The Big Bailout of the Eurozone (Another crisis coming? - Seriously)

[muppet]

In those graphs, what does the Y-axis signify?  From my reading, Ireland is in much better or worse position than Spain or Italy.  Which is it?

Y-axis id borrowing rate on the open bond market.

Ireland would be borrowing at over 13% interest rates. Not great.

>5% is considered unsustainable for any length hence the panic over Spain and Italy going above it.

Ireland were forced to borrow from the IMF at 7% and our we now consider that deal (5.8%) unsustainable. But it bought a few more months. The second bail out of Greece is lunacy but was to buy a few more months and no doubt what they do this week or next will be to buy Italy and Spain a few more months.

[Bogball XV]

There is considerable attention to public pay in the 26 counties, but this is significantly less than is spent of welfare and a third of pay comes straight back into to the exchequer in income tax. If all public services, other than welfare, were abolished, it would hardly cover the deficit.

Probably 75% of welfare comes back in to the exchequer in the form of excise duties.

I'm only half joking there, welfare transfers are ludicrously high and many on here have commented on that over the past few years, but, one would imagine that most of the money paid out is spent and almost immediately at that.  The main exceptions that I can think of are child benefit and old age pensions - in other words the non-means tested transfers. 
I know quite a few families where the child benefit goes straight into an account for the childer and lies there until they hit 18 and need it for 'college books'.  Similarily with the state pensions, many's the grandparent who throws this into an account to give to the grandchildren at a later date.
It would be extremely easy to at least partially redress this inequity by making these (and indeed) all transfers taxable, but can you see an irish govt doing that?  Me either, far better trying to pretend we're on the road to salvation by cutting 4 billion a year off spending (might not be too easy from here on in though)

[seafoid]

Ireland downgraded to junk by Moodys.

http://www.irishtimes.com/newspaper/breaking/2011/0713/breaking4.html

You can now earn 18% on Irish 2 year bonds. 

[Declan]

Meanwhile, the State will have to shell out €116bn to pay for the pensions of all existing civil servants, Public Expenditure and Reform Minister Brendan Howlin told the new Dail Select Committee that scrutinises spending in this area.
The figure, which is more than twice what the Government spends in a year, is not included in the calculations for the national debt, Mr Howlin admitted.


More confirmation of the fact that we are Fubared

[Bogball XV]

Meanwhile, the State will have to shell out €116bn to pay for the pensions of all existing civil servants, Public Expenditure and Reform Minister Brendan Howlin told the new Dail Select Committee that scrutinises spending in this area.
The figure, which is more than twice what the Government spends in a year, is not included in the calculations for the national debt, Mr Howlin admitted.


More confirmation of the fact that we are Fubared

but over how many years are you talking?  It's always been the norm (throughout the western world) that state pension obligations are accounted for on a current accounting basis has it not? 

[Declan]

but over how many years are you talking?  It's always been the norm (throughout the western world) that state pension obligations are accounted for on a current accounting basis has it not

Nor sure BB. I know my highlighting might be oversimplyfing the accounting/actuarial practices etc but the figures are fairly frightening all the same.

[Bogball XV]

but over how many years are you talking?  It's always been the norm (throughout the western world) that state pension obligations are accounted for on a current accounting basis has it not

Nor sure BB. I know my highlighting might be oversimplyfing the accounting/actuarial practices etc but the figures are fairly frightening all the same.

Where'd you get that from?  Not disputing that we're fubared btw!!

[muppet]

There is considerable attention to public pay in the 26 counties, but this is significantly less than is spent of welfare and a third of pay comes straight back into to the exchequer in income tax. If all public services, other than welfare, were abolished, it would hardly cover the deficit.

Probably 75% of welfare comes back in to the exchequer in the form of excise duties.

I'm only half joking there, welfare transfers are ludicrously high and many on here have commented on that over the past few years, but, one would imagine that most of the money paid out is spent and almost immediately at that.  The main exceptions that I can think of are child benefit and old age pensions - in other words the non-means tested transfers. 
I know quite a few families where the child benefit goes straight into an account for the childer and lies there until they hit 18 and need it for 'college books'.  Similarily with the state pensions, many's the grandparent who throws this into an account to give to the grandchildren at a later date.
It would be extremely easy to at least partially redress this inequity by making these (and indeed) all transfers taxable, but can you see an irish govt doing that?  Me either, far better trying to pretend we're on the road to salvation by cutting 4 billion a year off spending (might not be too easy from here on in though)

BogBallXV according to the 2010 receipts Excise was <€4.7bn.

VAT was €10.1bn.

That means total VAT + total Excise was still less than 75% of total Social Welfare spending.

TBH I still think there is something wring with that €20bn welfare figure. We couldn't really be spending double our total income tax take on welfare. Could we? Given that over half of our income tax take already goes on paying interest on the debt, and that we still have a serious annual deficit how the hell can anyone possibly think this is going to end well?

If the above was a family budget in a bankruptcy hearing the judge would give a serious bollocking to the head of the family.

[muppet]

Guardian - Greece set to default?

It will be interesting to see all those bondholders Lenihan spoke about (Widows and orphans etc.) getting burned.

[muppet]

Looking at the above (which is in €Billions) is the following a way out?

http://www.eudebtwriteoff.com/

The idea
The idea is very simple - if Portugal owes Ireland €0.34bn of short term debt, and Ireland owes Portugal €0.17bn, we can write off Ireland's obligations and leave Portugal with a reduced debt of €0.17bn.

If you are both a debtor and a creditor you do not need money to settle claims. Rather than require additional funds to deal with choking debt, why not write it off? 
The diagrams above show the before and after situation, based on analysis done by students. The simulation itself took place on May 17th 2011 and involved three separate trading rounds.

[muppet]

Apologies for the multiple posts just one last picture which explains an awful lot imho.

[seafoid]

Check out the graph of debt expansion on page 5

http://www.361capital.com/docs/Addicted%20to%20Debt_361_Capital_Sept_10.pdf

[muppet]

Apparently the EU stress tests about to be announced didn't factor in a Greek default.

Not worth the paper they are written on so.

[Denn Forever]

Now come on, who would have thought that Greece could default?   Be real.

[muppet]

Now come on, who would have thought that Greece could default?   Be real.

The markets and the rating agencies but then the banks always know better.