The National Debt


#602

I use GDP as this is the standard international comparison and this is the key metric that delineates solvency on the sovereign level. GNI is a bit of a private metric (for us Irish) and we do not have a GNI projection for 2020 from anyone, only GDP drops have been forecast.

So, accepting we do NOT know whether GNI* is more affected than GDP by the Covid crisis I can only say this much. ** _ GNI* was €214bn in 2019 and the Debt was €204bn, a Debt/GNI* ratio of around 97%. _ **

And a rise in borrowing of €30bn will increase the Debt/GNI* ratio to around 113% without adjusting for falls in GNI* which will result in a worse Debt/GNI* ratio than 113%…perhaps up to 130%.

That enough gloomys and woes lads ??? :smiley: That chart is hot off the press this morning and more GDP and GNI stats are available here.


#603

Mainstream


#604

#605

No mention that all this debt comes at the expense of savers who have seen negative real rates for over a decade now and ultimately more debt will destroy our currencies. No mention that every “deserving” zombie company we keep alive is at the expense of a novel company kept from competing with the zombie cartels. No mention that most of these zombie companies have long since been bled dry by stock buy backs that have grossly enriched the corporate elite who take massive performance bonuses which are tied to high share prices. Which is another consequence of reckless monetary policy. I suppose that’s what passes for an Irish times article these days. Promoting socialism is the least of their indiscretions.


#606

#607

The Irish media appear to be giving the Government a very easy ride around the massive increase in our debt levels. The debate seems to be around our Debt to GDP levels and no mention of GNI* which I thought all the experts were agreed gave us a much better understanding of the potential impact of our current debt levels.

According to the economist, David Ricardo: “Ricardian equivalence is an economic theory that argues that attempts to stimulate an economy by increasing debt-financed government spending are doomed to failure because demand remains unchanged. The theory argues that consumers will save any money they receive in order to pay for the future tax increases they expect to be levied in order to pay off the debt.”

According to the Irish Times in July 2019:

"How big is our national debt?

It’s just over €200 billion. On a per capita basis that’s the third highest in the world, eclipsed only by the US and Japan. It equates to €42,000 for every man, woman and child in the State or nearly €90,000 for every worker in the economy."

Link to Irish Times article here: https://www.irishtimes.com/business/economy/ireland-s-200bn-debt-burden-how-did-we-get-here-1.3943085

So, back to the Ricardian equivalence above. Will some potential property investors now pull out as they may realise they’re a prime candidate for a probable future tax grab? Companies and workers can and will most likely move out of Ireland if taxes do increase considerably to pay for this debt. Land/property can’t be moved.


#608

Well done for getting to the last paragraph before once again showing how all roads lead to property prices getting trashed.


#609

I take it you don’t believe potential international property investors factor in political risks.


#610

:icon_rolleyes:


#611

200 billion would be nice but it’ll be at least 250 by the end of next year.


#612

Hard to believe back pre-crash it was in the 40s (billion).

What do posters think the collateral is for all this borrowing?


#613

The next five generations of slaves.