or when demand will ever pick up again. Martin Wolf's recent article in the FT explains this far better than I can:

...My conclusion, then, is the exact opposite of the conventional wisdom with which I began: the only way that the private sector can de-leverage, when large economies are in a post-crisis recession, is for the government to leverage. The economy, as a whole, cannot de-leverage in any other way, other than via accelerated mass bankruptcy, which would certainly deepen the recession, if not create a depression. If the government tried to eliminate its deficit over night, it would have to drive the private sector back towards balance (or achieved a massive shift in the external balance very swiftly). In the context of excessive debt, that is only going to happen if private sector incomes are so squeezed that paying down their debt is no longer feasible. But in this situation, mass bankruptcy and a slump again becomes a likely outcome.

The latter is, indeed, what now threatens peripheral European countries forced to reduce fiscal deficits at exactly the time when their households are trying to pay down their debts and corporations are slashing investment. I fear the outcome of this hair-shirt policy, which is likely to break the will of some countries and, quite possibly, the eurozone itself.

So the least bad way to deal with a huge debt overhang has three elements: facilitate mass bankruptcy of the hopelessly over-indebted; lower interest rates, so making it easier for the indebted to carry and pay down their debt; and accept large fiscal deficits as a way of sustaining the incomes of those trying to pay down debts. The recommended alternative of slashing the fiscal deficit while the private sector tries to slash its debt suffers from a fallacy of composition: it is impossible for all sectors of the economy to spend less than income at the same time....

Mr Benevolent

So what now? Even if the ECB buys up Ireland's bonds surely it's just facesaving? Are we inevitably going to default? If we're funded up to the middle of next year doesn't that just delay the inevitable?

Apologies if the above questions seem uneducated.

Edit: And if Anglo's final bailout cost is due very shortly with our S&P rating riding on the total cost being below e35B, won't that drive things up further too?

View

Confab wrote: »

So what now? Even if the ECB buys up Ireland's bonds surely it's just facesaving? Are we inevitably going to default? If we're funded up to the middle of next year doesn't that just delay the inevitable?

Apologies if the above questions seem uneducated.

Edit: And if Anglo's final bailout cost is due very shortly with our S&P rating riding on the total cost being below e35B, won't that drive things up further too?

There is always the "Greek bail-out" mechanism available to us - Handelsblatt reported yesterday that apparently some European central banks had been put on stand-by to raise funds in case Ireland made a formal request for assistance under the mechanism but that it had proved unnecessary for the mechanism to be activated.

Permabear

This post has been deleted.

Scarab80

Confab wrote: »

Yes we have, but we won't be able to borrow anything after that if 7% is hit. That's my interpretation anyway.

7% is not a magical figure above which you can't borrow. It's just that once you get up into that kind of area unrealistic GDP growth rates/inflation are needed in order to pay back the debt.

Mr Benevolent

donegalfella wrote: »

This post has been deleted.

I'm not raking in thousands a month and I'm unemployed. Unfair to tar the unemployed 10% of the country as dole scroungers who get thousands a month doing nothing. It's not my fault I'm unemployed, thanks.

Permabear

This post has been deleted.

irishconvert

donegalfella wrote: »

This post has been deleted.

Everything has to come down also. You can't blame all the ills on the unemployed. The cost of living is damn high in this country, hence the high benefits.

Permabear

This post has been deleted.

Mr Benevolent

donegalfella wrote: »

This post has been deleted.

Do you blame disproportionately low income tax as well?

southsiderosie

donegalfella wrote: »

This post has been deleted.

I think it's a bad idea to throw people off the dole right now, but I think now is the time to impose some limits on when and how people can draw dole payments. Starting with an end to lifetime benefits.

irishconvert wrote: »

Everything has to come down also. You can't blame all the ills on the unemployed. The cost of living is damn high in this country, hence the high benefits.

I don't think it is fair to blame the recently unemployed. But the government would be in a better position to help these people if they hadn't spent so much money on welfare payments when unemployment was at 3% over the boom years.

hinault

irishconvert wrote: »

RTÉ seem to be almost reporting this in a blasé fashion. The top story on their website is "Taoiseach Brian Cowen has launched a five-year overseas investment plan aimed at generating up to 300,000 jobs". Perhaps they are trying not to panic everyone. Does anyone else have a deep feeling of dread?

We're told that politics doesn't influence the spreads.

It might just be coincidence but nearly every government economic pronouncement has been uttered when the spread has moved appreciably.

Announcing 300,000 jobs sounds like an attempt to play for more time in my opinion.
Remember the Farmleigh think in?

irishconvert

southsiderosie wrote: »

I think it's a bad idea to throw people off the dole right now, but I think now is the time to impose some limits on when and how people can draw dole payments. Starting with an end to lifetime benefits.



I don't think it is fair to blame the recently unemployed. But the government would be in a better position to help these people if they hadn't spent so much money on welfare payments when unemployment was at 3% over the boom years.

There will always be unemployed for a variety of reasons. Some people have health problems which prevent them from holding down a full time work. We all know where the blame for this mess lies so let's lay off the unemployed.

irishconvert

hinault wrote: »

We're told that politics doesn't influence the spreads.

It might just be coincidence but nearly every government economic pronouncement has been uttered when the spread has moved appreciably.

Announcing 300,000 jobs sounds like an attempt to play for more time in my opinion.
Remember the Farmleigh think in?

I think there is a stack of preprepared press releases. Whenever sh1t hits the fan one gets released to divert attention.

Mr Benevolent

hinault wrote: »

We're told that politics doesn't influence the spreads.

It might just be coincidence but nearly every government economic pronouncement has been uttered when the spread has moved appreciably.

Announcing 300,000 jobs sounds like an attempt to play for more time in my opinion.

300,000 jobs? We might as well have announced our intent to send the first Irish person into space by next Tuesday.