The "Recovery Bond"

tonys wrote:

Auditor #9 wrote:

coc wrote:

cactus flower wrote:

The ICTU 10 Point Plan here - not a lot to it, by the looks of it:

http://www.ino.ie/Attachment.aspx?nAttID=2303

Is the National Recovery Bond not a good idea?

Begg selling it now. He's doing a good job too.

Will it be very transparent though ? The banks need to be bypassed at this stage.

The difficulty with a national bond could be that it would cause a problem for the banks as that's where most of the money would come from and if it caused a serious cash flow problem the Government could end up having to lend it back to the banks again. I like the idea of a national bond and I'm sure it would be well supported, but where's the cash going to come from in a way that doesn't hurt the banks ability to lend?

Ok - I haven't read anything on that link but I'm imagining this Bond will literally be asking the irish people to foot the bill for infrastructure or anything else potentially with a certain return - 3% or 4% or more - I don't know but that money would have to be left in the banks for a little while - a few years.

If this is done through a bank and if it gains some measure of success then it will make that bank look healthy so that bank may be able to borrow on international markets a lot more easily once there is a good capital base and enough money going in and out frequently enough. I think Irish people would understand this plus they'd have a measure of ownership of it which is quite important from my point of view for recovery and indeed health. In essence it would be a national bank account.

I don't see where you'd think there might be cashflow that the Government might need to supplement ... so what if it did - the cash would be for a piece of national infrastructure or the IDA and research and job creation or for education anyway ... Where do you see the problems with cashflow exactly ?

Auditor #9 wrote:

Where do you see the problems with cashflow exactly ?

That people would invest their money in the bond rather than the banks, presumably. I'm not sure how true it is though because people invest in all sorts of things.

johnfás wrote:

Auditor #9 wrote:

Where do you see the problems with cashflow exactly ?

That people would invest their money in the bond rather than the banks, presumably. I'm not sure how true it is though because people invest in all sorts of things.

I'm sure this will all have to be done via one or more banks ... the country would have a big account in one or more of those banks so wouldn't it be the case that there would now be plenty of capital on the bank's balance sheets albeit not Tier 1 or whatever that primary capital is called that banks need.

The national account would be fully transparent, the people would have an interest in knowing how it's used and the bank would have an interest in preserving it or they'd be in the shite i.e. they might return to lending and borrowing that would be some way sane.

Maybe that's not how it would work though but it seems as if it could make everyone happier. Sure, commercial banks might experience a dry-up of capital for a while but maybe not either - private capital often depends ultimately on public infrastructure, education and personnel. And public services tend to rely on private tax.

Sounds like it could be a good symbiosis if executed properly.

Auditor #9 wrote:

tonys wrote:

Auditor #9 wrote:

coc wrote:

cactus flower wrote:

The ICTU 10 Point Plan here - not a lot to it, by the looks of it:

http://www.ino.ie/Attachment.aspx?nAttID=2303

Is the National Recovery Bond not a good idea?

Begg selling it now. He's doing a good job too.

Will it be very transparent though ? The banks need to be bypassed at this stage.

The difficulty with a national bond could be that it would cause a problem for the banks as that's where most of the money would come from and if it caused a serious cash flow problem the Government could end up having to lend it back to the banks again. I like the idea of a national bond and I'm sure it would be well supported, but where's the cash going to come from in a way that doesn't hurt the banks ability to lend?

Ok - I haven't read anything on that link but I'm imagining this Bond will literally be asking the irish people to foot the bill for infrastructure or anything else potentially with a certain return - 3% or 4% or more - I don't know but that money would have to be left in the banks for a little while - a few years.

If this is done through a bank and if it gains some measure of success then it will make that bank look healthy so that bank may be able to borrow on international markets a lot more easily once there is a good capital base and enough money going in and out frequently enough. I think Irish people would understand this plus they'd have a measure of ownership of it which is quite important from my point of view for recovery and indeed health. In essence it would be a national bank account.

I don't see where you'd think there might be cashflow that the Government might need to supplement ... so what if it did - the cash would be for a piece of national infrastructure or the IDA and research and job creation or for education anyway ... Where do you see the problems with cashflow exactly ?

The cash that people would use to buy the bond is, mostly, already in the banks, it would have to be withdrawn from the banks and given to the Government in exchange for the bonds. At that point the Government presumably uses the money to finance it's spending, money it would normally raise from foreign investors through a bond issue. The Government gets whatever it gets for the money, but the banks, in cash flow terms, are out of pocket and depending on the amount involved may come calling, in which case it would be a waste of time & effort.
If the banks can stand the outflow it's a good idea, if not it could still make a contribution as whatever interest would be paid on the bond would come to Irish people, in turn spent or invested or saved, rather than the interest going to foreign investors and out of the economy.

Sweepstakes, anyone?

tonys wrote:

Auditor #9 wrote:

tonys wrote:

Auditor #9 wrote:

coc wrote:

cactus flower wrote:

The ICTU 10 Point Plan here - not a lot to it, by the looks of it:

http://www.ino.ie/Attachment.aspx?nAttID=2303

Is the National Recovery Bond not a good idea?

Begg selling it now. He's doing a good job too.

Will it be very transparent though ? The banks need to be bypassed at this stage.

The difficulty with a national bond could be that it would cause a problem for the banks as that's where most of the money would come from and if it caused a serious cash flow problem the Government could end up having to lend it back to the banks again. I like the idea of a national bond and I'm sure it would be well supported, but where's the cash going to come from in a way that doesn't hurt the banks ability to lend?

Ok - I haven't read anything on that link but I'm imagining this Bond will literally be asking the irish people to foot the bill for infrastructure or anything else potentially with a certain return - 3% or 4% or more - I don't know but that money would have to be left in the banks for a little while - a few years.

If this is done through a bank and if it gains some measure of success then it will make that bank look healthy so that bank may be able to borrow on international markets a lot more easily once there is a good capital base and enough money going in and out frequently enough. I think Irish people would understand this plus they'd have a measure of ownership of it which is quite important from my point of view for recovery and indeed health. In essence it would be a national bank account.

I don't see where you'd think there might be cashflow that the Government might need to supplement ... so what if it did - the cash would be for a piece of national infrastructure or the IDA and research and job creation or for education anyway ... Where do you see the problems with cashflow exactly ?

The cash that people would use to buy the bond is, mostly, already in the banks, it would have to be withdrawn from the banks and given to the Government in exchange for the bonds. At that point the Government presumably uses the money to finance it's spending, money it would normally raise from foreign investors through a bond issue. The Government gets whatever it gets for the money, but the banks, in cash flow terms, are out of pocket and depending on the amount involved may come calling, in which case it would be a waste of time & effort.
If the banks can stand the outflow it's a good idea, if not it could still make a contribution as whatever interest would be paid on the bond would come to Irish people, in turn spent or invested or saved, rather than the interest going to foreign investors and out of the economy.

Can we not estimate what the interest would be going to foreign debt first and issue a National Bond to this quanitity only for a start. Switching over radically to a whole new system all of a sudden is a bit mental anyway so couldn't it not be built up over time.

Projects that result would be published in the papers and so on. It'd be great - just like the lotto.

I'm not convinced this can't be done.

Auditor #9 wrote:

Can we not estimate what the interest would be going to foreign debt first and issue a National Bond to this quanitity only for a start. Switching over radically to a whole new system all of a sudden is a bit mental anyway so couldn't it not be built up over time.

Projects that result would be published in the papers and so on. It'd be great - just like the lotto.

I'm not convinced this can't be done.

It can be done, I've no doubt of it, but equally it's not as straight forward a win win situation as it first appears.

tonys wrote:

Auditor #9 wrote:

Can we not estimate what the interest would be going to foreign debt first and issue a National Bond to this quanitity only for a start. Switching over radically to a whole new system all of a sudden is a bit mental anyway so couldn't it not be built up over time.

Projects that result would be published in the papers and so on. It'd be great - just like the lotto.

I'm not convinced this can't be done.

It can be done, I've no doubt of it, but equally it's not as straight forward a win win situation as it first appears.

The electricity grid is infinitely more complicated and works well - the Bond thing could not only work but could be voted on as to what it gets used for - buy Eircom back for example.

Is there another country with such a model does anyone know ?

Auditor #9 wrote:

tonys wrote:

Auditor #9 wrote:

Can we not estimate what the interest would be going to foreign debt first and issue a National Bond to this quanitity only for a start. Switching over radically to a whole new system all of a sudden is a bit mental anyway so couldn't it not be built up over time.

Projects that result would be published in the papers and so on. It'd be great - just like the lotto.

I'm not convinced this can't be done.

It can be done, I've no doubt of it, but equally it's not as straight forward a win win situation as it first appears.

The electricity grid is infinitely more complicated and works well - the Bond thing could not only work but could be voted on as to what it gets used for - buy Eircom back for example.

Is there another country with such a model does anyone know ?

Well now, there you go, taking a possibly good idea and fucking it up by wanting a vote on it. If you want to end up with a camel don’t start off by buying a horse.

Split from the Questions and Answers thread - might make a good topic of discussion on its own.