Originally Posted by Taxi Driver

The principal is replaced rather than repaid. In 2010 a €31 billion liability was created with the Promissory Notes. This will always be €31 billion but it will change as the Promissory Notes are repaid.

For example after €10 billion of the PNs have been repaid we will have a €21 billion debt from the PNs and a €10 billion debt from the money used to repay the PNs. The total will still be €31 billion. That will never be repaid. What needs to be slowed down is the rate at which the PNs are repaid with other government borrowings.

The 3.7% is the average rate on the EU/IMF loans. It is set by those institutions. The EU rate is set at the rates at which the EFSM/EFSM could/can borrow and this is passed on to Ireland. The IMF rate is set relative to some formula.

Ok - crystal clear on the interest rates now and how they arise.
Also I can see how the debt is reflected in the GGD (gross government debt balance) as the years go by, etc.

In your example of €10 billion PNs paid down --- is that said to happen once 10 billion + interest due is paid or just €10bn paid off ?
In the term structure shown here :
http://www.finance.gov.ie/documents/...issory2010.pdf

the total amount paid over the 15yr or so term is north of €43 billion.
That would indicate we are paying 31bn + interest (I am assuming the key interest rate here is the 3.7%)

Does Taxi Driver still have schedule agreed by Lendahand re repayments and interest. I think the total cost for Anglo / INBS ( what a joke ) was around €60 billion

Yes, €60billion not €32 billion, €60 billion.

Anyone find out what BIFFO and Seanie discussed at Druids Heath ?

Originally Posted by MayoDub

Many thanks for the clarification TD.
So - is there any grain of truth in a statement that the principal is never repaid (in any scenario open to the Irish govt)?

Ahhhh! Now we are getting to the nub of the discussion; the bottom line as it were!

Open! - the truth is that the government has no other option!

Official Ireland does not want this to get out. All discussions on the airways will have this aura of dressing up, befuddlement! So as to give the insiders time to extricate themselves from the whole sorry mess. Then watch the axe being taken to CS salaries etc. God knows the kind of shenanigans that are going on behind the scene: all a result of visionless people in control. It is a slow moving horror film; now in its thirteen year!

Originally Posted by MayoDub

the total amount paid over the 15yr or so term is north of €43 billion.
That would indicate we are paying 31bn + interest (I am assuming the key interest rate here is the 3.7%)

North of €43 billion is approximately €47-€48 billion in total.

Originally Posted by gerhard dengler

North of €43 billion is approximately €47-€48 billion in total.

sounds to me like we are on the hook for interest + principal (or coupon + interest) or whatever the counterparts are in bond-debtspeak

I realise this isn't new news but I'm wondering why there is quite a bit of obfuscation based on financial engineering/off balance sheet stuff to downplay what the Irish taxpayer is actually being caught for.
Also I realise that the structural deficit due to imbalances in tax receipts/current spending are a massive component of what is causing austerity here.

Originally Posted by MayoDub

sounds to me like we are on the hook for interest + principal (or coupon + interest) or whatever the counterparts are in bond-debtspeak

I realise this isn't new news but I'm wondering why there is quite a bit of obfuscation based on financial engineering/off balance sheet stuff to downplay what the Irish taxpayer is actually being caught for.
Also I realise that the structural deficit due to imbalances in tax receipts/current spending are a massive component of what is causing austerity here.

Anglo/IRBC is €31 billion in capital repayment with €17 billion in interest charges repayments = €48 billion.
This accounts for repayments 2011-2025.

There is speculation that the actual costs of Anglo/IRBC 2026-2031 might well push the final costs to €52 billion
It's actually discussed at this link (hat tip to Namawinlake)
Minister Noonan again confirms gross cost of IBRC bailout at

Originally Posted by gerhard dengler

Anglo/IRBC is €31 billion in capital repayment with €17 billion in interest charges repayments = €48 billion.
This accounts for repayments 2011-2025.

There is speculation that the actual costs of Anglo/IRBC 2026-2031 might well push the final costs to €52 billion
It's actually discussed at this link (hat tip to Namawinlake)
Minister Noonan again confirms gross cost of IBRC bailout at

Good link Dengler.

The reality of 2011-2025 (under current plan of record + any adjustments due to potential losses at IBRC) seem spot on.
I'm not sure whether I was listening to Alice in Wonderlandonomics this morning.
Maybe it was smoke and daggers but the distinct impression I got from the economics prof (architect/advisor of the IBRC PNs??) was that the capital/principal made little odds to the repayment schedule and that the interest rate was dirt cheap and likely to get better on account of the ECB key interest rate forecast.

Originally Posted by MayoDub

Good link Dengler.

The reality of 2011-2025 (under current plan of record + any adjustments due to potential losses at IBRC) seem spot on.
I'm not sure whether I was listening to Alice in Wonderlandonomics this morning.
Maybe it was smoke and daggers but the distinct impression I got from the economics prof (architect/advisor of the IBRC PNs??) was that the capital/principal made little odds to the repayment schedule and that the interest rate was dirt cheap and likely to get better on account of the ECB key interest rate forecast.

I'd also like to know people's views on the assertion that National Debt never gets paid down. Did Ireland Inc. not do exactly this during the boom years?

To suggest that National Debt is never ending seems a bit like saying that a credit card never gets paid off. This might work, but is depending on inflation to erode the debt value, and adequate economic growth to fund the interest payments?

Originally Posted by MayoDub

Good link Dengler.

The reality of 2011-2025 (under current plan of record + any adjustments due to potential losses at IBRC) seem spot on.
I'm not sure whether I was listening to Alice in Wonderlandonomics this morning.
Maybe it was smoke and daggers but the distinct impression I got from the economics prof (architect/advisor of the IBRC PNs??) was that the capital/principal made little odds to the repayment schedule and that the interest rate was dirt cheap and likely to get better on account of the ECB key interest rate forecast.

If Noonan is telling the Dail that the Anglo/IBRC promissory note mechanism is going to cost €48 billion, I think that reasonable to take what Noonan says at face value.

Originally Posted by clearmurk

I'd also like to know people's views on the assertion that National Debt never gets paid down. Did Ireland Inc. not do exactly this during the boom years?

To suggest that National Debt is never ending seems a bit like saying that a credit card never gets paid off. This might work, but is depending on inflation to erode the debt value, and adequate economic growth to fund the interest payments?

Yes - stag-{de}-flation won't cut it .. totally unsustainable.

Regarding the Promissory Note element .. it seems to me that the repayment schedule includes both principal/capital + interest and any idea that the 31bn capital component can just accumulate into some never-never accumulating wodge of debt to be inherited by our children/grandchildren seems obscene.

I guess by restructuring the PNs into a 40 year term ... the interest payments get spread over a much longer period of time ... much like the Treaty of Versailles for WWI Germany.