Ireland's national debt 'one of the highest in the world' on a per capita basis

jams100 · 02-12-2023 2:29pm

https://www.boards.ie/discussion/comment/121445346#Comment_121445346

Don't understand the question, I mean if the famine hadn't have hit Ireland would the same people have owned houses 5 or 10 years later?

The issue of housing is a much bigger issue than the debt we took on (Pyrite, lack of desire to build social housing, regulations, inflation etc.). I guess you could argue that the much stricter mortgage criteria are the main legacy result that's coming from the celtic tiger, but then again, that's done to protect individuals as much as to protect the banks.

Speaking as a person in their mid twenties, still living with the parents in Dublin, I'm looking across the water to England and they are in a similar boat to us (not quite as bad) in terms of housing so it's not just an Irish problem.

In terms of who should pay the 200 billion? Given that they never burned the bondholders at the time it doesn't really matter, its government debt now and one way or another its the taxpayer (citizens) that will pay it, regardless of whether its USC or a bank levy etc.

There's an argument that the debt should've been shared around Europe, but I don't agree with a country that regulated themselves much better being saddled with Irelands or Greeces debt due to a complete lack of oversight on the regulators and ultimately the government of that country.

Wanderer78 · 02-12-2023 2:32pm

https://www.boards.ie/discussion/comment/121445436#Comment_121445436

...how would you feel over bailing out primarily French and German bank bond holders, were they appropriately regulated?

jams100 · 02-12-2023 2:50pm

https://www.boards.ie/discussion/comment/121445443#Comment_121445443

As I said, senior bondholders should have been burned.

Also, f**k all bankers got convicted, and those that did received minimal punishments. Other than reputational damage most escaped unscathed. That's where I have the bigger issue, people screwed up, knowingly for their own gain and got away with it

StevenToast · 02-12-2023 2:57pm

National Debt is never paid back...the interest on the debt is serviced to keep the credit rating strong and varying governments continually pile on more debt hoping inflation eats away at it...

Wait until you see what SF add on...we will have debt of half a trillion by the time the decade is out.....

Francis McM · 02-12-2023 3:38pm

https://www.boards.ie/discussion/comment/121445514#Comment_121445514

I would hope the EU would not let our national debt get so high, but then again the EU were helped inflate our Celtic Tiger instead of keeping us in check 20 / 18 years ago. Scary to think that the minister of Finance in a few years could be that lad who dropped out of his certificate course in Letterkenny I.T. or whatever it was called.

Francis McM · 02-12-2023 3:45pm

https://www.boards.ie/discussion/comment/121445346#Comment_121445346

Interesting question. In that hypothetical situation, house prices would be lower but the standard of living in the country would have been a lot lower as well this past 14 or 15 years.

If we had not borrowed the 200 billion, we would not have been in a position to pay our left wingers the salaries to which they have become accustomed. Eg President Michael D Higgins has continued to draw his pension from NUI Galway of €19,000 while he has been in office. That in addition to his annual salary which is now €332,017, not bad for a 82-year-old. And it would be doubtful if we could have continued to pay our retired Presidents and Taoiseachs their six figure pensions either.

Peregrinus · 02-12-2023 4:08pm

https://www.boards.ie/discussion/comment/121445637#Comment_121445637

Not sure why you mention left-wingers here; the financial burden of paying a salary depends on the amount of the salary, not on the political views of the person to whom it is paid.

Also bit bizarre to single out politicians's pay and pensions in this context. If you cancelled 100% of all pay and pensions for politicians tomorrow, it wouldn't even be a rounding error in the calculation of our ability to service our debt. If you think that not borrowing the 200 billion means we couldn't pay politicians, then it would also mean that we couldn't pay guards, nurses, teachers, busdrivers, etc. That would probably have a bigger impact on the public welfare, and certainly capture more of the public's attention, than the pay cut for politicians.

House prices would collapse in this scenario, but that wouldn't make them more affordable. They'd collapse because, instead of many people being unable to buy a house as at present, virtually nobody would be able to buy a house. Houses would be less affordable, not more affordable.

Francis McM · 02-12-2023 4:29pm

https://www.boards.ie/discussion/comment/121445686#Comment_121445686

Yes, of course if we did borrow that 200 billion, then not only would we not be able to pay our President his salary and pensions ( close to €400,000 a year - not bad earnings for a socialist to get from taxpayers? ) but as you correctly say it would also mean "that we couldn't pay guards, nurses, teachers, busdrivers, etc. That would probably have a bigger impact on the public welfare, and certainly capture more of the public's attention, than the pay cut for politicians.".

House prices would collapse. It is likely the government would raid peoples savings, same as the government did in Greece, so even people with savings could not buy houses. I disagree with you that in that scenario " virtually nobody would be able to buy a house ". I would suspect Irish people working abroad and who had money from abroad, for example, could return to Ireland and pick up property bargains. There would be a certain amount of empty houses - from probate to give just one example - these could and probably would be sold to anyone who had earnings or savings (eg returned emigrants ) from abroad.

It is a very interesting question RealityKeeper posed " If Ireland had not borrowed 200 billion euro since 2009..."

Would society have broken down if the IMF / EU / the UK had not rescued us? Would we have had widespread rioting / looting? Would our population have increased to the over 5 million we have today - nobody foresaw that 15 or even 10 years ago. IMO we would have gone back to the old story of net emigration if we had not borrowed the 200 billion. I remember in the 1980s whole classes emigrated.

Peregrinus · 02-12-2023 4:40pm

I think the what-if " if Ireland had not borrowed 200 bn" is pretty meaningless unless we specify what Ireland would have done instead. For example, very different scenarios ensue if you assume (a) that Ireland stopped borrowing, but honoured its existing debt obligations, or (b) that Ireland stopped borrowing and repudiated its existing debt obligations. Or even more basically, if Ireland had not borrowed 200 bn, how much would it have borrowed? Zero? 100 bn? What?

"What if we had followed a different course?" is never a useful question to explore unless you specify what different course.

realitykeeper · 02-12-2023 4:56pm

https://www.boards.ie/discussion/comment/121445686#Comment_121445686

Well I understand why he mentioned left wingers.

Wanderer78 · 02-12-2023 6:08pm

https://www.boards.ie/discussion/comment/121445514#Comment_121445514

sf, even if they can form a government, will do nothing of the kind, they ll meet eu rules of the time, as they ll have ff to contend with.....

..please stop catastrophising!

https://www.boards.ie/discussion/comment/121445619#Comment_121445619

the previous boom was a credit boom, not a deficit boom, noting, we were actually regularly running budget surpluses prior to the crash....

...tis fairly scary to think, we ve actually spent the time from the 08 crash to now, re-inflating our property markets, along with other asset markets, im sure it ll all be fine in the long run!

Francis McM · 02-12-2023 7:04pm

https://www.boards.ie/discussion/comment/121445845#Comment_121445845

Well, the point was public expenditure was / is higher - much higher - that if we did not borrow the 200 billion since 2009, to be one of the most indebted countries in the world ( per head of population ).

Leadership comes from the top down. Take our President, for example. Even though he is left wing, he gets / is entitled to €400,000 from the taxpayer here / government borrowings, even though he has free digs, and at the age of 82 could not even spend a tenth of that. I think he rents out property in Galway too so he is not short of a few bob.

To put things in context, the salary of the Prime minister of Spain, a more responsible job (being at the top of politics there and on call 24/7, rather than just a figurehead ) , with a much larger population - is only paid 97,926 USD per year. That is close to the income our average Garda gets here, according to the CSO ( 82,000 per year ). No wonder house prices etc here have gone through the roof. As well as our national debt.

It is scary to think what will happen if / when a real left wing government gets in to office, after the promises it made its electorate, "free" housing for many etc.

amacca · 03-12-2023 12:18am

https://www.boards.ie/discussion/comment/121446239#Comment_121446239

Who in there right mind would want to be a prime minister of Spain for 97k per annum.......and in dollars at that

Something tells me it's a bit like president of the US type scenario...official earnings surprisingly low....real earnings due to speaking engagements etc etc in the millions

Nobody but nobody would want the workload and potential risk/danger due to the target you make yourself being a head of state entails for 97k usd alone

I suspect you must be aware of that

Ffs there's software devs in their mid twenties on more.

rossie1977 · 03-12-2023 11:00pm

The only thing that matters is

1. Can we service the debt. The current repayments are approximately €10b a year

2. Who owns the debt.

Ireland will have budget surplus of ~€10b a year until 2026 based on predictions so we can easily meet the interest payments for the foreseeable future.

Tiger20 · 03-12-2023 11:34pm

https://www.boards.ie/discussion/comment/121450794#Comment_121450794

….late current interest rates. If interest rates increase, even minimally, that would have an adverse effect on our annual debt servicing costs. What I don’t understand is why the government didn’t use the recent unexpected tax windfall from corporation tax, apparently up to €64bn, to reduce our national debt by about 30% of our debt, to reduce servicing costs and save €3bn which could be spent annually, rather than one off tax/ spending initiatives which are now gone and soon to be forgotten. We could have benefited from an annual reduction in debt servicing costs and an increase in spending which would deliver long term benefits

Tiger20 · 03-12-2023 11:35pm

https://www.boards.ie/discussion/comment/121450946#Comment_121450946

*at current interest rates

Podge_irl · 03-12-2023 11:41pm

https://www.boards.ie/discussion/comment/121450946#Comment_121450946

Because with the current rates on our debt the money is far more effective being used for infrastructure or even just invested at higher rates.

The "up to €64bn" is over the next 10 years also. It's not like they could reduce the debt that much overnight.

Peregrinus · 04-12-2023 1:59am

https://www.boards.ie/discussion/comment/121450946#Comment_121450946

What Podge said.

Also, governments can't pay off debt whenever they happen to have a bit of spare cash. It's not like an overdraft. Governments raise debt by issuing government bonds, and bonds typically have a fixed interest rate and a fixed term.

For example, on 14 September last, Ireland issued €515 million worth of the 2% Treasury Bond 2045. If you hold that bond, you're entitled to be paid 2% interest until 2045, and then get a repayment of capital. The government can't change it's mind, and pay back your capital earlier than that.

Bonds like this are issued multiple times during the year, with varying durations. Also multiple times during the year bonds (which were issued in the past) fall due for repayment. A government wishing to reducing overall borrowing repays bonds as they fall due, and doesn't issue new bonds (or issues fewer new bonds than they are repaying). It follows that the rate at which overall borrowing can be reduced is limited by the rate at which bonds fall due for redemption; you can't pay off government debt faster than that.

A government can, of course, issue bonds with early redemption dates, and the more they do this, the more they roll over their debt, redeeming bonds and issuing new bonds at a faster rate. There's a tradeoff here; raising mostly short-term debt gives you more flexibility about paying it off (if you find you can afford to) but at the cost of more uncertainty about what your long term debt costs will be (because interest rates go up and down, and if you can't or don't reduce your debt when the bond falls due, you'll have to borrow at whatever the prevailing interest rate is at the time).

Ireland's debt is mostly long-dated; average maturity of Ireland's public debt is over 10 years, which I think is long by international standards. And this means we still get the benefit (and will for many years still get the benefit) of low interest rates at the time the bonds were issued; three-quarters of our public debt was issued at rates below 2%, but debt issued this year commands rates of more than 3% — meaning that, if we were rolling over our debt much faster, we'd be much more affected by rising interest rates.

riddles · 04-12-2023 6:35am

https://www.boards.ie/discussion/comment/121450946#Comment_121450946

Our Government survives with a short term outlook and populist measures like energy credits and additional welfare bonuses. There are no votes in proper fiscal management and prudent use of windfalls. The forthcoming reduction in tax payers from currently 5-1 to 2-1 in about twenty years combined with poorly provisioned pension funding is a calamity unfolding. Throw in billions per year commitments Michael Martin just signs up to flippantly and you can see where profligate spending has become a by product of a short term focused political system with no long term planning.

Francis McM · 04-12-2023 12:18pm

https://www.boards.ie/discussion/comment/121447599#Comment_121447599

The Spanish Prime Minister gets paid €90,000 and everyone in Spain thinks that is huge money. According to Statista, the average salary in Spain is €29,113 per year or €2,426 a month

Here in Ireland, public spending has run riot over the last few decades to the extent our 82 year old figurehead President - who is only a figurehead, does not have the responsibility of running Spain, a bigger country - gets paid over €400,000 from the Irish taxpayer ( salary + pensions). Our Gardai currently earn an average €82,000 per year according to the statistics. No wonder we have a huge national debt per head of population, one of the highest in the world.

,

Podge_irl · 04-12-2023 12:37pm

https://www.boards.ie/discussion/comment/121452146#Comment_121452146

Different countries have different costs of living - this is hardly news.

The fact our salaries are, in general, so much higher makes the debt more manageable, not less.

Esho · 04-12-2023 12:47pm

https://www.boards.ie/discussion/comment/118678566#Comment_118678566

Why, what will happen?

The only option for any political party in Ireland is to further squeeze the middle, and make benefit cuts - leaving one of these options for SF

amacca · 04-12-2023 1:55pm

https://www.boards.ie/discussion/comment/121452146#Comment_121452146

Look whatever about debating the merits of what Michael D gets paid...and tbh I'm probably with you there

Not even 100k for being the head of state of a country with a population of 50 million

I don't have to do any research to know that isn't the whole story..

As I said there are software developers in their mid 20s earning more and they probably don't have to worry about being a target of assassination or work 24/7 365 running a country.

I'd be willing to bet the man's actual earnings are way in excess of that due in large part to being the prime minister and the climb to get there.

I'd imagine you have a brain too and know that as well.

bucketybuck · 04-12-2023 2:10pm

I'm not sure a Prime minister being able to have side deals means as much as you think it does.

Anybody can agree extra income on the side, I'm sure Higgins has a few juicy deals in the background also. It doesn't change the fundamental fact of a role with X responsibility getting Y as a salary.

tom1ie · 04-12-2023 2:32pm

https://www.boards.ie/discussion/comment/121451266#Comment_121451266

So how do governments pay off debt?

You’ve outlined how governments raise debt but not how they pay off that debt.

Podge_irl · 04-12-2023 3:01pm

https://www.boards.ie/discussion/comment/121452707#Comment_121452707

They don't necessarily. That is why Norway, for example, has a massive sovereign wealth fund and also has significant government debt.

There is no particular reason, or necessarily any benefit from paying off government debt if they debt is being used to grow the economy of the country at a rate that is higher than the interest rates of the debt.

amacca · 04-12-2023 3:16pm

https://www.boards.ie/discussion/comment/121452604#Comment_121452604

Yes it does...if the role affords you the possibility of getting x side deals...

It's not like ordinary Joe public stacking shelves would be able to get them🤣

Hey Dave,when you are finished doing that stock take any chance you are interested in addressing the south african economic forum subsequent to your presentation at the G20 wha?

Seriously, pull the other one...the only income (direct and indirect) the leader of a country with a population of 50 million is getting comes in under 100k....

A person would need their head examined if they believed that.