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 Post subject: The National Debt
PostPosted: Fri Jan 16, 2009 11:36 am 
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The national debt was 50 bn before the Quinn/Anglo/ Fitzpatrick bailout

After the farce in anglo brian lucey is saying

“I would suspect that as time has gone on it has become abundantly clear that there are so many unexploded land mines in Anglo that the government had to throw something on it,”

"Unfortunately they have thrown the Irish economy onto these exploding bombs ... So, we have seen as a minimum I think a doubling of the national debt as a consequence of this"


And we havent gone near Irish Nationwide, BOI, AIB yet :evil:

So say the national debt hits 100bn pretty shortly thats a drain of at least5-6bn in interest per year. Are we going to have to borrow to pay the interest? That sounds like default

that bloody guarantee is the end of us

of course as we all part of the knowledge economy now after primetime on weds and have 5 loaves and 2 fishes we are fine

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 Post subject: Re: The National Debt
PostPosted: Fri Jan 16, 2009 11:41 am 
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Please Note: This is now the defacto thread for all things relating to the National Debt. Carry on :? .

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 Post subject: Re: The National Debt
PostPosted: Fri Jan 16, 2009 11:44 am 
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lord vader wrote:
of course as we all part of the knowledge economy now after primetime on weds and have 5 loaves and 2 fishes we are fine


Ah sure it'll be grand, Steorn has that invention for free energy in the pipeline.


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 Post subject: Re: The National Debt
PostPosted: Fri Jan 16, 2009 11:45 am 
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Debt to GDP ratio was 41% last year and the government estimate (according to The Guardian) 53% this year.


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 Post subject: Re: The National Debt
PostPosted: Fri Jan 16, 2009 12:03 pm 
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Not a big fan of relating things to Irish GDP (or even GNP).


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 Post subject: Re: The National Debt
PostPosted: Fri Jan 16, 2009 12:18 pm 
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I don't understand how all the liabilities of Anglo will not be considered part of the national debt, that is, why would all 110 bn of liabilities not now be national debt?

Consider, 50 bn is depositors money and 20 bn is institutional deposits. If any of these people want their money back, Anglo (and so now the government) has to pony up.

Add to this the NAO (National Audit Office) in the UK ruled that all Northern Rock and Bradford & Bingley's liabilities had to be added to the UK national debt.


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 Post subject: Re: The National Debt
PostPosted: Fri Jan 16, 2009 12:35 pm 
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During the American Depression of the '30s, US GDP fell from approx. 103.6 Billion to approx. 56.4 billion that's over 45% of a fall. Our ratios are going to look horrendous if we have falls in GDP of that scale (Which I suppose is not inconceivable).


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 Post subject: Re: The National Debt
PostPosted: Fri Jan 16, 2009 12:55 pm 
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Constantin lets fly:
http://trueeconomics.blogspot.com/2009/ ... tings.html
Quote:
Next stop for the country? An honest reappraisal of our sovereign debt ratings to reflect the fact that our actual debt ratio to committed obligations under the banks guarantee and recapitalization schemes is about 1:5, implying that Ireland’s own bonds cannot be traded at the prices far off the banks bond levels.

Of course, not willing to buy into S&P’s delirious review that left Ireland’s sovereign rating at AAA and the Fitch’s yesterday’s failure to mention the need for downgrading Irish sovereign debt, the markets have already started the repricing process. Our five-year credit default swaps are now quoted at a 250bps, roughly 66bps above Monday levels.

We are now at par with Greece, while enjoying a much more rapid deterioration in the economy and public finances, implying our debt rating should be at or below their A-/A-2 range.


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 Post subject: Re: The National Debt
PostPosted: Fri Jan 16, 2009 1:07 pm 
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Thanks to our nationalisation of the zombie Anglo Irish the cost of issuing NEW debt is now 2% ( 200 basis points) more than German debt . The spread was about 20 basis points a year ago and 69 bp in October .

Two years ago it was 3bp . We have had the same triple A rating as Germany for quite some time .

You will see an interesting analysis of the early part of this spread widening here ( with charts and tables even)

http://cib.natixis.com/flushdoc.aspx?id=43047

Even GREECE can issue cheaper debt that we can :(

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 Post subject: Re: The National Debt
PostPosted: Fri Jan 16, 2009 1:39 pm 
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yoganmahew wrote:
Constantin lets fly:
http://trueeconomics.blogspot.com/2009/ ... tings.html
Quote:
Next stop for the country? An honest reappraisal of our sovereign debt ratings to reflect the fact that our actual debt ratio to committed obligations under the banks guarantee and recapitalization schemes is about 1:5, implying that Ireland’s own bonds cannot be traded at the prices far off the banks bond levels.

Of course, not willing to buy into S&P’s delirious review that left Ireland’s sovereign rating at AAA and the Fitch’s yesterday’s failure to mention the need for downgrading Irish sovereign debt, the markets have already started the repricing process. Our five-year credit default swaps are now quoted at a 250bps, roughly 66bps above Monday levels.

We are now at par with Greece, while enjoying a much more rapid deterioration in the economy and public finances, implying our debt rating should be at or below their A-/A-2 range.


Pity Lenihan doest listen to any advice from anyone....


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 Post subject: Re: The National Debt
PostPosted: Fri Jan 16, 2009 6:05 pm 
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Mr. Lenihan, on The Right Hook doesn't accept that the 100bn of Anglo's debt should go on the state's national debt, as there are performing assets covering the debt, or 'repaying' it, as he says. We'll see what the rating agencies and the debt markets say, I guess.


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 Post subject: Re: The National Debt
PostPosted: Fri Jan 16, 2009 8:19 pm 
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yoganmahew wrote:
Mr. Lenihan, on The Right Hook doesn't accept that the 100bn of Anglo's debt should go on the state's national debt, as there are performing assets covering the debt, or 'repaying' it, as he says. We'll see what the rating agencies and the debt markets say, I guess.


I'm not going to back up FF here, but in all seriousness suggesting 100% of Anglo's debt should be put onto National Debt is a bit knee-jerk imo. I dont know the ins and outs of the UK's decision re NR and B&B but the highest bad debt figure I've seen bandied about so far is 30% meaning 70% of the loan book still has value, no? My point here being not what percentage of the loans will go bad, but that those loans still have some value.

On the other hand, from the FT yesterday (sorry no linky):

Quote:
Distressed asset indices fall sharply

By Aline van Duyn in New York

Published: January 15 2009 20:40 | Last updated: January 15 2009 20:40

Indices tracking the value of the trillions of dollars of distressed assets that continue to blight bank balance sheets fell sharply this week as a negative spiral of financial distress and subsequent economic pain continued.

The declines – which signal further potential writedowns by banks – are fuelling fears that the first quarter of this year could herald further pain for the financial system, even as many banks reveal sharp losses for the fourth quarter of 2008.

Click for full graphic

After several weeks of stabilisation and even some improvement, there have been renewed falls this week in the value of securities linked to subprime mortgages, leveraged loans and commercial mortgages.

The Markit ABX index for triple A rated securities backed by subprime loans has dropped 13 per cent in the past week. The Markit CMBX index for triple A rated securities backed by commercial mortgages was also down 14.5 per cent in the past week.

The LCDX index, a barometer of leveraged loans, was down 4.6 per cent in the past week, back to levels it traded at about a month ago. Many of the assets tracked by these indices are hard to value, and banks’ exposures are far from clear.

“Neither fresh government-sponsored capital nor other liquidity injections will dissipate the black cloud over the banks,” said Rob Smith, chief executive of NSM, an investment adviser.

The value of assets has been hit by general concerns about the depth of the global economic slowdown – which could result in more people and companies defaulting on debts.

The reintroduction last week in the US Senate of a bill aimed at amending the bankruptcy code to allow the modification of mortgage contracts – and its backing by Citigroup – also has sent tremors through the market for securities backed by mortgages not owned by agencies like Fannie Mae and Freddie Mac.

The increased chances of the passing of so-called bankruptcy cramdown bills – which allow judges to reduce the outstanding mortgage to match the value of the property it is based on – could continue to hurt mortgage assets.

Copyright The Financial Times Limited 2009



Right, time for scoops


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 Post subject: Re: The National Debt
PostPosted: Fri Jan 16, 2009 9:30 pm 
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i am assuming 50bn bad debt

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 Post subject: Re: The National Debt
PostPosted: Fri Jan 16, 2009 9:40 pm 
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lord vader wrote:
i am assuming 50bn bad debt


I agree on 50. I see it as EUR 20 bn Anglo [out of EUR 72 bn loans] plus EUR 15 bn each for AIB and BoI.

I fear AIB and BoI are about to go the wall very quickly.
The 25% drop in AIB's share price and 16% in BoI today cannot be considered just 'volatility'
All investors, institutional and international, are bailing out, very fast from both AIB and BoI.

We cannot afford the 50 bn.
The IMF will not get involved, as they will say it is up to the EU.
The EU has no centralised mechanism to fund us and we are not flavour of the month, anyway.
Maybe the EU can invent some mechanism to protect one of its member states - but currently it does not exist.

Put it any way you like, Ireland is bankrupt.


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 Post subject: Re: The National Debt
PostPosted: Fri Jan 16, 2009 9:43 pm 
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its not an issue of the politics. its an issue of accounting and the key is what eurostat/cso say the treatment is of the debts.


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