Bonds v National Pension Reserve Fund

McLovinit

Hi,

Question for the more well informed.

If the cost of borrowing from international markets continues to rise and is at unrealistic levels come next March, could we borrow from our own NPRF in the form of a coupon issued to the DOF?

I understand that they have €24 billion in reserves or are things that bad that we wouldnt even lend to ourselves?

thank you.

oppenheimer1

We can, but it would require a change in legislation afaik

Sleepy

I have to admit, I wouldn't be surprised to hear that the NPRF had been blown on coke and hookers at the Kildare Street Christmas Party at this stage...

Nijmegen

Question: Would you spend your life savings in Tesco?

€24bn would last us into 2012, no further. And every politician and his granny has been earmarking that money for 'stimulus' as well as it having guarentees against it for bank bailouts etc, and acting as a shock buffer.

What you propose doing is putting that capital to work to keep the lights on.

Then what?

McLovinit

Sleepy wrote: »

I have to admit, I wouldn't be surprised to hear that the NPRF had been blown on coke and hookers at the Kildare Street Christmas Party at this stage...

In fairness I would say they probably just made do with the invitation to the Anglo one every year ;-)

McLovinit

On reflection, they are probably the only ones that havent blown all their beans. Perhaps we should just ask them to manage the country instead of the IMF.

McLovinit

Nijmegen wrote: »

Question: Would you spend your life savings in Tesco?

€24bn would last us into 2012, no further. And every politician and his granny has been earmarking that money for 'stimulus' as well as it having guarentees against it for bank bailouts etc, and acting as a shock buffer.

What you propose doing is putting that capital to work to keep the lights on.

Then what?

Yes possibly certainly while yields are at levels that are unsustainable. As much as I like Tesco , you have a hard time finding your way there without any lights on..... then what

ardmacha

Entering the EU bailout regime or using the NPRF might allow a return to markets later, if

a) cuts did in fact proceed on target
b) underlying economic growth was a least moderate
c) there is a new government with a large majority determined to keep up the good work
d) no further smell originated from the banks

There seems a fair chance of a) b) and c), who knows about d)!

McLovinit

ardmacha wrote: »

Entering the EU bailout regime or using the NPRF might allow a return to markets later, if

a) cuts did in fact proceed on target
b) underlying economic growth was a least moderate
c) there is a new government with a large majority determined to keep up the good work
d) no further smell originated from the banks

There seems a fair chance of a) b) and c), who knows about d)!

We also have €20 billion plus in cash reserves.

Cavehill Red

McLovinit wrote: »

We also have €20 billion plus in cash reserves.

20 billion cash plus 24 more in the NPRF.

This money is devaluing daily in the current currency war.
We have only 2 tonnes of gold afaik.
It's late in the day, but we should bulk up on our gold to prop up the return of the punt when we get booted out of the euro.

Nijmegen

Cavehill Red wrote: »

20 billion cash plus 24 more in the NPRF.

This money is devaluing daily in the current currency war.
We have only 2 tonnes of gold afaik.
It's late in the day, but we should bulk up on our gold to prop up the return of the punt when we get booted out of the euro.

Gold, which is currently hugely over valued and being eyed as the next big asset bubble to burst in the near future?

Actually, I'd say the DoF is bulking up as you suggest, knowing them.

Cavehill Red

Nijmegen wrote: »

Gold, which is currently hugely over valued and being eyed as the next big asset bubble to burst in the near future?

Actually, I'd say the DoF is bulking up as you suggest, knowing them.

If they were, we'd know about it. But let's wait for the budget. We'll see the country's balance sheet then.

As for gold being overvalued, that's your opinion and you're entitled to it. But gold is not overvalued when looked at in terms of inflation-adjusted fiat currencies.

And of course it doesn't increase or decrease in value at all - its apparent rise is due to the devaluation of paper money, caused by ongoing quantative easing (Ben Bernanke's printing press) and the race to the bottom currency war we're currently in.

It will end up a bubble, most likely. But so long as the world economy is in the crapper and governments try to print their way out of their debts and difficulties, gold remains the only true currency, which explains its current position.

What's more, fewer than 1% of investment funds have any holdings, we've passed 'peak gold' and the physical element (as opposed to paper gold ETFs) is becoming highly scarce.

It's a protection of wealth in tough times, which is why it's currently getting some headlines. In comparison to the euro, dollar, sterling and all the other fiat currencies which we've likely got our state money tied up in, gold at least will preserve its value, since its value doesn't change.

And if, as seems inevitable, we're kicked out of the euro, we'll need to have something to back up an punt nua.

ashleey

Don't forget that some of that nprf is in directed investments. That is they bought shares in our great financial institutions. They won't be worth much in a sale if at all. I would lower that 24bn by about 5 or 6 bn. Or about 3 months wages for the ps. Still what's 5 bn between friends these days?

Peanut

McLovinit wrote: »

Hi,

Question for the more well informed.

If the cost of borrowing from international markets continues to rise and is at unrealistic levels come tomorrow afternoon, could we borrow from our own NPRF in the form of a coupon issued to the DOF?

I understand that they have €24 billion in reserves or are things that bad that we wouldnt even lend to ourselves?

thank you.

FYP* :pac:

* current rate is not an indicator of future performance. terms & conditions apply

Cavehill Red

Sweet Jesus.

If that hits 10, it's game over.