# Financial cost of Covid and who will pay the bill



## joe sod (11 Apr 2021)

I started a new thread on the financial impact of the Covid measures first introduced by the government last year and who will ultimately pay for it when its all over. I didn't want to start yet another Coronavirus thread but actually this topic has not been really discussed at all yet. Also in another thread "will you go for a pint when restrictions are lifted" the discussion moved very much off topic to the area of bond yields . Ultimately the government is borrowing all this money to fill the gap caused by closed businesses and forced unemployment. Obviously the vaccine rollout is well under way now and the end looks to be in sight but I am very concerned at the lack of urgency and the cavalier approach of the authorities to reopening businesses and getting off the borrowed money.


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## noproblem (11 Apr 2021)

A quick answer to your question and not straying from what you asked, my answer is, The taxpayer will, but it will be many many,  years in the future.


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## Sunny (12 Apr 2021)

noproblem said:


> A quick answer to your question and not straying from what you asked, my answer is, The taxpayer will, but it will be many many,  years in the future.



I am sure my kids and Grandkids will be relieved....... Sure they only have the Financial Crisis and pensions timebomb to pay for as well......


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## noproblem (12 Apr 2021)

A pity about them, sure we never had anything like that at all in our lifetime. Thankfully we got toilets inside before I reached my teens, a fridge shortly afterwards and I had great pleasure later in life to get some central heating for my hard working parents and grandparents who lived there as well. We won't mention the 22/24% interest rates we paid. Then again we never had the internet or mobile phones either, that's why we invented them for you and your grandkids


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## Sunny (12 Apr 2021)

noproblem said:


> A pity about them, sure we never had anything like that at all in our lifetime. Thankfully we got toilets inside before I reached my teens, a fridge shortly afterwards and I had great pleasure later in life to get some central heating for my hard working parents and grandparents who lived there as well. We won't mention the 22/24% interest rates we paid. Then again we never had the internet or mobile phones either, that's why we invented them for you and your grandkids



Ah sure as long as you are ok now.......Sure why do we bother with climate change as well. We will all be dead by the time it impacts us. 

We should probably more borrow more money and have the craic.......


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## Purple (12 Apr 2021)

noproblem said:


> We won't mention the 22/24% interest rates we paid


Wow, so the real cost of your debt was reducing by 22/24% each year. Yet another thing to add to the list of reasons why you had it better than those starting out now. 
Oh, and you had a house to put the fridge in. That's another thing the 20 somethings won't have.


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## RedOnion (12 Apr 2021)

Cost: estimates are around 38bn, including stimulus packages to reboot the economy.

Who will pay: it'll just get added to the national debt bucket to be continually refinanced, with little bits repaid from budget surpluses in years to come.

Some official stuff published recently if you care for some light reading. I've tried to avoid any spurious websites...

Projections from the ESRI:




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						Irish economy to recover quite strongly from restrictions but unemployment unlikely to return to pre-pandemic levels until 2023 at the earliest
					






					www.esri.ie
				




Debt issuance. NTMA presentation is an interesting one that covers a lot on the economy and public finances:


			https://www.ntma.ie/uploads/general/NTMA-Investor-Presentation-April-2021.pdf
		


Dept of Finance Fiscal Monitor to end of March, covers tax incomes, expenditures and numbers stuff:




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						Fiscal Monitor March 2021
					






					www.gov.ie


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## noproblem (12 Apr 2021)

Purple said:


> Wow, so the real cost of your debt was reducing by 22/24% each year. Yet another thing to add to the list of reasons why you had it better than those starting out now.
> Oh, and you had a house to put the fridge in. That's another thing the 20 somethings won't have.


The fridge was for my parents, both dead now, bless them. My interest rates were because I didn't have a large deposit or parents/grandparents to give me anything. If you can't understand how bad things were only a short time ago I suggest you don't make condescending remarks to those of us who did have it really hard.


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## Purple (12 Apr 2021)

noproblem said:


> The fridge was for my parents, both dead now, bless them. My interest rates were because I didn't have a large deposit or parents/grandparents to give me anything. If you can't understand how bad things were only a short time ago I suggest you don't make condescending remarks to those of us who did have it really hard.


I did know the hard times. I remember the late 70's and 80's.
I also know that young people starting out now have it much harder than I did or than my parents did after they were married (they both grew up dirt poor so as children they did really have it worse).

The best time to buy a property is when interest rates are high. I bought my first apartment in Dublin city centre for £57,000 when I was 23 year old. I sold my second hand car and used savings for the deposit. I was 2 years qualified as a tradesman. Interest rate was 14%. Within a year it was 7.5% (that's why I bought; with EMU on the way rates were going to go down so prices were going to go up).

When interest rates are high then inflation is high so the real cost of your debt reduces significantly each year. You struggle for a few years but after 5-7 you are comfortable. People who took out big loans 15 years ago have seen no reduction in their real debt levels and their property is still worth less than they paid for it.


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## joe sod (12 Apr 2021)

AIB boosts holdings of Irish bonds to €7.7bn
					

State-controlled bank AIB increased its holdings of Irish government bonds by nearly €2.5bn last year as the National Treasury Management Agency (NTMA) ramped up debt issuance to fund pandemic spending.




					www.independent.ie
				




Interesting article today in the independent that AIB boosted its holdings in Irish government bonds to 7.7 billion euros a 45% increase and Irish government debt now constitutes 70% of its total capital. The rest of the article is behind the pay wall. Still it's a bit curious that a state owned bank would invest most of its capital in the debt of the state that owns the bank.
Therefore indirectly savers in AIB are owners of Irish government debt and that's where some of their savings are going now. Thanks to the ECB those savers are getting virtually no interest and the Irish government is getting very  cheap credit.   Viva la Republic


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## RedOnion (12 Apr 2021)

joe sod said:


> AIB boosts holdings of Irish bonds to €7.7bn
> 
> 
> State-controlled bank AIB increased its holdings of Irish government bonds by nearly €2.5bn last year as the National Treasury Management Agency (NTMA) ramped up debt issuance to fund pandemic spending.
> ...


What should AIB do with their excess cash? They need to put it into highly liquid assets. Is there another country's debt you would prefer to see them holding?

They haven't actually invested their capital in state bonds, but the amount equates to 70% of their capital.

But I fear you're taking your own thread off topic now. AIB were holding Irish bonds long before Covid. But in the last year they've got extra cash, so they've bought extra bonds.


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## joe sod (12 Apr 2021)

RedOnion said:


> They haven't actually invested their capital in state bonds, but the amount equates to 70% of their capital.


I don't understand what you are saying here because this is the sentence from the independent article 

_"Figure represents 7pc of bank’s total assets and 70pc of its capital"_


RedOnion said:


> But I fear you're taking your own thread off topic now. AIB were holding Irish bonds long before Covid. But in the last year they've got extra cash, so they've bought extra bonds.


Im not taking it off topic, because the topic is about how The government is funding the Covid borrowing . Im not saying anything improper is going on Im just shining a light into the area which most people don' t consider. The government is getting cheap credit from its own bank and savers in that bank are actually paying in a small way for the Covid response .


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## Sunny (12 Apr 2021)

joe sod said:


> I don't understand what you are saying here because this is the sentence from the independent article
> 
> _"Figure represents 7pc of bank’s total assets and 70pc of its capital"_
> 
> Im not taking it off topic, because the topic is about how The government is funding the Covid borrowing . Im not saying anything improper is going on Im just shining a light into the area which most people don' t consider. The government is getting cheap credit from its own bank and savers in that bank are actually paying in a small way for the Covid response .



Haven't read the article but looks like that they are taking the nominal value of the bonds and saying they represent 70% of their equity which is a nonsense. Banks are leveraged and assets are risk weighted so the % of the banks capital allocated to the bonds would be tiny.

As for the State getting cheap credit from AIB, that doesn't really stack up. The Government are not issuing billions of debt in private placements to AIB. The debt is all being issued through normal channels and most Irish debt is owned by non resident institutions. I don't know why they have increased their holdings to such an extent. Might be the yield or for collateral reasons.


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## RedOnion (12 Apr 2021)

joe sod said:


> _"Figure represents 7pc of bank’s total assets and 70pc of its capital"_





joe sod said:


> Still it's a bit curious that a state owned bank would invest most of its capital in the debt of the state that owns the bank.



Nowhere in that article does it say that AIB has invested its own capital in State debt.




joe sod said:


> Im not saying anything improper is going on Im just shining a light into the area which most people don' t consider. The government is getting cheap credit from its own bank and savers in that bank are actually paying in a small way for the Covid response .


The alternative is that somebody else buys the bonds from NTMA, at a negative yield. And AIB has to find somewhere else to place their excess deposits, at a negative yield.

Interest rates were negative before Covid. Just looks like they will be for longer now.
AIB has excess deposits before Covid, they just have more now.
AIB held state bonds before Covid, they just have more now.


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## almostthere (28 Apr 2021)

A quote from The Irish Independent from a Government minister....._"He said he expected the estimated cost of mandatory hotel quarantine to now exceed the projected €7m. He said as further hotels were added the cost would increase."_

I thought that those individuals who were staying in mandatory quarantine were paying top dollar for the privilege?

Where do the other costs come in to justify €7m?


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## odyssey06 (28 Apr 2021)

almostthere said:


> A quote from The Irish Independent from a Government minister....._"He said he expected the estimated cost of mandatory hotel quarantine to now exceed the projected €7m. He said as further hotels were added the cost would increase."_
> 
> I thought that those individuals who were staying in mandatory quarantine were paying top dollar for the privilege?
> 
> Where do the other costs come in to justify €7m?


There may be some additional security costs the state needs to pickup.

Also, I think state is covering costs of returning Erasmus students.


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## joe sod (12 Mar 2022)

I think this question is much more appropriate now that the covid emergency is over and the total cost of it is circa 35 billion euros bringing our national debt to close to 250 billion euros now. The government threw the kitchen sink at Covid spending more per head on it than any other european country. The thinking seemed to be that Covid was the only thing that mattered and there would be no more emergencies afterwards yet now we have a much bigger problem, the Ukraine war, exploding inflation, and possible shortages and rationing.
The ECB now about to raise interest rates to counter this inflation and to stop the value of the euro falling on the currency markets, therefore the cost of that huge debt to Ireland is about to rise substantially .
Throughout Covid we were being told by the media and government that over 4000 people died from Covid yet a study in the lancet journal showed that Ireland had the lowest excess deaths from Covid of any country with just over a 1000 excess deaths from Covid or only 25% of the official statiistics


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## Sophrosyne (13 Mar 2022)

joe sod said:


> Throughout Covid we were being told by the media and government that over 4000 people died from Covid yet a study in the lancet journal showed that Ireland had the lowest excess deaths *from Covid* of any country with just over a 1000 excess deaths *from Covid* or only 25% of the official statiistics


You are misinterpreting the conclusions of the Lancet study.

“In Ireland, the study estimates there were an additional 1,170 excess deaths from *all* *causes* over the period in which 5,910 Covid-19 deaths were recorded.”


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## Purple (15 Mar 2022)

Sophrosyne said:


> You are misinterpreting the conclusions of the Lancet study.
> 
> “In Ireland, the study estimates there were an additional 1,170 excess deaths from *all* *causes* over the period in which 5,910 Covid-19 deaths were recorded.”


Exactly; fewer road deaths and deaths from other causes *but* also plenty of people who would have died otherwise who had Covid when they died and so were shown as Covid deaths. 
If I was Covid positive but died of a heart attack or was run over by a bus I would have gone into the Covid deaths statistics. Thereofre it is fair to say that the real figure of those who died *from* Covid is lower than the number who died *with* Covid.


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## odyssey06 (15 Mar 2022)

Purple said:


> Exactly; fewer road deaths and deaths from other causes *but* also plenty of people who would have died otherwise who had Covid when they died and so were shown as Covid deaths.
> If I was Covid positive but died of a heart attack or was run over by a bus I would have gone into the Covid deaths statistics. Thereofre it is fair to say that the real figure of those who died *from* Covid is lower than the number who died *with* Covid.


In Ireland you wouldn't have been included in the death stats ... I thought it went from the death cert causes, which is why the lag in deaths were so pronounced. It's not automatic that a positive covid means it is included. A heart attack is a murky one because covid could be a contributing factor. But as we would expect a certain number of people to die from hearts attacks etc in the year, that is where the excess death figure comes in.


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## Purple (15 Mar 2022)

odyssey06 said:


> In Ireland you wouldn't have been included in the death stats ... I thought it went from the death cert causes, which is why the lag in deaths were so pronounced. It's not automatic that a positive covid means it is included. A heart attack is a murky one because covid could be a contributing factor. But as we would expect a certain number of people to die from hearts attacks etc in the year, that is where the excess death figure comes in.


Fair enough. I was under the impression that a person who had Covid and died was a Covid death. It is certainly the case that plenty of people who were close to death (would have dies within weeks or months) were in the statistics.


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## Sophrosyne (15 Mar 2022)

This was investigated by The Journal in July 2020 in response to misleading social media posts.

“*Death certificates *

The document adds that Covid-19 “should be recorded on the medical certificate of cause of death for ALL decedents (deceased people) *where the disease caused, or is assumed to have caused, or contributed to death”*.

The guidelines also note that if the person who died was suffering from other conditions, these should also be included on the death certificate.

For example, in cases where Covid-19 caused pneumonia and fatal respiratory distress, both pneumonia and respiratory distress should be included on the certificate, along with the virus, to highlight the “chain of events” that led to the person’s death.”

“They added that where the treating doctor has “a strong clinical suspicion” the patient had Covid-19 “due to the circumstances” and “the nature of the illness” but where the person has tested negative for the virus, or not been tested at all, these deaths will be notified to the national surveillance system and reported by the HPSC as a death in a “probable/possible Covid-19 case”.

If it is later confirmed that the patient in question did not have the virus, their death is removed from the official figures.

When announcing the latest figures in its daily press release, the Department of Health sometimes includes the following line: “Validation of data at the HPSC has resulted in the denotification of x death(s).” This is generally a low number and indicates that a death previously listed as being caused or probably caused by Covid-19 was later found to be incorrectly categorised.

The HSE spokesperson said there are “different reasons as to why Covid-19 deaths would be denotified, for example, test results pending which are subsequently negative or validation of data which may identify duplicate entries”.”


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