Ireland - Hero to zero!

bigheadxx

Degenerate wrote: »

I don't share your optimism. AIUI, a big part of the low taxes thing was actually time-limited investment concessions. The expiry of these is one reason Dell, who contributed a staggering 5% of Irish GDP in recent years, is massively scaling back it's operations. Another reason is that the Irish economy simply isn't competitive any more. The Euro remains over-valued and even within the Euro-zone, Ireland is seriously out of whack. Like other peripheral members, it's wages and prices spiraled out of control in the years leading up to the crash.

All very true and Ireland will probably face a decade of austerity, falling incomes and job losses. Its 13% unemployment rate is set to fall but only due to migrants leaving the country.

Unlike the UK, Ireland is also heavily dependent on one other country for its exports, ie the UK and is very heavily dependent on foreign investment.

Its minimum wage is a very high 8 EUR and hasn't risen since 2007 and is unlikely to rise anytime soon. Public sector workers have faced massive pay cuts, with more to come. Until the correct balance is reached there is unlikely to be much good news coming from there for quite some time.

worldtraveller

The final cost to the taxpayer of bailing out failed Anglo Irish Bank will be known by the end of this month, the Sunday Independent has learned.

Ireland's financial position has been weakened considerably in recent weeks because of the continuing uncertainty over the total cost of the bailout, and Finance Minister Brian Lenihan is keen to bring finality to the issue as soon as possible.

It has emerged that a final figure for the bailout will be announced within the next 10 days or so, once final agreement and clearance has been obtained from Brussels.

The bank will cost at least €25bn, but the bill could go higher, Anglo Irish chairman Alan Dukes has admitted.

International ratings agency Standard & Poor's last month cut Ireland's sovereign credit rating to AA-, its lowest since 1995, due to its estimated €35bn cost of the bank rescues and the size of the budget deficit.

According to Mr Lenihan, even if a sum like €25bn is financially manageable if stretched out over a long time, the markets want the certainty of knowing what the final cost will be.

It has also emerged that customer funding at the failed bank amounted to €23.1bn as of June 30, 2010, while market funding amounted to €49.8bn it has emerged.

Of that €49.8bn, some €26.3bn is funding support from the European Central Bank (ECB) and other central banks.

Financial Regulator Matthew Elderfield has been tasked with identifying the final figure to bring that much-needed certainty after Irish bond spreads peaked at record highs last Friday.

Bond spreads are the cost of borrowing to Ireland over what Germany pays.

Last Friday, the interest rate being demanded to lend to Ireland was 6.34 per cent. This is from a level below 5 per cent earlier this year.

ANALYSIS Pages 24, 25, 38
This followed the release of two separate statements from the Department of Finance and the International Monetary Fund (IMF), denying an earlier report that Ireland was close to needing outside emergency assistance.

Speaking to the Sunday Independent on Friday about the matter, Mr Lenihan said: "The IMF released a statement saying there is no question of Ireland needing emergency support.

"Unfortunately this was a very damaging report, because of the headlines.

"It has caused some minor speculation on world markets but that speculation has eased."

He added: "But it was an inaccurate report. Ireland is not in that position and the Barclays report didn't suggest Ireland was in that position.

"Barclays are very good buyers of Irish debt and the position is that Barclays commended the Government, saying it had taken all the right steps so far. But, of course, it did point out that the Government would have to continue to take the right steps."

Several leading European analysts have commented since Friday that Ireland is "struggling to raise the funds" it needs from the markets as investors shun the country on fears over the sustainability of its finances.

The ECB has been buying small amounts of Irish bonds, traders said, with the latest instalment yesterday.

Domenico Crapanzano, head of euro rates trading at Jefferies, a major global securities and investment banking group, said: "There are just no buyers out there for Ireland because of worries over its economy."

Ireland has been widely praised for the austerity measures it is undertaking to cut the deficit and get on top of its public debt.

However, economists are now questioning whether -- given the austerity measures and the size of the banking crisis -- Ireland will be able to pay its debts.

Independent.ie

Final figure? What the hell is that?!! A 'final' figure, to date?! Payable over just how many years? Manipulated by the Government & EU, no doubt!

MissMoneypenny

Generali wrote: »

Ireland's GDP per capita is about 20% higher than the UK's so they're clearly doing something right.

Ireland's GDP per capita is about the same as Iceland's GDP per capita.

Germany's GDP pre capita is about the same as the UK's GDP per capita.

Figures from the CIA site and all 2009 figures.

Malcolm.

GDP is not a great measure of standard of living.

Having to pay to park a car contributes towards GDP.

I prefer free parking.

There's nothing that infuriates me more than having to pay at dogging sites.

leveller2911

Malcolm. wrote: »

GDP is not a great measure of standard of living.

Having to pay to park a car contributes towards GDP.

I prefer free parking.

There's nothing that infuriates me more than having to pay at dogging sites.

Not sure where you are but many Beach car parks are free down here........:D free to walk your dog anytime between september and May each year.....

worldtraveller

Ireland auctioned 400 million euros ($533 million) of bills, less than the maximum sought by the debt agency, as concern mounted that growth in the region is slowing, making it harder for governments to cut their deficits.

The Dublin-based National Treasury Management Agency sold 300 million euros of securities due Feb. 14, 2011, at an average yield of 1.907 percent, compared with 1.925 percent at a Sept 9th sale. The debt agency also sold 100 million euros of bills maturing April 18, 2011, at an average yield of 2.23 percent, up from 2.19 percent at the previous sale. Ireland sold less than the 500 million-euro maximum set for the sale.

Borrowing costs for the most indebted euro-region nations jumped today after European manufacturing growth slowed more than economists forecast, raising concern the nations may struggle to trim their budget gaps as the economic expansion slows. The extra yield investors demand to hold 10-year Irish bonds over German bunds widened 10 basis points to a record 414 basis points.

Ireland, which has the biggest budget deficit in the region at 14.3 percent of gross domestic product last year, saw its economy contract 1.2 percent in the second quarter from the previous three months, a separate report showed today.

Today’s auction came two days after Ireland sold 1.5 billion euros of four- and eight-year bonds, in an auction described by Willem Buiter, chief economist at Citigroup Inc., as “horrible” for the government and “great” for investors. Ireland sold the eight-year debt to yield 4.767 percent, a jump from 3.627 percent at the previous auction on Aug. 17. Ireland offered about twice the yield on German 10-year bonds sold at a Sept. 15 auction.

Bloomberg

blueboy43

MissMoneypenny wrote: »

Ireland's GDP per capita is about the same as Iceland's GDP per capita.

Germany's GDP pre capita is about the same as the UK's GDP per capita.

Figures from the CIA site and all 2009 figures.

a very elegant comparison. One of the big problems for Ireland will be the amount of emigration that is likely to happen in the next few years. All that young talent off to North America and Australia.

Many of the companies based there can easily up sticks & go.

JP45

worldtraveller wrote: »

Ireland saw its economy contract 1.2 percent in the second quarter from the previous three months, a separate report showed today.

Unexpectedly depressing news, particularly as most economists had been predicting growth of 0.5% in the second quarter. And just to add to the gloom, first quarter growth was revised down from 2.7% to 2.2%.

As Ambrose Evans-Pritchard recently commented:

Ireland has shown what happens when you grasp the fiscal nettle, slashing public wages by 13pc – to applause from EU elites – without offsetting monetary and exchange stimulus. Irish bonds have spiked even higher to a post-EMU record 6.38pc.

Two years into its purge, Ireland has a budget deficit near 20pc of GDP. It is 12pc if you strip out the bank rescues, but the reason why the bad debts of Anglo Irish keep spiralling upwards is that the economy keeps spiralling downwards. House prices have fallen 35pc. Nominal GDP has contracted 19pc.

"Ireland's debt is ballooning, while its capacity to pay has collapsed," said Simon Johnson, ex-chief economist at the IMF. He said the country has made a Faustian pact with Europe, able to draw ECB loans worth 75pc of GDP so long as Irish taxpayers shield European creditors.

.....

Simon Johnson says the solution for EMU's orphans is debt reduction along the lines of "Brady Bonds" in Latin America in the 1980s, forcing creditors to share pain in an orderly fashion and giving debtors a way out of the morass.

In fairness to EU policymakers, perhaps the problem really is so big that if they let Greece, Portugal, or Ireland restructure debt they risk instant contagion to Spain, and from there to Italy. Perhaps they really have no choice. If so, monetary union has created a monster.

blueboy43

Generali wrote: »

The IMF, World Bank and CIA numbers all say about the same thing. I'm not sure about the other 2 but the CIA use Government figures for GDP and population (where available, otherwise they use the UNICP numbers) and they make an attempt to adjust for purchasing power parity using figures from the World Bank PPP project.

If the difference between UK and Irish GDP were a couple of percent then I'd be wary of saying which had the higher GDP per head. That Ireland's is 20% bigger is significant I think.

It will be interesting to see the figures in 2011 or 2012.

According to Ambrose Evans... in the Telegraph, Irish nominal GDP has fallen by 19% from peak.
Irish deficit this year will be 12% or 20% including bank bailouts - and thats after 2 years of fairly brutal cuts.

Irish GDP fell again in Q2 - was forecast to rise. They are cutting like mad and not getting anywhere.

The logic for exiting the Euro is even more compelling for Greece & Portugal.

Hard to think how things will get better.

worldtraveller

The cost of Ireland's banking bail-out will rise to €40 billion (£34bn), the authorities have announced, placing an unprecedented strain on the nation's finances.

The increase in the bill to bail out Anglo-Irish bank and other stricken lenders will push the country's budget deficit up to 32 per cent of GDP, more than ten times the limit imposed on eurozone economies by Brussels.

Worries over the costs of rescuing the financial sector has lead to sharp rises in the premium Dublin must pay to borrow on international markets.

Telegraph.co.uk