tag:blogger.com,1999:blog-8817171247555815363.post7866539433125285963..comments2024-03-26T05:57:44.937+00:00Comments on True Economics: Economics 07/01/2010: NTMA's end of year resultsTrueEconomicshttp://www.blogger.com/profile/07350536454228478974noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-8817171247555815363.post-12202717376904793522010-01-07T19:18:16.240+00:002010-01-07T19:18:16.240+00:00“NAMA will acquire loans with a nominal value of a...“NAMA will acquire loans with a nominal value of approximately €80 billion”. Hold on, folks – was it €77 billion or €80 billion?<br /><br />I suppose thats why they call it a "bad bank" Constantin, they are terrible with their calculuspatrick1978https://www.blogger.com/profile/09173078693875805958noreply@blogger.comtag:blogger.com,1999:blog-8817171247555815363.post-28240245650112715472010-01-07T14:22:16.609+00:002010-01-07T14:22:16.609+00:00''..But the worrying thing is the time pro...''..But the worrying thing is the time profile of these bonds. €14.53 billion of the bonds issued this year will mature ..''.<br /><br />The NTMA have been expanding the number of primary dealers they use in the Bond markets.<br />Presumably these dealers are the buyers of our bonds and they make the case for Ireland by selling into the secondary market.<br /><br />I think an interesting question to ask who is are credit default swaps being purchased by the dealers to hedge their bets.<br />Secondly if they are what is the spread between the cost of CDS and the Bond yield?.In other words what is the risk free rate these dealers are getting?<br />This ,in my opinion,would be one pointer to whether these dealers will continue to buy our bonds.<br /><br />The other point which might lower that spread is whether we have passed the point where the marginal utility of debt turns negative re injecting growth in the economy.<br /><br />The euro is not backed by the gold standard and has no effective tax base.So maybe increased Quantative Easing by ECB (through Government bond purchses by our Zobie banks and repo at ECB) will keep the show on the road.<br /><br />Regarding your issue with the Growth and stability pact.Maybe they will try to roll up these bonds into one 10 year or 20 year bond now the perception is better of our finances and spreads are lower.<br />Another possiibility is the repo'd bonds deposited with ECB will be rolled over when they reach maturity and will de facto become perpetuity bonds.This would effectively lower any coming liabilities for the current account defecit in 2014 and we would meet the growth and stability pact target albeit through creative accounting.<br /><br />By that time the EU should have set up a Federal EU tax.Effectively our debts will be written down through conversion to perpetuity bonds.<br />The ECB will then emasculate the Irish states capacity to raise money internationally by forcing on it a system of raising revenue similar to Muni bonds in the USA.<br />These bonds will be linked to local Irish taxes where holders of the bonds can claim against income tax.International investors would have no reason to invest in them.<br /><br />This way the EU gets what it wants , an EU federal tax ,German voters are satisfied because interest payments are made in perpetuity on these bonds even if the principal is never redeemed,the integrity of the Euro as a currency is ensured and the Irish state as a member of the EU also survives with a less troublesome capacity to inflict damage outside of Ireland.<br /><br />This is speculation but German politics will in my view drive the type of measures that lead to my conclusions above.<br /><br />Regards,<br />Sean.Anonymousnoreply@blogger.com