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13 minutes ago, Mr Newbie said:

They plan to raid the NI Fund for £100M (Cannan has said as much) which seems sensible but if this goes on longer term they will probably need more than that. Italy looked at issuing Corona Bonds to pay for their mess but the EU refused to let them. However, I would say IOM and the UK might well be wise to look at ways of debt funding via institutional subscriptions. Why liquidate equities when long term come the recovery they’ll make a better return then the coupon you pay out on your bond? 

Either way,the claims have to be paid. And I can't see many takers for a bond issue. 

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Press Release from the Rob Vine Fund   Following the cessation of Motor Sport on the Isle of Man in the midst of the Covid-19 pandemic the Directors of the Rob Vine Fund, Registered Charity No.954

@Lost Login - (and anyone else who thinks this doesn't apply to them particularly) I seem to recall you're an accountant so you can do this. Set up your own model of exponential growth in numbers

There's a lot of difficult concepts and difficult decisions being made here.  I'll have a go at a further explanation.  Possible long post ahead. First the difference between 'public health' and

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6 minutes ago, Andy Onchan said:

That's very sad. Have there been deaths from any other care home? 

Doesn't seem to have been. There have been 4 at Noble's, 2 at Abbotswood on Saturday and a further 3 from Abbotswood announced today by Ashford. 

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3 minutes ago, Andy Onchan said:

Either way,the claims have to be paid. And I can't see many takers for a bond issue. 

Why no appetite for a bond? It’s the best way of funding all of this to replace money taken out of the NI fund and there will definitely be an appetite. 

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36 minutes ago, Mr Newbie said:

They plan to raid the NI Fund for £100M (Cannan has said as much) which seems sensible but if this goes on longer term they will probably need more than that. Italy looked at issuing Corona Bonds to pay for their mess but the EU refused to let them. However, I would say IOM and the UK might well be wise to look at ways of debt funding via institutional subscriptions. Why liquidate equities when long term come the recovery they’ll make a better return then the coupon you pay out on your bond? 

Indeed.

Some folks are getting all wound up about what is, in the grand scheme of things, a relatively small amount of money. (Has OTB gone?).

£100M i.e. £1M per day for three months is something that the Island can easily afford. VAT receipts are not all 'losses' even if not collected now - they are mostly deferrals i.e. Cash-flow issues. Same with building maintenance, car repairs and most of the economy, its deferral not cancellation.

Borrowing would be simple for the IOM (Even if I got slagged off for it last time). Borrowing would not need to be against assets - The borrowing would be against the willingness to tax in future to pay it off just as most Government borrowing has always been. In 1694 the Bank of England was formed on exactly this basis to tax, the amount raised was £1,200,000 and 50% of that was immediately spent on the Royal Navy to open up trade routes (mostly South America) to get they money back (they did).

I named the first 6 taxes that came into my head the other day (to shut OTB up) - it doesn't matter what individual taxes, that's for debate. Nor does it matter what you call the borrowing - Gilts , Bonds, Promissory notes, credit cards, mortgages, IOU's - same thing in the end, borrow now, pay later, it's just cash flow.

Cannon understands this, that's why he has already set it in motion, it's up for debate next House of Keys.

"Of course all the measures that we are undertaking are and will impact on Government finances particularly when combined with projected losses of revenue.  I have already indicated that the estimated direct cost of these interventions may be up to £100m in the next three months and that we may experience a short term decline in expected tax and VAT receipts.

In order to prepare for any unforeseen eventualities I have written to Tynwald Members today indicating that I will be seeking to amend our legislation to allow the Treasury more flexibility when it comes to borrowing money.  This will be needed as a prudent measure to protect against unexpected eventualities and I will outline the full purpose and intent of the Treasury when the House of Keys next sits."

It's no big deal really, despite the hyperbole. About £1,200 for each person on the Island - that's not something that needs to be passed onto the Grandkids!

Broken down car, war with the Froggies again, Covid 19 - unexpected event requiring short-term finance paid off over time. Hey-ho.

Edited by Manximus Aururaneus
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20 minutes ago, Mr Newbie said:

You are quite right that MERA is £200. It is the Salary Supoport Scheme that is £280 and I that is what I thought was being discussed but it is confusing. MERA is for those who have been made redundant or lost self-employed income.

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2 hours ago, John Wright said:

Telegraph has never been a decent newspaper. Not even a half decent one. It’s always been to the far right, sometimes even to the right of extreme Tories, full of Buffon-Tufton (colonel) and Disgusted of Tunbridge Wells. And the writing is, and was, turgid.

The best thing about the Telegraph in its good old broadsheet days was the cryptic crossword which was marginally easier than the Times, and much easier than the Guardian. (The less said about the Observer's Azed monstrosity, the better.) The best thing about the Guardian was - and presumably still is - the Steve Bell cartoons.

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6 minutes ago, Manximus Aururaneus said:

Indeed.

Some folks are getting all wound up about what is, in the grand scheme of things, a relatively small amount of money. (Has OTB gone?).

£100M i.e. £1M per day for three months is something that the Island can easily afford. VAT receipts are not all 'losses' even if not collected now - they are mostly deferrals i.e. Cash-flow issues. Same with building maintenance, car repairs and most of the economy, its deferral not cancellation.

Borrowing would be simple for the IOM (Even if I got slagged off for it last time). Borrowing would not need to be against assets - The borrowing would be against the willingness to tax in future to pay it off just as most Government borrowing has always been. In 1694 the Bank of England was formed on exactly this basis to tax, the amount raised was £1,200,000 and 50% of that was immediately spent on the Royal Navy to open up trade routes (mostly South America) to get they money back (they did).

I named the first 6 taxes that came into my head the other day (to shut OTB up) - it doesn't matter what individual taxes, that's for debate. Nor does it matter what you call the borrowing - Gilts , Bonds, Promissory notes, credit cards, mortgages, IOU's - same thing in the end, borrow now, pay later, it's just cash flow.

Cannon understands this, that's why he has already set it in motion, it's up for debate next House of Keys.

"Of course all the measures that we are undertaking are and will impact on Government finances particularly when combined with projected losses of revenue.  I have already indicated that the estimated direct cost of these interventions may be up to £100m in the next three months and that we may experience a short term decline in expected tax and VAT receipts.

In order to prepare for any unforeseen eventualities I have written to Tynwald Members today indicating that I will be seeking to amend our legislation to allow the Treasury more flexibility when it comes to borrowing money.  This will be needed as a prudent measure to protect against unexpected eventualities and I will outline the full purpose and intent of the Treasury when the House of Keys next sits."

It's no big deal really, despite the hyperbole.

I don't think anyone denies that government borrowing has its place. The IOM Government has borrowed in the past and some of these loans still exist. I don't doubt that at an appropriate rate new loans could be raised. However, and this is not an objection but a polite enquiry, what would the borrowing be for, what question does it answer? The Government has £millions of cash and investments, the problem looking at the Balance sheet is that its liabilities are greater. More borrowing does not fix that.

The Balance Sheet is misleading as it leaves out the Government's biggest asset - the capacity to tax the population. If we look at cash flows the problem is that going forward, and in recent years since the VAT incident, receipts are either less than expenditure or not positive enough to replenish reserves and renew fixed assets ie cash flow is tight. I don't see that borrowing fixes that?

You might think that the Government could borrow at a low rate and invest to achieve a greater return but having a Government operate like a hedge fund does not sound optimal.

I can see a place for borrowing to fund infrastructure - the MEA loans have ended up with Government and I could see a way that the loans could become a sort of rotating capital with no need for repayment - a business that size does require a permanent capital. However, I don't think another power station is on the cards at the moment?

I can also see a place for borrowing to fund seed-investment in new sectors. If a new sector needed infrastructure the government could afford to take a slightly lower return than commercial investors might require as it gets a triple-whammy in terms of return ie actual return, tax from activity and being relieved of having to pay benefits if those workers were not employed. You might fund a new space-age business park in this way - but you would have to be confident you could fill it once built.

Thus, there are niche areas where a bond might be useful. However, as a way of funding general expenditure, I would have thought we are back to basics ie either raise more taxes or spend less but alternative views are welcome.

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34 minutes ago, Mr Newbie said:

Why no appetite for a bond? It’s the best way of funding all of this to replace money taken out of the NI fund and there will definitely be an appetite. 

try paying next years tax bill with your government bonds

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20 minutes ago, Phillip Dearden said:

You are quite right that MERA is £200. It is the Salary Supoport Scheme that is £280 and I that is what I thought was being discussed but it is confusing. MERA is for those who have been made redundant or lost self-employed income.

Yes it is confusing. As we w’re talking about the building industry I assumed the benchmark was MERA as it’s all the self employed contractors will get - £200 a week. I’d say the bulk of claims may well be MERA as employers don't seem to be retaining that many staff. They seem to actually be letting them go in hospitality and retail as it’s not clear when they might be re-opening. Unemployment went from under 400 to over 850 alone by 30th March. I would imagine this months figures will be interesting. 

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10 minutes ago, Phillip Dearden said:

I don't think anyone denies that government borrowing has its place. The IOM Government has borrowed in the past and some of these loans still exist. I don't doubt that at an appropriate rate new loans could be raised. However, and this is not an objection but a polite enquiry, what would the borrowing be for, what question does it answer? The Government has £millions of cash and investments, the problem looking at the Balance sheet is that its liabilities are greater. More borrowing does not fix that.

The Balance Sheet is misleading as it leaves out the Government's biggest asset - the capacity to tax the population. If we look at cash flows the problem is that going forward, and in recent years since the VAT incident, receipts are either less than expenditure or not positive enough to replenish reserves and renew fixed assets ie cash flow is tight. I don't see that borrowing fixes that?

You might think that the Government could borrow at a low rate and invest to achieve a greater return but having a Government operate like a hedge fund does not sound optimal.

I can see a place for borrowing to fund infrastructure - the MEA loans have ended up with Government and I could see a way that the loans could become a sort of rotating capital with no need for repayment - a business that size does require a permanent capital. However, I don't think another power station is on the cards at the moment?

I can also see a place for borrowing to fund seed-investment in new sectors. If a new sector needed infrastructure the government could afford to take a slightly lower return than commercial investors might require as it gets a triple-whammy in terms of return ie actual return, tax from activity and being relieved of having to pay benefits if those workers were not employed. You might fund a new space-age business park in this way - but you would have to be confident you could fill it once built.

Thus, there are niche areas where a bond might be useful. However, as a way of funding general expenditure, I would have thought we are back to basics ie either raise more taxes or spend less but alternative views are welcome.

carbon tax

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3 minutes ago, Mr Newbie said:

. Unemployment went from under 400 to over 850 alone by 30th March. I would imagine this months figures will be interesting. 

i would imagine they'll be lies.

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18 minutes ago, Phillip Dearden said:

Thus, there are niche areas where a bond might be useful. However, as a way of funding general expenditure, I would have thought we are back to basics ie either raise more taxes or spend less but alternative views are welcome.

Corona Bonds aren’t like funding general expenditure. It’s funding to rebuild economies not unlike a lot of the borrowing that went on after WW2 by the European Bank for Reconstruction and Development etc.If we lose a big chunk of our private sector we have to have the means to invest to help them out of this so we can raise taxes against their future activity. 

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