The Impending doom for Ireland and what can be done about it.

Malbekh

Well-known member
Joined
Apr 30, 2009
Messages
3,012
I don't post here too often, I find the forums don't lend themselves to decent discourse and details. Everything has to be kept in concise bullet points to get your opinions across, and even then, rational arguments disappear rapidly as people derail threads they don't like.

Still, it's better than nothing.

It's important to point out that this is a fantastic country, one of, if not the best to live-in. People really don't understand or appreciate this, mostly down to our own psyche, but to bullet point things for you we have the following:

  • We have a stable land-mass not affected by earthquakes, volcanoes or hurricanes
  • We have a moderate and temperate climate, likely to change over the next 50 years with Anthropocene influence but not to the negative effects of other countries
  • Our population is small compared to our available land-mass and there is plenty of room to grow
  • The population is rising and is homogenising without the hang-ups and extremism associated with other colonial countries
  • We speak English as our lingua franca
  • We have no reliance on an industry likely to suffer tumultuous change in the next 25 years (like the car industry in Germany)
  • The population as a whole is stable, middle-class, compliant and law-abiding. Their outlook is positive pessimism and unlikely to be involved in any rioting or mass civil actions to undermine the functioning of the state.

So that's pretty much the good news. The bad news is that as a country, financially we are totally screwed. Actually, the correct word is doomed. There are a number of reasons for this, which can be outlines below. For reference, we can use the quite insightful observations by our old friend, Mr Donald Rumsfeld.

Known Knowns

Before our Icarus moment in 2007, we lived in the in a happy financial medium of having a national debt of some €40 billion. In those days, the interest rate was quite high, but the repayments on the government debt was a very affordable €1.6 billion per year, quite small in any reasonable terms.

Fast forward to 2017, and we have a national debt of €200 billion. Interest on 10-year government bonds is as low as feasibly possibly. But the critical element is that even with all these favourable interest rates, we currently spend €6.6 billion just to service the debt interest of the nation.

So we are spending €5 billion Euro every year just to finance the interest on our debt, the third most per capita in the world bar the US and Japan - who have their own currencies. This is the equivalent of 5 overpriced children's hospitals every. single. year.

So our known known from this is the following: We are aware that for every financial year the so-called ''fiscal space'' is anywhere between 500 and 1500 million. The problem we will have is that over the next few years the one thing we can guarantee is that interest rates will go up. As our bonds get paid back and new bonds are refreshed, thus, the cost to repay the interest on these bonds will go upwards, meaning our fiscal space will reduce rapidly to nothingness.

_____________________

Now this would be manageable if we continues to improve our tax take. but there's a problem there. We are currently one of the highest taxed countries in the world. To give a salient example, I will shortly receive a commission bonus of €7300 for achieving my sales targets for H1 2017. By the time I pay my tax this will be reduced to €3404. When I go to pay for anything I am likely to be hit by a VAT rate of 23% will mean I pay another ~€780 in taxes. So my real contribution to other companies, retail shops etc works out at ~€2600 should I choose to spend it while in real terms the government takes €4700.

Now I don't have an issue with this, assuming that all my taxes are used to maximise the benefits to society. So for example, a world class and free health service.....so the likelihood is that my precious H1 bonus will actually end up paying for my private health insurance, which I need in order to ensure that my extended family receive the services they may need in emergencies.

The known known in all this however, is that we are reaching full employment, probably by end 2018. So the possibility of squeezing the huddled masses by extracting more taxes is minimum. So think on this, we know that the national debt is not going to change, we know that the cost to service this debt is going to increase, and we know that the prospect of increasing our tax take is not going to improve, so where is the fiscal space going to come from?

_____________________________________

Which brings us to our other known, known: Demographics. Currently for every pensioner, we have 5 people in employment. By 2050 for every pensioner we will only have 2 people working. This is a gradual process of an aging population. Now, no matter how you increase the age when one comes into a pension, no matter how you reduce the state pension to in financial terms, nothing can escape the fact that servicing an older population in financial and medical terms will become more onerous and on an increasingly smaller number of people.

We used to have an item known as the national pension reserve fund. In 2006 it was a rather substantial €21 billion. Unfortunately this piggy bank was smashed open to pay for banks and day-to-day expenditure. It's all gone now. We live in a country with no pension reserve, where politicians dare not offend an increasingly larger grey vote, and where laughably in 2017, we still have no mandatory private pension scheme.

Where is the money going to come from, to pay for an aging, longer living, more expensive, population?

Known Unknowns


I do miss you Donald, I do. Known unknowns are things like Brexit. We really don't know how Brexit will end up. The only thing we can tell for certain is that it will be disastrous for the Irish economy. Whether it's down to a depressed valuation of Sterling or some format of trade restrictions or border controls, this will have a detrimental impact on our real economy.

Our unreal economy is known as the multinational sector, in particular the US version. Whether it's pharmaceuticals or tech, the known unknown we have is that at some stage, the version of the EU known as ''Ever Closer Union'' will enforce an homogenisation of federal corporate taxes. Whether this an EU-wide uniform corporate tax rate and/or the idea that corporations should pay taxes as a ratio to sales in individual countries, the only known guarantee we can give you is that our tax take from said multinationals will be emasculated, and that the only unknown is when this will happen.

Unknown Unknowns


Oh, this one is really easy. Donald Trump. No idea what the DT's of this world will end up doing, but we can be certain that none of it will be good. Sure, he could get bored and resign, but equally, to ensure his ratings he may nuke North Korea.

Then there's climate change. We don't know precisely what effect it will have on the world other than the fact it will be uniformly bad. It may not effect is too much, but the areas and regions it does may well persuade foreign countries to look after their citizens at the expense of others. And it's not like we're in a position to defend ourselves, are we?


_________________________________________

And so to recap.

3rd highest debt per capita and we have no control over our currency
We pay €5bn more every year in interest than 10 years ago even including historic low interest rates
This repayments can only go upwards
Aging catastrophic demographics with a narrowing tax base
Brexit
Homogenising corporate taxes at an EU level to further cripple our tax take
Any number of appalling vistas and no nice ones on the horizon

_____________________________________

We are just totally screwed.

But.

There is a choice and an option.

I know how to fix this.

It requires imagination and balls.

I have both
 


Hillmanhunter1

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Joined
Jan 9, 2009
Messages
2,491
 

OrderoftheDragon

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Joined
Jan 10, 2016
Messages
1,927
And as screwed as we are, we are importing people by the bucket load who will NEVER net contribute to this country...........HOW CRAZY IS THAT ??????????
 

publicrealm

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Joined
Aug 11, 2007
Messages
5,900
Also, the Euro is doomed (days at most).

But don't keep us in suspense - tell us what we must do!
 

HarshBuzz

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Joined
Feb 28, 2008
Messages
11,815
So Ireland is great altogether except it's fecked?
 

HarshBuzz

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Joined
Feb 28, 2008
Messages
11,815
Debt repayments are actually going to decrease in the near term (as we replace legacy debt with super-low rate debt) but let's not quibble with mere facts.

Your demographics point is actually well made. Anyone who thinks they can rely on the Irish State for an income in their old age is deluded beyond compare.
 

Bill

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Joined
Feb 1, 2009
Messages
8,115
That OP is too long to read so I'm going to go to the pub, order a pint and wait until this all blows over.
 

derryman

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Joined
Sep 17, 2011
Messages
10,622
It's pretty obvious that p.ies boast of being a premier political website is hollow at best and downright lies at worst
 

former wesleyan

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Joined
Nov 29, 2009
Messages
25,620
Very interesting post, only spoiled by you trying to identify the Unknown Unknowns which are , by definition , unknown.
 

Notachipanoaktree

Well-known member
Joined
Jul 26, 2013
Messages
8,137
I don't post here too often, I find the forums don't lend themselves to decent discourse and details. Everything has to be kept in concise bullet points to get your opinions across, and even then, rational arguments disappear rapidly as people derail threads they don't like.

Still, it's better than nothing.

It's important to point out that this is a fantastic country, one of, if not the best to live-in. People really don't understand or appreciate this, mostly down to our own psyche, but to bullet point things for you we have the following:

  • We have a stable land-mass not affected by earthquakes, volcanoes or hurricanes
  • We have a moderate and temperate climate, likely to change over the next 50 years with Anthropocene influence but not to the negative effects of other countries
  • Our population is small compared to our available land-mass and there is plenty of room to grow
  • The population is rising and is homogenising without the hang-ups and extremism associated with other colonial countries
  • We speak English as our lingua franca
  • We have no reliance on an industry likely to suffer tumultuous change in the next 25 years (like the car industry in Germany)
  • The population as a whole is stable, middle-class, compliant and law-abiding. Their outlook is positive pessimism and unlikely to be involved in any rioting or mass civil actions to undermine the functioning of the state.

So that's pretty much the good news. The bad news is that as a country, financially we are totally screwed. Actually, the correct word is doomed. There are a number of reasons for this, which can be outlines below. For reference, we can use the quite insightful observations by our old friend, Mr Donald Rumsfeld.

Known Knowns

Before our Icarus moment in 2007, we lived in the in a happy financial medium of having a national debt of some €40 billion. In those days, the interest rate was quite high, but the repayments on the government debt was a very affordable €1.6 billion per year, quite small in any reasonable terms.

Fast forward to 2017, and we have a national debt of €200 billion. Interest on 10-year government bonds is as low as feasibly possibly. But the critical element is that even with all these favourable interest rates, we currently spend €6.6 billion just to service the debt interest of the nation.

So we are spending €5 billion Euro every year just to finance the interest on our debt, the third most per capita in the world bar the US and Japan - who have their own currencies. This is the equivalent of 5 overpriced children's hospitals every. single. year.

So our known known from this is the following: We are aware that for every financial year the so-called ''fiscal space'' is anywhere between 500 and 1500 million. The problem we will have is that over the next few years the one thing we can guarantee is that interest rates will go up. As our bonds get paid back and new bonds are refreshed, thus, the cost to repay the interest on these bonds will go upwards, meaning our fiscal space will reduce rapidly to nothingness.

_____________________

Now this would be manageable if we continues to improve our tax take. but there's a problem there. We are currently one of the highest taxed countries in the world. To give a salient example, I will shortly receive a commission bonus of €7300 for achieving my sales targets for H1 2017. By the time I pay my tax this will be reduced to €3404. When I go to pay for anything I am likely to be hit by a VAT rate of 23% will mean I pay another ~€780 in taxes. So my real contribution to other companies, retail shops etc works out at ~€2600 should I choose to spend it while in real terms the government takes €4700.

Now I don't have an issue with this, assuming that all my taxes are used to maximise the benefits to society. So for example, a world class and free health service.....so the likelihood is that my precious H1 bonus will actually end up paying for my private health insurance, which I need in order to ensure that my extended family receive the services they may need in emergencies.

The known known in all this however, is that we are reaching full employment, probably by end 2018. So the possibility of squeezing the huddled masses by extracting more taxes is minimum. So think on this, we know that the national debt is not going to change, we know that the cost to service this debt is going to increase, and we know that the prospect of increasing our tax take is not going to improve, so where is the fiscal space going to come from?

_____________________________________

Which brings us to our other known, known: Demographics. Currently for every pensioner, we have 5 people in employment. By 2050 for every pensioner we will only have 2 people working. This is a gradual process of an aging population. Now, no matter how you increase the age when one comes into a pension, no matter how you reduce the state pension to in financial terms, nothing can escape the fact that servicing an older population in financial and medical terms will become more onerous and on an increasingly smaller number of people.

We used to have an item known as the national pension reserve fund. In 2006 it was a rather substantial €21 billion. Unfortunately this piggy bank was smashed open to pay for banks and day-to-day expenditure. It's all gone now. We live in a country with no pension reserve, where politicians dare not offend an increasingly larger grey vote, and where laughably in 2017, we still have no mandatory private pension scheme.

Where is the money going to come from, to pay for an aging, longer living, more expensive, population?

Known Unknowns


I do miss you Donald, I do. Known unknowns are things like Brexit. We really don't know how Brexit will end up. The only thing we can tell for certain is that it will be disastrous for the Irish economy. Whether it's down to a depressed valuation of Sterling or some format of trade restrictions or border controls, this will have a detrimental impact on our real economy.

Our unreal economy is known as the multinational sector, in particular the US version. Whether it's pharmaceuticals or tech, the known unknown we have is that at some stage, the version of the EU known as ''Ever Closer Union'' will enforce an homogenisation of federal corporate taxes. Whether this an EU-wide uniform corporate tax rate and/or the idea that corporations should pay taxes as a ratio to sales in individual countries, the only known guarantee we can give you is that our tax take from said multinationals will be emasculated, and that the only unknown is when this will happen.

Unknown Unknowns


Oh, this one is really easy. Donald Trump. No idea what the DT's of this world will end up doing, but we can be certain that none of it will be good. Sure, he could get bored and resign, but equally, to ensure his ratings he may nuke North Korea.

Then there's climate change. We don't know precisely what effect it will have on the world other than the fact it will be uniformly bad. It may not effect is too much, but the areas and regions it does may well persuade foreign countries to look after their citizens at the expense of others. And it's not like we're in a position to defend ourselves, are we?


_________________________________________

And so to recap.

3rd highest debt per capita and we have no control over our currency
We pay €5bn more every year in interest than 10 years ago even including historic low interest rates
This repayments can only go upwards
Aging catastrophic demographics with a narrowing tax base
Brexit
Homogenising corporate taxes at an EU level to further cripple our tax take
Any number of appalling vistas and no nice ones on the horizon

_____________________________________

We are just totally screwed.

But.

There is a choice and an option.

I know how to fix this.

It requires imagination and balls.

I have both
let's get this over with quickly. Quote and copy and paste.
 

mr_anderson

Well-known member
Joined
Dec 12, 2007
Messages
9,786
Debt repayments are actually going to decrease in the near term (as we replace legacy debt with super-low rate debt) but let's not quibble with mere facts.

Your demographics point is actually well made. Anyone who thinks they can rely on the Irish State for an income in their old age is deluded beyond compare.
Indeed.

The best advice anyone can ever follow is 'never rely on the government'.

So many here are oblivious to the coming pension crisis.
Actually, when I say 'coming', for many it's already here.
There have been numerous publicised renegotiation of pensions, e.g. ESB & Aer Lingus etc.
But what's not known are the unpublicised individuals who build up their own pension pots.
And the meager returns on safe investments crippling those who are already retired.

As the table above shows, if you have a pension pot of €100,000, you can expect a guaranteed income of just €4,224 a year with Standard Life, based on an annuity rate of 4.2 per cent. So to get an income of about €12,700 a year, which, along with the State pension, would give you an annual income of about €23,800, you would need a pension fund of €400,000 if you opted for an annuity.
https://www.irishtimes.com/business/personal-finance/how-to-generate-an-income-in-retirement-1.2632259

That was in 2016.
Assuming little has changed, a €1,000,000 pension pot will only get you €42,240 a year.
 

Wascurito

Well-known member
Joined
Apr 18, 2017
Messages
7,298
The OP is extraordinary for one reason: it caused me to "like" a post by Voltaire.
 

HarshBuzz

Well-known member
Joined
Feb 28, 2008
Messages
11,815
Indeed.

The best advice anyone can ever follow is 'never rely on the government'.

So many here are oblivious to the coming pension crisis.
Actually, when I say 'coming', for many it's already here.
There have been numerous publicised renegotiation of pensions, e.g. ESB & Aer Lingus etc.
But what's not known are the unpublicised individuals who build up their own pension pots.
And the meager returns on safe investments crippling those who are already retired.



https://www.irishtimes.com/business/personal-finance/how-to-generate-an-income-in-retirement-1.2632259

That was in 2016.
Assuming little has changed, a €1,000,000 pension pot will only get you €42,240 a year.
You would go down the ARF route surely?

Anyone considering buying an annuity these days ought to be locked up for the good of society.
 


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