# Bailout - Amount to Borrow & Interest Cost



## DerKaiser (24 Nov 2010)

Hi.

There was a sketch in the papers titled 'Reverse Mugging' with the EU/IMF forcing a wad of cash upon Brian Lenihan.

I'm starting to get concerned that this might actually happen!

The Budget deficits are likely to be approx €40bn over the next 4 years, so why do we need €85bn?

It appears as though approx €30 - 35bn of the additional borrowings is to be used to first bring the capital ratios in the banks up to 12% and then set aside a load more as a contingency.

It also appears as though we'll be charged up to 7% for the privilege of borrowing double the amount we need to.

We have alternatives.  

Unlike Greece, we have still about €30bn+ in the national pensions reserve and day to day cash already borrowed. 

Unlike Greece, we don't have any massive roll over of debt in the next year or so.

Is the only sensible course of action to take the EU/IMF money as a facility that we draw down only when necessary?

Can we negotiate a more reasonable interest rate (e.g. 4% for money to be repaid over 10 - 20 years)?

It seems that we are in a position to negotiate (regardless of the fact we got ourselve into the mess - but that's irrelevant) due to the fact that the EU seem seriously panicked over the possibility of the Euro being undermined if we were to default.

The amount we draw down and the rate we of interest pay are surely up for negotiation and amount to possibly the most important deal this state will ever make.


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## Tentman (24 Nov 2010)

Well, Just to show how crazy things are, consider this:
The UK is, out of the kindness of its heart, giving us €8bn of a loan. This will come at no cost to the UK taxpayer. The UK Gov can borrow this 8bn at 1.5 to 2%.They then loan it to us at 5%. Making a nice fat profit in the process. Mad, absolutely mad


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## jpd (24 Nov 2010)

Well, if we had to borrow it on the market, it would cost 9% so I suppose that 5% is a bargain!


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## markowitzman (24 Nov 2010)

The UK Gov can borrow this 8bn at 1.5 to 2%.They then loan it to us at 5%. Making a nice fat profit in the process. Mad, absolutely mad

Would you loan Ireland money at 5%??

Vincent Browne last night seemed to suggest game is up..
[broken link removed]


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## Tentman (24 Nov 2010)

I saw it and wouldnt give tuppence for the economists he had on. There are far better suggestions on how to address our problems here in this forum.


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