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1in4 chance of default in next 5 years

2»

Comments

  • #32
    ei.sdraob
    Closed Accounts Posts: 9,364 ✭✭✭ei.sdraob


    kbannon wrote: »
    Have you proof of these allegations? If so then head down to your local garda station with it!

    As was already mentioned moving millions around in the manner that was done would go against company law, there's plenty of regulation around directors loans. I am sure the Gardai are investigating this avenue among others but i do hope they have the expertise onboard to help


  • #33
    kevteljeur
    Registered Users, Registered Users 2 Posts: 1,287 ✭✭✭kevteljeur


    jmayo wrote: »
    Ah lets tax our way out of this mentality. :rolleyes:
    firstly you cannot tax your way out of a recession since increased taxes causes people to stop spending and businesses to close or go elsewhere.

    Secondly what grates with most of us is that our existing taxes, nevermind increaed ones, are being wasted on fruitless things like trying to save defunct insolvent financial institutions (Anglo & INBS) that were in all but name fraudently and corruptly run for the benefit of connected influential people.
    In most other western democracies the people that ran these banks into the ground would be facing charges of negligence and fraud.

    Well, my point was that if we collectively decide that we're not going to deal with it, whatever our solution is, then we'll default by definition. That can only end badly (how will the state pay for itself?). It's not an endorsement of one or other strategies, only that if the state works hard to avoid default (whether through tax, or by nationalising the huge offshore oilfields* and world-class butter industry*) then it's probably not going to happen, and be less of an issue of chance.

    jmayo wrote: »
    IMHO some of it is luck.
    It is like how sometimes something that comes out of left field can finish a government.
    The Euro is on a knife edge where each country owes so much to each other and most countries just don't have it.
    Spain, Portugal, Greece, Italy and Ireland are all shaky.

    Germany (and all the other countries including broke Ireland) are giving money to Greece, hoping Greece can pay back some of the money it owes other countries.

    IMHO it is like giving a gambler more money to gamble hoping he turns things around and can pay back his debts.

    An interesting one will be what happens when AIB needs it's next cash injection and it surely will.
    Than watch what happens to our credit rating.

    When NAMA eventually starts to chase their loans, they will have to take control of the dodgy assets, then there will be push to start offloading some property.
    They will start with foreign property, but once they try and offload the steaming pile of crud some of the Irish stuff is, we will discover we have lost more billions.
    Again our credit rating can take a hammering.

    Externally all it takes are things like a double dip in the states which could be on the cards despite the stimulus package announced by Obama or oil prices to increase dramitcally if things turn even more shaky in Middle East with say Israel bombing Iran.
    Then our borrowings go up and we can't cope anymore.

    This is what I was looking for; a good argument in favour of chance as a factor. Some of these are indeed unknown external factors which can cause an otherwise stable situation to become unmanageable.


    k



    * I'm not endorsing those as a strategy; but see here:
    http://www.boards.ie/vbulletin/showthread.php?t=2055313530
    http://www.boards.ie/vbulletin/showthread.php?t=2055316887
    Has to be seen to be believed.


  • #34
    maninasia
    Registered Users, Registered Users 2 Posts: 4,636 ✭✭✭maninasia


    Well put. For instance who could have predicted the Icelandic volcano would go off when it did? Anything could come in from leftfield, as the edifice is so weak at this point they are going to need lady luck to see it through. I'm fairly doubtful myself, the numbers are too big. The EU is supporting the whole thing at the moment..see how long the Germans are willing to support the Euro by proxy.


  • #35
    jmayo
    Registered Users, Registered Users 2 Posts: 13,227 ✭✭✭✭jmayo


    maninasia wrote: »
    Well put. For instance who could have predicted the Icelandic volcano would go off when it did? Anything could come in from leftfield, as the edifice is so weak at this point they are going to need lady luck to see it through. I'm fairly doubtful myself, the numbers are too big. The EU is supporting the whole thing at the moment..see how long the Germans are willing to support the Euro by proxy.

    I firmly believe the Euro will not work long term unless there is more cohesion across it's members.
    For the Euro to work Euro members need to become like US states.

    You cannot have some countries with good successful economies, with fiscal conservativism and fiscal responsible policies tied to the same currency that other very fiscally unresponsible states have.
    Greece and Ireland in particular have shown up the Eurozone as being flawed.

    The Germans, the Dutch, the French can't be happy that their currency, and thus their economic wellbeing, is tied to and at the mercy of the vagaries of some of their more irresponsible fellow Eurozone members.

    I am not allowed discuss …



  • #36
    Cavehill Red
    Registered Users, Registered Users 2 Posts: 6,109 ✭✭✭Cavehill Red


    kbannon wrote: »
    Have you proof of these allegations? If so then head down to your local garda station with it!

    Plenty of people have made submissions to the Gardai on this matter, including myself. The position of your local plod is they ain't touching it with a bargepole, never mind investigating or bringing a file to the DPP.
    There is, allegedly, an investigation into Anglo which has seen sweet FA achieved in over a year. It is my opinion that this functions as a smokescreen and mudguard, a protection against the allegation that nothing is being done. In reality, nothing IS being done.
    In the meantime, assets have been transferred overseas and into wives names, and in some cases they have transferred themselves permanently overseas too.
    The reality of the matter is that the culpable parties in the banking fiasco are so well got with the powers-that-be that they will never face charges in this country.


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  • #37
    ei.sdraob
    Closed Accounts Posts: 9,364 ✭✭✭ei.sdraob


    bumpy bumpy were up to 1in3 now :eek: despite all the positive spin from FF about being "mugged" at the last bond auction


    http://www.cmavision.com/market-data/#riskiest
    33% chance of default in next 5 years according to above


    or just over 50% in next 10 years according to Karl Wheelan over at irisheconomy.ie


    are there any bookies taking bets, for that matters which bookies will be still around after a default :D


  • #38
    hinault
    Registered Users, Registered Users 2 Posts: 5,932 ✭✭✭hinault


    kbannon wrote: »
    On what specific charge(s)?
    As much as I'd love to see them all hanging, I'm not sure if they have actually committed any crimes

    Artificially rigging the Anglo Irish share price, through share support buying scheme is illegal (see Guinness trial).

    Artificially inflating the reserves of your bank at year end is also illegal.

    failure to disclose loans made to directors in the yearend statutory reports.

    some examples.


  • #39
    ei.sdraob
    Closed Accounts Posts: 9,364 ✭✭✭ei.sdraob


    hinault wrote: »
    Artificially rigging the Anglo Irish share price, through share support buying scheme is illegal (see Guinness trial).

    Artificially inflating the reserves of your bank at year end is also illegal.

    failure to disclose loans made to directors in the yearend statutory reports.

    some examples.

    I seriously hope Revenue launch an audit into his wife as well

    http://www.independent.ie/national-news/courts/fitzpatrick-owes-euro40000-to-his-wife-2347710.html


  • #40
    hinault
    Registered Users, Registered Users 2 Posts: 5,932 ✭✭✭hinault


    The only Irish banker who did jail time that I know of is Patrick Gallagher.

    And even then Gallagher only did time because the Northern Ireland police force and British DPP took action in the Merchant Banking scandal.

    He was never charged in this country.



    Which begs the question................................


  • #41
    Colonel Sanders
    Closed Accounts Posts: 7,669 ✭✭✭Colonel Sanders


    Implied Default Rates curtosy of the Irish Economy blog:
    Today’s bond auction has attracted a lot of media attention. However, quite a lot of the comment has been a bit confused. Let me set out the usual framework that economists use to think about bond yields. Our more financially sophisticated readers know this stuff anyway but it’s still worth briefly spelling out.

    Consider an investor who has two options for their investment.

    Option A is to purchase a risk-free bond which carries an interest rate of RF.

    Option B is to purchase a bond with potential default risk. This bond delivers two possible outcomes. The first outcome occurs with probability p and in this case, the bond is defaulted on and the investor only recovers a percentage c of their original investment. The second outcome B occurs with probability 1-p and in this case the bond delivers the promised interest rate of RR and also repays the principal.

    (Weighted) averaging over these two outcomes, the expected return from option B is

    p(c-1) + (1-p) RR

    Now assume that investors are risk-neutral, meaning they will pick the bond with the highest average return (and won’t shy away from option B just because it carries some uncertainty).

    In this case, for investors to be willing to purchase both bonds, they must have the same average expected return. Setting the above return for option B equal to RF and re-arranging, this determines the interest rate on the risky bond as

    RR = RF / (1-p) + p (1-c)

    If one knows what the “recovery rate” parameter c is, then one can also back out the implied probability of default as

    p = (RR – RF ) / (1 –c + RR)

    Now to our current situation. As of this evening, the FT is reporting yields on ten-year Irish bond at annualised rates were 6.3% while the comparable German bond was yielding 2.46%. Let’s use 0.5 as the implied recovery rate should Ireland default. Now plug in RR = .063, RF = .0246, C = 0.5

    p = (0.0630 – 0.0246) / .563 = .0682

    Implies a default probability of 29.8% over 5 years


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  • #42
    johnnyskeleton
    Moderators, Entertainment Moderators, Politics Moderators Posts: 14,568 Mod ✭✭✭✭johnnyskeleton


    Colonel Sanders wrote: »
    Implied Default Rates curtosy of the Irish Economy blog:



    Implies a default probability of 29.8% over 5 years

    Germany is not entirely risk free and has an estimated CPD of c. 3%. Hence the 33% risk of default for Ireland I suppose.


  • #43
    ei.sdraob
    Closed Accounts Posts: 9,364 ✭✭✭ei.sdraob


    somewhat related
    Ireland Debt Swaps at Record High as Allied Signals 62% Chance of Default

    The cost of insuring Irish sovereign debt surged to a record as credit-default swaps on Allied Irish Banks Plc subordinated debt signaled a 62 percent probability of default within five years.

    Contracts insuring 10 million euros ($14 million) of Allied Irish’s junior bonds cost about 3.25 million euros upfront and 500,000 euros annually, according to data provider CMA. That’s up from 400,000 euros a year in April. Swaps on the government’s debt jumped 27 basis points to 545.

    http://www.bloomberg.com/news/2010-11-03/ireland-swaps-rise-to-record-as-allied-irish-signals-60-chance-of-default.html


  • #44
    sollar
    Closed Accounts Posts: 2,007 ✭✭✭sollar


    MrDarcy wrote: »
    The reason we are going to default in this country is because the cost of running the public sector is too high and there isn't enough money coming in through tax revenue from the private sector. There are reasons why we are paying too much to run the public sector and why we have a private sector that has already defaulted, and for the avoidance of doubt, these reasons are very much "on topic" in relation to the thread title! :rolleyes:

    Does the 50 billion bank bailout or 21 billion social welfare costs not figure in your calculations.

    Yes private sector tax intake has collapsed and is one major reason we are near default. The cost of our public services are a little to high but it is far from the reason we may default. It would be fairly affordable if we were near full employment again and tax take was at normal levels for an economy at full employment.


  • #45
    ei.sdraob
    Closed Accounts Posts: 9,364 ✭✭✭ei.sdraob


    sollar wrote: »
    Does the 50 billion bank bailout or 21 billion social welfare costs not figure in your calculations.

    Yes private sector tax intake has collapsed and is one major reason we are near default. The cost of our public services are a little to high but it is far from the reason we may default. It would be fairly affordable if we were near full employment again and tax take was at normal levels for an economy at full employment.

    Right so lads, lets build more houses and start selling/flipping them to each other. It worked great before :(


  • #46
    sollar
    Closed Accounts Posts: 2,007 ✭✭✭sollar


    ei.sdraob wrote: »
    Right so lads, lets build more houses and start selling/flipping them to each other. It worked great before :(

    Who mentioned building more houses and flipping them? Is that what the mention of full employment stirs in the irish imagination.


  • #47
    sollar
    Closed Accounts Posts: 2,007 ✭✭✭sollar


    Does anyone know if the figure quoted last night by the economists on primetime was the gross public sector pay or net. They quoted 17.3 billion i think.


  • #48
    ei.sdraob
    Closed Accounts Posts: 9,364 ✭✭✭ei.sdraob


    sollar wrote: »
    Who mentioned building more houses and flipping them? Is that what the mention of full employment stirs in the irish imagination.

    And how do you propose we get to full employment again?


    Anyways your thesis in previous post is wrong, it wasnt the tax take from income taxes that made the income during the bubble, but once off stamp duty and capital gains.


    Go check the breakdown of taxation during the bubble, theres a graphs threads here some where which illustrates it nicely


    edit: here

    oimg?key=0AoEU1Fq8-r6_cHpjc0NMRnZVUkxXTzVkU1dqTzJrYmc&oid=4&v=1263459114294


  • #49
    sollar
    Closed Accounts Posts: 2,007 ✭✭✭sollar


    ei.sdraob wrote: »
    And how do you propose we get to full employment again?

    Anyways your thesis in previous post is wrong, it wasnt the tax take from income taxes that made the income during the bubble, but once off stamp duty and capital gains.

    I agree that we were way off line with our method of generating revenues and taxes.

    We'll need all areas of the private sector growing to get near full employment and part of that will be a healthy/normal level of building activity. Unfortunately we are a long long way off that.

    Interesting graph there too. VAT is down a good bit too.


  • #50
    ei.sdraob
    Closed Accounts Posts: 9,364 ✭✭✭ei.sdraob


    woot, were up to 40% now (Greece is at 50%)
    how have things deteriorated since this thread started :(

    14tc2o1.png


  • #51
    Nody
    Moderators, Category Moderators, Arts Moderators, Business & Finance Moderators, Entertainment Moderators, Society & Culture Moderators Posts: 18,559 CMod ✭✭✭✭Nody


    ei.sdraob wrote: »
    woot, were up to 40% now (Greece is at 50%)
    how have things deteriorated since this thread started :(
    Don't worry, the lads in government knows what they are doing :pac:


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