The National Debt


#301

I am very surprised that nothing was done about the bloody bilaterals yet. :frowning:

Maturity Profile Feb 2015

Maturity Profile April 2016

Maturity Profile August 2016


#302

His argument makes sense, up to a point. We have all this legacy debt, most of which is at far higher interest rates than if we borrowed now. So why not replace a huge chunk of it now and make the replacement debt cheaper.

Problem for NTMA is they need to space it out, so we don’t get hit with a huge amount due at same time down the road.


#303

Imagine if the average person manged debt like the country does!


#304

I don’t think it works like that.

The issuer of a govt bond paying a certain coupon can’t just repay the principal and dodge all the future coupon payments that are due, because that stream of income is baked into the price. The purchaser of the bond would face a massive loss, it’d be equivalent to a default.

Obvs if the counterparty is a public institution like the IMF you can negotiate.


#305

Countries are not like people though, not least because they don’t die and almost never go bankrupt.


#306

And looking at the personal debt layout of the country, the average person with personal debt does manage debt like the country does. CU loan for deposit? Sure. Personal loan for holiday of a lifetime? Sure. Car loan? Sure. CC loan over Christmas? Sure. And get a new car loan before the last one is paid off and roll the last one in…


#307

Except every country in the EU bar the UK and Sweden has “died” for bond holders in some form or other in the last 100 years. All the big ones multiple times. And the UK had two large bail outs, one in 1947, one in 1976.

As of now the ECB seems to be directly or indirectly the majority buyer of EU sovereign debt. Following the same road as the BOJ but 10 years or so behind. So EU sovereign debt is turning into a pure ponzie

The other thing to bear in mind is that even the new CSO Modified GNI, which is around 2/3’rds of GDP, overstates the actual size of the real world, non MNC tax evasion, economy by a good 20%. The fact they get the EU net contribution wrong tells me the public number was finessed to hide the real number. Which is probably a lot closer to 150B. There is no way the national real world (GNI) economy grew 50% since 2012. Now 15% sounds a lot more reasonable.

So owing over 200B on a real economy of around 150B (maybe), very low net indigenous exports, and with government expenditure accounting for almost half of consumption, is as good a definition of sovereign insolvency as you can get.


#308

In jmc-world Ireland is running a 10bn deficit, so it must look that way. :smiley:

States are solvent until they’re not ; there are two equilibrium states. Right now Ireland is in the solvent state. There are a set of circumstances which Ireland could find itself in which would propagate a flip-flop to insolvency, and at that point it would be sacrificed to the gods of Austrian economics in the same way that Greece was. But for now it’s very much solvent because it’s able to meet it’s interest payments without running a deficit. For how many other developed economies is that true?


#309

Are we not still running a deficit?


#310

Sorry, yes we are, 1.2bn forecast for 2017. I should have written “without running a significant deficit”, which is obviously then an opinion rather than a fact.

edit: also, the tax take is reported to be 0.25bn down against estimates as of May.

Source: irishtimes.com/business/eco … -1.3105833

edit #2: still down about the same in June (or July?) but net voted expenditure down by similar amounts.

Source: independent.ie/business/iris … 94654.html


#311

Here are some 2016 GGB/capita figures from Eurostat. I had to compose from two different tables as they only offer GGB/GDP and GGB nominal.

Deficits for Ireland downwards:

Ireland: €323/resident
Slovenia: €355/resident
Portugal: €360/resident
Denmark: €438/resident
Austria: €625/resident
Italy: €673/resident
Finland: €747/resident
Belgium: €977/resident
United Kingdom: €1068/resident
Spain: €1089/resident
France: €1137/resident

For comparison USA is roughly €1400/resident but the Lannisters always pay their debts. :smiley:

Country GGB (€m) Population GGB/capita (€) Luxembourg 844.8 576249 1466.0329128554 Sweden 4141.6 9851017 420.4235968733 Germany 23705 82175684 288.4673281211 Malta 101 434403 232.5029983679 Netherlands 2923 16979120 172.1526203949 Greece 1288 10783748 119.4389928251 Czech Republic 1019.3 10553843 96.5809326517 Cyprus 64.4 848319 75.9148386397 Estonia 56.7 1315944 43.0869398698 Lithuania 100.8 2888558 34.8963046614 Bulgaria 15.3 7153784 2.1387282591 Latvia 3.4 1968957 1.726802566 Croatia -366 4190669 -87.3368906015 Hungary -2076.4 9830485 -211.22050438 Slovakia -1361.5 5426252 -250.9098361079 Romania -5150.5 19760314 -260.648692121 Poland -10252.8 37967209 -270.0435525824 Ireland -1525.8 4724720 -322.9397720923 Slovenia -733.1 2064188 -355.1517594328 Portugal -3722.4 10341330 -359.9537003461 Denmark -2498.8 5707251 -437.8290003366 Austria -5430 8690076 -624.8506917546 Italy -40809.4 60665551 -672.6947885135 Finland -4100 5487308 -747.1787623367 Belgium -11051.6 11311117 -977.0564657761 United Kingdom -69856.5 65382556 -1068.4271810971 Spain -50576 46440099 -1089.0588325404 France -75893 66759950 -1136.8043265461


#312

Cheers, though we were still allright, guess the government also forgot when they agreed to public sector pay rises :nin :smiley:


#313

Ireland is solvent as long as the ECB creates a market for its bonds. The moment Ireland has to return to the open capital markets and has to start paying market rate for non CB capital then it becomes insolvent. Which is currently 6%/7%. Ireland currently pays just over 2% net. Most of Ireland debt is short term so current cheap rollover will end sooner or later. Multiply current interest payments by 2/2.5? How much of the budget is left for other expenditures?

As for the deficit. Nope. You need to revise some basic econometrics re government expenditure. Also known as - How to Lie With Statistics. And have been reading the relevant budget documents for close on 30 years. There is a pattern. In good times and in bad. The deliberate vagueness and obscurity is alwasy a sign that there are things to hide.

Look at the full numbers, voted and un-voted, estimated and actual, over the last five years, and what we have is still a net deficit. Of the magnitude I wrote about. The fact that they have been mucking about with the numbers and format is a deliberate piece of obfuscation. The only important number is when you net out all cashes in versus all cashes out. In the long term all the rest is sleight of hand.

Here something you can try out. Take the Official Estimates for FY 2014. Now look at the final Actual Expenditure FY 2014 numbers. Do the same for 2015. And previous years. Notice a pattern? Also notice how they keep moving stuff around to make it hard to extract final net numbers that can be compared year on year. Now compare and match up with debt balance and issue by government. The obfuscation is deliberate and I stand by my original numbers of how much the deficit is after all above the line expenditure is taken care of.

To me the current accounts when you strip out all the noise look very mid 1980’s. The current political debate about the economy is pure 1977.

As I’ve said before the sense of utter unreality and fantasy in Ireland at the moment is something I have not seen for a long long time. Much worse than 2005/2006. You only have to look at postings like this, and the comments afterward, to get some idea of just how Alice in Wonderland the country currently is.

irisheconomy.ie/index.php/2017/08/24/that-26-growth-rate-from-startled-earwigs-to-stars-in-our-eyes/

This is a discussion about national accounts that would never ever happen when discussing the economy of Finland, Denmark or even New Zealand. Even trying to discuss the non-petroleum sectors of the Norway economy would never even begin to reach such levels of economic outlandishness as this discussion by purported serious academic economists. What they are actually discussing is an economy that is no different from Jersey or the Cayman Islands. Only 50/100 times larger. But this fact never seems to have crossed any of their minds.

Ireland is not Greece. But its not Italy either. But to my mind its national accounts are in a far more precarious state than they were in the early to mid 1980’s. And we have still to get to a 1987 moment. The country is still in a holding pattern until the other shoe drops. Which it must inevitable do. In these situations you can always predict the what. But never the when.


#314

So predict it. Outline the series of events that leads to the ECB stopping Irish debt rollover at low rates.


#315

Ireland follows Ray Kinsella’s advice and follows the UK out of the EU…


#316

There’s 2 Irish national debt clocks online.

The higher 1 goes up @ around €300 per seconds.
nationaldebtclocks.org/debtclock/ireland
Now at € 213,733,511,000

The other goes down @ around €100 per second.
financedublin.com/debtclock.php
Now at € 182,242,589,000

Which one is (more) correct?


#317

Horse manure!
Average life of Irish government debt is 11 years. For Eurozone countries it is 7 years.


#318

Economic recovery repeatedly overstated, warn Finance chiefs
irishexaminer.com/ireland/e … 69659.html

ntma.ie/business-areas/fundi … t-profile/

General Government Debt: 200.59Bn(2016) 210.71Bn (2017)


#319

‘Goldilocks’ Irish economy faces numerous threats - NTMA chief - by Peter Hamilton
irishtimes.com/business/eco … -1.3476733

Our public debt levels are still growing, even in the midst of these good times - by Dan O’Brien
independent.ie/business/world/our-public-debt-levels-are-still-growing-even-in-the-midst-of-these-good-times-36854705.html


#320

So if the ECB owns so many bonds that it’s possible Ireland could default on them, the interest the ECB earns on other bonds would need to cover the loss, or other ECB members would need to chip in. Or the ECB would just force Ireland to raise taxes to stupid levels. And eventually force Ireland into another round of austetity. If no one is lending to Ireland that would mean deep cuts to spending. Selling of assets again. Is this really a scenario they will allow to play out?
With regards the bank bailouts, interestingly risk has transferred from private sector (shares etc), to the public (bailout/government bonds), to the ECB balance sheet.
As the ECB balance sheet increases it dilutes creditors wealth/assets. Such a mess but I guess the ECB/Irish government live for the moment.
If other western countries/piigs haven’t changed their ways its surely going to be more money printing.