http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100004699/the-imf-should-impose-default-on-greece-to-end-the-charade/

+1

the State will add €33bn in debt in order to bail-out bank shareholders and bondholders. This is true whether the debt is issued in the form of promissory notes, IOUs, or sovereign bonds

the State has removed €10.6bn from the economy of spending cuts and tax increases

gven that nominal GDP was €163.5bn over the course of 2009 and nominal GNP was €131.4, the bank bailout was 20% of GDP and the fiscal contraction was 6.4% of GDP (not including December’s effort)

for those who insist on using the GNP denominator, the proportions were 25% bank bailout and 8% fiscal contraction (it would be wholly inconsistent to use two different denominators for government finances and the bank bail-out, since both debts must be met from the same income stream, mainly taxes)

likewise, it is important to use nominal measures, since, unfortuantely the debts cannot be serviced in CSO-2007 euros, but must be met from the actual incomes received, by corporates, households and the government in 2009 euros and beyond. This inconvenient truth is regularly ignored by advocates of competitive deflation; real debts increase as prices and incomes fall.

the €33bn is a fraud in the strictest sense; ie payment of an extremely large sum of money for something that is worthless. Without the government guarantee all the shares in the banks receiving capital would be revalued at zero, likewise the majority of the bonds. The government has increased its stake in nothing

the €33bn is, and I know many are fond of these type of comparisons, equivalent to the 3 largest voted departmental spending areas combined, health&children, social&family and education&science, with room to cover arts, sports & tourism as well as the communicatiin, energy and natural resources budgets for 2009 too

if issued as 4yr debt (assuming a speedy resolution of the banking crisis) the annual cost would be €925mn, for 4 years, or more realistically, if issued at 10yrs, the annual interest bill based on prevailing interest rates would be €1.475bn, slightly more than the employment, trade & enterprise budget

it is hard to imagine which Irish entitities that could absorb all the additional State borrowing, implying that foreign ownership of Irish government (or quasi-goernment debt will increase). While there was a €29.3bn trade surplus in 2009, net factor income from abroad was -€31.9bn. Increased foreign indebtedness will tend to increase the net capital outflow via debt interest payments, pushing a (virtually non-taxed) export-led recovery even further back on the horizon.

It is not like phythopthera. It is not entirely evil, few things are, outside of church or bad cinema. So it is attractive. To children. To money launderers. To the corrupt. To the greedy.

There are several types of banking: clearing and deposit is one. Pump and dump is the other. The only way to succeed with the latter is to make the victims intoxicated “at the pounch bowl”. As you see, all the techniques are so well known that have terms. Just like a mob movie. Study it a little more?

There is nothing that can save a nation determined to grow rich.

Corruption? By a government official? Involving tax? How unusual! Russia and Ireland were the only? European countries not to persecute women. As witches.

However, much of the €33bn debt that we are paying back was lent into the Irish economy, so effectively, the ‘cost’ element is the interest and the portions of the capital that are no longer swilling around in the system.

Impossible to quantify, but a factor none the less.

I don’t think it’s grand… but some people are acting as though it were end of days

Since Dec 2008 we’ve known there was a whopping hole (that was never going to be covered by equity and other risk capital)… by Jun 2009 the size was becoming clear. Yesterday wasn’t really much news.

However in the context of other crises in the world… seems we’re not winning first place

It is not grand… we need to get to the bottom of it… and for me I remain angry (as I have done for years now) that the FR didn’t catch it:

1) Ignoring specific incidences of malfeasance
2) Ignoring the “canary in the mine” of massively expanding money supply fueling growth in one asset class
3) Being generally pretty dopey

cYp on p.ie is mouthing the classic FF line that it is as bad everywhere else as here. You won’t be surprised that I don’t accept his argument.

Because of our unusual economy GNP is the appropriate measurement for Ireland, so we are at 26%. It is Irish taxpayers who have to pay for this catastrophe - not the people who keep the profits from FDI activity in Ireland.

So even in the broad sample, we are right up at the top of 3rd/bottom of the 4th quartile. However, 4th broad sample is only an estimate based on extrapolating data. The narrower sample is based on solid data.

Using the narrow sample of 48 countries, the 3rd quartile is [ 13.2% 16.7%]. We are way into the 4th quartile for his narrow sample which has the solid data.

So, we are close to twice that median in both samples: 13.2%(narrow) and 15.5%(broad).

Not a bad achievement for what used to be a mickey mouse bank.

Seanie is set to join the pantheon of great failures.

What is most interesting about the paper is that it describes the current crisis in most countries where much of the euphoria has actually related to the innovation in banking risk-management technology. The situation in Ireland was closer to a 19th century railway mania/fraud (Trolloppe: The Way We Live Now).

the gnomes of Zurich or the Rothchilds?

Dealing with facts and reality - it is practically ALL sovereign debt - the entire indigenous financial system is effectively nationalized (but without the usual benefits of ownership such as access to real data and information) - whatever the ‘creative’ accounting used.

Breaking newz_1: Insurance on all bonds to the Emerald Isle drops to zero -shur, why bother, the Irish sovereign will cover everything - the capital floods in.

Breaking newz_2: The Northern Ireland assembly votes to transfer the 6 counties into NAMA - thus wiping out the 32% structural deficit with one shot. London praises the generosity of the Irish in these difficult times.

Breaking newz_3; through a ground-breaking use of a new cute-heuristic derivative, influenced by the quantum finance now in vogue, 2_of_7, as Gaeilge, has raised 200% of GDP on the bond markets by placing the entire island in hock - the prospectus - Headlined ‘Prime Development Land - Unoccupied’ attracts global attention.

Breaking newz_4: The Minister interviewed on Bloomberg - “What Crisis?”

Breaking newz_5: Lord Salisbury on F0x Newz - I was right on all those years ago …

Here are a few stats:
* General Govt Debt was €106 billion, end of Dec.
* Debt/GDP ratio of 64.5%
* In Jan, NTMA estimated that the Govt deficit for 2010 will be €18.7 billion
* We also have promissory notes and building society investment of €10.1bn and a further €10bn likely for Anglo.
* Lenihan estimated GDP shall decline by 1.5% in 2010. That would lead to a €162bn sized economy

Add it all up, and we get to €145bn equal to 90% of GDP.

That compares to Govt’s forecast back in December of 78% and EU’s forecast back in the Autumn of 83%.

Imagine the impact if either NAMA or Anglo had to accounted for?

See:
http://www.ntma.ie/IrishEconomy/publicFinances.php
http://www.ntma.ie/IrishEconomy/budgetInfo.php
http://ec.europa.eu/economy_finance/publications/publication16055_en.pdf

National debt may equal: €114bn at the end of 2010.

“Fiscal costs, net of recoveries, associated with crisis management can be substantial, averaging about 13.3 percent of GDP on average, and can be as high as 55.1 percent of GDP. Recoveries of fiscal outlays vary widely as well, with the average recovery rate reaching 18.2 percent of gross fiscal costs. While countries that used asset management companies seem to
achieve slightly higher recovery rates, the correlation is very small, at about 10 percent.”

http://www.imf.org/external/pubs/ft/wp/2008/wp08224.pdf