Will you go for a pint when restrictions are lifted?

odyssey06

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It's a bit like the 'slate' in the Rovers return... on the 'never never' :)

There's a question now. What fictional bar would you most like to have a pint in?
Cheers of Boston?
 

joe sod

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I suppose there's a hope that this time there will be a coordinated EU response, a kind of Eurobond.
The whole issue of fiscal union was long-fingered after the 2008 crash but it's still there.
Its further away than ever, we in Ireland , spain and Italy might like the Eurobonds alright where our government borrowing is backstopped by Germany and the Nordics. However can you imagine the consternation if welfare or public sector pay had to be cut to German levels and taxation increased for lower paid workers.
The vaccine rollout shambles also shows that a "coordinated EU response" is not the best way of doing things . There is a big accountability deficit at the heart of the EU system, Ursula Von der Lyons wasn't democratically elected and there is no way of removing her now, The european parliament can't table a no confidence motion like you can in the Dail.
 

Sunny

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Its further away than ever, we in Ireland , spain and Italy might like the Eurobonds alright where our government borrowing is backstopped by Germany and the Nordics. However can you imagine the consternation if welfare or public sector pay had to be cut to German levels and taxation increased for lower paid workers.
The vaccine rollout shambles also shows that a "coordinated EU response" is not the best way of doing things . There is a big accountability deficit at the heart of the EU system, Ursula Von der Lyons wasn't democratically elected and there is no way of removing her now, The european parliament can't table a no confidence motion like you can in the Dail.
The EU have issued billions of euro worth of bonds to and done back to back lending with individual countries to pay for covid job protection schemes. Ireland alone has benefited from billions of cheap EU issued debt both from the financial crisis and from covid. Its still debt though. No matter how cheap it is.
 

joe sod

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Its still debt though. No matter how cheap it is.
Yes thats all true but the debt is irish sovereign debt not european debt which a Eurobond would be. The ECB has stepped in to buy up all those european sovereign debt bonds, it had to step back in again recently when the italian government bonds started going back up in interest rate. How long though can the ECB continue to do this especially with the prospects of inflation on the horizon. Nobody especially the irish government is prepared for rising interest rates even a small bit
 

Paul O Mahoney

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Yes thats all true but the debt is irish sovereign debt not european debt which a Eurobond would be. The ECB has stepped in to buy up all those european sovereign debt bonds, it had to step back in again recently when the italian government bonds started going back up in interest rate. How long though can the ECB continue to do this especially with the prospects of inflation on the horizon. Nobody especially the irish government is prepared for rising interest rates even a small bit
"Inflation on the horizon "? Being hearing this since 2008 and it has never transpired. Can't see it being an issue when the dust settles if anything deflation is more likely.
 

joe sod

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"Inflation on the horizon "? Being hearing this since 2008 and it has never transpired. Can't see it being an issue when the dust settles if anything deflation is more likely.
That's true but the commodities and materials are rising big time, ask anyone in the building industry. Their is a global shortage in the metals markets just as the world is about to go a spending boom and governments are ramping up their infrastructure investment. The tech and green booms are very "metals and materials" intensive. That's why the bond markets are trying to push up interest rates they no longer believe the "no inflation" narrative and the central banks have to come in to suppress them again .
 

Deiseblue

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It's a bit like the 'slate' in the Rovers return... on the 'never never' :)

There's a question now. What fictional bar would you most like to have a pint in?
Cheers of Boston?
I actually drank in what purported to be Cheers in Beacon Hill during the 1994 World Cup , basically a tourist trap.
The exterior was used in the TV show but inside was totally different.
More memorably I was in Larry Murphy’s pub in Baggot Street one quiet weekday night when Norm walked through the door , to our eternal credit the locals forsook the chance to shout “ Noooorm “
The actor had featured in the Kilkenny laughs festival, visited Dublin and had dined in L’ecrivan before visiting Larry.
Nice guy and a good laugh.
 

Leo

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The vaccine rollout shambles also shows that a "coordinated EU response" is not the best way of doing things . There is a big accountability deficit at the heart of the EU system, Ursula Von der Lyons wasn't democratically elected and there is no way of removing her now,

Can you imagine what a sad state we'd be in if we had been fully reliant on the HSE instead? No accountability there either, and none of them elected....
 

Purple

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Ursula Von der Lyons wasn't democratically elected
She was proposed by the European Council, which is made up of the EU's heads of State. She was then elected by the European Parliament so yes, she was democratically elected. Your statement is factually incorrect.
 

Purple

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"Inflation on the horizon "? Being hearing this since 2008 and it has never transpired. Can't see it being an issue when the dust settles if anything deflation is more likely.
There's been a lot more fuel thrown on the fire in the last 12 months. Increased money supply in the West after 2008 resulted in massive wage inflation in South East Asia. That sink is almost full.
 

RedOnion

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There's been a lot more fuel thrown on the fire in the last 12 months. Increased money supply in the West after 2008 resulted in massive wage inflation in South East Asia. That sink is almost full.
The bond markets are pricing in expected inflation in Eurozone of c. 0.8% per annum to end of 2028. There's a lot of money behind those projections.
There is no real prospect of inflation of CPI, although there are massive increases in specific commodities and asset values. The EU wants inflation to rise to about 2%, and they're not able to get it there.

But that's got nothing to do with going for a pint!
 

Purple

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The bond markets are pricing in expected inflation in Eurozone of c. 0.8% per annum to end of 2028. There's a lot of money behind those projections.
Isn't it fair to say that the short term (2 year or so) yield curve is more a reflection of stated policy from the FED and ECB rather than economic forecasts whereas the longer term yield curve is a reflection of actual economic forecasts?
 

RedOnion

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Isn't it fair to say that the short term (2 year or so) yield curve is more a reflection of stated policy from the FED and ECB rather than economic forecasts whereas the longer term yield curve is a reflection of actual economic forecasts?
Wait til I pour a drink here!!
 

RedOnion

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Isn't it fair to say that the short term (2 year or so) yield curve is more a reflection of stated policy from the FED and ECB rather than economic forecasts whereas the longer term yield curve is a reflection of actual economic forecasts?
Pint in hand (I wish!!)

There are 2 main types of Government bonds: 'Normal' bonds, and Inflation Linked bonds (OATis in Europe). OATis pay a return based on the nominal interest rate + the actual CPI. The overall yield is determined by excess liquidity now, ECB policy, etc., but the difference in the the 2 yields tells us what 'the market' expects inflation to be.

If the yield on a 'normal' bond is 0%, but the yield on an OATis (for the same country / term so there is no difference in risk) is -0.8%, then we can infer that the market expects the CPI to be 0.8% over that term (i.e. the holder will end up with the same 0% total return).

There's a very large volume of these issued by the French, and the bonds are highly liquid & traded daily so it's a good example to look at. The current spread is 0.8% to the end of 2028. That's where 'real money' is betting that inflation will average over the next 7 years - if CPI is higher, they'll make money (vs holding normal bonds), if it's lower they'll lose.

As for interest rates in general, the talk in the market has in some areas moved away from 'lower for longer' to the possibility of 'lower forever'. There is currently no prospect of inflation being 'stoked' to the level that interest rate policy will change. The ECB have a target of 2% inflation per annum. Official Interest rates will only rise if there's a possibility of inflation going above that level. There are risks of short term liquidity squeezes affecting bond yields outside of that official policy. At the moment most inflation is in specific areas (an in some cases only bringing commodity prices back to where they were previously), and price rises due to supply issues - e.g. try to buy building timber at the moment in Ireland: prices are changing weekly, but the price rises are primarily due to issues getting felling licences for forestry.
 

joe sod

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The bond markets are pricing in expected inflation in Eurozone of c. 0.8% per annum to end of 2028. There's a lot of money behind those projections.
Yes but what was their expected inflation target for 2028 a year ago? I bet it was a lot lower than 0.8% therefore just because they predict 0.8% now doesn't mean that they will be correct. The fact is that the bond markets in total are trying to push interest rates up now whereas they were not doing that a year ago therefore things are changing. The future projection of inflation is a moving target, I bet the projection of where the bond markets predict inflation will be in 2028, will be higher next year.
The important thing to understand is that the narrative put out that there is all this money that the government can spend because the ecb will print it and that it will never have to be paid back is totally false
 
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