Constantin Gurdgiev says interest only payment on IMF loan would be 5 billion a year?

vanla sighs

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He just said it on VB. Basing it on Ireland taking a 100 billion bailout/loan at roughly a 5% interest rate. How the hell are we going to manage to pay the loan back? We'll be saddled with debt for decades (a century wouldn't be far off I'd nearly say) We thought we'd have to take out 3 billion in the next budget, that rose to 6 billion - and everyone is saying that's a huge amount but if we have to we have to but at least it's frontloaded and will only be for the first year, reducing subsequently. Not so I'm begining to think. Increasing subsequently could be more like it. Now how the hell do we take out 5 billion year on year for decades potentially, simply to pay only the interest on the 100 billion IMF/EU bailout/loan?

At this stage is it not the lesser of two evils to says: let the banks fall and we'll start anew? Let it burn rather than enslave ourselves and those who come after us for decades to come. Or is that simply impossible to do now?
 
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That boat has sailed..
i read that the 6bil cut equates to the us cutting their defence department.
Even with an offset devaluation, fiscal adjustments have been known to fail.
Its complete self destruction - how much is acceptable before one wonders about the real motives for such actions.
 

Iarmuid

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He just said it on VB. Basing it on Ireland taking a 100 billion bailout/loan at roughly a 5% interest rate. How the hell are we going to manage to pay the loan back? We'll be saddled with debt for decades (a century wouldn't be far off I'd nearly say) We thought we'd have to take out 3 billion in the next budget, that rose to 6 billion - and everyone is saying that's a huge amount but if we have to we have to but at least it's frontloaded and will only be for the first year, reducing subsequently. Not so I'm begining to think. Increasing subsequently could be more like it. Now how the hell do we take out 5 billion year on year for decades potentially, simply to pay only the interest on the 100 billion IMF/EU bailout/loan?

At this stage is it not the lesser of two evils to says: let the banks fall and we'll start anew? Let it burn rather than enslave ourselves and those who come after us for decades to come. Or is that simply impossible to do now?
no it is not impossible - there is no easy path out of this situation - there will
pain.

Your mind is a sovereign monad, ultimately we each are masters of our own destiny, a battle rages for how each mind frames its thinking - it is called bias or propoganda.

That said the question one needs to ask now, is not what is expedient, nor what is easy, nor what is most profitable, we have had 10 years of that, but what is right and moral not for the sake of I, but the sake of my children and my children's children.
 

Civic_critic2

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Its complete self destruction - how much is acceptable before one wonders about the real motives for such actions.
An interesting question.

That boat has sailed.
I don't know if it has. We have the option of taking over the country and overturning everything that FF have done in the last 2 years. Of course it would appear that any of the so-called opposition don't have it in them to do this so looking to them will be a disaster for our young also. But the option to take control of our country remains.
 

havesomeimagination

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why though? would we not be better off taking customers' deposits out of the banks and using them as the base of a new domestic bank. Everyone keeps talking about the bond markets as if they're a few individuals who if we default will never lend to us again, but if we defaulted & then started afresh with a clean balance sheet we would be a much better lending risk for any bond buyer wanting to have a go. The bond market is actually competitive and if people think they can make money they will lend money. They won't care if some other bond holder got burnt by a now defunct Irish bank when lending to a state without massive debts. On the other hand if we take this bailout we'll be at high risk of default for decades anyway.
 

johnfás

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Of course it would be. 5% of 100 billion is 5 billion. You cannot avoid the mathematics and all the mathematics say we cannot resolve the crisis without the posh word restructuring. Which is lingo for default just as leverage is a way of not mentioning the word debt.
 

He3

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Five billion a year interest only and for what exactly?

Here is how the Financial Times puts it in an editorial today -



Saving the banking system, however, is not the same as bailing out extant institutions; nor should taxpayers give up even more of their blood to the walking dead. Yet this is what Ireland is being asked to do – borrow money from the EFSF to raise the banks’ equity. Doing so would be an insult to the Irish people (whose incomes will be mortgaged to pay the loan back) and a gratuitous one at that: it defies logic to claim that adding to Dublin’s debt will seduce markets back to Irish sovereign bonds.

This is their alternative plan:

So Ireland – and Europe – must confront the prospect of an inevitable string of bank restructurings. Giving away more capital now will weaken states’ ability to deal with the problem when there is no more time to be bought.

Preparations must now be made for dealing with a run on banks by depositors or wholesale lenders. Countries that have yet to put in place special insolvency regimes – Ireland included – must do so without delay. They must allow states swiftly to take control of banks so as to keep operations going during a panic and quickly allocate losses by forcibly restructuring wholesale debt or converting it into equity.


Why are we waiting?

FT.com / UK - Europe heads back into the storm
 

goatstoe

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David McWilliams said today that a German colleague of his said to him something along the lines of "why do you Irish need to be loved so much"?. McWilliams went on to say you're in no position to negotiate a good deal if you're trying to please and be friends with the person you're negotiating with. Haven't been a fan of Gurdiev in the past, but he's starting to make sense to me now. Watching him on the VB show I'd definitely back his judgement over John Bruton who was there in the studio as well. From what I could gather Gurdiev was saying we should default on what's left of the bondholders bailout and put our people first.

We hear statements about Ireland being a young country that needs a cuddle, about time we grew up a bit and started to fight for ourselves. Lets start by burning whats left of the bondholders. Then negotiate a tough deal with the ECB. If the Europeans need us to save the Euro, let them pay a us a fair price otherwise threaten to let the Euro monetary project sink.
 
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dresden8

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Tonic, where are you?

Lenny told us this would cost us 4.5 billion.

5% of 4.5 billion is not 5 billion. Use your superior logic to dispel this myth please.
 

Reality bites

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we'd have a facility of €100Bn- wouldn't have to draw it all down in one go- would probably be over a number of years
but would mean we'd have access to stable rate of finance but either way we're ************************************
 

johnfás

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we'd have a facility of €100Bn- wouldn't have to draw it all down in one go- would probably be over a number of years
but would mean we'd have access to stable rate of finance but either way we're ************************************
We're not. The State is. Irish people will still wake up tomorrow morning, and the next and the next. In our universities young people will still have fantastic ideas and unfortunately as a consequence of our Government's failures many will emigrate. However, many will not and some will get finance, and they'll run with their ideas and they will be a success and they will employ people. Eventually our State will realise we cannot pay back all these debts and things will collapse and we will rebuild. The world will not end and neither will this country. However, the most important thing, above all else, is that we now absolutely purge the country from the rabid parochial nonsense that we heard on the airwaves today from f@cking eijits like Ned O'Keefe. We will develop again as a country, but we must never put ourselves in this situation again.
 

dent

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Why the f**k won't people listen to Morgan Kelly ? Does he fecking smell or something ????

He said THIS over a week ago, that 2%+ and we were goosed, AND that the EU were likely to impose at least 5% on us, as a warning to the likes of Italy and Spain.

We are -€15bn on our current expenditure. We haven't a frigging hope of paying back €4-5BN a year.

This in itself shows that Liarehan couldn't negotiate in a brothel, when we had the chance to get something decent or bring down the Euro with us.

God forgive me, and I don't like saying it, but the cancer that he had in Sept 08 can't be that bad. If it was, we might have saved ourselves €80bn.
 
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We're not. The State is. Irish people will still wake up tomorrow morning, and the next and the next. In our universities young people will still have fantastic ideas and unfortunately as a consequence of our Government's failures many will emigrate. However, many will not and some will get finance, and they'll run with their ideas and they will be a success and they will employ people. Eventually our State will realise we cannot pay back all these debts and things will collapse and we will rebuild. The world will not end and neither will this country. However, the most important thing, above all else, is that we now absolutely purge the country from the rabid parochial nonsense that we heard on the airwaves today from f@cking eijits like Ned O'Keefe. We will develop again as a country, but we must never put ourselves in this situation again.
The world may not end but thats gona be a tough ride. I have seen numerous people predicting the economic collapse of the united states too. The time frame varies from within a year to 5 years.. Is the united states systemic to the world economy? lol

Simon Johnson
Financial crises are actually not rare, and the rules for their resolution are clear. The fundamental insight is that huge amounts of financial losses, of seemingly real value, need to be distributed across creditors, debtors, equity holders and taxpayers.

The public debt can be contained in two ways. The first and preferable option is that the state never nationalizes private bank debt as Ireland has done. For Ireland, this opportunity has probably passed, but other countries should be warned not to make the same mistake. Kazakhstan’s refusal last year to bail out its major banks, despite strong demands from the senior creditors of these banks, has proved a far more successful path. Banks can and should go under if they have failed. The state should only defend small and medium-sized depositors.

If the state has taken on too large debt, sovereign default is the natural outcome.
The Debt Problems of the European Periphery « The Baseline Scenario
 

kerdasi amaq

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You know, if the government pays interest only, at 5% for twenty years, how much will the total sum of interest paid amount to?

I don't believe that the Irish economy can generate the revenue to pay. There will be no point in starting a business, and paying nearly all your revenue in taxes and charges.
 

Simbo67

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Jan 23, 2004
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Five billion a year interest only and for what exactly?

Here is how the Financial Times puts it in an editorial today -



Saving the banking system, however, is not the same as bailing out extant institutions; nor should taxpayers give up even more of their blood to the walking dead. Yet this is what Ireland is being asked to do – borrow money from the EFSF to raise the banks’ equity. Doing so would be an insult to the Irish people (whose incomes will be mortgaged to pay the loan back) and a gratuitous one at that: it defies logic to claim that adding to Dublin’s debt will seduce markets back to Irish sovereign bonds.

This is their alternative plan:

So Ireland – and Europe – must confront the prospect of an inevitable string of bank restructurings. Giving away more capital now will weaken states’ ability to deal with the problem when there is no more time to be bought.

Preparations must now be made for dealing with a run on banks by depositors or wholesale lenders. Countries that have yet to put in place special insolvency regimes – Ireland included – must do so without delay. They must allow states swiftly to take control of banks so as to keep operations going during a panic and quickly allocate losses by forcibly restructuring wholesale debt or converting it into equity.


Why are we waiting?

FT.com / UK - Europe heads back into the storm
Jesus. That's one scary article.
 


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