So we’re either going to strike oil or they’ll issue longer debt to replace them.

Note, we need 54 bn over the next three years (including the current) for the projected deficit.

Anyway, the NTMA look like they have pulled next weeks auction.

I believe our financing needs were planned to be 29 bn for the year - 20.5 bn for the deficit and 8.5 bn rollover. Some of that may be short-term that will roll over more than once in the year, hence the relatively high number?

So far they are saying they have, what, 20 bn in the bag?

There’s a fair-size rollover in July, I believe, so the NTMA will have to or get off the pot then.

Sorry. Thanks also for the clarification

Fair point.

It is flexible though, you can give in weekly payments, take your cash back whenever (although naturally lose your lump sum).

It certainly seems like a reasonable method of saving if nothing else.

‘I do think that our next problems will come from a failed short-term rollover, though…’

Looks like NTMA are going to kick the auction can down the road. They must be expecting a good summer.

I’m sure the thought never entered their (government) heads.

This isn’t a spoof is it? I would have thought that if anything that looked like another SSIA scheme cropped, up at a time like this, it would take so much money out that the retail sector would collapse

The first player who lost all his lives, as per the house-rules we played by, got to stay in the game on the so-called ‘cat’s life’.

It occured to me even then how rarely it was that the cat’s life player ended up being the first to get knocked out of the game. Inevitably, it was the second player to lose all his coins who took the dive. A quick exercise in probability ‘counting’ would show that this is indeed the case statistically.

So, Greece gets the cat’s life, while Ireland or Portugal get knocked out of the game first?

‘ We saw the first glimpse of this on Tuesday, when both Spanish and Irish short-term-debt auctions virtually failed.”

http://www.ntma.ie/Publications/2010/Irish_Treasury_Bill_Auctions_Q2_2010.pdf
It doesn’t look like there was an scheduled short-term auction (one a month on or about the sixth). There is also no announcement notice for last tuesday.

If there was an unscheduled auction, I am not surprised it failed; the calendar is planned carefully with purchasers well aware in advance (I believe). But I don’t see that there was one - I haven’t seen anything about it elsewhere.

I do think that our next problems will come from a failed short-term rollover, though…

‘ We saw the first glimpse of this on Tuesday, when both Spanish and Irish short-term-debt auctions virtually failed.

Fantastic article
All the rocks lifted.

There are two very difficult predicaments that have to be sorted: political willingness to conduct fiscal affairs properly (most unlikely), and the ‘Growth’ paradigm (busted!).

Governments of states will seek to protect themselves (and their citizens) at the expense of all others. It cannot be otherwise. The EU experiment may or may not succeed: it depends on whether or not individual states judge the EU survival as being essential to the survival of their own state. Time will tell.

The ‘Growth’ paradigm is unfixable - using business-as-usual processes. These latter will do a good, temporary cosmetic job. Sometime, possibly within the next two - five years, the penny will clang on the floor. Then all bets will be off. The issue will be the inability to access an adequate supply of liquid (primarily transport) fuels. This will destroy, once and for all, the ‘Growth’ paradigm. Absent growth: debt defaults.

B Peter

While everyone knew we were put €4bn into Anglo last year and we wouldn’t be getting it back.

The reality of seeing the €4bn adding 2.5% to the deficit seems to have spooked them.

So while at the start of the week our 10 year spread was close to Spain and Italy and significantly below Greece and even Portugal. As I type our 10 year spread is now 110bps above Italy & Spain’s and only 29bps below Portugal’s.

Adding 8% or 9% to the deficit would spoke them again IMO but it would be better than a drip feed of 1% pa for the next 10 years.

If they are that shallow though or if we fall foul of S&P again then who cares.

PS: What a quote by EU Commisisoner Olli Rehn in today’s times, “Who are Standard & Poor’s anyway?”

yep. or even a bit more if the full 10 billion extra went in this year. On the one hand a scary number, on the other it was money already commited to by BL in his Dail speech. So your guess is as good as mine in terms of market reaction, though in the current environment it priobably isnt good to be transparently top of the borrowing league. I agree , as you say, that it is better than the drip feed , given the pressure we will be on to cut the ggd number from 2011 on.

Yeah the Lenihan has certainly made it clear that the promissary note would be added to 2010 debt (deficit or otherwise) all in one go. An accounting issue I believe, I think Anglo can tecnhically claim all or some of the €8.3bn at any stage and therefore it is practical to assume it as a liability for the year.

Of course, I also heard, in the wake of the 1st NAMA announcements that the promissary note would be claimed a little by little each year by Anglo but this appears to have fallen by the wayside (unless anyone can correct me).

Still waiting further clarification on the next €10bn though..

In reality, even though the 2010 figure will look scary and may spook the markets somewhat, it is better than drip feeding 1.5% pa onto the GGD over the next 10 years.

The only question is how quickly the rest of the money which may be needed to plug the anglo hole becomes needed and how the state deals with this. I have seem some estimates from credible sources that 6 - 7 billion of the remaining 10 bn may be needed this year, but this will all be tied up with the debate about whether anglo is shut down and how quickly.

Either way our official “ggd” for this year is going to be very high again. Though as we won’t need to find all the angl/nationwide money this year, this will overstate the cash hit on the exchequer in 2010.

Nick Leeson would be happy to give a presentation of the delights of suspense accounts for the determined fraudster.

They may be a contingent liability, but they are not yet an actual one.

In addition, I thought there was an addition twenty billion of funding for Anglo? Some paid immediately, some paid as promissory notes? The figures have become so mad, they have become a little blurred in my head!

Hopefully these big capital injections into Anglo are one-off (ish) and so it may be misleading to suggest that the Government’s annual fiscal deficit includes them.