Profit from some Banks and Nama

realitykeeper

andrew wrote: »

Proof that it's being fuelled by debt? And if it is, proof/argument for why that's a bad thing? It's entirely possible to have debt fuelled growth so long as you're using that debt for productive investments and not consumption.

Since 2008, Ireland borrowed upwards of 100 billion euro. Do you need proof of this or do you just want proof that these borrowings are fueling growth?

Back in the 1970s, the UK had to call in the IMF. After that humiliating episode, British Labour Prime Minister Jim Callaghan was forced to admit:

"We used to think that you could spend your way out of a recession and increase employment by cutting taxes and boosting government spending. I tell you in all candour that that option no longer exists, and in so far as it ever did exist, it only worked on each occasion since the war by injecting a bigger dose of inflation into the economy, followed by a higher level of unemployment as the next step."

andrew

realitykeeper wrote: »

Since 2008, Ireland borrowed upwards of 100 billion euro. Do you need proof of this or do you just want proof that these borrowings are fueling growth?

Back in the 1970s, the UK had to call in the IMF. After that humiliating episode, British Labour Prime Minister Jim Callaghan was forced to admit:

"We used to think that you could spend your way out of a recession and increase employment by cutting taxes and boosting government spending. I tell you in all candour that that option no longer exists, and in so far as it ever did exist, it only worked on each occasion since the war by injecting a bigger dose of inflation into the economy, followed by a higher level of unemployment as the next step."

I'm fairly sure that that borrowing mainly went to cover that little bank bailout we had, as well as the massive deficit at the time. I'd like to see some evidence that increases in government expenditure are fuelling the GDP growth we're currently seeing.

Oh wait there is no evidence of that, see page 6 of the Central Bank's quarterly bulletin. Specifically, 'public consumption' versus every other component of national income shown on that table, as well as the associated commentary on the following pages.

Dob74

BoJack Horseman wrote: »

Show your sums for the rest of the class....







cant win em all I guess

Or if you want to look at gnp you can Iceland is doing better than before the banking crash.
While we are still just breaking even.
13.3 billion PPP dollars (2013)
Iceland, Gross national income
1990199520002005201015B15B10B10B5B5B00
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180.4 billion PPP dollars (2013)
Republic of Ireland, Gross national income

19901995200020052010400B400B300B300B200B200B100B100B00
•Norway338.2 billion PPP dollars
*


•Greece283.5 billion PPP dollars
*


•Republic of Ireland180.4 billion PPP dollars
*





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FreudianSlippers

realitykeeper wrote: »

NAMA should be disbanded and whatever profit it made should be given back to the banks.

What a remarkably terrible idea! I can't even begin to understand the logic behind this one. Can you elaborate?

realitykeeper

FreudianSlippers wrote: »

What a remarkably terrible idea! I can't even begin to understand the logic behind this one. Can you elaborate?

Certainly. Giving the money back to the banks would be the first step in reversing the bank bailouts which landed a 100 billion extra in debt on the Irish taxpayer.

The next step would be to tell the creditors that lent to Ireland to bail out the banks that the banks have been refloated and that they have done a reverse takeover of Ireland Inc and that they should ask Sean Fitzpatrick if they want their money back.

realitykeeper

andrew wrote: »

I'm fairly sure that that borrowing mainly went to cover that little bank bailout we had, as well as the massive deficit at the time. I'd like to see some evidence that increases in government expenditure are fuelling the GDP growth we're currently seeing.

Oh wait there is no evidence of that, see page 6 of the Central Bank's quarterly bulletin. Specifically, 'public consumption' versus every other component of national income shown on that table, as well as the associated commentary on the following pages.

How can you blissfully ignore the stimulus effect of government borrowing. All of the statistics shown are garnished by that stimulus. If Ireland had borrowed nothing since 2008, the public consumption would have been a shadow of what it is. Infrastructure investment could not have happened and the property market would have had to collapse properly by perhaps 80% instead of just the 60% fall reached before it began to rise again.

Needless to say, the next recession will not be one the government will be able to borrow its way out of. Furthermore, since the pea brains in the ECB have started QE, the resulting bond buying frenzy has ensured Ireland`s true debt has spiraled again, far beyond the 100 billion it borrowed to balance the books and the other 100 billion needed to bailout the banks and all that on top of what was a sizable enough national debt.

The Bank of International Settlements has repeatedly warned the various central banks of the dangers of QE and yet these Central Banks blindly march on, ignoring all the warnings.

KingBrian2

realitykeeper wrote: »

How can you blissfully ignore the stimulus effect of government borrowing. All of the statistics shown are garnished by that stimulus. If Ireland had borrowed nothing since 2008, the public consumption would have been a shadow of what it is. Infrastructure investment could not have happened and the property market would have had to collapse properly by perhaps 80% instead of just the 60% fall reached before it began to rise again.

Needless to say, the next recession will not be one the government will be able to borrow its way out of. Furthermore, since the pea brains in the ECB have started QE, the resulting bond buying frenzy has ensured Ireland`s true debt has spiraled again, far beyond the 100 billion it borrowed to balance the books and the other 100 billion needed to bailout the banks and all that on top of what was a sizable enough national debt.

The Bank of International Settlements has repeatedly warned the various central banks of the dangers of QE and yet these Central Banks blindly march on, ignoring all the warnings.

It is the responsibility of the banks to comply with the Basel III agreement on financial conduct. If they don't they should be punished by the governments overseeing them.

realitykeeper

KingBrian2 wrote: »

It is the responsibility of the banks to comply with the Basel III agreement on financial conduct. If they don't they should be punished by the governments overseeing them.

Yes but governments are more the problem than the solution. In this country, the central bank did attempt to reign in excess borrowing to be fair to them but politicians are only interested in getting re-elected so they watered down what the Central bank was trying to do.

andrew

realitykeeper wrote: »

How can you blissfully ignore the stimulus effect of government borrowing. All of the statistics shown are garnished by that stimulus. If Ireland had borrowed nothing since 2008, the public consumption would have been a shadow of what it is. Infrastructure investment could not have happened and the property market would have had to collapse properly by perhaps 80% instead of just the 60% fall reached before it began to rise again.

Needless to say, the next recession will not be one the government will be able to borrow its way out of. Furthermore, since the pea brains in the ECB have started QE, the resulting bond buying frenzy has ensured Ireland`s true debt has spiraled again, far beyond the 100 billion it borrowed to balance the books and the other 100 billion needed to bailout the banks and all that on top of what was a sizable enough national debt.

The Bank of International Settlements has repeatedly warned the various central banks of the dangers of QE and yet these Central Banks blindly march on, ignoring all the warnings.

government expenditure.PNG

Yeah, the government propped up the economy with expenditure....decreases. What a stimulus that was eh?

Though I suppose you're right that if the government had just stopped spending money at all then by definition "public consumption would have been a shadow of what it is", but then again so would the entire economy, so good luck justifying that one while keeping in mind that the majority of government expenditure goes on social welfare, healthcare, and education.

djpbarry

realitykeeper wrote: »

The net cost of bailing out the banks will be upwards of 100 billion...

Any chance of a source for that statement?

realitykeeper wrote: »

The deficit is a minor issue. The big problem is the existing debt which is extremely high.

The debt is high because the deficit was/is high. Getting the deficit down is paramount if debt is to be brought under control.

realitykeeper wrote: »

Domestic growth will not solve the problem. Growth from exports may help but it will be nowhere near enough to create the income necessary to significantly reduce the national debt before the next recession.

Actually, only fairly modest growth is required to make the debt manageable.

realitykeeper wrote: »

Giving the money back to the banks would be the first step in reversing the bank bailouts...

By giving the banks even more taxpayers’ money?!?

realitykeeper

djpbarry wrote: »

Actually, only fairly modest growth is required to make the debt manageable.

Modest growth can only manage the debt as long as the growth can be sustained. Growth cannot be sustained because another recession will come. The present lack of urgency in dealing with the debt will be regretted.

FreudianSlippers

realitykeeper wrote: »

Modest growth can only manage the debt as long as the growth can be sustained. Growth cannot be sustained because another recession will come. The present lack of urgency in dealing with the debt will be regretted.

Care to tell us when this next recession is gonna be Mystic Meg?

All kidding aside, I don't disagree that it's a boom/bust cycle, but I don't see the point in reducing the national debt if we're inevitably headed to another major recession. I don't think it'll be for another 20+ years to be honest.

djpbarry

realitykeeper wrote: »

Modest growth can only manage the debt as long as the growth can be sustained.

True, but at present, Ireland's GDP growth rate is far better than modest.

realitykeeper wrote: »

Growth cannot be sustained because another recession will come.

Growth cannot be sustained because at some unspecified point in the future, growth will stop?

Em, ok.

realitykeeper wrote: »

The present lack of urgency in dealing with the debt will be regretted.

But it is being dealt with, by reducing the deficit.

realitykeeper

realitykeeper wrote: »

Modest growth can only manage the debt as long as the growth can be sustained.

True of course.

realitykeeper wrote: »

Growth cannot be sustained because another recession will come.

All cumulative growth will be wiped out by this recession? If we have another recession in 2025 that lasts 3 years, what effect on the debt would that have?

realitykeeper wrote: »

The present lack of urgency in dealing with the debt will be regretted.

We are reducing the deficit and paying down the debt. What else would you have us do?

realitykeeper

andrew wrote: »

government expenditure.PNG

Though I suppose you're right that if the government had just stopped spending money at all then by definition "public consumption would have been a shadow of what it is", but then again so would the entire economy, so good luck justifying that one while keeping in mind that the majority of government expenditure goes on social welfare, healthcare, and education.

So you agree. The growth is fueled with borrowed money. If the government had not bailed out the banks, those with mortgages would have their mortgages written off and this would would enable them to pay more toward education, healthcare etc. The Icelandic government did this and their economy is now growing without borrowing money.

realitykeeper

FreudianSlippers wrote: »

I don't think it'll be for another 20+ years to be honest.

That would be a 28 year growth cycle. 10 to 15 is more common and my guess is the next recession will come sooner rather than later.

Ireland tried credit fueled growth in the past and see how that ended. Given that Ireland has done nothing to tackle its debt and gone on another borrowing binge, I think the next recession will be far worse than the last.

djpbarry

realitykeeper wrote: »

So you agree. The growth is fueled with borrowed money.

Only if you believe that (reduced) government spending on welfare, healthcare, education, etc. is what is driving that growth.

realitykeeper wrote: »

If the government had not bailed out the banks, those with mortgages would have their mortgages written off and this would would enable them to pay more toward education, healthcare etc. The Icelandic government did this and their economy is now growing without borrowing money.

Yay! Free lunches for all!

realitykeeper wrote: »

Given that Ireland has done nothing to tackle its debt and gone on another borrowing binge...

How many times...

Steps have been made to reduce the deficit - yes or no?

Reducing the deficit results in less borrowing to meet day-to-day expenditure (or "growing the economy" in your world) and, therefore, "tackles" national debt - yes or no?

andrew

realitykeeper wrote: »

So you agree. The growth is fueled with borrowed money.

No. Government expenditure fell, hence it could not have contributed to growth, since growth is an upward movement. All it did was reduce the size of the fall.

If the government had not bailed out the banks, those with mortgages would have their mortgages written off

Those two things do not follow.

The Icelandic government did this and their economy is now growing without borrowing money.

Iceland does borrow money. In fact, they'll be borrowing money (some short term T-Bills) literally TOMORROW.

aido79

realitykeeper wrote: »

So you agree. The growth is fueled with borrowed money. If the government had not bailed out the banks, those with mortgages would have their mortgages written off and this would would enable them to pay more toward education, healthcare etc. The Icelandic government did this and their economy is now growing without borrowing money.

I really hope you educate yourself a bit better before you start your next thread on this topic. Also why do you continue to compare Ireland's financial crisis to a country with a population of 300,000 with their own currency?

realitykeeper

aido79 wrote: »

I really hope you educate yourself a bit better before you start your next thread on this topic. Also why do you continue to compare Ireland's financial crisis to a country with a population of 300,000 with their own currency?

I did not start this thread.

According to the President of Iceland (and me) the Icelandic solution to the crisis could have been adopted by any of the modern economies including the United States with its population of over 300,000,000.00

realitykeeper

djpbarry wrote: »

Steps have been made to reduce the deficit - yes or no?

Reducing the deficit results in less borrowing to meet day-to-day expenditure (or "growing the economy" in your world) and, therefore, "tackles" national debt - yes or no?

Yes but a deficit is still a deficit and as long as there is a deficit the national debt continues to grow. Even reducing the deficit to zero will not reduce the debt.

I believe the next recession will be a currency crisis, and the fiat currencies will tumble in value. This would be great if Ireland had significant gold reserves. The small amount of gold Ireland does have is stored abroad and that could be a problem. You see when Ireland needs its gold, other country`s will need theirs and no doubt there will be competing claims to the same physical gold.

realitykeeper

andrew wrote: »

Iceland does borrow money. In fact, they'll be borrowing money (some short term T-Bills) literally TOMORROW.

"Short term" being the significant point. At least their grandchildren will not be paying for their greed, hubris and stupidity.

andrew

realitykeeper wrote: »

"Short term" being the significant point. At least their grandchildren will not be paying for their greed, hubris and stupidity.

Actually I had a bit more of a look and they issue some longer term stuff too.

Anyway, I thought you said they don't borrow at all? And you do realise that they still have a debt/gdp ratio of 94%, so their grandchildren have plenty to pay for.

realitykeeper

realitykeeper wrote: »

Yes but a deficit is still a deficit and as long as there is a deficit the national debt continues to grow. Even reducing the deficit to zero will not reduce the debt.

I believe the next recession will be a currency crisis, and the fiat currencies will tumble in value. This would be great if Ireland had significant gold reserves. The small amount of gold Ireland does have is stored abroad and that could be a problem. You see when Ireland needs its gold, other country`s will need theirs and no doubt there will be competing claims to the same physical gold.

Tumble in value vs what exactly?

All of the non fiat currencies?

FreudianSlippers

realitykeeper wrote: »

I did not start this thread.

According to the President of Iceland (and me) the Icelandic solution to the crisis could have been adopted by any of the modern economies including the United States with its population of over 300,000,000.00

... and you believe that?

aido79

realitykeeper wrote: »

I did not start this thread.

According to the President of Iceland (and me) the Icelandic solution to the crisis could have been adopted by any of the modern economies including the United States with its population of over 300,000,000.00

This might help explain a few things to you and make you think twice about your idolation of the Icelandic "solution":

http://www.washingtonpost.com/news/wonkblog/wp/2015/06/17/the-miraculous-story-of-iceland/

Without its own currency Ireland would have been an almost unbearable place to live by following the Icelandic model.

djpbarry

realitykeeper wrote: »

Yes but a deficit is still a deficit and as long as there is a deficit the national debt continues to grow.

Is that not precisely the point that I and others were trying to make? All the while you insisted that nothing was being done to tackle the debt.

realitykeeper wrote: »

I believe the next recession will be a currency crisis...

Because?

johnnyskeleton

realitykeeper wrote: »

"Short term" being the significant point. At least their grandchildren will not be paying for their greed, hubris and stupidity.

Mod Note:

If we can avoid these one line assertions please, this isn't the Cafe. Particularly since this comment doesn't actually address the point. You asserted that Iceland was growing without borrowing and when this was contradicted you changed the goal posts. If you want to assert something, by all means go ahead. But if challenged you should either be able to back it up or else accept that you overstated your position.

KingBrian2

The initial uproar to Nama was that it was a house for property developers. We see now it is not. It is more like a treasury responsible for the health of the economy as we saw the property developers went to court over Nama so far from it being just for the Dublin construction industry it has proven to be very adept at managing the accounts of the nation.

The property developers suffered more from Nama than the general public. I see that as a good sign. Others will disagree I know but considering how bad the Central Bank governed the banking sector this has been a marked success. It is uncomfortable looking over at Europe and seeing the consequences of austerity but we are fortunate that the economy responding well to improved oversight.

realitykeeper

johnnyskeleton wrote: »

Mod Note:

If we can avoid these one line assertions please, this isn't the Cafe. Particularly since this comment doesn't actually address the point. You asserted that Iceland was growing without borrowing and when this was contradicted you changed the goal posts. If you want to assert something, by all means go ahead. But if challenged you should either be able to back it up or else accept that you overstated your position.

Actually I have not responded to that yet. When I do, I`ll be sure not to change the goalposts.