PVC King wrote:The discussion is whether one should spend an estimated â‚¬5bn building a metal tube under a little of Dublin City Centre to the greying suburbs and beyond to Dublin International Airport and a small town called Swords.
The people who would pay for that are the taxpayers; now that the taxpayers can't pay for healthcare they turn to an agency called the National Treasury Management Agency or NTMA. Last week said agency went to Market or Capital Markets as they are known offering about 125 basis points above what the Bund (or what the prudent German Central Bank) would offer to tempt investors to part with their money.
These investors who for 10 years between say 1997 -2007 would have asked for between 3 and 15 basis to cover the extra risk. The markets refused the risk spread of almost 50% higher return than what the Germans pay; they wanted a further 175 basis points or slightly higher than what the Greeks pay and three times the risk spread the Spanish pay.
If â‚¬5bn is borrowed the markets will want over â‚¬5.6bn plus interest to hand over â‚¬5bn.
In 1986 a simple choice was set out by impartial independent economists, continue to spend money you don't have and that capital markets don't want to give you or restructure. Thankfully McSharry sorted things out very quickly and the rest is as they say history. I have no doubt Ireland can restructure successfully as there are a lot of qualities in the Irish business culture.
However you can't live beyond your means and when your cost of credit is higher than Greece it is fair to say that you have no reputation to risk; that was the case in 1986 and it is the case again.
How this project can seriously be discussed against this backdrop is frankly laughable. I have no doubt that all the private sector submissions link price to government covenant and if that goes the penalties will be severe. The costs of project finance will be linked to perceived risk of the underwriter (The Taxpayer) and if big ticket items like underground light rail systems keep being bought you only have to change the R to a C to see where it leads.
what is really laughable are the schoolboy howler maths you invariably cough up.
you have a perverse mission to prove MN is wrong but you consistently garble the basic facts of the project.
further you have a sort of theoretical dream concept of the reality of Dublin transport which makes it plain that your grasp is hopelessly vague..
Your idea that Airport DMUs could fit into the Northern Line with the DART would be laughable if it was not so ridiculous.
you continually spout banking technical data while getting the obvious wrong.
The fact that you use this guff, when it might as well be Chinese to most people is the sad 'blinding with science' tactic of someone who is bluffing.
Firstly, the capital cost of MN is being tendered for less than 3 billion.
So, what's the tripe about borrowing 5 billion?
You previously stated that the 25 year payments would only be a subvention and the debt would still be owed.
After 25 yrs, the debt is cleared.
You think we won't be able to afford it based on your prophecies for the Irish economy.
If you know so much how come you failed to see the recession and originally supported MN?
Your mindset is that which built the M50 too small at great cost eventually.
What is happening in the world economy is simply a correction.
Expansion and growth will resume quite quickly and increase exponentially as they always do.
MN will be peanuts in cost, likely even by the time it is built.
So, spout on.
It will be built. There is serious political will behind it. As said many times, no real money needed until it's built in 2016 approx.