Has the Run on Ireland Begun?

[mick999]

Just copied the thread title from politics.ie:  http://www.politics.ie/economy/137541-has-run-ireland-begun.html

This topic has had 19,000 views in last 4 hours ..

Cost of Irish Borrowing - 10 year bonds has spiked this morning above 6%

http://www.bloomberg.com/apps/quote?ticker=GIGB10YR:IND#chart

http://blogs.wsj.com/marketbeat/2010/09/07/europes-bond-market-tanks-again/

http://sg.finance.yahoo.com/news/Bonds-Spreads-In-Greece-And-siliconalley-822667600.html?x=0

Keep all your money under your bed for the time being !!

[Declan]

We are FUBARed

[IolarCoisCuain]

How is this news boys? How are we worse off today than we were yesterday?

19,000 views on a message board isn't really the same as seeing the Reaper at the end of the bed. The country is in shit-street alright, and will be for years, but I don't see why this story in particular is such a big deal. I don't have a background in international finance - maybe someone can explain it to me?

[lilpaulie85]

Keep all your money under your bed for the time being !!

If i had any to put under it id seriously consider it 

[Zapatista]

How is this news boys? How are we worse off today than we were yesterday?

There won't be a penny of cash left in the Country soon. We'll be buying bread with turf.

[mick999]

How is this news boys? How are we worse off today than we were yesterday?

19,000 views on a message board isn't really the same as seeing the Reaper at the end of the bed. The country is in shit-street alright, and will be for years, but I don't see why this story in particular is such a big deal. I don't have a background in international finance - maybe someone can explain it to me?

Far from me to claim to understand international finance .... but see below an explanation from someone else

What has happened? I have no idea about economics. Can someone explain this to a simpleton in layman's terms?

The 10 year bond yield has been increasing today and is now above 6. It would have gone higher but for the intervention of the ECB.

Why does this matter? Because we're now paying more interest for the money we have to borrow to run the country. Why is this important? Hammer puts it well below ...


Quote:
Originally Posted by hammer 
It will not be long before total income tax take is wiped out by debt interest.

And this is after the extra income levies, health levies,etc introduced ...................

So we will need to run all services on CT (12.5%), VAT, CGT, CAT and excise.

The country is effectively bankrupt, and the bond markets and ECB know it.


I guess we knew that we were bankrupt already, but the higher that the bond yield rate goes, the more interest we (the country) pay on our borrowings and the worse we get ...

[AZOffaly]

How is this news boys? How are we worse off today than we were yesterday?

There won't be a penny of cash left in the Country soon. We'll be buying bread with turf.

Maybe that's Cowan's plan? Return the power base to the Midlands, and their brown gold.

[IolarCoisCuain]

How is this news boys? How are we worse off today than we were yesterday?

19,000 views on a message board isn't really the same as seeing the Reaper at the end of the bed. The country is in shit-street alright, and will be for years, but I don't see why this story in particular is such a big deal. I don't have a background in international finance - maybe someone can explain it to me?

Far from me to claim to understand international finance .... but see below an explanation from someone else

What has happened? I have no idea about economics. Can someone explain this to a simpleton in layman's terms?

The 10 year bond yield has been increasing today and is now above 6. It would have gone higher but for the intervention of the ECB.

Why does this matter? Because we're now paying more interest for the money we have to borrow to run the country. Why is this important? Hammer puts it well below ...


Quote:
Originally Posted by hammer 
It will not be long before total income tax take is wiped out by debt interest.

And this is after the extra income levies, health levies,etc introduced ...................

So we will need to run all services on CT (12.5%), VAT, CGT, CAT and excise.

The country is effectively bankrupt, and the bond markets and ECB know it.


I guess we knew that we were bankrupt already, but the higher that the bond yield rate goes, the more interest we (the country) pay on our borrowings and the worse we get ...

Thanks for that Mick. Just a few questions.

1. What's a ten year bond?
2. What's a bond yield?
3. Why is ten year bond yield being above six significant? Six what?
4. Why is ECB (European Central Bank - I do know that one) intervention insignificant?
5. How long will it be before total income tax take is wiped out by debt interest? Weeks, months, or years? Will Enda have time to get elected and steady the ship of state, or is it happening on Friday?
6. Why won't the ECB intervene again? Significantly, this time?
7. What does the country being bankrupt mean, in real terms? Does it mean the arrival of the IMF is inevitable?

They were talking about what the IMF on the radio last week (Raidió na Gaeltachta). Apparently they have the same process for every country that can't balance its books, which is the same as you'd do in your own household if your expenditure exceeds your income. It's simple enough. Nasty, of course, but very simple.

It's all the jargon that I don't get. The arrival of the IMF means that the Government has failed to mind the shop, and someone else has to do it for us. That's the next step.

What I want to know is how nearer are we as a result of this "run on Ireland" today to the IMF coming here. Again, in layman's terms please. I think we'd all like to know. When the IMF gets here we'll know all about it. I can assure you of that. I just want to know are they now on their way because of this so-called "run on Ireland." I like to know where I stand, if I can.

[Bogball XV]

this sounds eerily like a pile of threads 2 years ago, am i suffering from deja-vu?  Surely there's something up, did not our masterful department of finance, finance minister (who quickly got a handle on his brief because of his training as a senior counsel) and bank chief execs sort all this in Sept 2008?  Surely you must remember, the bank guarantee scheme - the cheapest bailout in europe as we were constantly reminded

[seafoid]

Maybe the Anglo problem can be taken over by the ECB.
Maybe the game is up for Fianna Fail.   

[IolarCoisCuain]

this sounds eerily like a pile of threads 2 years ago, am i suffering from deja-vu?  Surely there's something up, did not our masterful department of finance, finance minister (who quickly got a handle on his brief because of his training as a senior counsel) and bank chief execs sort all this in Sept 2008?  Surely you must remember, the bank guarantee scheme - the cheapest bailout in europe as we were constantly reminded

Again, I'm exposing my lack of financial acumen here. Do you think we'd be better off if they hadn't guaranteed the banks? Or do you think the bank guarantee failed? What is the basis for these judgments? I don't know anything about banking. I don't know if this is good or bad.

I notice a certain amount of inconsistency in the reporting of this story today. Here's RTÉ: http://www.rte.ie/news/2010/0907/economy_bonds.html

It says the yield on ten-year Irish Bonds is twice that of Germany's. But why compare Ireland with Germany? Why not compare us with Portugal, Italy, Greece and Spain? Are they not the countries against whom we should be comparing ourselves, rather than Germany?

Again, I don't know. I don't understand any of this. If anyone can help, I'd be glad to learn.

[Bogball XV]

I've many's the post over the last 2 years explaining my take on the guarantee - go check them out on the big bailout thread - it'll be a long read, but you'll be well educated financially come the end of it.

[thebigfella]

I've many's the post over the last 2 years explaining my take on the guarantee - go check them out on the big bailout thread - it'll be a long read, but you'll be well educated financially come the end of it.

Yes it does read that bad.

[mick999]

I see we've just extended the bank guarantee until the end of the year ....

http://www.politics.ie/economy/137568-bank-guarantee-extended-dec-31st.html

Bank Guarantee extended to Dec 31st

--------------------------------------------------------------------------------

Brian Lenihan has just announced that the Government guarantee for short term liabilities will be extended to December 31st 2010. The guarantee includes corporate and interbank deposits, as well as debt securities. The expiry date for the guarantee was previously Sept 29th (this month).

Statement from the Department of Finance follows.........


Quote:
Minister announces extension of the short term guarantee

The Minister for Finance, Mr Brian Lenihan, TD today announced that the Government guarantee for short term bank liabilities, including corporate and interbank deposits as well as debt securities would be extended from its current expiry date of 29 September to 31 December 2010.

A State guarantee will therefore be available for both short- and long-term liabilities up to the end of the year. This is an important support to the Irish banking system facilitating their access to both short- and longer-term funding to help maintain the overall stability of the banking sector and complements the broad Government Strategy to restore fully the banking system and maximise its contribution to overall economic recovery.

This modification to the Guarantee was recommended to the Minister by both the Governor of the Central Bank, the Financial Regulator and the NTMA. As is customary the Department will be liaising with the European Central Bank on this measure. An approval by the European Commission under the State aid rules needs to be secured before the guarantee can be extended.

Following the Minister's meeting with Commissioner Almunia yesterday he is satisfied that Commissioner Almunia is aware of the Irish situation. It is intended that some technical details relating to the implementation of this modification will be agreed with the European Commission in coming days.

The Minister said that:

"I am very grateful for the assistance of Commissioner Almunia and his officials in the European Commission for their open engagement and co-operation on this important issue for Ireland and I look forward to continued strong co-operation in resolving this and other significant issues for the Irish banking system in the coming weeks"

The Minister reiterated that this announcement does not affect retail deposits of up to €100,000 as these deposits continue to be guaranteed under the ordinary Deposit Guarantee Scheme and that Scheme is not time limited. 

[IolarCoisCuain]

I've many's the post over the last 2 years explaining my take on the guarantee - go check them out on the big bailout thread - it'll be a long read, but you'll be well educated financially come the end of it.

Cheers Bogball XV. Can you shoot me a link?