A Naive Question.

fatboypee

If theres billions in deposits being taken out of Irish banks over the last while as confidence wains, where's it going ?

Why can't Ireland Inc offer a FULLY guaranteed bond that citizens can buy that has a good rate of return for a percentage with a "share" in the prosperity as the economy does better ?

I am naive. Intentionally so to ask this question. But if there's billions being pulled out, I don't see why we need a bail out. Surely managed right, a bond such as above could be provided to do the same job ?

Even, maybe this:
GOVT: We need to raise X billons, part of that is tax increases. Instead, How-a-bout YOU, the people of Ireland, buy X amounts of bonds, redeemable after X years at Y interest.

Fly a patriotic flag over it all. bring everyone in....

Faced with just what happened over the 4 year laugh-along, I'd buy a bond or two....

yeah, go on, flame me... I don't mind.. honest question for a simpleton this Thursday...

sv650

Yeah, we could call it a Special Savings Incentive Account, or "SSIA" for short.
Of course it would only be available to people with plenty of disposable income...
Might be handy if you could time it so everyone got their lump sum just in time for the next election as well :pac:

fatboypee

sv650 wrote: »

Yeah, we could call it a Special Savings Incentive Account, or "SSIA" for short.
Of course you'd have to make sure it was only affordable to people with plenty of disposable income...
Might be handy if you could time it so everyone got their lump sum just in time for the next election as well :pac:

Ah, derisory amusement.. what a surprise... yes, a fair comparison to make,yes, yes, however I'm not talking about SSIA's 1 in 4 or any such opportunistic bullsh*t.

I'm talking about monies already in accounts / under mattresses etc being put to a use for a cause in return for a modest return comparable to that of an investment of a similar period. If you think about it without smirking for a moment, we are told the irish people have lots of money stashed but are not spending it whilst conversely, Ireland Inc is potless and begging in Europe..

mickoneill30

I was wondering about that too.

If Ireland is borrowing at 8% (or whatever it is now) a bond at that rate would get some money from the people. At least the interest would be going to the citizens which we'd spend here rather than going to banks abroad.

I have a mortgage that I've been making extra repayments into. If I could loan it to the government at 8% or 7% I'd be better off.

sv650

fatboypee wrote: »

Ah, derisory amusement.. what a surprise... yes, a fair comparison to make,yes, yes, however I'm not talking about SSIA's 1 in 4 or any such opportunistic bullsh*t.

I'm talking about monies already in accounts / under mattresses etc being put to a use for a cause in return for a modest return comparable to that of an investment of a similar period. If you think about it without smirking for a moment, we are told the irish people have lots of money stashed but are not spending it whilst conversely, Ireland Inc is potless and begging in Europe..

Fair enough, I was being a bit sarky...
I don't have any money stashed away unfortunately, but if I did I'm not sure a scheme like that would convince me.
The problem is that investors are already offloading Irish Govt. bonds as quick as they can, hence the record yields..

gollem_1975

fatboypee wrote: »

If theres billions in deposits being taken out of Irish banks over the last while as confidence wains, where's it going ?

Why can't Ireland Inc offer a FULLY guaranteed bond that citizens can buy that has a good rate of return for a percentage with a "share" in the prosperity as the economy does better ?

I am naive. Intentionally so to ask this question. But if there's billions being pulled out, I don't see why we need a bail out. Surely managed right, a bond such as above could be provided to do the same job ?

Even, maybe this:
GOVT: We need to raise X billons, part of that is tax increases. Instead, How-a-bout YOU, the people of Ireland, buy X amounts of bonds, redeemable after X years at Y interest.

Fly a patriotic flag over it all. bring everyone in....

Faced with just what happened over the 4 year laugh-along, I'd buy a bond or two....

yeah, go on, flame me... I don't mind.. honest question for a simpleton this Thursday...

had a quick scan of your post.

they already have offered something like this.

the national solidarity bond , its a 10 year bond.

you can buy them in the post office.

guaranteed .. well in theory they are anyway .

sv650

Indeed there is a national solidarity bond:

http://www.statesavings.ie/products/Pages/NationalSolidarityBond.aspx

• The net after tax return is 47.5% (AER 3.96%)*
• Minimum investment is €500
  Maximum individual investment is €250,000
  (or €500,000 from 2 or €750,000 from 3 joint applicants)
• If you do not have €500 to invest there is a facility to save through regular lodgements
• You can access your money at any time by giving 7 days notice
• There are no fees, charges or sales commissions

fatboypee

gollem_1975 wrote: »

had a quick scan of your post.

they already have offered something like this.

the national solidarity bond , its a 10 year bond.

you can buy them in the post office.

guaranteed .. well in theory they are anyway .

They did. However not in the context I'm suggesting and not backed by the alternative of raising the capital via excessive taxation. Faced with buying a bond to bail out this crappy establishment, or being massively taxed (as is happening) I would choose the former, provided my capital was fully guaranteed and i did not stand to lose money doing so ?

Think about it, buying such a bond to prevent taxation on this scale IS logical. The alternative being for myself, everything taken into account, a nett loss of over 5k per year ? I know, all relative.. would'nt raise the whole lot needed via this but still....

gollem_1975

fatboypee wrote: »

They did. However not in the context I'm suggesting and not backed by the alternative of raising the capital via excessive taxation. Faced with buying a bond to bail out this crappy establishment, or being massively taxed (as is happening) I would choose the former, provided my capital was fully guaranteed and i did not stand to lose money doing so ?

Think about it, buying such a bond to prevent taxation on this scale IS logical. The alternative being for myself, everything taken into account, a nett loss of over 5k per year ? I know, all relative.. would'nt raise the whole lot needed via this but still....

taxation may have to be raised in order to guarantee/pay the bondholders back on maturity.

however the tax hike would be imposed on everyone , not just those who bought the bond, so as a bondholder you'd be marginally happier than those without.

fatboypee

gollem_1975 wrote: »

taxation may have to be raised in order to guarantee/pay the bondholders back on maturity.

however the tax hike would be imposed on everyone , not just those who bought the bond, so as a bondholder you'd be marginally happier than those without.

Yes, but look at the laugh-along plan. Its stepped and staged in yearly items and there is nothing to stop the bond implementation in year 1 proposed to offset hikes planned for year 2, thus giving the people the option of being able to invest to make up the shortfall and thereby lessening the tax burden planned ? Tax is less or the same in year 2 dependent upon funds raised...

All about a bit of creativity but I think it might be achieved and would / could be backed (to an extent) if positioned correctly.


makes sense to me at least

Dotsie~tmp

Its still borrowing. Except it will discourage those who have disposable income to spend even less driving down internal demand reducing growth. There are no easy solutions. The debts must be allowed to play out.

fatboypee

Dotsie~tmp wrote: »

Its still borrowing. Except it will discourage those who have disposable income to spend even less driving down internal demand reducing growth. There are no easy solutions. The debts must be allowed to play out.

Yes it's still borrowing. but is different in such that:

1. People who are directly affected by the current borrowing are investing, ultimately for their own preservation and moreover, gives them a choice as to which method the government uses to manage the deficit. Your Savings, or your taxes?

2. As said previously, monies invested here would remain here.

3. I'm not sure THAT many people have THAT much disposable income right now and whatever happens with the plan, they're sure not gonna have much afterwards. Thus this plan may actually maintain a level of disposable income, remember, I'm talking about currently INVESTED or deposited monies, not disposable income.

fbp

gollem_1975

fatboypee wrote: »

Yes, but look at the laugh-along plan. Its stepped and staged in yearly items and there is nothing to stop the bond implementation in year 1 proposed to offset hikes planned for year 2, thus giving the people the option of being able to invest to make up the shortfall and thereby lessening the tax burden planned ? Tax is less or the same in year 2 dependent upon funds raised...

All about a bit of creativity but I think it might be achieved and would / could be backed (to an extent) if positioned correctly.


makes sense to me at least

if you have cash to put into a bond I think you'd be flying the flag more and also benefitting yourself it you just spent it.. at least you'll have something to show for it.. and thats a guarantee

fatboypee

gollem_1975 wrote: »

if you have cash to put into a bond I think you'd be flying the flag more and also benefitting yourself it you just spent it.. at least you'll have something to show for it.. and thats a guarantee

But, But, But.... The NETT effect of the laugh-along plan for me is I will likely be in excess of 4k WORSE off EACH YEAR. If I had any money (which personally I dont) and I was presented with an opportunity of lessening that impending tax burden by moving such monies into a guaranteed bond I would do so.

If I had such monies however, I would NOT go spending faced, as I am with such a hike in taxation. On the contrary. In fact I would hoard ever tightly whatever I had left and I'm pretty confident that this kind of entrenched thinking will become evermore prevalent in the coming years of the laugh-along plan.

fbp.

Shuco

I actually don't think that it is a Naive question. Thought of something like it myself yesterday.
Biggest problem that I see with it is the famous theoretical guarantee. Very hard to trust a "guarantee" from someone who is broke, so I'd be very slow to invest in anything backed by Irish Government at present. I've actually spent the past few hours enquiring into how to open a bank account in another country. Just not sure what's best thing to do.

fatboypee

Shuco wrote: »

I actually don't think that it is a Naive question. Thought of something like it myself yesterday.
Biggest problem that I see with it is the famous theoretical guarantee. Very hard to trust a "guarantee" from someone who is broke, so I'd be very slow to invest in anything backed by Irish Government at present. I've actually spent the past few hours enquiring into how to open a bank account in another country. Just not sure what's best thing to do.

Ahhh but there is one guarantee we trust isn't there? The one that says we're gonna get taxed to hell and back over the next 4 years. Its not too difficult to position this within the laugh-along plan as described: investment now using this mechanism would offset funds needed in yrs 2,3,4...... pull the whole thing down to Euro-Bond level and get the country backing it... ok, clichéd but patriotically buying a few bonds here'n there to drag the country out of the ****e...

Could be do-able. Tho, a more pertinent question does remain: Do we trust the current incumbents to invest OUR money correctly (or for that matter those who are pretenders to the throne) and to that question I have to answer a resounding NO...

Still a good plan all the same IMHO.

Saadyst

fatboypee wrote: »

But if there's billions being pulled out, I don't see why we need a bail out. Surely managed right, a bond such as above could be provided to do the same job ?

Even, maybe this:
GOVT: We need to raise X billons, part of that is tax increases. Instead, How-a-bout YOU, the people of Ireland, buy X amounts of bonds, redeemable after X years at Y interest.

Two problems I can see from what you pose.

The possible amounts raised from this would not go anywhere near the amounts that this country has taken on from the bailout. If we assume that the bailout is the minimum amount that we need - 85 billion - then every man, woman and child would need to put in around 20,000 each to get to that amount. My math is just rough, but you get the gist of it.

Secondly - the % return - the time will come to collect on what was paid... and there might be options for 7yr, 10yr, 13yr bonds etc.. but the amounts to return would be staggering.. and this country would not be able to generate such a surplus to pay it off on her own.

I'm sure there can be some financial trickery, such as borrowing again a few years later to pay off those that you've borrowed from before - but at the end of the day, you can't overcome problem #1.

professore

Saadyst wrote: »

Two problems I can see from what you pose.

The possible amounts raised from this would not go anywhere near the amounts that this country has taken on from the bailout. If we assume that the bailout is the minimum amount that we need - 85 billion - then every man, woman and child would need to put in around 20,000 each to get to that amount. My math is just rough, but you get the gist of it.

Secondly - the % return - the time will come to collect on what was paid... and there might be options for 7yr, 10yr, 13yr bonds etc.. but the amounts to return would be staggering.. and this country would not be able to generate such a surplus to pay it off on her own.

I'm sure there can be some financial trickery, such as borrowing again a few years later to pay off those that you've borrowed from before - but at the end of the day, you can't overcome problem #1.

By this logic we can't afford the bailout either - and the interest will be higher too !!!

fatboypee

Saadyst wrote: »

Two problems I can see from what you pose.

The possible amounts raised from this would not go anywhere near the amounts that this country has taken on from the bailout. If we assume that the bailout is the minimum amount that we need - 85 billion - then every man, woman and child would need to put in around 20,000 each to get to that amount. My math is just rough, but you get the gist of it.

Secondly - the % return - the time will come to collect on what was paid... and there might be options for 7yr, 10yr, 13yr bonds etc.. but the amounts to return would be staggering.. and this country would not be able to generate such a surplus to pay it off on her own.

I'm sure there can be some financial trickery, such as borrowing again a few years later to pay off those that you've borrowed from before - but at the end of the day, you can't overcome problem #1.

I would not expect to raise ALL of it but did I not hear in excess of 100 billion in deposits was taken out of AIB ALONE in the last 12 months ? Or am I waaay off ??

Say we reap 33% of that (optimistically) (bearing in mind this is also WHAT IS there, discounting anyone wishing to buy bonds actively), thats still 33billion we'd otherwise have to find in tax returns from an ever-diminishing working population.

As for ROI in 5 years etc, this could well be managed if the capital was used correctly as, the investment would effectively remain in the country. The counterpoint to this is taxing more people at higher rates will actually diminish both the disposable income and the willingness to spend it, thus, in turn having a massively detrimental affect on the country's ability to pay long-term in any case.

Idbatterim

Is it possible for a country who still have complete control over their financial affairs I.e the USA to print off money and donate it to another state?

Saadyst

professore wrote: »

By this logic we can't afford the bailout either - and the interest will be higher too !!!

Difference being Joe on the street just wants his return then and there - good luck telling him that he will have to wait, along with countless others, to get it back, staggered over a number of years. Let's not forget Joe has a vote.

Those overseeing the bailout would have some form of understanding if the country couldn't pay back the amount owed to a certain extent, allowing it to restructure - and possibly provide additional funds and assistance if required.

Saadyst

fatboypee wrote: »

I would not expect to raise ALL of it but did I not hear in excess of 100 billion in deposits was taken out of AIB ALONE in the last 12 months ? Or am I waaay off ??

Say we reap 33% of that (optimistically) (bearing in mind this is also WHAT IS there, discounting anyone wishing to buy bonds actively), thats still 33billion we'd otherwise have to find in tax returns from an ever-diminishing working population.

As for ROI in 5 years etc, this could well be managed if the capital was used correctly as, the investment would effectively remain in the country. The counterpoint to this is taxing more people at higher rates will actually diminish both the disposable income and the willingness to spend it, thus, in turn having a massively detrimental affect on the country's ability to pay long-term in any case.

I can't remember the exact figure that was taken out. It was certainly in the billions - but the key thing was, this was foreign deposits / investment. Not domestic.

There would be no real "investment", as you and I would imagine. No real infrastructure upgrade, no major capital expenditure.

A bulk of this bailout as I understand it, is essentially going into trying to polish that massive pile of shít that is the banking system here.

johnnyskeleton

mickoneill30 wrote: »

I was wondering about that too.

If Ireland is borrowing at 8% (or whatever it is now) a bond at that rate would get some money from the people. At least the interest would be going to the citizens which we'd spend here rather than going to banks abroad.

I have a mortgage that I've been making extra repayments into. If I could loan it to the government at 8% or 7% I'd be better off.

Anyone who feels patriotic about it can simply buy these bonds anyway, they don't have to wait for some special scheme in order to do so. However, people don't understand this.

Why don't you write to your local TD suggesting that they introduce the "patriot bond" that they've been talking about for years.

Ray Burkes Pension

Anyone with a sound financial head on them has their money out of the irish banks, out of anything euro related and into gold.

Gold is such a bubble right now but it wont collapse til there Euro does or the Euro stabilises.