Irish Economy and Budget Watch / / /Emergency Budget Announced for April 7th

Motivation Weight Loss also announced 500 odd new jobs and IKEA has announced 500 jobs for the summer. Problem with the IKEA one is it will also reduce jobs in the industry as well as presumably havin a knock on effect on Irish furniture manufacturers.

Did you see Ingrid Miley on the news at nine? She was talking about deferring pay deals etc. and trying to spare €2bn a year.

We will be borrowing €20bn this year - that's €55m INTEREST per day. If David Begg and Turlough O'Sullivan convince all their ... people to take a pay cut or to defer the pay rise then that borrowing requirement will be reduced by 2bn down to 18bn, with an interest payment of €50million.


These men could save the country ~€2bn next year IN INTEREST

Auditor #9 wrote:

Did you see Ingrid Miley on the news at nine? She was talking about deferring pay deals etc. and trying to spare €2bn a year.

We will be borrowing €20bn this year - that's €55m INTEREST per day. If David Begg and Turlough O'Sullivan convince all their ... people to take a pay cut or to defer the pay rise then that borrowing requirement will be reduced by 2bn down to 18bn, with an interest payment of €50million.


These men could save the country ~€2bn next year IN INTEREST

I think your sums may have gone astray there.

tonys wrote:

Auditor #9 wrote:

Did you see Ingrid Miley on the news at nine? She was talking about deferring pay deals etc. and trying to spare €2bn a year.

We will be borrowing €20bn this year - that's €55m INTEREST per day. If David Begg and Turlough O'Sullivan convince all their ... people to take a pay cut or to defer the pay rise then that borrowing requirement will be reduced by 2bn down to 18bn, with an interest payment of €50million.


These men could save the country ~€2bn next year IN INTEREST

I think your sums may have gone astray there.

Oh? 5m per day is 1825m per year - isn't that right? - ~2bn.

The 5m per day would be saved if the govt. had to borrow 2bn less because the interest payable wouldn't be 55m it would only be 50m.

Jesus, are we borrowing 20bn and paying back 40bn including interest ?? Mother of Jaysus.

Telll me where I went wrong please so.

I can't help thinking we may need to save more than 2 bn......they should scrap the PRSI ceiling, sure we were all prepared for this in the autumn

expat girl wrote:

I can't help thinking we may need to save more than 2 bn......they should scrap the PRSI ceiling, sure we were all prepared for this in the autumn

Were we? Seemed to me most people didn't have a clue how deep we were in it at Budget time last year. It seems to me that many still don't.

Government's procrastination has undoubtedly eroded the sense of urgency that was building up last summer.

I think there's a sense of urgency now allright. Most of the reasonably well off are prepared to pay more taxes, I have NO idea why they aren't considering this option. Especially as a lot of these people's disposable income is going to Newry right now. I got my p60 last week and I worked out that, in childcare benefits and mortgage income relief, I have gotten back from the Govt roughly what they took from me in income tax. I am, just, a higher rate tax payer..... this is RIDICULOUS!!! Especially at this time of crisis.

The whole system seems to have evolved such that the maximum disposable income could go into property and spending, such that the Govt presumably retrieved a lot of the money in stamp duties. However, costs have, at least temporarily, gone down, for those in employment, other than the worry over losing jobs, they're better off than they were....

Someone I knew was talking to an accountant working for the very wealthy; they were braced for the PRSI ceiling to go in October, and it never did. Had they done that instead of the cards for over 70s morass, the Govt would have more credibility AND more money

Which tells us a lot about this Government.

cactus flower wrote:

Which tells us a lot about this Government.

And, maybe, even more about the Opposition. Or lack of it, at the time. I seem to remember Pat Rabbitte recommending even more spending at the height of the boom....all parties competing to hand out the goodies before the 2007 election.

Our only saving grace is that they went into this with low debt. It gives us two years to sort this mess

On the plus side, once properties maybe lose another maybe 10-20%, and interest rates another 1%, it is possible that we may get a slightly increased trading volume on properties, which means better tax returns. Maybe by next January??? The market is utterly frozen at the moment. Does anyone know what stamp duty revenues were in 2000-2003?? Perhaps that would be a good way to estimate what the tax take could return to?? Level asset prices would also gradually halt the bank crisis, too. In the Irish case, the toxic assets may be worth something again??

Auditor #9 wrote:

tonys wrote:

Auditor #9 wrote:

Did you see Ingrid Miley on the news at nine? She was talking about deferring pay deals etc. and trying to spare €2bn a year.

We will be borrowing €20bn this year - that's €55m INTEREST per day. If David Begg and Turlough O'Sullivan convince all their ... people to take a pay cut or to defer the pay rise then that borrowing requirement will be reduced by 2bn down to 18bn, with an interest payment of €50million.


These men could save the country ~€2bn next year IN INTEREST

I think your sums may have gone astray there.

Oh? 5m per day is 1825m per year - isn't that right? - ~2bn.

The 5m per day would be saved if the govt. had to borrow 2bn less because the interest payable wouldn't be 55m it would only be 50m.

Jesus, are we borrowing 20bn and paying back 40bn including interest ?? Mother of Jaysus.

Telll me where I went wrong please so.

As I work it out interest per day on 20 billion would be about 2.5 million not 55 million

tonys wrote:

Auditor #9 wrote:

tonys wrote:

Auditor #9 wrote:

Did you see Ingrid Miley on the news at nine? She was talking about deferring pay deals etc. and trying to spare €2bn a year.

We will be borrowing €20bn this year - that's €55m INTEREST per day. If David Begg and Turlough O'Sullivan convince all their ... people to take a pay cut or to defer the pay rise then that borrowing requirement will be reduced by 2bn down to 18bn, with an interest payment of €50million.


These men could save the country ~€2bn next year IN INTEREST

I think your sums may have gone astray there.

Oh? 5m per day is 1825m per year - isn't that right? - ~2bn.

The 5m per day would be saved if the govt. had to borrow 2bn less because the interest payable wouldn't be 55m it would only be 50m.

Jesus, are we borrowing 20bn and paying back 40bn including interest ?? Mother of Jaysus.

Telll me where I went wrong please so.

As I work it out interest per day on 20 billion would be about 2.5 million not 55 million

I just got that as well - Ingrid Miley - what was she talking about ?

4.7% of 20,000,000,000 / 365

Well spotted. I don't normally work in such large haushalt-sized figures.

The figure of 55 million a day refers to the deficit the government is running at the moment. It has nothing what so ever to do with interest rates.

So 55 multiplied by 365 days is 20 billion. Which they reckon they can borrow this year to make ends meet

That's it dan. I'd swear she said it was 55 million interest per day though.

At least it isn't interest anyhow and is instead money that will be money well spent

We've a dwindling chance to shet our git together now because that interest at 4.7% went up to 6% last week. We could borrow or "issue bonds" and take that hit but then it'd probably launch up to 9%. We'd be working for interest nearly at that point, and if we were successful they'd hoist it up further, the bond marketeers.

We'd be a country with a subprime mortgage by 2011

Watching RTE would confuse anybody. I watched a clip of Charley Bird report from Washington and he pronounced Washington Mall not as MAUL but MAL an in maladjusted. I hope they don't pay that fool whoever he is but it would not surprise me if he was a big reporter.

I also watched Miriam O Callaghan interviewing Lenahan. She should get his job as she fully understood the subject matter and Burton had little clue and Lenahan had no clue.

She clearly asked Lenahan about the anglo bondholders and he thought she was talking about those who got loans from anglo.

That is sad.

Can you link that Audi because to begin with the interest was 4.07 and it would be higher but not 6% I would guess.

I did say they did well to grab 6 billion at that price and they would look very smart as time went on.

That's a fitting description of Miriam I have to say.

Here you go on the cost of the debt - we had our debt insurance readjusted I saw on Bloomberg, other than that the link below is from the Tribune yesterday.

Quote :

Foreigners lending to Ireland now demand a huge 6%, up from 4.7% the previous week.

That's within a whisker of the rate Greece pays, and is much more than the 4.7% rate paid by Italy, one of the most indebted countries in the world. Irish bond rates last matched these levels in 1999 but have not soared by such a large amount since the currency crisis of the early 1990s.

Every 1% rise in interest rates can add about €1bn to the cost of servicing the €90bn government debt.

In a revised budget submitted to Brussels this month, the government estimated the interest rate on government debt would average 5.3% this year.

http://www.tribune.ie/business/news/article/2009/jan/25/growth-in-cost-of-irish-debt-is-the-biggest-for-a-/

Thanks Audi. I explained elsewhere how interest rates change.

That change is just startling. The market is accepting my view that default is approaching

youngdan wrote:

Thanks Audi. I explained elsewhere how interest rates change.

That change is just startling. The market is accepting my view that default is approaching

Really - is that such a dramatic change? It's dramatic in the context of the nationalisation of a bank and in the space of one week too. Bizarrely during the last few days on Bloomberg there was some quick reporting on the bond prices and some graphs of the change in the cost of debt of the UK, Spain, Portugal etc. When it was Ireland's turn he said there was little risk of sovereign default but the graph behind the guys head was actually of Iceland! Was it the UK version of Bloomberg?? Was that a sneaky bit of economic terrorism or a genuine mistake?

I suppose we'll know soon what such a default means soon then?? Can you tell us what to expect ?? Higher interest again I suppose.

It is a big change and let me say what it means for the lads that bought the bonds on day one. I will use round figures. On day one Ireland sold the 6 billion at a interest rate of 4.08%. For the sake of argument 1 lad bought the whole lot. He sells them next day to someone else who sells them again etc etc. So today we are told that the bond yield 6%

The cash paid in interest on day one by the Irish government was 4% was 240 million a year. This figure is constant. Therefore at 6% the 240 a year means that the bond is worth only 4 billion.

That is a lad can buy it today for 4 billion and because the cash paid by the Irish goverment 240 million a year the interest rate is 6%.

This says that the buyers have lost a third of their money or 2 billion dollars in a 3 weeks. This is such a dramatic loss that I did not believe it and still suspect that those figures are wrong or I am wrong or something is wrong.

Looking on the bright side of a dark situation one could say the Irish saved 2 billion by getting it done 3 weeks ago.


I still can't believe this and may check later.

Breaking Bad News. Anyone not really dying to see what the unemployment figures for next week/week after will be? 310,000 ??

http://www.breakingnews.ie/ireland/mhsngbidauey/

Quote :

29/01/2009 - 11:31:37
The Central Bank today warned the economy will contract by an alarming 4% this year.

As talks begin in earnest on saving €2bn in public spending, Governor John Hurley urged unions and employers to strike a deal to bring stability to the country’s finances.

“To support a return to more stable economic activity in the medium term, difficult decisions have to be taken and implemented now,” he said.

The Governor called on the social partners to take account of falling inflation, the dire state of the public finances and the potential for tax reform.

“While this will require painful choices, that will result in a short-term decline in living standards, it is also important that the measures taken are equitable and that the community as a whole benefits from this over the medium-term,” he said.

“With the right approach now we have the potential to grow solidly again.”

The Central Bank’s first bulletin of the year forecasts,

:: Gross Domestic Product, measuring all output in Ireland, to contract by 4%

:: Gross National Product, measuring homegrown output, to contract by 4.7%

:: Inflation will turn to deflation with the cost of living dropping by 1.9%

:: Unemployment will hit 9.4%

:: The state coffers will be €9.5bn euro in the red

:: Oil should fall to 51 a barrel

:: House building will fall to just 22,000 units

The report warned that the state no longer has the resources to fund the public sector wage bill and workers need to be realistic about wages.

Social partners have agreed a framework to open detailed talks on saving €2bn in public spending this year alone. Employers’ federation Ibec and trade union leaders from Congress will have intense negotiations over the next three or four days as the Government seeks to table a solution before next the next cabinet meeting next Tuesday.

The Central Bank’s forecast looked forward to 2010 suggesting the global economy could see a moderate recovery as activity stabilises and the recession levels off.

However, officials warned an improvement is not inevitable and requires sound economic management.

The bank’s January bulletin said the framework agreement will provide for continued infrastructural investment, promoting R&D, active labour market strategies and a focus on renewable energy.

9% already, do you think? These figures don't count people put on short time either.

IT: Cowen warns of 'financial storm' facing Ireland

Speaking during a Dáil debate on the economy this morning, the Taoiseach warned that the world was facing the most difficult economic conditions for 70 years. He said the IMF was expected to make significant downward revisions to global forecasts and most of the world’s economies were now in recession.
....

Mr Cowen said the Irish economy could contract by 10 per cent by 2010, “a scale of decline that is without precedent here in Ireland and with few international parallels” and predicted a further 100,000 jobs could be lost over the next year.

IT: Irish economy 'particularly vulnerable' - EU


The European Commission has warned the Irish economy is particularly vulnerable in the wake of the housing boom and the erosion of its competitive position.

In a report released today, the Commission recommends careful prioritisation of public spending, strengthening productivity and rebuilding competitiveness as key factors in helping the country to weather the current financial crisis.
....