# Is Ireland on Course for an Inevitable Default?



## One (23 Apr 2011)

I read the following remark this morning;

"Ireland must go back to the EU and be honest about the fact that we cannot pay this ever spiralling mountain of debt.  If we don’t do it now then we will face interest payments in the near future which will amount to over €10 billion per year, in other words one third of this year’s tax take. This will in the end force us to default anyway". 

Is it true that we will face interest of over €10 billion per year?
Is it inevitable that we will be forced to default?


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## horusd (23 Apr 2011)

Where did you read the remark one? Opinions are many, it would be good to know the source.


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## One (23 Apr 2011)

On the website of an elected T.D. presently sitting in the Dáil in opposition. It is presented as an opinion / general statement, with no references to any research performed or any facts, data, etc.


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## horusd (23 Apr 2011)

Altho they may be right, I don't trust opinion that isn't impartial, and if TD's were such experts in economics, they kept it very quiet for the last long period of time!

There maybe a structured default imo. Rather different from a chaotic one. The powers that be would be very wary of contagion, so I think the latter is unlikely, altho not impossible given the strains on the Euroland political system.  ie recent election in Finland.


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## One (30 Apr 2011)

Do you know if it is accurate for him to say that we will face interest payments in the near future which will amount to over €10 billion per year, in other words one third of this year’s tax take? Do you know of any interesting links where I could read about that kind of thing?


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## The_Banker (1 May 2011)

horusd said:


> Altho they may be right, I don't trust opinion that isn't impartial, and if TD's were such experts in economics, they kept it very quiet for the last long period of time!
> 
> *There maybe a structured default imo. Rather different from a chaotic one. The powers that be would be very wary of contagion*, so I think the latter is unlikely, altho not impossible given the strains on the Euroland political system. ie recent election in Finland.


 
Hi horusd,
The bit in bold makes it sound as if the EC/ECB have a plan and are in control of the situation. But are they?
Colm McCarthy writing in todays Indo makes the point that they have no plan in place and we will merely be sacrificed for the greater good of the European project.
Now, I am no economist but what Mr McCarthy is saying seems to be how it is panning out to me.

http://www.independent.ie/opinion/a...and-and-the-eurozone-to-disaster-2634443.html


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## DrMoriarty (7 May 2011)

Morgan Kelly takes it a step further in today's _IT_... an extraordinary article.

[broken link removed]


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## JoeB (7 May 2011)

The figure of 10 billion interest to 30 billion income is quite accurate I'd imagine.

We will be paying interest on up to 250 billion. Even 200 billion at 4% would be 8 billion per year.

I belive we used to spend up to 50 billion a year.. I think we'll struggle making do with 22 billion. We used to spend 15 billion on both the health service, and social welfare, so 30 billion between those two departments... and another 20 billion spent elsewhere. Soon we'll have 20 to 25 billion per year, for everything.

Are these figures substantially wrong?

I suppose I should add that the US owes 14,000 billion, and is paying interest on it. Can it afford to repay?


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## Knuttell (7 May 2011)

> At this stage, with Lenihan looking set to exploit his strong  negotiating position to seek a bailout of the banks only, Honohan  intervened. As well as being Ireland’s chief economic adviser, he also  plays for the opposing team as a member of the council of the European  Central Bank, whose decisions he is bound to carry out. In Frankfurt for  the monthly meeting of the ECB on November 18th, Honohan announced on  RTÉ Radio 1’s Morning Ireland that Ireland would need a bailout of “tens  of billions”.
> *Rarely has a finance minister been so deftly sliced  off at the ankles by his central bank governor. And so the Honohan  Doctrine that bank losses could and should be repaid by Irish taxpayers  ran its predictable course with the financial collapse and international  bailout of the Irish State.*




That just jumps right out at you,with friends like that etc.


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## Brendan Burgess (9 May 2011)

JoeBallantin said:


> The figure of 10 billion interest to 30 billion income is quite accurate I'd imagine.
> 
> We will be paying interest on up to 250 billion. Even 200 billion at 4% would be 8 billion per year.
> 
> ...



Hi Joe

I have a post here which sets out the National Debt at 31 12 2010. The net national debt was €133 billion.  I don't know what interest rate we are paying on it. 

It will have increased since as we continue to live beyond our means.

It will increase for the money we are borrowing to recapitalise AIB, BoI, PTSB and EBS. But we should get most of this back. 

Morgan Kelly adds in the €70 billion which NAMA has borrowed. This is backed up by assets of roughly that value. I think that the interest cost on this is the ECB rate of 1.25%


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