The "Burn the Bondholders" argument in light of Covid 19

Marcos the black

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As has been well discussed here and on other forums the cost of the Covid 19 pandemic is massive. At an individual level in terms of job losses, wage reduction, under employment etc., And in terms of the economy.

It is projected that we will go from a surplus situation in Jan/Feb to a negative situation that will require the state to borrow between €23bn - €30bn in 2020 to balance the books.

Ireland's 10 year bond rates, and credit rating are excellent by international standards:


The above allows us to borrow at far lower rates of interest than other countries. This ability will allow us to get through this pandemic without going bankrupt.

A number of political parties, and posters here at the time, and since then called on the Irish govt to "burn the bond holders" and were very annoyed that this wasn't done.

Had the Irish govt of the day burnt the bondholders, today we would find ourselves in a situation whereby we would either not be able to borrow to keep the country afloat, or if we could borrow, it would be at a far higher rate of interest and therefore would cost us massively over the coming decade.
If Ireland had done as many parties wanted to do, and burned the Bondholders, Ireland would be today bankrupt.

Is it fair to say so that the Covid 19 pandemic puts an end to the myth that Ireland should have burned the bondholders in the last financial crash?
 


enuffisenuff

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As has been well discussed here and on other forums the cost of the Covid 19 pandemic is massive. At an individual level in terms of job losses, wage reduction, under employment etc., And in terms of the economy.

It is projected that we will go from a surplus situation in Jan/Feb to a negative situation that will require the state to borrow between €23bn - €30bn in 2020 to balance the books.

Ireland's 10 year bond rates, and credit rating are excellent by international standards:


The above allows us to borrow at far lower rates of interest than other countries. This ability will allow us to get through this pandemic without going bankrupt.

A number of political parties, and posters here at the time, and since then called on the Irish govt to "burn the bond holders" and were very annoyed that this wasn't done.

Had the Irish govt of the day burnt the bondholders, today we would find ourselves in a situation whereby we would either not be able to borrow to keep the country afloat, or if we could borrow, it would be at a far higher rate of interest and therefore would cost us massively over the coming decade.
If Ireland had done as many parties wanted to do, and burned the Bondholders, Ireland would be today bankrupt.

Is it fair to say so that the Covid 19 pandemic puts an end to the myth that Ireland should have burned the bondholders in the last financial crash?

perhaps a simplistic view on my part but we still have to pay for the bondholders and covid?
 

Sync

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Yes, but at a much lower rate than would have been possible is we had burned The Bondholders. That's presuming that we could find someone who would have given us a loan.
Right. Watch how much fun Argentina has in the aftermath of all of this.
 

Marcos the black

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Marcos the black

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Iceland not doing so badly and they burned bondholders

Will Iceland have to borrow this year?

Edit: Their 10 year bond% rate is 2.5%+, several times the rate of Ireland's, so again we would pay much more, and therefore have to borrow less.
 

tsarbomb

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Iceland not doing so badly and they burned bondholders

Turkey defaulted on tons of loans and has a reckless monetary policy, but lenders keep lending to them. Not only that, but they've handled the virus very well, or at least better than we have.
 

Marcos the black

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Turkey defaulted on tons of loans and has a reckless monetary policy, but lenders keep lending to them. Not only that, but they've handled the virus very well, or at least better than we have.
Jesus. Turkey's 10 year yield is 12.7%... do you really want to be in their shoes?
 

Marcos the black

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I'd assume every country on the planet will have to borrow money. But Iceland's economy is expected to contract a little more than ours. By a percentage point.
Then they'll pay about 5 times more in interest for that borrowing then we will.
 

tsarbomb

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Jesus. Turkey's 10 year yield is 12.7%... do you really want to be in their shoes?
Very low considering all their defaulting and living standards have been increasing there for years remember. Years ago the bed wetters would have us believe the sky would fall in if a country defaults on its debts. The evidence is that it doesn't.

Thanks for reminding everyone that Fianna Fàil and Fine Gael governments can't manage the public finances competently.
 

tsarbomb

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Iceland's 10 bond yield is 2.5 and they have a credit rating of A. That's practically Armageddon.

 

Marcos the black

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Very low considering all their defaulting and living standards have been increasing there for years remember. Years ago the bed wetters would have us believe the sky would fall in if a country defaults on its debts. The evidence is that it doesn't.

Thanks for reminding everyone that Fianna Fàil and Fine Gael governments can't manage the public finances competently.
12.7% is very low?
What's ours?
 

Marcos the black

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Very low considering all their defaulting and living standards have been increasing there for years remember. Years ago the bed wetters would have us believe the sky would fall in if a country defaults on its debts. The evidence is that it doesn't.

Thanks for reminding everyone that Fianna Fàil and Fine Gael governments can't manage the public finances competently.
The reason that we can borrow at 0.0% is because of, not in spite of our successful management of the economy.
 

raetsel

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I now know who not to ever consider lending money to based on this discussion.

Pay yer debts the dodgy bollixes.........................:)
 

tsarbomb

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The reason that we can borrow at 0.0% is because of, not in spite of our successful management of the economy.
Having to borrow tens of billions of Euro and an unemployment rate of 14% is a successful management of the economy? That's daft altogether.

Iceland defaulted on its debt and it's unemployment rate is a lot lower than ours. They obviously have the better idea of things.
 


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