reducing our millstone debt by 1%

jakdelad

seriously and realistically people
reducing our repayments by 1 or even 2 percent will it make a huge difference???

i cant see this making a serious hole in the countrys debt
surley it only prolongs the agony for longer?

if you have to pay 2000euro a month to feed a mortgage
and your struggeling
but you lender says ok, we will reduce your payments by 1 percent
its not gonna make a difference

chris85

jakdelad wrote: »

seriously and realistically people
reducing our repayments by 1 or even 2 percent will it make a huge difference???

i cant see this making a serious hole in the countrys debt
surley it only prolongs the agony for longer?

if you have to pay 2000euro a month to feed a mortgage
and your struggeling
but you lender says ok, we will reduce your payments by 1 percent
its not gonna make a difference

It is a big deal really. 1% interest on say 90 billion is 900 million which is would could be saved for 1%. There is more to it but more less thats the simple way of looking at it.

900 million saving in one year only is a big deal.

Sand

Its worse than you think - the negotiations which are so difficult and so hardfought arent to reduce Irish debt by 1%...its to reduce the interest rate on a portion of Irish debt by 1%, with an almost negligable impact. Given the furious rejection of this tiny improvement in our position, it doesnt say much for the idea that the current arrangements are about "buying time" for the EU to reach some better solution...It might be that the current, imperfect solution is about as good as the EU can deliver given the anger of their electorates.

TheInquisitor

jakdelad wrote: »

seriously and realistically people
reducing our repayments by 1 or even 2 percent will it make a huge difference???

i cant see this making a serious hole in the countrys debt
surley it only prolongs the agony for longer?

if you have to pay 2000euro a month to feed a mortgage
and your struggeling
but you lender says ok, we will reduce your payments by 1 percent
its not gonna make a difference

But the 2000 a month your paying might only be the interest of 5% on the loan. Imagine then if you only had to pay 1200-1600(3-4%).... now its a lot bigger eh!

ardmacha

Don't worry, QEII is going to announce reparations!

Taxi Drivers

Serious lack of understanding here. The government only ever makes interest payments on its debt, never capital. Capital payments are funded by rolling over the debt to a new lender and paying them interest. The capital amount rarely goes down.

If we have a €100 billion of debt at 5%, it costs €5 billion a year to service in interest payments. If that were reduced to 4% the interest cost woudl be €4 billion. A one percentage point reduction in the interest rate reduces our debt servicing cost by 20% in this hypothetical example. It is significant.

pog it

According to last weekend's Sindo survey only 10% of people questioned said they would be in favour of taking on Morgan Kelly's suggestion for reducing the deficit in one year.

Don't think anything here will ever change. I've officially given up on the majority of Irish people who are going to bring the rest of us down with them.

jakdelad

this may sound a bit unethical

but could we borrow the bailout money in one lump
and loan it to a country for a higher return rate
a bit like renting
so instead of paying us the repayments they could pay it to the imf
we make a small profit in the deal???

Sand

Taxi Drivers wrote: »

Serious lack of understanding here. The government only ever makes interest payments on its debt, never capital. Capital payments are funded by rolling over the debt to a new lender and paying them interest. The capital amount rarely goes down.

Serious lack of understanding here. We are locked out of the bond markets. We arent going to be able to roll over our debt to a new lender.

later12

Sand wrote: »

Serious lack of understanding here. We are locked out of the bond markets. We arent going to be able to roll over our debt to a new lender.

We already are doing so. The EU-Eurozone-IMF and other funds are not just funding the state in terms of its domestic obligations, but will also be involved in discharging bond redemptions. This constitutes rolling the debt over to a new lender.

Sand

We already are doing so. The EU-Eurozone-IMF and other funds are not just funding the state in terms of its domestic obligations, but will also be involved in discharging bond redemptions. This constitutes rolling the debt over to a new lender.

And whose going to lend to us so we can pay back the EU/ECB? We're locked out of the markets.

later12

Sand wrote: »

And whose going to lend to us so we can pay back the EU/ECB? We're locked out of the markets.

In my opinion, there will probably be an EU Treasury phased in over the coming years with responsibility for raising sovereign debt through a central vehicle. Ireland might never fully return to the markets on its own representation.

Your suggestion that Ireland simply will not redeem its debt is plainly wrong. We already do so, we are already in a process of changing lenders.

Sand

@Later 10

In my opinion, there will probably be an EU Treasury phased in over the coming years with responsibility for raising sovereign debt through a central vehicle.

Okay, thats your opinon - have you asked the Germans for their opinion? I think you might find its slightly different.

Ireland might never fully return to the markets on its own representation.

It certainly wont under the terms the ECB/EU are dictating. Given that the current deal projects that Ireland returns to the markets by 2012 you dont seem to be all that confident in its ability to deliver the required results...

Your suggestion that Ireland simply will not redeem its debt is plainly wrong. We already do so, we are already in a process of changing lenders.

Yeah, now remember youre discussing present tense. And I said are not going to be able to roll over our debt to a new lender. Future tense. Plenty of banks thought they could could continously roll over their debt forever and ever and only considered their debt in terms of short term interest payments.

Go and find them now.

jakdelad

Sand wrote: »

@Later 10


Okay, thats your opinon - have you asked the Germans for their opinion? I think you might find its slightly different.



It certainly wont under the terms the ECB/EU are dictating. Given that the current deal projects that Ireland returns to the markets by 2012 you dont seem to be all that confident in its ability to deliver the required results...


Yeah, now remember youre discussing present tense. And I said are not going to be able to roll over our debt to a new lender. Future tense. Plenty of banks thought they could could continously roll over their debt forever and ever and only considered their debt in terms of short term interest payments.

Go and find them now.

how big is the hole now compared to this time next year??
will we ever get out of the quicksand or are we slowly sinking like greece

later12

Sand wrote: »

In my opinion, there will probably be an EU Treasury....

Okay, thats your opinon - have you asked the Germans for their opinion? I think you might find its slightly different.

I'm not talking about desire, I don't think many people implicitly desire European sovereign bonds in themselves, but rather I consider it likely that such a debt raising process will become an inevitability - even in spite of Greek and Irish voluntary restructuring of debt - even if it is unwelcome.

And interestingly enough, based on comments by Wolfgang Schauble, I don't consider the Berlin opposition insurmountable.

Most of the German and mainland continental opposition is based on a European treasury being unfeasible under current fiscal and budgetary processes, i.e. low integration. The only real exception seems to be the more firm opposition by Austrians, actually, whose opposition is based on principle or morality or something very woolly like that.

The way out ahead for the European currency project by launching European sovereign bonds is almost too compelling, for it solves the treasury and the fiscal concerns altogether, thus galvanising the sustainability of the single currency. I would love for someone to explain a viable or a better alternative for all of the European economies together.

I do admit however that there may be a 'cleverer' way out than Eurobonds, which are not very intellectually stimulating. And it is possible that in the obvious attraction of Eurobonds, something more perfect is going unrecognized.

It certainly wont under the terms the ECB/EU are dictating. Given that the current deal projects that Ireland returns to the markets by 2012 you dont seem to be all that confident in its ability to deliver the required results...

The notion that Ireland would return to the markets by 2012 does not appear credible at this stage. Nevertheless, we need not be overly worried. The current MoU, nor the current debt crisis programme sacrosanct, it did not come down a mountain with Moses.

The problem is that you get a lot of civil service types and even domestic politicians (many of them in the last administration) who believe, to their detriment, that challenging the status quo is political sacrilege. People who are interminably summoning rules and regulations and remonstrating that change is impossible, are almost inevitably left standing by when change eventually comes. I wouldn't be too concerned with 2012 as a deadline.

Yeah, now remember youre discussing present tense. And I said are not going to be able to roll over our debt to a new lender. Future tense.

For the foreseeable future the capital amount is largely going to be rolled over to the EU-IMF, I see that as future tense but presumably you mean long term. Personally I think that our sovereign paper will, under law, roll along with the Eurozone (as stated), with investors paying for it on a different tier. So technically I don't see a problem with Ireland permanently disengaging from the markets on its own representation.

What exactly is your argument about rolling over the capital? That Ireland will never find investors, and will not be able to rely on the Eurozone? That we will be out in the street?

yet Plenty of banks thought they could could continuously roll over their debt forever and ever and only considered their debt in terms of short term interest payments.

Banks have whole treasury divisions staffed with workers who work on debt capacity for the institution. The notion that the banks only considers the interest rate is a little absurd, the aim is to model the sustainability and risk based on current operations, that includes the interest and rates payable, but also the overall capital exposure, obviously.

To be honest this is running absurdly close to the small town Irish businessman's 'entrepreneurial' philosophy of the 1950's, which can be summed up with the words 'debt is bad'.

tenchi-fan

jakdelad wrote: »

seriously and realistically people
reducing our repayments by 1 or even 2 percent will it make a huge difference???

i cant see this making a serious hole in the countrys debt
surley it only prolongs the agony for longer?

if you have to pay 2000euro a month to feed a mortgage
and your struggeling
but you lender says ok, we will reduce your payments by 1 percent
its not gonna make a difference

Jakdelad, it would make a huge difference.