Why is Ireland`s National Debt Clock almost as high as Poland`s?

fash · 19-08-2018 07:25AM

Del2005 wrote: »

So the financial crash that nearly bankrupted the world's banking system which required governments to bail out the banks was our fault. I thought that it was because a US bank collapsed and brought down the house of cards, thanks for correcting history and letting me know it was our fault.

Only certain countries had out of control banking systems - that was a choice. Only certain countries allowed limitless borrowing by consumers to inflate the housing markets - that was a choice.
Of the countries that were required to bail out their banks (US, UK), almost all made massive profits from it because they bailed out their banks correctly and in a limited manner only - the nature of the bail out was a choice.
Blaming "De Layman Brudders" for the Irish financial crash is like blaming the particular rock you hit while driving at 250km/hr down a narrow country road.

Del2005 wrote: »

As a matter of interest what could we have done not to collapse the world banking system which lead to one of the biggest international recessions?

It wasn't a question of not collapsing the world banking system, it was a question of failing to have a robust system in place to survive it.

Del2005 wrote: »

And considering that we were paying more out than we earned how where we to keep the country running after we told the lenders to feck off we aren't paying our debts, regardless of them been secured or not?

They weren't *our* debts. They were bank debts. They only became *our* debts when FF decided to guarantee them. Even up to the day of the bank guarantee even if you had no other good ideas on the table, you could have guaranteed future bond holders only. The existing bond holders had already paid their money and taken their risks and had to wait years or decades for it to be returned with interest- if at all. There was never any reason to guarantee them and nothing achieved by it. In fact it damaged the guarantee given to future bond holders since they now had to share that guarantee with others.

LeinsterDub · 19-08-2018 07:50AM

realitykeeper wrote: »

How can we inflate our way out of Debt? Ireland is in the Eurozone. Do you think Germany, the Netherlands and Finland will agree to that?

We can't so we've to grow

y0ssar1an22 · 19-08-2018 08:04AM

LeinsterDub wrote: »

You inflate or grow your way out of debt. The US has been at it for years. If you want less tax what services would you like cut?

let me have a little think :rolleyes::rolleyes:

Wanderer78 · 19-08-2018 08:11AM

realitykeeper wrote:

Cutting would make a lot more sense.

You do realise that economic measures such as austerity are a busted flush, in the words of Scottish political scientist mark Blyth, 'it never ever ever works'! And again, global debt problems are not whats commonly perceived, i.e. public debt, it is in fact growing private debt, which is largely due to growing asset prices, in particular housing, it's good for us, apparently!

Arthur Daley · 19-08-2018 08:11AM

realitykeeper wrote: »

... but check out this link and look at Ireland`s debt per capita.

Luxembourg is an outlier, there is probably some distorting reason for that. Of course, some say Ireland`s GDP is distorted and GNP should be used. Remember Paul Krugman`s leprechaun economics jibe?

Exactly. GDP in Ireland is not a suitable measure when assessing the solvency of the sovereign. Debt will not and cannot be paid out of GDP. It is paid out of the tax base.

The government debt has quadrupled in the past 10 years. However the (sustainable) tax base (the only place the debt will ever be paid out of) is stable, with fairly limited opportunity for growth, as it is massively overdependent on a cohort of middle income paye workers.

The numbers were so bad for Ireland over the last 15 years now that the FG/Labour govt. effectively had to 'default/restructure' parts of it and push it out into the never never. This wasn't the write down promised in 2011 but it was the only workable solution under the circumstances. In a few years it has largely been forgotten how unsustainable this is with a fairly stagnant tax base, everyone seems to be suffering from amnesia.

The only real plan FG/FF have (with the backing of Europe) is to keep importing labour and expand the population. But such wishful, simple minded thinking didn't prevent the economic crash in 2008, you just run out of road if the average worker cannot continue to pay extortionate housing costs and taxes. Meantime average workers are fairly fed up, hence why there is a hung parliament type situation in politics with no dominant party until FG/FF merge.

Once off windfalls like €13bn of tax underpayment from Apple must be used to get the government debt down. That will help a lot but it means government acting responsibly and lobbyists and the media being overruled for the long term good of the people of Ireland.

dr.fuzzenstein · 19-08-2018 08:40AM

Wanderer78 wrote: »

You do realise that economic measures such as austerity are a busted flush, in the words of Scottish political scientist mark Blyth, 'it never ever ever works'! And again, global debt problems are not whats commonly perceived, i.e. public debt, it is in fact growing private debt, which is largely due to growing asset prices, in particular housing, it's good for us, apparently!

Seems to have worked fine in Ireland. I mean what the hell is Blyth blathering on about?
Should Ireland have tried to grow the economy by injecting massive sums of money? Debt would be far worse now. You don't get to complain about Austerity AND the national debt.
That is magic money tree economics.
So injecting billions into the economy in a financial crisis is not an option for a small player like Ireland.
Next, let the banks fail.
You think it's hard getting a loan/credit card/mortgage now? The one or two surviving banks would not give loans and only at inflated rates. When ECB rates were at zero, mortgages in Ireland were over 5%! Otherwise it would have been 10%.
Ireland would have been right back in the 80's. Jobs only for relatives and an inflated civil service as a posh way of being on the dole.
I mean the civil service is still suffering from that with thousands of redundant admin staff that have very little to no purpose.
You can also have too much austerity.
I think Ireland got it right. And you shouldn't always listen to experts who know it all from behind their keyboard.
It's easy to pick a buzzword and say "XYZ doesn't work!" and write something clever about it.
Doesn't mean it's real world applicable or going to work.

19-08-2018 08:55AM

realitykeeper wrote: »

... but check out this link and look at Ireland`s debt per capita. The only two countries in the world with higher debt per capita are Luxembourg and Palau.

https://en.wikipedia.org/wiki/List_of_countries_by_external_debt

Luxembourg is an outlier, there is probably some distorting reason for that. Of course, some say Ireland`s GDP is distorted and GNP should be used. Remember
Paul Krugman`s leprechaun economics jibe?

You aren't comparing like with like - your link includes private debt so say all those aircraft leasing companies will have lots of debt to add to this but it wouldn'thave much of an impact on the Irish economy.

Luxembourg would be similar.

tabby aspreme · 19-08-2018 09:01AM

Is Ireland's GDP figure distorted by the amount of Shell company money which passes through the state , but we get minimal return from .

realitykeeper · 19-08-2018 05:41PM

LeinsterDub wrote: »

We can't so we've to grow

But in a recession, Ireland will not be credit worthy so growth will need to be organic. That means slashing spending in order to stimulate growth in the private sector. Spending more money (even if it were available via credit) would only increase the velocity of money in the economy, like a drug increasing the heart rate of a drug user.

realitykeeper · 19-08-2018 05:54PM

Wanderer78 wrote: »

You do realise that economic measures such as austerity are a busted flush, in the words of Scottish political scientist mark Blyth, 'it never ever ever works'! And again, global debt problems are not whats commonly perceived, i.e. public debt, it is in fact growing private debt, which is largely due to growing asset prices, in particular housing, it's good for us, apparently!

All debt is a problem, especially in western countries where fiscal, banking and private debt are now an issue. If the perceived risk of lending to Ireland were to rise with a recession, then the state would need to either tax an already indebted population or it would need to cut back. Mark Blyth is wrong. The Austrian School of Economics advocates are right. Kaynesianism to be fair does say that during times of strong economic growth, debt should be paid down but even that minimum of common sense does not reflect reality. Fiscal debt of both the EU and US are growing still, no effort is ever made to pay down the debt.

realitykeeper · 19-08-2018 06:05PM

Arthur Daley wrote: »

Exactly. GDP in Ireland is not a suitable measure when assessing the solvency of the sovereign. Debt will not and cannot be paid out of GDP. It is paid out of the tax base.

The government debt has quadrupled in the past 10 years. However the (sustainable) tax base (the only place the debt will ever be paid out of) is stable, with fairly limited opportunity for growth, as it is massively overdependent on a cohort of middle income paye workers.

The numbers were so bad for Ireland over the last 15 years now that the FG/Labour govt. effectively had to 'default/restructure' parts of it and push it out into the never never. This wasn't the write down promised in 2011 but it was the only workable solution under the circumstances. In a few years it has largely been forgotten how unsustainable this is with a fairly stagnant tax base, everyone seems to be suffering from amnesia.

The only real plan FG/FF have (with the backing of Europe) is to keep importing labour and expand the population. But such wishful, simple minded thinking didn't prevent the economic crash in 2008, you just run out of road if the average worker cannot continue to pay extortionate housing costs and taxes. Meantime average workers are fairly fed up, hence why there is a hung parliament type situation in politics with no dominant party until FG/FF merge.

Once off windfalls like €13bn of tax underpayment from Apple must be used to get the government debt down. That will help a lot but it means government acting responsibly and lobbyists and the media being overruled for the long term good of the people of Ireland.

Indeed. I of course was not advocating the use of GDP but rather highlighting the per capita debt. I referred to GDP because a lot of people seem to think is especially important, I am not one of them.

Restructuring the economy to be a low cost economy would make sense and of course government spending would need to be cut to a small fraction of what it is.

realitykeeper · 19-08-2018 06:18PM

I think it is useful to include private debt because there is a lot of private debt in this country. It includes many thousands who are years behind in their mortgages and their debt will probably be passed on to the taxpayer even though it shouldn`t. There is also auto debt, credit card debt, student debt and as you pointed out, commercial debt. All this debt matters. In a recession, aircraft leasing may well be affected and if the companies in question cannot keep up payments, borrowing costs of Irish industry will go up and more jobs will be at risk. As for the banks, they will be right back in the eye of the storm when default rates increase and property prices crash again.

realitykeeper · 19-08-2018 06:24PM

tabby aspreme wrote: »

Is Ireland's GDP figure distorted by the amount of Shell company money which passes through the state , but we get minimal return from .

I am not sure but a few years ago, Ireland`s economy grew by 26% on paper because of the distorting effect of US multinationals registering in Ireland. I think Pfizers was one of them. Some economists have suggested GNP would be a better indicator in the case of Ireland.

Debt per capita is what I look at.

Hector Bellend · 19-08-2018 06:26PM

Do you seriously expect any irish government to run the country in a fiscally responsible fashion?

Hector Bellend · 19-08-2018 06:29PM

realitykeeper wrote: »

I am not sure but a few years ago, Ireland`s economy grew by 26% on paper because of the distorting effect of US multinationals registering in Ireland. I think Pfizers was one of them. Some economists have suggested GNP would be a better indicator in the case of Ireland.

Debt per capita is what I look at.

Therein lies the problem.

A housing crisis with a schooling crisis only around the corner. If only it was a 26% growth in reality.

Wanderer78 · 19-08-2018 06:31PM

realitykeeper wrote: »

All debt is a problem, especially in western countries where fiscal, banking and private debt are now an issue. If the perceived risk of lending to Ireland were to rise with a recession, then the state would need to either tax an already indebted population or it would need to cut back. Mark Blyth is wrong. The Austrian School of Economics advocates are right. Kaynesianism to be fair does say that during times of strong economic growth, debt should be paid down but even that minimum of common sense does not reflect reality. Fiscal debt of both the EU and US are growing still, no effort is ever made to pay down the debt.

apologies, but i think i ll stick to blyths opinion, public debt wasnt really one of the triggers of the recession, again, it was the rapid rise in private debt, largely due to the deregulation of the financial sector, the fact that banks actually create the majority of our money supply via loans, and disturbingly banks are also still seen by many as intermediates in this process, is a major cause for concern

Harry Palmr · 19-08-2018 06:38PM

Cheap money and wobbly banks = blame the euro.

Pro-cyclical fiscal imprudence and central bank incompetence = blame the gubberment

Star Bingo · 19-08-2018 09:14PM

Reminds me what’s up with the new ‘s and ’s on the iphones now

Can still do a ' but I have to copy it. Same goes with the “ and ” if I want to hyperlink it’s a f*ckin disaster

realitykeeper · 20-08-2018 03:53AM

Hector Bellend wrote: »

Therein lies the problem.

A housing crisis with a schooling crisis only around the corner. If only it was a 26% growth in reality.

The housing crisis was the result of the Bolschivicization of the building sector. Bring back unmanipulated capitalism and the problems in the housing market will sort themselves out.

realitykeeper · 20-08-2018 04:04AM

Wanderer78 wrote: »

apologies, but i think i ll stick to blyths opinion, public debt wasnt really one of the triggers of the recession, again, it was the rapid rise in private debt, largely due to the deregulation of the financial sector, the fact that banks actually create the majority of our money supply via loans, and disturbingly banks are also still seen by many as intermediates in this process, is a major cause for concern

In the movie The big Short, they concluded that the bankers were not being stupid because they knew the government would bail them out and the governments did bail them out.

dr.fuzzenstein · 21-08-2018 04:18PM

realitykeeper wrote: »

The housing crisis was the result of the Bolschivicization of the building sector. Bring back unmanipulated capitalism and the problems in the housing market will sort themselves out.

OK, so light touch or no regulation that would for example allow banks to give away money like sweets.
I think that worked great last time.

21-08-2018 11:00PM

Is it because Ireland's debt clock includes our external debt? All cash on deposit in Irish banks would be included in that debt figure as it is technically money that is owed, which makes Ireland's external debt figure appear like a big scary number.

Victor · 21-08-2018 11:18PM

Deleted User wrote: »

Is it because Ireland's debt clock includes our external debt? All cash on deposit in Irish banks would be included in that debt figure as it is technically money that is owed, which makes Ireland's external debt figure appear like a big scary number.

We're talking about government debt.

Why is Ireland`s National Debt Clock almost as high as Poland`s?

Comments