The National Debt


Any meaningful way of shorting Irish Govt Debt?


It will be well over 50 and you left out the not insignificant Irish Nationwide.


Lads, you’re talking about losses here, not about national debt. Eurostat will account for the debt using ESA95 rules: … 585-EN.PDF

Not being an accountant, I am making little headway into what is applicable and what is not.

I did find a couple of interesting things (but may have wildly misinterpreted them):

Part V relates to the calculation of national debt:

WM1: There is no offsetting of assets in this accounting.

Part II.5.2 covers financial defeasance:

WM2: As far as I can see, these bad asset situations may not end up on the national debt.


but in that case the debt borrowed for covering them will be on the ND…


they should have let anglo hang (my thoughts here )


I can understand why they didn’t let them hang…

  1. Our banking guarantee would likely have been called upon. Probably in the order of 100 bn of liabilities. Systemic threat.

  2. 7,000 customers, 5,000 of them in ROI. More systemic threat.

  3. Investors would have got even more of the shits about Irish banking collapse. At least the government are being consistent in their stated commitment to do absolutely everything in their power to ensure any money invested here by investors will not disappear in a banking failure.

  4. Something to do with CDS’s?


They should not have been in the guarantee in the first place. That was mistake number 1.


We need out of this guarantee NOW!


10y bond yields broke this morning through the 5.9% level and rising like a helium balloon. We are now 290bp over the bund. But sure the guarantee cost us nothing
(october 2008 68bp…)


Just nationalising the bits that don’t work in the case of BOI and AIB.

From todays IT


Dont forget it was McWilliams who was one of the biggest proponants of the bank guarantee.

You guys all got fooled by McWilliams. Hes been on the side of the bankers throughout this whole crisis.


That’s right, we all went out and invested in his products and lost all our money :unamused:

The guarantee is supposed to be, in the swedish model, the first step towards rebuilding the banking system. We are not seeing any of the other steps. Further, the guarantee should only be for depositors and new debt (from the date of the guarantee) to keep the system ticking over while it is rebuilt. Anything else is, as Mr. McWilliams himself said shortly after the announcement, wrong.


Not quite accurate there. What were your gombeen colleagues in FF party HQ advising?


McWilliams had a very different idea on how to recapitalise the banks. … 98843.html

You only need to read the title of the URL to realise that he simply didn’t blind tell us to recapitalise/nationalise.


another consideration:

…as GDP and tax revenues contract the relative percentages of debt to GDP and tax revenue accelerate higher.

its projected government debt will double this year.However the tax take is already down a third and still decreasing (from 60 Billion to 40 billion euros).This means government debt will be a lot higher than double the reported figure and there will be less capacity in tax revenue to service that debt.


I’m told we need 2 Bn this year, 4 Bn in next, 4 the following year, 3.5 the next and 3 the next.

Now I’m told that 1 bn of what is saved this year makes next year easier as we only need 3 Bn. Does that mean if we save 3Bn next year we don’t need any more cuts as we have 4 Bn saved. By this reckoning we can loosen the strings the following year a bit as we only need 3.5 where we are saving four.

Basically when someone tells me we need to save 16 Bn, is this comulatively, taking 2009 as a base line, 2Bn in 2009,6bn in 2010, 10bn in 2011, 13.5bn in 2012 and 16.5 in 2013.
I’m sorry if this isn’t clear but I can’t reconsile some of the saving made this year making it easier next year. Apologies in advance if I haven’t made my point across clearly.


You’re right, I heard George Lee mention this last night and thought that can’t be right. The problem I guess is that some costs are recurring and some are once-off’s (e.g. cap-ex) and the two are being mixed in together.

But yeah, it’s clear as mud to me too right now.


I understand it to be cumulative.
e.g. saving €2bn for 2009. €4bn for 2010, implies a €6bn saving for 2010 compared to 2008.

not paying the pay increases due in Nov-08 saves €75m in 2009 but €1bn for 2010.

so they only need to find €3bn more saving for 2010.

But then they have to find more again in 2011, 2012 and 2013.

We will run a defecit of €18bn to €23bn in 2009, I reckon.
Ideally we need to close this gap now by €15bn, half from taxes and half from spending, but we don’t have the leadership to do it this year.

Oh yeah, we also don’t know the length or depth of this recession, so arguments that cutting too much too early hurt growth, don’t stack up against the risk of letting debt get out of control while the economy is in freefall, eroding the ability to service debt.
Given the open nature of the economy, It will be global factors, outside our control, which dictate when the economy will recover.
The government’s “plan” is to propose a series of cuts in the future without giving any details, they hope if there is an upturn they won’t have to find all those savings in future years.
It does not look like a credible plan.


Cheers Podge. I there is still no credability to their plan but at least I under stand the logic now.


I heard Constantin Gurdiev say that the CDS margins on Irish debt mean that they were pricing in an 18% of Ireland defaulting on its debt.