Why are we panicing about bond markets?

Mr Marri

So we lose access to fresh borrowing from the bond market, so what?
Yes there will be major adjustments, but, even if we had access to the bond markets this would only kick the can down the road. We will have to pay sometime.
I just wonder if all this worry about the bond markets is like worrying about which deck chair you'll get on the titanic.

Am I missing something .

Économiste Monétaire

More suited to Irish Economy. Moved.

gollem_1975

don't the discounts being offered on the bond markets indicate the markets view that they may not be repaid ?

also don't they indicate the interest rate that the Irish government may have to offer at the next issue i.e. it will cost us more to borrow money that we need to keep us in the manner we are accustomed ?

these are not rhetorical questions. I would actually know the correct answer to this ( if indeed there is correct answer )

Scofflaw

gollem_1975 wrote: »

don't the discounts being offered on the bond markets indicate the markets view that they may not be repaid ?

also don't they indicate the interest rate that the Irish government may have to offer at the next issue i.e. it will cost us more to borrow money that we need to keep us in the manner we are accustomed ?

these are not rhetorical questions. I would actually know the correct answer to this ( if indeed there is correct answer )

The answers, as far as I'm aware, are very simply "yes" and "yes". We're asking people to loan us money (that's essentially what buying our debt means), and the interest rate they charge is what we pay. That interest charge factors in the market's estimation of the likelihood we won't pay back the money.

It's not that we can't borrow on the markets when the interest rates are 8-9%, it's just that it's prohibitvely expensive to do so.

cordially,
Scofflaw

Mr Marri

But surely high interest rates are not a bad thing as it will discourge us from borrowing more and hence force us to get our house in order.

If you can't afford your mortatage the last thing you want is somebody to give you a car loan, even if the rate offered was very attractive.

Scofflaw

Mr Marri wrote: »

But surely high interest rates are not a bad thing as it will discourge us from borrowing more and hence force us to get our house in order.

If you can't afford your mortatage the last thing you want is somebody to give you a car loan, even if the rate offered was very attractive.

Assuming we have no more self-discipline than a junkie in a heroin shop, that's true. Unfortunately, that's exactly what our economic history suggests. Still, if getting one's house in order was easy, even we might have done it before now.

cordially,
Scofflaw

gollem_1975

Mr Marri wrote: »

But surely high interest rates are not a bad thing as it will discourge us from borrowing more and hence force us to get our house in order.
If you can't afford your mortatage the last thing you want is somebody to give you a car loan, even if the rate offered was very attractive.

you make it sound like this will be as easy as people starting to bring packed lunches to work instead of eating out.

theres no debate that the country needs take some pain... the problem is determining how the pain is going to be shared out.

gollem_1975

Scofflaw wrote: »

Assuming we have no more self-discipline than a junkie in a heroin shop, that's true. Unfortunately, that's exactly what our economic history suggests. Still, if getting one's house in order was easy, even we might have done it before now.

cordially,
Scofflaw

and also when it comes to borrowing money in this case.. the people who borrow the money aren't necessarily the people who have to pay it back.

carveone

Scofflaw's still around. Thought he would have lost his mind after the last EU treaty referendum

Mr Marri wrote: »

But surely high interest rates are not a bad thing as it will discourge us from borrowing more and hence force us to get our house in order.

You'd think.

Angela Merkel (cannot find an exact quote, but it was this week) actually said that lenders should pay too. Essectially implying that the crisis is not just the fault of "stupid borrowers" but also of reckless lenders.

I earnestly believe the government should take its balls off the shelf, dust them off, and renegotiate. This is what real business do. When they're screwed, they make deals. Both sides write down and life goes on.

The very thought that the government is actually considering paying back all debt in full is just terrifying. The economy will go under and then we'll default anyway.

This refusal to make deals, this refusal to act like a grown up and "do it all myself like a big boy" will destroy the country. We're busy converting to a passive deficit model - trying to reduce the deficit by increasing taxation and reducing public spending in an arena of increasing unemployment. This doesn't work.

murphaph

gollem_1975 wrote: »

you make it sound like this will be as easy as people starting to bring packed lunches to work instead of eating out.

You know something, it would be a start!

When I think of the money I wasted in staff canteens down the years. These days I am happy to say that it's literally ham and cheese sambos for lunch every day. It's boring but it costs about 50c for my entire lunch, compared to €3 or €4 if I ate out.

We need to get away from the Cafe Lattes and all that sh!te (trappings of wealth we never had) and get back to basics. Shopping for staple foods like our parents did and COOKING for ourselves. Me and the GF eat out once a week (and when I say eat out I mean BK or McDonalds!). We might hit a restaurant once every 6~8 weeks and even then it would be nothing fancy.

When I see the way her family recycles food (they are from the former East) it would make you embarrassed. Nothing is wasted, just like nothing was wasted in ireland before we got notions of ourselves. If people started packing a lunch it would indeed be a start.

Mr Marri

gollem_1975 wrote: »

you make it sound like this will be as easy as people starting to bring packed lunches to work instead of eating out.

theres no debate that the country needs take some pain... the problem is determining how the pain is going to be shared out.

But the pain would be worse if we had lower bond rate as we would just borrow more money untill at some point in the future we owe X times what we do now and the pain would be X times what it will be now.

Sadly this will be a very painfully but worthwhile lesson .

OMD

Mr Marri wrote: »

But the pain would be worse if we had lower bond rate as we would just borrow more money untill at some point in the future we owe X times what we do now and the pain would be X times what it will be now.

Sadly this will be a very painfully but worthwhile lesson .

I don't think you have this right at all. This year Ireland will take in about 18 billion less than it pays out. If we make the planned 6 billion cutbacks this year, we will still need to borrow 12 billion just to get by. We are already discouraged from borrowing but we have no choice.
Were we to cut 18 billion in 1 year that would mean halving pensions, dole, PS pay, closing many hospitals, closing and merging schools etc. It would totally destroy the economy not to mention the human lives destroyed.

Mr Marri

OMD wrote: »

I don't think you have this right at all. This year Ireland will take in about 18 billion less than it pays out. If we make the planned 6 billion cutbacks this year, we will still need to borrow 12 billion just to get by. We are already discouraged from borrowing but we have no choice.
Were we to cut 18 billion in 1 year that would mean halving pensions, dole, PS pay, closing about 30% of hospitals, closing and merging schools etc. It would totally destroy the economy not to mention the human lives destroyed.

But these cuts are going to have to happen, how will deferring them for 18-24 months really change things?

OMD wrote: »

It would totally destroy the economy not to mention the human lives destroyed.

This is my only concern, we really do need strong and carefully leadership to guide this process. But I just don't see that happen in Ireland.
For my own part I will do what I can to look after the people around me, and if everbody else can do the same we will be just fine.

Scofflaw

gollem_1975 wrote: »

and also when it comes to borrowing money in this case.. the people who borrow the money aren't necessarily the people who have to pay it back.

From a democratic perspective, that's not really the case. The money is borrowed on our behalf by the government elected by the majority of the electorate. It's then paid back by the electorate.

Angela Merkel (cannot find an exact quote, but it was this week) actually said that lenders should pay too. Essectially implying that the crisis is not just the fault of "stupid borrowers" but also of reckless lenders.

It's not so much that they're reckless, but that the interest rates they charge are supposed to have risk factored in already. If there's no risk, because they never get hit in a crisis, then bond rates should only reflect the opportunity cost of not investing the money somewhere else - there should be no risk premium. Since there is a risk premium, there should be a risk.

cordially,
Scofflaw

Mr Marri

carveone wrote: »

The very thought that the government is actually considering paying back all debt in full is just terrifying. The economy will go under and then we'll default anyway.

This refusal to make deals, this refusal to act like a grown up and "do it all myself like a big boy" will destroy the country. We're busy converting to a passive deficit model - trying to reduce the deficit by increasing taxation and reducing public spending in an arena of increasing unemployment. This doesn't work.

I've seen this so many times in real life and it works

This nosense of they will never lend to us again is complete rubish.

Next time we go to the market they will assess us as borrowers and deternine the interest rate for themselve based on what we present to them at the time. If they see a good deal they will go for it...that is the way of the world.

ashleey

The idea is that we make a big cut in spending now, grow our income over time and then the future cuts won't feel big or maybe not even necessary. That's the plan. And as they say 'good luck with that'

Goodluck2me

Mr Marri wrote: »

But these cuts are going to have to happen, how will deferring them for 18-24 months really change things?

Of course! you have a chance for the world economy to pick up, and other counties to invest in Ireland through our exports and national outward investment, which means the extra 12 we need this year, might turn out to only be a couple of 3's.

Mr Marri wrote: »

This nosense of they will never lend to us again is complete rubish.

Next time we go to the market they will assess us as borrowers and deternine the interest rate for themselve based on what we present to them at the time. If they see a good deal they will go for it...that is the way of the world.

What if the interst rate is 42% like Argentina got to in the very recent past? You are just wasting productivity by paying excessive interest out of the country.

gollem_1975

Scofflaw wrote: »

From a democratic perspective, that's not really the case. The money is borrowed on our behalf by the government elected by the majority of the electorate. It's then paid back by the electorate.

absolutely have no problem with your logic vis-a-vis government borrowing on behalf of the electorate.

My thinking was moreso that the government and the electorate ,i.e. those that vote ( the silver foxes etc. ), may not live to see this debt paid off.
the present younger generation and perhaps even future generations will be the ones paying off this debt.

murphaph

gollem_1975 wrote: »

absolutely have no problem with your logic vis-a-vis government borrowing on behalf of the electorate.

My thinking was moreso that the government and the electorate ,i.e. those that vote ( the silver foxes etc. ), may not live to see this debt paid off.
the present younger generation and perhaps even future generations will be the ones paying off this debt.

Then the younger generations should take a damn bit of interest in politics beyond moaning to each other about it in the pub/students union/work/dole queues. The pensioners are not the only ones who can vote. We can actually have a government that represents us but the problem is apathy. There is no excuse for it. If one more person says "they're all the same" I'll scream. They aren't all the same. Few are perfect but we have to elect the slightly less imperfect ones and then through an iterative proces (which will take years) we punish bad government and show the opposition that we expect more.

gollem_1975

murphaph wrote: »

Then the younger generations should take a damn bit of interest in politics beyond moaning to each other about it in the pub/students union/work/dole queues. The pensioners are not the only ones who can vote. We can actually have a government that represents us but the problem is apathy. There is no excuse for it. If one more person says "they're all the same" I'll scream. They aren't all the same. Few are perfect but we have to elect the slightly less imperfect ones and then through an iterative proces (which will take years) we punish bad government and show the opposition that we expect more.

OT : Are there any examples of a democracy where the younger generation are actually represented by people of their own age ? I can't think of any high profile examples.

i'm not criticising younger people for not being involved in politics(thats another debate..it was only after years of paying taxes that I developed an interest ).. I'm just making a point that the demographic currently holding political power have the power to transfer the cost of cleaning up after their fsck-up onto the younger generation ( which in fairness is also OT so its not one I intend to develop any further)

ps: and the next generation will probably do the same to the one that succeeds ( trotting out the same old line "we built the country for you" etc. )

P. Breathnach

gollem_1975 wrote: »

... My thinking was moreso that the government and the electorate ,i.e. those that vote ( the silver foxes etc. ), may not live to see this debt paid off.
the present younger generation and perhaps even future generations will be the ones paying off this debt.

As a silver fox, I have no difficulty in suggesting that younger people should be prepared to do some of the paying. Collectively, you stand to inherit a considerably better infrastructure than existed when I entered my adult years; individually, many of you have expectations of family inheritances that will greatly exceed your share of the national debt. The young will probably still be net gainers on intergenerational transfers.

So quit bitching.

Or, if you want my lot to pay, why not expropriate all our property when we die?

Cavehill Red

P. Breathnach wrote: »

Or, if you want my lot to pay, why not expropriate all our property when we die?

Because it won't be worth magic beans by then?

Scofflaw

gollem_1975 wrote: »

OT : Are there any examples of a democracy where the younger generation are actually represented by people of their own age ? I can't think of any high profile examples.

i'm not criticising younger people for not being involved in politics(thats another debate..it was only after years of paying taxes that I developed an interest ).. I'm just making a point that the demographic currently holding political power have the power to transfer the cost of cleaning up after their fsck-up onto the younger generation ( which in fairness is also OT so its not one I intend to develop any further)

ps: and the next generation will probably do the same to the one that succeeds ( trotting out the same old line "we built the country for you" etc. )

That's a fair point - there's the flip side you've alluded to, though, which is that if the older generation have worked hard through less prosperous conditions to build prosperity, or fought for civil rights, the younger generation get the benefit without having had to do anything but be born later.

cordially,
Scofflaw

thebman

P. Breathnach wrote: »

As a silver fox, I have no difficulty in suggesting that younger people should be prepared to do some of the paying. Collectively, you stand to inherit a considerably better infrastructure than existed when I entered my adult years; individually, many of you have expectations of family inheritances that will greatly exceed your share of the national debt. The young will probably still be net gainers on intergenerational transfers.

So quit bitching.

Or, if you want my lot to pay, why not expropriate all our property when we die?

Our infrastructure is pathetic

Regardless of whether it is better than it was, it is a joke compared to the countries we are trying to compete with for jobs. Its just less of a joke now than it used to be.

And now we have no money to bring it up to spec so we are stuck between a rock and a hard place...

P. Breathnach

thebman wrote: »

Our infrastructure is pathetic

Regardless of whether it is better than it was, it is a joke compared to the countries we are trying to compete with for jobs. Its just less of a joke now than it used to be.

And now we have no money to bring it up to spec so we are stuck between a rock and a hard place...

The present twenty-somethings stand to receive an infrastructure that is an order of magnitude better than that my generation found when we became economically active.

We are passing on a great deal more than we inherited, and you are complaining that it isn't even more.

Children can be so ungrateful.

Goodluck2me

P. Breathnach wrote: »

The present twenty-somethings stand to receive an infrastructure that is an order of magnitude better than that my generation found when we became economically active.

We are passing on a great deal more than we inherited, and you are complaining that it isn't even more.

Children can be so ungrateful.

I agree with you, no doubt we will be the ones complaining when the next generation of young people come through saying the same!

murphaph

gollem_1975 wrote: »

OT : Are there any examples of a democracy where the younger generation are actually represented by people of their own age ? I can't think of any high profile examples.

i'm not criticising younger people for not being involved in politics(thats another debate..it was only after years of paying taxes that I developed an interest ).. I'm just making a point that the demographic currently holding political power have the power to transfer the cost of cleaning up after their fsck-up onto the younger generation ( which in fairness is also OT so its not one I intend to develop any further)

ps: and the next generation will probably do the same to the one that succeeds ( trotting out the same old line "we built the country for you" etc. )

I wasn't having a go at you and if that's how it came across I apologise. What you said is bang on the money: the oldies vote and younger generations less so. However I am critical of younger people who don't vote and who are really too ignorant not to see that politics is not some abstract thing that has no effect on them. Quite the contrary, politics directly affects each and every one of us.

The younger generation who are now facing increased taxes and dole cuts (and indeed the public sector workers facing pay cuts) should see that there is a sector of society that the FF party are prepared to spare any pain in order to retain their vote.

murphaph

P. Breathnach wrote: »

The present twenty-somethings stand to receive an infrastructure that is an order of magnitude better than that my generation found when we became economically active.

We are passing on a great deal more than we inherited, and you are complaining that it isn't even more.

Children can be so ungrateful.

Your generation wants to take credit for the motorways? (little else was actually built, no underground for Dublin, a disconnnected Luas, disconnected by an oldie (Mary O'Rourke) to keep a few traders happy and on the promise of a never built metro north)

Then you can also take the credit for the debt you will be passing on!

I personally don't think any demographic can claim credit for such things. I'm 32 so not a silver fox just yet. When I was born there was also NO MOTORWAY and basically sh!t infrastructure. It remained that way until 1983 when we built the short Naas Bypass and then in 84 the M1 Airport Motorway and then a loooooooong pause until the Newbridge Bypass was opened in the 90's.

Don't really see where you can claim the current pensioners paid for our infrastructure when the M7 isn't even complete and most motorways were finished in the last 2 years and even then they have long PPP sections which have not yet been paid for (apart from land costs).

Strange point of view to take really.

P. Breathnach

I'm not going to play the "when I were a lad" card, but if you take the position that today's infrastructure is not significantly better than that of several decades ago, you are ignoring facts.

On intergenerational transfers [gets envelope; turns it over; finds pencil; sharpens it] let's see now:
About 50,000 deaths a year in Ireland. Assume everybody is married, and half the estates pass to surviving spouses (intragenerational). That leaves 25,000 estates passing to children (another simplifying assumption but hey, this is back-of-an-envelope stuff). What is the value of those estates? Suppose an average of one house per estate, either mortgage free at time of death or mortgage redeemed by insurance policy: say €250k average value (we oldies generally have superior houses). Other assets (businesses, farms, savings, cars, jewelry, proceeds of insurance policies, etc.): let's make a conservative estimate at €50k. So an average estate might be about €300k. On the basis that 25,000 people pass on €300k to the next generation, we have intergenerational transfers of (counts zeroes again just to be sure of order of magnitude) €7.5bn per annum on which, at present, only a small amount of Capital Aquisitions Tax is levied. I think that I have been reasonably, perhaps very, conservative in my estimates.

Many people will protest that they do not expect a family inheritance on the scale that I suggest, and they are right. That's the way things work with averages. Many others will expect far more.

My point is this: people want to take our infrastructure for granted, and even complain that it is not better. They want to pocket large inheritances. And they also want to complain about shouldering the national debt.

Cut out the whinging and get on with life. Take the bad and the good as the one package.

ashleey

And now that they've bankrupted the country(again) what do they do? They cut capital expenditure to preserve their own pay and conditions, thus falling further behind real countries/ republics like France and Germany..discuss

murphaph

P. Breathnach wrote: »

I'm not going to play the "when I were a lad" card, but if you take the position that today's infrastructure is not significantly better than that of several decades ago, you are ignoring facts.

On intergenerational transfers [gets envelope; turns it over; finds pencil; sharpens it] let's see now:
About 50,000 deaths a year in Ireland. Assume everybody is married, and half the estates pass to surviving spouses (intragenerational). That leaves 25,000 estates passing to children (another simplifying assumption but hey, this is back-of-an-envelope stuff). What is the value of those estates? Suppose an average of one house per estate, either mortgage free at time of death or mortgage redeemed by insurance policy: say €250k average value (we oldies generally have superior houses). Other assets (businesses, farms, savings, cars, jewelry, proceeds of insurance policies, etc.): let's make a conservative estimate at €50k. So an average estate might be about €300k. On the basis that 25,000 people pass on €300k to the next generation, we have intergenerational transfers of (counts zeroes again just the be sure of order of magnitude) €7.5bn per annum on which, at present, only a small amount of Capital Aquisitions Tax is levied. I think that I have been reasonably, perhaps very, conservative in my estimates.

Many people will protest that they do not expect a family inheritance on the scale that I suggest, and they are right. That's the way things work with averages. Many others will expect far more.

My point is this: people want to take our infrastructure for granted, and even complain that it is not better. They want to pocket large inheritances. And they also want to complain about shouldering the national debt.

Cut out the whinging and get on with life. Take the bad and the good as the one package.

Your figures have a huge flaw:

Where did the current older generation get the money to trade up to "superior houses" from? Well, they sold their "inferior houses" to first time buyers and the like who have taken out massive mortgages (much bigger than anything, even in relative terms) taken out by the older generation to purchase the "superior properties" initially. Therefore there has been a massive transfer of wealth from the younger generations to the older ones. The older ones now have the money and the younger ones now have the mortgages.

As for you last line:

Cut out the whinging and get on with life. Take the bad and the good as the one package

Well, touche! I am not asking for the older generations to endure the entire burden, while you appear to be in favour of them being completely spared this burden due to them passing on houses to their children, who were themselves paid for by the future work of their children's friends!

I just think EVERYBODY should take some pain. What is so wrong with that?

Your point about infrastructure being better now than "several decades ago" is irrelevant because the infrastructure was rubbish right up until the early 90's, so people in my generation can just as rightly claim to have worked and paid for it. Indeed, 90 year old pensioners finished working 25 years ago, when we had the grand total of app. 10 miles of motorway built, so well done them :rolleyes:

maninasia

murphaph wrote: »

You know something, it would be a start!

When I think of the money I wasted in staff canteens down the years. These days I am happy to say that it's literally ham and cheese sambos for lunch every day. It's boring but it costs about 50c for my entire lunch, compared to €3 or €4 if I ate out.

We need to get away from the Cafe Lattes and all that sh!te (trappings of wealth we never had) and get back to basics. Shopping for staple foods like our parents did and COOKING for ourselves. Me and the GF eat out once a week (and when I say eat out I mean BK or McDonalds!). We might hit a restaurant once every 6~8 weeks and even then it would be nothing fancy.

When I see the way her family recycles food (they are from the former East) it would make you embarrassed. Nothing is wasted, just like nothing was wasted in ireland before we got notions of ourselves. If people started packing a lunch it would indeed be a start.

Or you could live in a country where it costs 1 or 2 euro to get a lunch . I get your point alright though, I was shocked a couple of years back at seeing a family of immigrants eating a packed lunch in the local park in Dublin, just something I hadn't seen in years and years.
Still I'd rather focus on making more money if I could then giving up certain creature comforts.

gollem_1975

murphaph wrote: »

Then you can also take the credit for the debt you will be passing on!

I think one reason for the historical lack of involvement of young people in politics is probably because they were happy with their place in the pyramid. i.e. while some young people may moan and rebel I think that the majority (whilst starting careers, getting on the ladder, sowing oats etc.) trusted the leadership of their elders and expected the society/economy they inherited from their elders to be better than the society/economy inherited by their predecessors.

It could be said that the interest of the younger generation have always been at the bottom of the pile. Its just that now these people are the ones who are going to be paying (though they don't realise it yet) for the decisions made by those currently in power while they don't really stand to benefit from them very much. In fact it would be better for the younger generation if the government took the difficult decisions now and didn't borrow to (over)pay for current public service expenditure (and bank bailouts of course).

then again I'm not far off being a silver fox myself and when I was young I was too bothered with simpler things to be aware of the above...But these are the guys that are going to be paying for my pension :eek:

thebman

P. Breathnach wrote: »

The present twenty-somethings stand to receive an infrastructure that is an order of magnitude better than that my generation found when we became economically active.

We are passing on a great deal more than we inherited, and you are complaining that it isn't even more.

Children can be so ungrateful.

.
Look at any statistics, our broadbrand infrastructure is a joke and that is being kind to it.

The worst thing about it, the money is there, was put aside for the use and then the governments have divided it up among their invested interests instead of spending it on what it was supposed to be spent on.

3 lied about their statistics to get the NBS in the first place and the technology was known to not be good enough to provide the required service when it was chosen.

Roads, yeah roads littered with tolls and speed cameras, built with borrowed money so future generations can pay for them. Roads built with future generations tax money that you now want to take credit for. :pac:

Sorry, not buying it. Building a road, pointing at it and saying look a road does not mean your generation paid for it to be there...

gollem_1975

Scofflaw wrote: »

That's a fair point - there's the flip side you've alluded to, though, which is that if the older generation have worked hard through less prosperous conditions to build prosperity, or fought for civil rights, the younger generation get the benefit without having had to do anything but be born later.

cordially,
Scofflaw

the content of your post is the side of the coin that is normally facing up.

history has not been written yet on this period so it remains to be seen if the flip side( i.e. it is the job of the young to pay for the mistakes of the old) will be the dominant narrative for the post-celtic tiger years.

though I agree with P.Breathnach that every generation has to take the good with the bad...and I do believe that every cloud has a silver lining.

P. Breathnach

murphaph wrote: »

Your figures have a huge flaw:

Where did the current older generation get the money to trade up to "superior houses" from? Well, they sold their "inferior houses" to first time buyers and the like who have taken out massive mortgages (much bigger than anything, even in relative terms) taken out by the older generation to purchase the "superior properties" initially. Therefore there has been a massive transfer of wealth from the younger generations to the older ones. The older ones now have the money and the younger ones now have the mortgages.

You know, that argument is a load of rubbish. The main reason why we silver foxes have superior houses is that 1970s shoeboxes were considerably better than the shoeboxes built in the past 20 years, and many long-term homeowners have invested in improving their houses. Most people of my generation did not trade up in the bubble years -- that was more typical of people now in their 30s or 40s. Where younger people have taken out huge mortgages to buy the houses of the older generation, it is more typically when the house is sold after death, and an intergenerational wealth transfer is taking place.

[I paused while composing this post, and tried to think of anybody aged more than 50 that I know who traded up in the past ten years. I was able to think of one couple. I can recall quite a few cases of younger people trading up.]

As for you last line:

Well, touche! I am not asking for the older generations to endure the entire burden, while you appear to be in favour of them being completely spared this burden due to them passing on houses to their children, who were themselves paid for by the future work of their children's friends!

It might be wiser not to say what I appear to favour when you have nothing to support your claim. I was reacting to gollem_1975's suggestion that all the burden of our present problems would be imposed on the younger generation, and I was pointing out that considerable value would also be transferred to them, both in terms of infrastructure and inheritance.

I just think EVERYBODY should take some pain. What is so wrong with that?

Absolutely nothing. I think so, too. One option, which I have rather strongly implied in this thread, is to look at some form of inheritance tax at a level that is more than token.

Your point about infrastructure being better now than "several decades ago" is irrelevant because the infrastructure was rubbish right up until the early 90's, so people in my generation can just as rightly claim to have worked and paid for it. Indeed, 90 year old pensioners finished working 25 years ago, when we had the grand total of app. 10 miles of motorway built, so well done them :rolleyes:

You might have a poor opinion of the infrastructure we had in the early 1990s, but you have no memory of what it was like in the 1960s.

P. Breathnach

thebman wrote: »

Look at any statistics, our broadbrand infrastructure is a joke and that is being kind to it....

It's better than 1960s broadband.

EoghanRua

Scofflaw wrote: »

The answers, as far as I'm aware, are very simply "yes" and "yes". We're asking people to loan us money (that's essentially what buying our debt means), and the interest rate they charge is what we pay. That interest charge factors in the market's estimation of the likelihood we won't pay back the money.

What I don't understand is why would they loan us money at all if they think we will not pay it back?

thebman

P. Breathnach wrote: »

It's better than 1960s broadband.

Aiming high I see :rolleyes:

The purpose of infrastructure isn't to look nice.

We need it for our economy to be competitive and our economy isn't competitive in the area of infrastructure.

Your argument is silly as it refuses to look at the purpose of infrastructure or compare it to anything other than the past in our country.

It is an isolated, silly way of looking at things. Our debts are now so high paying for the mistakes of the past that our government is slashing capital expenditure so as not to touch wages or reform public sector and we are now in a position whereby we have poor infrastructure and no money or means to improve it.

Rock and hard place is where the current generation has been placed.

Permabear

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murphaph

P. Breathnach wrote: »

You know, that argument is a load of rubbish. The main reason why we silver foxes have superior houses is that 1970s shoeboxes were considerably better than the shoeboxes built in the past 20 years, and many long-term homeowners have invested in improving their houses.

Got a BER cert for that 1970's 9" cavity block construction? I'm not for one miute suggesting that irish housing is of as good a standard as German housing, but a modern Irish dwelling built to code is a LOT more energy efficient than your 1970's equivalent and don't try to tell me that the majority or anything like it of 1970's housing stock has been retrofitted with acceptable insulation! In fact, the typical cavity block construction (as opposed to twin leaf) cannot have insulation pumped into it. The retrofitting MUST be clad to the outside to be effective and this is the most expenive way....so basically I strongly dispute your claim that 1970's built is better built. About the only genuine advantage they have is usually possessing a cut roof, enabling an easier attic conversion and the downstairs internal walls are usually block built, but upstairs they are the same stud partitions seen today.

As for the wiring "standards" (ie, any bit of wire, regardless of colour will do!) of the 1970's, don't make me laugh. Also, you may be unfortunate enough to have that lovely asbestos in your 1970's property, very likely in the shed roof

P. Breathnach wrote: »

It might be wiser not to say what I appear to favour when you have nothing to support your claim. I was reacting to gollem_1975's suggestion that all the burden of our present problems would be imposed on the younger generation, and I was pointing out that considerable value would also be transferred to them, both in terms of infrastructure and inheritance.

Well, we fundamentally disagree on what that infrastructure is worth and these "superior houses" which cost a lot more to heat will probably fall in value faster than modern stock, as people begin to realise just how expensive they are to run. As pointed out to you already, the motorway network was completed in the last 2 years (if you consider an incomplete M7 to be a complete network). I'm not exactly sure what super duper infrastructure improvements you think took place in the 1970's and 1980's. As you were around, perhaps you could cite a few examples? I believe we built more under British rule and in the very early years of independence (canals, railways,electrification) than we did during your heyday. I don't think we could have been building all that much as we were mostly exporting labourers to build other countries infrastructure!

P. Breathnach wrote: »

Absolutely nothing. I think so, too. One option, which I have rather strongly implied in this thread, is to look at some form of inheritance tax at a level that is more than token.

How does that spread the burden amongst all generations? It means pensioners pay nothing towards recovery. Their descendents pay now and if lucky enough to inherit something, pay later too. It also allows people to pay nothing by moving assets outside the state prior to death. Not an equitable way to share the pain at all!

P. Breathnach wrote: »

You might have a poor opinion of the infrastructure we had in the early 1990s, but you have no memory of what it was like in the 1960s.

See above. What major improvements in Irish infrastructure were made in the 1970's and 1980's? We went from 10 miles of motorway in 1990 to an (almost complete) network today. what did an 80 year old pensioner contribute to that?

What's your problem with just reducing state and public service pensions a bit so we save money right now, when we need to, instead of long fingering the debt and letting someone else pay for it?

Permabear

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murphaph

donegalfella wrote: »

This post has been deleted.

Rather shameless in fact.

Permabear

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Scofflaw

EoghanRua wrote: »

What I don't understand is why would they loan us money at all if they think we will not pay it back?

It's a bet - the interest rates are the odds. Why does anyone bet on a horse that's not expected to win?

cordially,
Scofflaw

P. Breathnach

donegalfella wrote: »

This post has been deleted.

I thought that we had a gentleman's agreement not to respond to one another's posts, and I think your taking this indirect route breaches the spirit of the agreement.

Further, your interpretation of my motives is simply incorrect, and I think the tone in which you do so is nasty. I have said more than once that I believe that public service pensions should be reduced.

syklops

I recently started a new job, and part of the job will involve a bit of travel so I need to get the company credit card.

To my surprise it is a Bank of Ireland credit card. My company has their financial head quarters in Ireland, and the credit card is obtained from there, so I and the 4000-odd other european employees get BoI credit cards.

Until I found out it was a BoI card I didn't really get what all of this was about. Then it all clicked. Along with my new company, my previous company had their financial headquarters in Ireland as well. I just thought it was a coincidence, but now I get it.

Ireland has a very low corporation tax, so it makes financial sense to 'route' as much of the money through Ireland as possible. That is why Ireland has so many headquarters. Google has their EU Headquarters in Ireland. As do Microsoft, Symantec, Hewlett Packard, Dell and hundreds of other companies. An awful lot of money comes from those companies.

This is a source of some annoyance for many French and German politicians and accountants. Why does small, backward, sheep-filled Ireland house Microsoft's European headquarters and get it's tax take, instead of Berlin or Munich, or Stuttgart, or even Paris.

If the interests rate grow much more it will become prohibitively expensive to borrow more money, the result of which will be us needing a bailout from Europe. If Ireland needs a bailout from the EU it will be on the EU's terms. I would imagine one of their terms will be that Ireland increase the corporation tax. The cover reason is to raise more money and get us out of debt faster, but the real reason is to make us a less attractive place for the likes of M$, Dell and HP, plus many others.

An increase in corporation tax, coupled with an uncertain political and financial climate would be just the push many of the companies would need to move else where.

Permabear

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Scofflaw

If the interests rate grow much more it will become prohibitively expensive to borrow more money, the result of which will be us needing a bailout from Europe. If Ireland needs a bailout from the EU it will be on the EU's terms. I would imagine one of their terms will be that Ireland increase the corporation tax. The cover reason is to raise more money and get us out of debt faster, but the real reason is to make us a less attractive place for the likes of M$, Dell and HP, plus many others.

An increase in corporation tax, coupled with an uncertain political and financial climate would be just the push many of the companies would need to move else where.

Which would result in a decreased tax take, which would hamper our ability to repay the bailout. It doesn't entirely make sense.

cordially,
Scofflaw

syklops

Scofflaw wrote: »

Which would result in a decreased tax take, which would hamper our ability to repay the bailout. It doesn't entirely make sense.

cordially,
Scofflaw

Do you mean my post or the situation?

Scofflaw

syklops wrote: »

Do you mean my post or the situation?

The idea that we're forced to take a bailout while also being forced to accept measures we don't want, and that would result in a diminished ability to repay the bailout. Who exactly wins in that scenario?

cordially,
Scofflaw