How much is this all going to cost and who will pay for it ?

timmyntc

brickster69 wrote: »

ECB cannot wind up anything because they are the only ones keeping everything low. That's why people are offloading and shorting, because it is artificially priced and can't go any lower.

If they stop, everyone is sat holding a load of toxic waste that no one wants.

It is artificially priced because of the ECB's stimulus - but the shorting is only happening because the pandemic support is due to wind down in the next 12months. it can't go on forever, and with vaccines it looks like most EU economies should be opening up shortly.

The ECB wont keep at this forever, investors know this, national Govts know this.

KyussB

The ECB was at this long before Covid. We know the ECB can't go at this forever: They are stopping when full economic recovery is reached.

That is the whole point. Spending our way to recovery. Then stopping. That's how it works.

Topgear on Dave

KyussB wrote: »

The ECB was at this long before Covid. We know the ECB can't go at this forever: They are stopping when full economic recovery is reached.

When is that?

timmyntc

KyussB wrote: »

The ECB was at this long before Covid. We know the ECB can't go at this forever: They are stopping when full economic recovery is reached.

That is the whole point. Spending our way to recovery. Then stopping. That's how it works.

Economic recovery for who?

The ECB does not work to look after every single country - only the bloc.
The ECB will not keep printing to help Greece, Italy, Portugal. Neither will it keep printing to help us. ECB stimulus will have winded down long before Ireland has managed to get its debt servicing payments down to an acceptable level.

Arthur Daley

You have to love how the people buying this debt are happy and will continue to be happy to receive negative returns for their investment. And this is seen to be good and sustainable.

I'd love to get a hold of those contact cards. I have a pig in a poke to sell them.

KyussB

Economic recovery means Full Output and Full Employment - and the ECB reacts to the inflation which that will generate, raising rates.

Public Debt is at its most sustainable when economic output is maximized, thus maximizing the rate at which Public Debt vs GDP/GNI/GNI* is reduced, and maximizing employment. Nothing less than that is acceptable.

Arthur Daley

Something which has hardly happened in the twenty odd year career of the Euro. Unemployment in countries like Spain and Portugal is still high, especially for the young. The response of the Irish government is to import more and more non EU labour.

So their track record with this 'experiment' doesn't fill us with confidence.

timmyntc

KyussB wrote: »

Economic recovery means Full Output and Full Employment - and the ECB reacts to the inflation which that will generate, raising rates.

Public Debt is at its most sustainable when economic output is maximized, thus maximizing the rate at which Public Debt vs GDP/GNI/GNI* is reduced, and maximizing employment. Nothing less than that is acceptable.

But the ECB is not going to continue its stimulus until every EU member state's economic output is maximized. It's never happened before, and it will never realistically happen. Some countries will do well, others wont. Once the majority/the bigger members are on their feet, they will push for the ECB to stop propping up the others.

brickster69

timmyntc wrote: »

But the ECB is not going to continue its stimulus until every EU member state's economic output is maximized. It's never happened before, and it will never realistically happen. Some countries will do well, others wont. Once the majority/the bigger members are on their feet, they will push for the ECB to stop propping up the others.

They cannot stop propping up the others because the others are totally f##ked. If they do stop propping them up they will collapse and bring the rest of them down with them. Not to mention the banks who have been given free money to buy the stuff and put them down as assets on the balance sheets.

KyussB

timmyntc wrote: »

But the ECB is not going to continue its stimulus until every EU member state's economic output is maximized. It's never happened before, and it will never realistically happen. Some countries will do well, others wont. Once the majority/the bigger members are on their feet, they will push for the ECB to stop propping up the others.

Don't you understand anything about central banks? Their entire job is to regulate the economy at Full Employment, while keeping inflation in check...

That's literally the purpose of central banks. It's their job.

Do you have any idea of the compounding effects of being below Full Output? Covid-19 adjusted unemployment is between 15-20% worse than before. That is a massive loss to economic output.

Our GNI* in 2019 was €218 billion - if we conservatively take that as only a 5% loss from economic output, then that is almost €11 billion a year wiped out from the economy.

That's not all - if that reduces economic growth by as little as 1%, then our economy is permanently €2.1 billion smaller than it could have been, per year - and this is compounding, it leaves the economy permanently ~€6.5 billion smaller than it could have been after 3 years, more than €11 billion smaller than it could have been after 5.

You can't restore that by restoring Full Output/Employment - the economy remains permanently smaller than it could have been.

Every year we are below Full Output and Full Employment, is a gigantic loss to the economy - and permanently leaves the economy smaller than it may have been. There is nothing more inefficient and wasteful in terms of money, than that. It blows away even our worst debt servicing costs in recent history.

scamalert

brickster69 wrote: »

ECB cannot wind up anything because they are the only ones keeping everything low. That's why people are offloading and shorting, because it is artificially priced and can't go any lower.

If they stop, everyone is sat holding a load of toxic waste that no one wants.

one thing i learned with trading if you ever think bottom is reached prepared to get literally fcked in the back, market doesnt know any bottom once it comes to trading usual scenario goes your reaching either for new time low, or position you hold hold becomes to expensive to carry, so time for likes of ECB is of little importance as swings like these play out over the years not a simple next day recovery.

timmyntc

KyussB wrote: »

Don't you understand anything about central banks? Their entire job is to regulate the economy at Full Employment, while keeping inflation in check...

That's literally the purpose of central banks. It's their job.

Do you have any idea of the compounding effects of being below Full Output? Covid-19 adjusted unemployment is between 15-20% worse than before. That is a massive loss to economic output.

Our GNI* in 2019 was €218 billion - if we conservatively take that as only a 5% loss from economic output, then that is almost €11 billion a year wiped out from the economy.

That's not all - if that reduces economic growth by as little as 1%, then our economy is permanently €2.1 billion smaller than it could have been, per year - and this is compounding, it leaves the economy permanently ~€6.5 billion smaller than it could have been after 3 years, more than €11 billion smaller than it could have been after 5.

You can't restore that by restoring Full Output/Employment - the economy remains permanently smaller than it could have been.

Every year we are below Full Output and Full Employment, is a gigantic loss to the economy - and permanently leaves the economy smaller than it may have been. There is nothing more inefficient and wasteful in terms of money, than that. It blows away even our worst debt servicing costs in recent history.

The ECB does not exist solely to prop up Greece and Italy - once the majority of the union is back on its feet Greece and Italy will stop being lent such cheap money.

Many EU countries have acknowledged that they actually want interest rates to go up, as the impact low and negative rates are having across the economy (pension funds for example) is staggering. The return of positive rates is seen as a way back to normality and a stopgap for the upcoming pension crises.

coolshannagh28

KyussB wrote: »

Don't you understand anything about central banks? Their entire job is to regulate the economy at Full Employment, while keeping inflation in check...

That's literally the purpose of central banks. It's their job.

Do you have any idea of the compounding effects of being below Full Output? Covid-19 adjusted unemployment is between 15-20% worse than before. That is a massive loss to economic output.

Our GNI* in 2019 was €218 billion - if we conservatively take that as only a 5% loss from economic output, then that is almost €11 billion a year wiped out from the economy.

That's not all - if that reduces economic growth by as little as 1%, then our economy is permanently €2.1 billion smaller than it could have been, per year - and this is compounding, it leaves the economy permanently ~€6.5 billion smaller than it could have been after 3 years, more than €11 billion smaller than it could have been after 5.

You can't restore that by restoring Full Output/Employment - the economy remains permanently smaller than it could have been.

Every year we are below Full Output and Full Employment, is a gigantic loss to the economy - and permanently leaves the economy smaller than it may have been. There is nothing more inefficient and wasteful in terms of money, than that. It blows away even our worst debt servicing costs in recent history.

Thats the rose tinted view of central banking and economic performance ; the ECB and the FED have been desperately printing money for years to keep the illusion alive and as time and Covid go on its taking more and more stimulus and negative rates to maintain stability.

KyussB

timmyntc wrote: »

The ECB does not exist solely to prop up Greece and Italy - once the majority of the union is back on its feet Greece and Italy will stop being lent such cheap money.

Many EU countries have acknowledged that they actually want interest rates to go up, as the impact low and negative rates are having across the economy (pension funds for example) is staggering. The return of positive rates is seen as a way back to normality and a stopgap for the upcoming pension crises.

Germany, Europe's strongest economy, is hovering around 10-12% covid-adjusted unemployment. We have a long way to go before any EU-wide recovery - the ECB's policies are not changing anytime soon.

It is true that central bank led interest rate changes are an abysmally poor and blunt way to manage inflation - destined to trash underperforming economies in the EU (like Italy/Greece), to bring down inflation in well performing economies (like Germany, when it recovers).

That's all the more reason to abandon interest rate targeting permanently, and use taxation targeted at overheating sectors to bring down inflation, instead.

That can deliver a permanent interest rate of 0%, even once economic recovery is achieved - but only if EU countries are disciplined about taxing-away inflation.

johnnyskeleton

KyussB wrote: »

It is true that central bank led interest rate changes are an abysmally poor and blunt way to manage inflation - destined to trash underperforming economies in the EU (like Italy/Greece), to bring down inflation in well performing economies (like Germany, when it recovers).

Is it not the opposite? They are trying to increase inflation in Germany, France etc, thus leading to higher inflation in peripheral countries? Low interest loans are ideal for the less well developed countries like Greece and Italy, as they allow people to borrow to invest. They cause more damage in places like Ireland, where the borrowing leads to over inflated asset prices.

That's all the more reason to abandon interest rate targeting permanently, and use taxation targeted at overheating sectors to bring down inflation, instead.

Does taxation not increase inflation, rather than decreasing it?

That can deliver a permanent interest rate of 0%, even once economic recovery is achieved - but only if EU countries are disciplined about taxing-away inflation.

0% interest rates are very bad because they make the value of money almost meaningless. If I can borrow at 0% then I will put it into investments even if they only pay out 1%. If anything, we need to raise interest rates because they are causing a weird situation of staglfation - asset prices through the roof, while consumer prices stay relatively flat.

KyussB

coolshannagh28 wrote: »

Thats the rose tinted view of central banking and economic performance ; the ECB and the FED have been desperately printing money for years to keep the illusion alive and as time and Covid go on its taking more and more stimulus and negative rates to maintain stability.

The ECB has placed things in governments hands, effectively.

Monetary policy is ineffective at provide the stimulus needed for speedy economic recovery - only fiscal policy (government spending) can do it - and for the last number of years the ECB has been waving a blank cheque in front of governments faces, waiting for them to take it and spend - and it took a pandemic for governments to start doing this, and even then they still aren't spending enough.

timmyntc

johnnyskeleton wrote: »

Is it not the opposite? They are trying to increase inflation in Germany, France etc, thus leading to higher inflation in peripheral countries? Low interest loans are ideal for the less well developed countries like Greece and Italy, as they allow people to borrow to invest. They cause more damage in places like Ireland, where the borrowing leads to over inflated asset prices.

The ECB is attempting to keep rates down so that EU countries can get cheap finance while their economies are on life support because of covid. They are not targeting inflation - but inflation is a side-effect.

The impact of all this cheap borrowing is now becoming clear, so the ECB will be winding down their bond buying much sooner than anticipated. By early 22 rates will start to rise

KyussB

johnnyskeleton wrote: »

Is it not the opposite? They are trying to increase inflation in Germany, France etc, thus leading to higher inflation in peripheral countries? Low interest loans are ideal for the less well developed countries like Greece and Italy, as they allow people to borrow to invest. They cause more damage in places like Ireland, where the borrowing leads to over inflated asset prices.



Does taxation not increase inflation, rather than decreasing it?



0% interest rates are very bad because they make the value of money almost meaningless. If I can borrow at 0% then I will put it into investments even if they only pay out 1%. If anything, we need to raise interest rates because they are causing a weird situation of staglfation - asset prices through the roof, while consumer prices stay relatively flat.

I was talking about when the major EU economies have recovered, with inflation rising, and the ECB looking at raising rates then to keep inflation in check.

So when most of the EU is recovered, Germany/Ireland etc. may be close to Full Employment and be near ~2% inflation, but Greece/Italy may still have significant unemployment and be down at 0.5% inflation etc..
The ECB raising interest rates to dampen inflation would be suitable for Ireland/Germany in that situation - but it would be a very blunt tool - because it would also raise interest rates for Greece/Italy before they have fully recovered, hampering their recovery.

Taxation doesn't always mean the taxed money is spent. If you tax an overheating sector of the economy, that removes money from that sector - which would slow that sector down and reduce inflation caused by that sector.

The problem with asset prices is QE. If you invest zero interest money, you're still tied to the investment and can't put the money elsewhere (and investments still carry risk, there's no guaranteed return).
With QE, the central bank is literally buying financial assets - so for certain types of privileged assets that are purchased through QE, finance markets are completely warped.

With QE limited to government bonds, and zero interest rates, you pretty much end the massive distortion of asset prices.

Timing belt

KyussB wrote: »

I was talking about when the major EU economies have recovered, with inflation rising, and the ECB looking at raising rates then to keep inflation in check.

So when most of the EU is recovered, Germany/Ireland etc. may be close to Full Employment and be near ~2% inflation, but Greece/Italy may still have significant unemployment and be down at 0.5% inflation etc..
The ECB raising interest rates to dampen inflation would be suitable for Ireland/Germany in that situation - but it would be a very blunt tool - because it would also raise interest rates for Greece/Italy before they have fully recovered, hampering their recovery.

Taxation doesn't always mean the taxed money is spent. If you tax an overheating sector of the economy, that removes money from that sector - which would slow that sector down and reduce inflation caused by that sector.

The problem with asset prices is QE. If you invest zero interest money, you're still tied to the investment and can't put the money elsewhere (and investments still carry risk, there's no guaranteed return).
With QE, the central bank is literally buying financial assets - so for certain types of privileged assets that are purchased through QE, finance markets are completely warped.

With QE limited to government bonds, and zero interest rates, you pretty much end the massive distortion of asset prices.

QE being limited to gov bonds and interest rates still distorts all other asset prices as investors chase yield on other asset classes.

KyussB

That'd be chasing yield with a pot of money that is not being constantly topped up by QE, though.

Timing belt

KyussB wrote: »

That'd be chasing yield with a pot of money that is not being constantly topped up by QE, though.

Even if the pot of money is the constant it will lead to asset inflation as investors pile out of Government bonds and Deposits and into other assets chasing yield which will push prices higher and yields lower....

is_that_so

Looks like jobless rate will not be that bad once we unwind PUP. Good to see details on standard data v PUP data.

https://www.rte.ie/news/business/2021/0809/1239830-covid-adjusted-jobless-rate-falls-to-pandemic-low/

head82

https://www.boards.ie/discussion/comment/117729281#Comment_117729281

It's encouraging to see PUP numbers etc. dropping. Indicates that we are heading in the right direction.

But that figure of 728,748 (including those availing of EWSS) is very scary. At some point the EWSS will have to be wound down and the potential fallout doesn't bear thinking about.

Sorry if I come across as a 'doom and gloomer' but it's a reality that will have to be faced.

Pussyhands

Well, another 200m pulled from the taxpayers arses again.

All with the aim of "keeping people in jobs" they said. There is no shortage of jobs. Those in hospitality aren't in specialist positions. If you're pulling pints you can go get a job in the local meat factory or coffee shop instead.

The EWSS is a sham. Free money for businesses so they don't have to pay proper labour. And it's extended until April! Rates paused until March or April. Covid Restrictions Support Schemes (big weekly grants) up and running again.

At the stage of 2 years into the pandemic, any job still getting support shouldn't be. At that stage, it's a new normal and that job or industry doesn't exist anymore. Just like peat workers are put out of work due to government.

ECB are up to their tits in it too. They literally can't raise interest rates because they're still lending like **** to the EU countries. So they're going to pretend the inflation is "transitory" (it's not), and steal our money through rapid inflation.

Whoever said there was no money tree is proving themselves to be very very wrong.

M_Murphy57

https://www.boards.ie/discussion/comment/118298705#Comment_118298705

It was reported last few days that we are facing into 300k unemployed people once these supports are removed.

It is absolutely nuts that we borrowed this much only to end up destroying the economy (and by extension our ability to pay back what we borrowed)

We massively abused lockdown as a tool for managing this pandemic. MM will ride off next year on a massive pension and everyone else will be left picking up the pieces.

Pussyhands

Another 50 or 60m plucked out of the sky to install hepa filters. Covid has come and gone in multiple phases. It will ease off again and all these filters will end up being a massive waste of money.

enricoh

We went for grub yesterday in the local hotel. The room was empty at one stage only for us and a clatter of staff, it'd usually be hopping. I couldn't help but think that only for the government more or less paying their wages a lot of the staff wouldn't have been there.

hamburgham

https://www.boards.ie/discussion/comment/118317804#Comment_118317804

Yes, I was thinking how all the parents of special needs kids who’ve had to fight tooth and nail, sometimes even going to court to secure educational provision for their kids, were feeling when they heard that. Just plucked out if the sky. This madness just goes on and on.

hamburgham

https://www.boards.ie/discussion/comment/118317804#Comment_118317804

This government literally governs by what it hears on the radio. There wasn’t really any talk of hepa filters until about a week ago when the media latched onto it. Lo and behold, a few days later 50m for hepa filters. It is pathetic.

Pussyhands

https://www.boards.ie/discussion/comment/118317864#Comment_118317864

It's really mad how they're just picking money out of the sky. Money tree does exist it seems. I've lost count at how many times Catherine Martin has announced new fundings of tens of millions.

200m being plucked out of the sky again for the electricity credit (which all the rich will get too)

So just in the last couple of weeks and without even looking for announcements, it's a about an extra half a billion they've spent that they've just plucked out of the sky. It's all borrowed money.