Michael Noonan - ''we should pay our way''. RTE radio one

Rabble Rabble wrote: »

WEll I was arguing against Seamas, who said the rich are not subsidised by the poor. I changed the goal posts on the definition of poor.

I agree with the way your looking at it. But I don't think that's how parties like Sinn Fein or the ULA are looking at it. People who I think are moderately well off they think are absurdly rich, and taking advantage of the "average man" and the "wurker."

squod wrote: »

How catastrophic. If a €100bn+ debt on a nation of ~1.2 million workers (and falling) isn't a catastrophe then I don't know what is. We can't possibly afford it. I doubt we could even afford a quarter of that debt.

I think over the next five years we'll make an attempt at paying it, the country will spiral further downwards, every multinational will leave and then we'll default, because in that situation, **** the EU, we're totally boned and they've thrown us a lead lifejacket with the EU/IMF intervention.

We'll be totally hosed as a nation though.

Snakeblood wrote: »

The problem is that's going to happen eventually anyway. We're expected to pay back 100 billion over many many years, by raising taxes. Our economy is in recession. We will earn less each year, be able to pay back less, the interest rates will make the amount we have to pay back larger. We can't pay the money back, it's impossible unless there's a radical change to prosperity when most evidence points to us losing any competitive advantage over other nations as a quid pro quo for the bailout.

That's why I think renegotiating the deal is important. And a mixture of Labour and FG's policies is the best position to do that from. Throwing out the IMF and rejecting the markets is just petulant. If we can make a case where by the plan isn't working, despite trying it, we can actually do something. That allows for things to change. Rejecting everything out of hand just guarantees failure.

Lets look at the facts;

1. We were being charged over 9% yields on government bonds before the bailout, the bailout money has an average interest rate of 5.8% - I know which one I would choose
2. We have an €18bn gap between our national income and expenditure (nothing to do with banks). With out the EU/IMF money we have nowhere else to get money so losing the bailout would mean we have to make an €18bn budget adjustment this year - imagine the damage that would do to the economy when you consider last years adjustment was only €6bn
3. Our banks cant get money elsewhere so the ECB has committed €160bn to Irish banks. Were we to default on senior bondholder debt, they would remove that funding thereby collapsing our entire banking system - no money in ATMs, all deposits wiped out, no payment of wages, businesses not able to access working capital, etc.

We have to pay the bondholders until the EU says otherwise. Without their money we would have to slash €18bn from the national budget and our banks would collapse, basically complete economic devastation within weeks. Like it or not, but they are the only people giving us money right now.

The EU/IMF are beginning to realise that we will not be able to repay our debts and there is a growing consensus that something will have to be done. The IMF want burden sharing with bondholders but the EU want to lower the interest rate (burning bondholders would cause further problems in other European countries). Something is going to have to give, but we cant make that decision on our own - pissing off all our major trading partners is not going to set us on the road to economic recovery.

Having listened to all the parties over the past few weeks I know Noonan is the guy I want to be doing the talking when we go back into negotiations (which will happen).

squod wrote: »

Who is suggesting that, RTE? The separation of debts has to happen. Like it or not. The vision you're painting of the utter destruction of the country is of course 100% bull-poo. No sane economist would endorse FF/FGs plan.

Where will we get the money to run the country from? What banks will operate here if the current ones are allowed to collapse? What will the indigenous businesses use for money?

squod wrote: »

These questions have already been answered. Either you are not listening or you do not want to hear.

The only thing you've said is a quote from an economist who seems to think we're still on the gold standard.
:rolleyes:

Probably been posted already but personally I think Michael Noonan is a cnut.

The money cannot be repaid. It is totally immoral to do so. and it is simply not there.

If the EU don't like it, let's see how they like a failed state on their doorstep. :cool:

Offer to sell a few islands off to the Chinese or Iranians for a few billion.

brianthebard wrote: »

Because the markets recognised the impossibility of the state guaranteeing the banks debts. Decouple the banks from the state and the interest rate will reduce.

Yes, the markets did see a danger with guaranteeing bank debt, and they saw the problems with the Eurozone in general. They also ratcheted up the interest on bonds when Merkel started making waves about haircuts.

10% interest on a loan of 20bn is a ****ton less than 5.8% interest on a loan for 100bn+. I know which one I would choose.

It's part of the deal that we don't let the banks go bust. Which means we need to recapitalise the banks, they need money to lend. Part of that is ensuring that the bank's obligations are maintained. (I'll have more on this though.)

Simply not true, we have cash in the economy, atms only run out of cash when there is a disorderly default which is what we will end up with if we don't take steps to do it right.

We wouldn't continue to receive the loans from the EFSF/EFSM/IMF if we reneged on the banks debts. The government can't raise enough domestically to cover budgetary expenditure (and I don't think they can slash the 15bn instantly.) There would be a run on the banks. They would run out of money.

The IMF wanted and gave lower interest rates, Angela Merkel wants bondholders to share the pain. Arseways again.

The IMF did give a lower interest rate, and they also want burden sharing. Merkel has nothing to do with this because she doesn't control the terms of the loan. (She will be important later.)

The ECB have already told FG that the interest rate is non-negotiable, what makes you think Noonan can change their minds? I'd prefer someone with a policy which hasn't already been proven to be a spoof.

There are more and more reports coming out from non-Irish sources that the interest rate is too high, it will change, eventually, but being petulant and rejecting the terms outright isn't the way to do it.




Now for the two things I said in brackets, about maintaining the banks debt and Merkel. I think, that for the moment we need the funding from our current sources. To outright reject the terms of the loan would be disasterous. When Merkel talked about haircuts there was a huge spike in the bond rates, so we can't rely on them if we were to renege on the banking debt. So for the moment, I think we have to go along with the deal as we have it.

However, Merkel and a lot of others have openly talked about rejecting the speculative debts that were incurred. And that's where we can change things. A united European front on a different method to deal with the banking debt would be a much stronger force. The markets would have less of an effect on the entire Eurozone. But that's not currently possible. We need the current Euroloans to be kept up while that happens. So no, I don't think we can burn the bondholders, which would be a rejection of the financing we're currently receiving. I do think it will happen in the future. Just not in the way the ULA and Sinn Fein are talking about it.

There were posts here asking about who is currently paying all the Income Tax.

There is always interesting stats in the documentation that accompanies the budget.

See Table on Page 22.

http://www.budget.gov.ie/budgets/2011/Documents/Part%20C%20-%20Annexes%20to%20SBM%20FINAL.pdf

37.9% of Workers pay no income tax
44% pay at the standard rate
18.1% pay at the higher rate of tax (402,000 people)

This stats show clearly that less than 20% of the workforce pay the vast majority of the income tax. (>90%)

Now if you pay tax at the higher rate then the ULA and Sinn Fein class you as wealthy or rich and want to tax you into obliteration.

Fine Gael at least want to freeze tax as much as possible and close the gap by cutting spending.