ECB policy during the pandemic in relation to borrowing.

political analyst · 28-02-2021 1:50am #1

This is from last October.

https://www.rte.ie/news/politics/2020/1018/1172209-budget-debt-covid/

Ten words. That was the extent of the acknowledgement in Finance Minister Paschal Donohoe's Budget speech to the European Central Bank.

The bank, led by Christine Lagarde, has engaged in extraordinary activities during the pandemic which bankrolled this week’s Budget.

It has enabled borrowing of €20 billion this year at interest rates close to zero. And it will support the State’s plans to ask lenders for a further €20.5 billion next year.

Even during this pandemic, I find it hard to believe that the ECB thinks it's feasible to let EU member states continue to borrow money cheaply.

The frustration that I, like many other people, have because of lockdown after lockdown makes me wish that the ECB would pull the rug from under us because that would force this government to think of better ways of containing the virus than lockdown until there is a significant number of people fully vaccinated.

Thats me · 28-02-2021 12:58pm

It is inexpensive to borrow from ECB for years.

historic figures showing the ECB interest rates since 2003

2011 15 July 1.50
2011 9 Nov 1.25
2011 9 Dec 1.00
2012 9 July 0.75
2013 8 May 0.50
2013 Nov 0.25
2014 Jun 0.15
2014 Sept 0.05
2016 March onwards …. 0.0

political analyst · 28-02-2021 2:39pm

Thats me wrote: »

It is inexpensive to borrow from ECB for years.

historic figures showing the ECB interest rates since 2003

2011 15 July 1.50
2011 9 Nov 1.25
2011 9 Dec 1.00
2012 9 July 0.75
2013 8 May 0.50
2013 Nov 0.25
2014 Jun 0.15
2014 Sept 0.05
2016 March onwards …. 0.0

That doesn't mean our government should go wild when it's borrowing money.

Danno · 28-02-2021 2:58pm

We should borrow enough to bankroll this country for 100 years and default on the repayments. By the time we need to borrow again in 2121 the people we borrowed from will be dead and generations will have passed forgetting what the Irish did.

doublejobbing 2 · 28-02-2021 3:05pm

Danno wrote: »

We should borrow enough to bankroll this country for 100 years and default on the repayments. By the time we need to borrow again in 2121 the people we borrowed from will be dead and generations will have passed forgetting what the Irish did.

Agreed. This is now the second economic disaster in a decade where one of the core causes was EU Freedom of Movement rules.

fcuk them.

Donald Trump · 28-02-2021 4:00pm

doublejobbing 2 wrote: »

Agreed. This is now the second economic disaster in a decade where one of the core causes was EU Freedom of Movement rules.

fcuk them.

Well I think it's fair to say you haven't got a breeze of what you are talking about there fella.

Donald Trump · 28-02-2021 4:03pm

political analyst wrote: »

This is from last October.

https://www.rte.ie/news/politics/2020/1018/1172209-budget-debt-covid/

Even during this pandemic, I find it hard to believe that the ECB thinks it's feasible to let EU member states continue to borrow money cheaply.

The frustration that I, like many other people, have because of lockdown after lockdown makes me wish that the ECB would pull the rug from under us because that would force this government to think of better ways of containing the virus than lockdown until there is a significant number of people fully vaccinated.

You need to allocate around an extra million quid for each ICU bed you want to add to the system there boss.

That's a lot of 350 quids.

doc22 · 28-02-2021 5:18pm

The capital sum still has to be repaid and refinanced at unknown rates in the future. This talk of borrowing at near zero interest is over blown

Donald Trump · 28-02-2021 5:41pm

doc22 wrote: »

The capital sum still has to be repaid and refinanced at unknown rates in the future. This talk of borrowing at near zero interest is over blown

10 year negative yields on Irish sovereign issuances.

Diarmuid · 28-02-2021 5:42pm

Danno wrote: »

We should borrow enough to bankroll this country for 100 years and default on the repayments. By the time we need to borrow again in 2121 the people we borrowed from will be dead and generations will have passed forgetting what the Irish did.

This thread reads like the journal.ie

political analyst · 28-02-2021 6:24pm

doublejobbing 2 wrote: »

Agreed. This is now the second economic disaster in a decade where one of the core causes was EU Freedom of Movement rules.

fcuk them.

EU member states are allowed to suspend freedom of movement across borders in an emergency. France did so in the aftermath of the November 2015 terrorist attacks.

Beasty · 28-02-2021 7:51pm

I think that once this pandemic is over we will see a return to inflation (raw materials are already going up in price with supplies of timber and metal product starting to dry up - precious metals are also gong up in price). That in turn is likely to result in increasing interest rates - it may take a year or two to start filtering through.

The pandemic has shown that it's not really feasible to try and deal with such issues on a pan-EU basis and there may be significantly differing recoveries in different parts of the EU. The single market could cause further issues as well as a transfer of resources from the countries that have handled this well to some of those that have suffered most, causing some disquiet within certain member states. It's going to be a challenging few years and I'm not sure increasing government debt is going to help things.

We'll probably start seeing increases in taxation (with the UK Budget statement this week being a possible precursor to the sort of things we may well see across the EU). It will not only be to cover some of the direct costs of this pandemic, but also to bolter health systems that have struggled to handle all of this

And that's all before considering the impact of climate change and the costs of trying to redress some balance there

[Deleted User] · 28-02-2021 7:54pm

I read the thread title as ESB response. I had noticed far more power outages this year than at any time dice I moved in to current home almost 11 years ago

political analyst · 01-03-2021 12:01am

Donald Trump wrote: »

You need to allocate around an extra million quid for each ICU bed you want to add to the system there boss.

That's a lot of 350 quids.

How many people died because of the austerity brought about by the Troika in this country?

LuckyLloyd · 01-03-2021 1:00am

political analyst wrote: »

How many people died because of the austerity brought about by the Troika in this country?

So you want austerity or you don’t want austerity? The ECB approach to the crisis has been the opposite of austerity.

Geuze · 01-03-2021 1:28am

political analyst wrote: »

This is from last October.

https://www.rte.ie/news/politics/2020/1018/1172209-budget-debt-covid/

Even during this pandemic, I find it hard to believe that the ECB thinks it's feasible to let EU member states continue to borrow money cheaply.

The frustration that I, like many other people, have because of lockdown after lockdown makes me wish that the ECB would pull the rug from under us because that would force this government to think of better ways of containing the virus than lockdown until there is a significant number of people fully vaccinated.

Just to be clear, the ECB does not lend to States/Govts.

And it does not decide on how much they can/do borrow.

Donald Trump · 01-03-2021 2:33am

political analyst wrote: »

How many people died because of the austerity brought about by the Troika in this country?

Probably a lot less than if market forces had been allowed free reign and things reverted to survival of the fittest (so to speak).

political analyst · 02-03-2021 12:12am

LuckyLloyd wrote: »

So you want austerity or you don’t want austerity? The ECB approach to the crisis has been the opposite of austerity.

But the ECB's current approach is not without a catch - our government will have even more money to pay back in the future.

CruelSummer · 02-03-2021 12:49am

Not directly related to the ECB, but there’s talk starting on the US side of upcoming inflationary issues. They’ve printed so much money at this stage, and have used so many stimulus packages. There always needs to be a balance playing this game and I really hope central banks around the world are aware of the true volatility of the current situation...

ECB policy during the pandemic in relation to borrowing.

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