The National Debt


#582

NTMA wants a syndicated issue this week, to frontload their still quite onerous cash requirements for the remainder of the year.

I am thinking around €12-15bn would be a good idea while sovereign issuance in Europe is fluid at present. The assumption is that some ECB programme or other will mop a whole lot of this right up so a low coupon (less than 1%) is not out of the question here.

Over the rest of the year they will need at least €25bn including a large €9bn redemption in October. Perhaps as much as €30bn.

We have no idea how much of a deficit they are planning on financing in 2021 but it sure won’t be a surplus and Brexit will also be a factor by then.


#583

This weeks issue turned out to be €6bn for 10 years with a coupon of 0.3% or so. Considering the impending retirement of 5% coupon paper in October (€6bn too) they are replacing an issue they pay €300m a year in interest on, alone, with a new issue that costs a mere €15m a year in interest.

Not sure how much of the issue went to the ECB programmes but the bids were generous, 10x or so. Right now we are as far from a sovereign debt crisis as you can get.


#584

Official Debt/GDP Ratio at end 2019 was 58.8%

That and more stats are below in todays CSO dump. Believe it or not the Irish Economy GREW during Q1 2020 :eyes: , not that it matters.

https://www.cso.ie/en/releasesandpublications/er/gfsq/governmentfinancestatisticsquarter12020/


#585

We started 2020 with an economy of €347bn according to the final 2019 revision published by the CSO today.

The economy is recently projected to fall by 12% during 2020. 12% of €347bn is €42bn so that would leave the economy sized at €305bn this year.

Debt at the start of 2020 was €204bn and the government is projecting this will worsen by €30bn over the course of the years to €234bn. The debt was already at €230bn at the end of June but some of that is for a redemption of over €10bn due in October…not for expenditure purposes.

I assume the debt will easily end up north of €240bn gross or 80% of GDP, at the end of 2020 but the question now is how far north.


#586

Why are you using GDP/GNP which are utterly meaningless in the Irish context of a mostly MNC revenue scrubbing economic activity. GNI is a bit closer to reality. In fact when it comes to ability to service national debt the Net GNI is the only number that really matters. The closest number to the real economic activity in the economy minus all the MNC tax evasions. Which is basically around 50% of the official GDP numbers most quarters.

https://www.cso.ie/en/releasesandpublications/in/nie/in-mgnicp/

And given that the its the ECB magic money tree that is currently servicing the debt when the ECB magic fairy is killed by the Germans, or dies of its own accord, it backs to traditional sovereign debt servicing capital markets and historical interest rates. The MMT theory fantasy land can only last so long. Euroland has pretty good (not asset) price stability the last decade for macro reasons but the actual day to day price inflation rate in places like the US has been pretty much a rerun of the 1970’s. But with official stats deliberately hiding the truth. So it will end in tears. Always does.

At historical costs servicing the current national debt would cost about 100% of income tax and most of the VAT revenue. That’s a much realistic interpretation of future risk for sovereign default.


#587

I always respect 2packs posts but I have to agree with jmc here. Nobody seems to realise how perilously close we are to the edge because the thought of the collapse of the Federal reserve and the global banking system is inconceivable to almost everyone.

https://ca.finance.yahoo.com/news/new-york-fed-john-williams-not-time-to-think-rate-hikes-191436423.html

The Fed have publicly stated they will exercise yield curve control last done to this extent during WW2. Basically they commit to purchasing enough T bonds to cap yields.

What they don’t seem to realise is that in 1940, the Feds liabilities were backed 90% by gold, over one quarter of the world supply. Now the backing is less than 6%.

This will end in disaster for the entire world make no mistake about it.


#588

Unless of course, the plan all along by the current Admin, has been to use the globalist central banksters tools, economic models and economic reporting complex against it, to allow, at the right moment, the US roll out a GOLD backed dollar once more, while ending the Fed (as we know it) and A New World begins or some such unimaginable fork in the desinty of humanity that few ever thought it could happen. Imagine.

Does 6 tons of the shiny qualify as PREPARED?


#589

Apart from QAnon and his enlightened disciples. :icon_rolleyes:


#590

You are at leat consistent in your characterisation by metaphor toward the millions around the world who like to dig in to the Q drops and all the chatter around it. Perhaps it is the perfect metaphor, castigating those millions as if (early) followers of Christ.

I mean, it could be the perfect metaphor.

To entertain the strawman - what Q drop or drops to you think specifically outlines, or supports your belief, that this is a mainstay of belief within the millions of anon who faithfully believe Trump will end the Fed and restoring the US Republic to a Gold standard blowing the central banksters matrix out of the waters (again) and ushering in a new age of human innovation and freedom like never before? :slight_smile:


#591

Just some background. The Anti Fed stuff in the US is a very weird political sub-culture that actually goes back way way before 1913 when the Fed was founded. Its most direct antecedent was the Free Silver Movement of the previous 40 years in the late 19’th century and the Silver stuff was a direct descendant of great Bank of the United States political battles that started with Hamilton in the 1790’s.

The whole Anti Fed stuff actually has little to do with central banking and everything to do with a particular strain of political contrarianism that is baked into the system. So I have always ignored it when ever it has popped up over the years with people I have known. Its a bit like a peculiar personal religious belief. You note it but ignore it because there is no actual rational foundation to the belief. Its just based mainly on a natural suspicion of the powers that be. A suspicion that has often been justified in history.

So I would considered them sometimes useful hecklers, nothing more.


#592

Jmc you will always be a bellend.


#593

Very persuasive argument.

Perhaps you might want to discuss how the Free Silver Movement and its failure with both of William Jennings Bryants Presidential campaigns led directly to the opposition to the creation of the Fed both inside and outside of Congress. It was quite a battle. Which went on for years. If it had not been for the Bull Moose debacle of 1912 the bill establishing the Fed would probably have not made it across the line at the end of 1913.

I suspect you know fuck all about the subject. Or have actually known many of the Anti Fed conspiracy people personally over the years. I have heard all the arguments first hand. Long before there was an internet in fact. Most are very sincere. That still doe not distract from the fact its mostly contrarian crank material. Just like the Free Silver Movement.

Now if you want a real conspiracy I’d start with the post 2011 ECB. Now there was a very deliberate debasing of all the previously stated tenets of Central Banking for purely political expediency. We are very definitely into Rudolf Havenstein’s Reichsbank territory which ended with wheelbarrows of currency.

So its not the Fed I would be worrying about at the moment.


#594

Syberspud I enjoy your posts, and in fact I have learnt a great deal from all of the posters here. Lets not lewdly heckle each other.

Anyway, per OW’s point about our 6 tonnes (assume metric) that’s worth a mere $349M at Friday’s closing price.

Debt is projected at €234bn.

Correct me if I am wrong, but this means our gold assets are roughly 0.1% of our debt.

Now, I realise that our assets include tax revenues and so on, but the Irish portion of the Euro currency is a massively geared obligation.


#595

You’re gas…but just to indulge you. The ECB have more gold than the Fed. And their fiscal position is three times better. AND the euro isn’t the reserve currency.

Also I quite like the Fed despite my enjoyment of The creature from Jekyll island… Volcker was a hell of a chairman.


#596

And you just proved how little you do know about the modern financial system if you think that solvency or robustness of a CB has anything to do with shiney bars of Au. That world ended in 1971. Or actually really in 1931. Its pretty much in the same league as the Marxist Labour Theory of Value. Simplistic theories for simple minded people.

If you can make lots of money speculating in gold thats fine by me. If keeping your wealth in Krugerrands or Maple Leafs makes you sleep sounder at night thats fine by me. But if you think that any of the gold standard shit has any relevance to the modern world then you are in the same category as flat earthers.

The reason why MMT is half way plausible is because a good 90% of net financial balances are getting remarkable close to the Schrodinger Horizon for something that may or may not exist in the real world. Best not to think to hard about it. This does n’t stop me thinking that there is a huge crash on the horizon as the Baby Boomer retirement side-effects rebound though the financial system . Whatever utility gold might have a personal financial instrument it has as much to do with any possible viable long term macro solution as the Rei from Yap.

If you think gold is part of the macro solution you obviously dont even understand what the question is. CDO Squared and other dodgy derivatives might be the height of folly but the Gold Standard is just bloody stupid. Gold standard economies were even more unstable than fiat currency one. Just read the economic history of the time. If you want a 19’th century standard of living then the Gold Standard is guaranteed to give you one.

I’m surprised the Greens havent cottoned on yet to the fact that the Gold Standard would be a very effective way of collapsing economic activity by at least 90%. They always were thick as planks.


#597

Quite frankly, the thought of using gold to back the currency would be disastrous for the electronics industry when you consider just how much is used and what it would be worth if it was used to back the current levels of debt.


#598

I’ll donate 100 lids to the charity of your choice if Q is ever revealed to be the well-connected insider that his / her / their / its disciples believe. But my money is safe because it’s a baseless conspiracy cult with a track record that’s less reliable than a daily horoscope.


#599

You really do enjoy flaunting your ignorance. The gold standard was ended by decree by Nixon who was we were promised only “temporarily” suspending the standard. Don’t worry it will be reimposing itself on the world shortly. That’s why any central bank worth it’s salt hordes vast gold reserves and hasn’t sold any in decades. Gold is money and nothing else. I suggest you read the minority report of the 1982 Gold Commission entitled The case for Gold. The abandonment of the gold standard has led to the vampire squid of finacialisation which has consumed the world in gigantic credit bubble and which will inevitably collapse with disastrous consequences. It was a political decision made by corrupt politicians not by the bean counters in the Fed and has required vast economic and military resources to keep it upheld. But now, even the most optimistic Congressional Budget Office report has to admit that the end is near.

Also I think I’m correct in saying the 19the century saw the greatest economic growth in world history but hey don’t let the facts get in the way of your rant.


#600

It’s like 10 percent of production. The other 90% is investment. That’s not to miss the point that gold stock above ground dwarfs production. This high stock to flow ratio is what makes it such excellent money.

Gold will eventually back the Feds balance sheet just like it has always backed the central banks. The Bank of England maintained 33% gold backing of sterling for centuries. The price of gold will need to go to between 8000-12000 USD following the latest round of QE. This would imply a backing of between 33% and 54% which was the ration from 1913-1933.

Incidentally the backing in 1980 was well over 100%. Of course the US economy was a lot less indebted then at a debt to gdp ratio of about 30% compared to the shit show of today where we have the debt to gdp ratio doubling every 12 years.


#601

I even heard Paschal the Rascal play down the Debt/GDP metric in an interview he did on Newstalk last week. Instead, to make the point that something approaching fiscal conservatism was needed now, he admitted that they are concerned about Debt relative to the tax take.

Totally clutching at straws here but only good thing about this new government is that FG retained the Minister of Finance position.