The "Bailout" That Is In Actual Fact A High-Interest Loan, Not Free Money.

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Originally Posted by dancinpants

I read that the reports also said "that 45% of Irish taxpayers paid no income tax this year". How is that possible?

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The very low paid didn't enter the tax net, and the very highly paid avoided it (the very high earners tend to have a low effective tax rate compared to PAYE workers).

I haven't had a chance to read the document yet. I was expecting the change to pension tax reliefs to be in it - I think I flagged it on here a few weeks ago as effectively a pay cut on the public sector - but didn't realise it went further for the public sector. Despite the hype, some public servants would be better with the standard contributory pension, so that'd be a tough hit. Edit - Dodge, can you give the page for what you said earlier, as I can only find about the general reduction of pension reliefs to standard rate, and how much extra in pension levy because of that rather than a specific change for the public sector having no relief?

Listen, I don't think we can be too concerned with this. It's all waffle and it won't be implemented by this crowd of knobends.
FG and Labour will revisit it and ensure we won't go to the great country heaven in the sky.

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Originally Posted by dancinpants

I read that the reports also said "that 45% of Irish taxpayers paid no income tax this year". How is that possible?

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They include a huge percentage of people who work part time, seasonally etc etc

MAcy, i think I may have taken it up wrong earlier...

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Originally Posted by Dodge

MAcy, i think I may have taken it up wrong earlier...

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I think the PRSI and Health Levy changes are off the gross now - for anyone paying a pension, but public sector have no choice but to join the pension and also have the pension levy. If you do a lot of overtime or are acting up (niether of which count for pension entitlement), you'll be paying way over the odds for your pension.

Apparently we are going to be charged 6.7%.
http://www.rte.ie/news/2010/1126/economy_bailout.html

INSANITY!

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Originally Posted by BonnieShels

Apparently we are going to be charged 6.7%.
http://www.rte.ie/news/2010/1126/economy_bailout.html

INSANITY!

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Saw that on the 9 oclock news. Far more than predicted.

If it is true there is an even stronger case for a partial default on bank bonds to save us from complete ruin.

I think its media spin, so when they announce it as 5%, it will appear like a moral victory even though it is still unsustainable.

I have a feeling that banks will be allowed to default and that Ireland will leave (forced out) the Euro and set up a new punt that will be devalued by around 50%.

If that comes to pass then there is absolutely no point in all of this. We have a default window now and we need to take it.

The interest rate doesn't matter. Spain can't be bailed out, so it'll have to default. We need to default now, otherwise we're going to look like even bigger simpletons in a few weeks..

Negotiations over the % rate are, at best, merely negotiations about how long Ireland spends on economic death row.

http://www.bgcpartners.com/news-cent...108955249.html

Irish taxpayers must pay the bill for the banking crisis, and not foreign investors, Dan McLaughlin (chief economist) from Bank of Ireland has said.
"The difference (between Ireland and the UK) is that we are tiny, and as a result 85% of the government deficit is funded from abroad.
"So taxpayers will have to pick up the bill for everything, it is hard to disagree with that," he said.

Quite so, outstanding logic indeed, Dan is the man our times.

I have a question. If "we don't have to go back to the bond markets until March", why the rush to sign loan agreements?

According to the Irish Times, the deal could face a constitutional challenge, which would lead to a Dáil vote or even a referendum:
SINN FÉIN has taken legal advice on the constitutional status of the Government’s agreement with the European Union and the International Monetary Fund.
Party vice president Mary Lou McDonald said it had taken “initial legal advice on this matter” last Thursday.
She said the joint programme bailout “certainly offends the spirit” of Article 29 of Bunreacht na hÉireann which prevents the State from entering an international agreement involving a charge on public funds unless it is first approved by the Dáil. But she added: “We actually need to see the document, we need to see the Memorandum of Understanding . . . before you could take any kind of definitive legal view on it.” Pat Rabbitte is also considering going down the legal route.

Nice synopsis of what the world thinks of us here:

http://www.nytimes.com/2010/11/26/op...NytimesKrugman

NY Times also had this graph showing the debt of the IMF/IMF threatened countries.

http://blog.prospect.org/blog/weblog/Europe_Debt.jpg
How on earth do we owe almost as much as Spain and Italy?!

" Italy owes the French an equivalent of 20% of GDP"

If ever there was a sentence which shows the bond holders need to share the pain in all of this, then there it is. I mean who would continue to lend to someone who owes them so much money ? Should they not have stopped at 50 billion or 100 billion etc etc.

Actually, our debt there possibly includes the bank guarantee, which other countries therefore didn't go with?

And I suppose if that's the case, then following on from Real ale's point about the French exposure, are we at a situation where actually, we're not that unique at all, but where a good chunk of the Western world is struggling (adding in bank bail-outs in America and England, for example, not to mention other issues like car sales plummeting)? Is free-market capitalism imploding in on itself under the weight of greed and self-interest (sadly two of mankind's more base instincts)? Or is that still a little bit too tabloidy?

I think that unless we see some major mechanism of debt forgiveness soon, not just in Ireland but in Greece, Spain and Italy - then eventually everyone will just default anyway - one by one. I don't think anyone knows what the consequences of that are. Debt forgiveness iss one of the principles of free market capitalism ( so im told ! ). We certainly can't afford to pay what's being proposed, Greece are being told to pull thier socks up, I'm not sure of Italy's and Spain's potential to generate the nessesary income's to pay back any potential "bailouts" in the future, but a trend is developing and its starting to snowball. What next ?

That NYT graph is about bank external debt not sovereign debt, yet they put names on the debt as if the debt belongs to a country - Italy's debt or Spain's debt. In Europe they try to apply ownership of the external bank debt, to the country. Even Stu asked "how do we owe almost as much as Spain or Italy?
Bank external debt is not sovereign debt.
Ireland chose a total surrender of their strong negotiating position to an enemy force who only had to throw a few hissy fits. Ireland chose to transform the Bank external debt into sovereign debt. The military farce that was the surrender of Singapore in WW2, pales into comparison.

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Originally Posted by geysir

That NYT graph is about bank external debt not sovereign debt, yet they put names on the debt as if the debt belongs to a country - Italy's debt or Spain's debt. .....
Bank external debt is not sovereign debt..... Ireland chose to transform the Bank external debt into sovereign debt.

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I was thinking the same thing - if no other country has given the bank guarantee Ireland did, then the vast majority of the debt in that graph is actually debt owed by banks, is that right? It would be more accurate to say that Italy's banks owe French banks/institutions $511 billion. I'm assuming that Italy's sovereign debt isn't $1.4 trillion.

Though when you consider it is quite common (how many exceptions are there?) that governments take over the debt of one of their failing banks, maybe there isn't much of a practical difference.