You are equating bankruptcy/insolvency procedures to debt forgiveness.

The difference in my mind is that an insolvent person loses all assets and must start from scratch.

If they are allowed to keep their house then it is only with the consent of the bank and on the basis that they will have to start from scratch to pay market value or more for it. If they have any equity it must be sold to pay their creditors.

My suggestion is that they should be allowed start from scratch more quickly and should spend less time as bonded serfs.

Let’s be very clear, people are already living as bankrupts under the control of their banks because our bankruptcy system does not function for creditors or debtors.

Ultimately, I don’t think shortening the bankruptcy period will cost the state or the taxpayer anything. I believe that much as the Germans need to support the recovery of the rest of Europe out of enlightened self interest, so must the prudent Irish support the recovery of the insolvent Irish out of enlightened self interest.

I believe that a shorter insolvency period will lead to greater tax revenues through a quicker recovery.

A shorter insolvency period will also stop people carrying their capital losses and business losses forward forever and a day, paying no tax on new income and remitting their money to banks and foreign creditors.

Who will pay? We’ll all pay dearly if we follow your logic.

(you will also note that the IMF have pointed out that debt relief for americans in negative equity is critical to american recovery.)

These figures put the total amount of debt in Ireland that is almost 2.5 times that of Greece. However, in 2010, households, firms and government in Greece paid the equivalent of 12.1% of GDP on interest. In Ireland the figure was 10.4% of GDP. If our debt levels were so high surely the interest burden would match. In 2010, the EU average was to spend 8.6% of GDP on interest. Ireland is above that but not by much

Could the lower Irish interest be due to more variable rate mortgages in Ireland than other countries?

The deliberate confusion (?) of the nations money supply with its private credit (loans) is the mark of a colony.

PS witnessed the female(socialist) PM of Denmark on Euro news - I was shocked.
Not because she is a good looking woman & all but her Invasion of the body snatchers response to Euro questions…………
Google this & you should get the video

Danish PM: What’s good for euro is good for Europe
euronews‎ - 19 hours ago

If debt not written off, how does one get your debt reduced?

A goverment monies value is based on the productivity of the state - if the productivity of the state is dramatically reduced to pay back private loans - how is that peserving Bs savings ?
I took most of my savings from the Post Office when I witnessed the NAMA / Bank Bond Holder wealth transfer operation.

“THEY ARE DETERMING WHO THE LOSERS ARE”

The existence of all this debt implies the existence of a creditor. A creditor who most of us imagine is lending existing money. However new money is created through the bank loan process and with it a corresponding debt.

This is the root of the debt crisis problem. Any future money which the economy needs will also have a debt. Restricting debt, and hence money, arbitrarily to some ratio of GDP won’t solve the debt crisis.

Now if A get to keep his assets and get out of his debt he is even better off. If however, B now has assumed A’s debts but not his assets, B is rightly screwed.

You and Zhou are operating according to a model where someone else will always pays.

Its this intense symbiotic relationship of banks & the state which has destroyed the west.
We could be witnessing the end of Cromwellian like republics.

Your argument seems to be that once the debt is owed to people within your own country the size of the debt is not very important.

Can you not see that a massive debt even if owed to a small number of people/financial institutions within the country is a huge chain around the ankles of the productive economy.
If Businesses and people are spending significant parts of their income on repaying debt it is a massive transfer of wealth from the productive economy to the Financial sector.

In the US in 2010 half of all profits in the Sand P 500 went to financial related institutions.

Now if it was a socialist utopia where every individual in the country had an equal amount to invest and it was all invested in the domestic economy you would have a point. But that is not the case.
Excessive levels of debt once funded domestically may not matter currency traders who are mainly interested in the sustainability of the country as a whole but it matters a great deal to the general population.
Are you genuinely suggesting that the poor growth rates in japan over the last 20 years and their massive and increasing levels of debt are not related or significant?

In Ireland we have similar problems where massive earnings in the productive economy are siphoned off to landlords. Rents were much too high companies were all paying way more than was affordable. Is it any wonder that the majority of companies in Ireland do not make a profit?
I will repeat that as it is not said enough. The majority of Businesses in the Irish Economy do not make a Profit.

Even in the good times we relied massively on MNC’s to create profit collected in Corpo Tax.

The government badly needs to take on this powerful group and are failing in the task.

So taxes for cars & oil, both for transport & heating rise to fill the debt void.
What do you think happens to the price of houses out in the sticks which are dependent on both cars & oil central heating ?
The country would become rapidly more effiecent in its entire resourse allocation chain , from post offices to public transport to electric utility provision - pretty much everything while maintaining the value of money and thus their contract.
But don’t expect this - this debt artifice will eventually collapse and they will be forced to massively defecit spend out of this to cover the CAPITAL Losses & socialise the losses through raw inflation as the bank bond holders have escaped.
Unfortunetly this is what will happen as they break their social contract to remain on top.
Its is essentially the same trajectory although in the second the Irish will have very little wealth to rebuild our capital base
Go to 15.45 to 21.10

http://www.youtube.com/watch?v=hGl3QPfB084

“Settlement is a function of bankruptcy”
“The whole system is running toward bankruptcy which is a way of settlement”
“what they are doing is DETERMINING WHO THE LOSERS ARE”

I included the nominal amount that is owed on the Irish loans in NAMA rather than the amount NAMA valued/paid for them. If we write down the value of the NAMA loans then the Promissory Notes would have to be added to the government debt as it is largely these that will make up the difference. There is little impact from doing one or the other on the final total. Either the developers repay the full €50 billion of loans or they repay €20 billion and the State pays €30 billion. And we know which one is going to happen.

@ Eamonn Moran

Yes, the non-financial corporate sector is the main difference. The Sector Accounts figures provided by the Central Bank and CSO are gross and non-consolidated. I think the Credit Advanced to Irish Resident Private-Sector Enterprises data provided by the Central Bank gives a better idea of the debts of the corporate sector. This spreadsheet contains a lot of useful figures. I would point out that Bank of Scotland (Ireland) left this series in December 2010 when it pulled out of the Irish operations. Its loans still exist but are in a recovery vehicle called Certus rather than a bank. NAMA accounts for much of the drop seen since the middle of 2009.

I’m not suggesting Irish debt is not excessively high. It is. Rather we should try to get a handle on just how high it is.

From your link

“The authors argue that although debt can be used to drive growth and development, “…history teaches us that borrowing can create vulnerabilities. When debt ratios rise beyond a certain level, financial crises become both more likely and more severe (Reinhart and Rogoff (2009)). This strongly suggests that there is a sense in which debt can become excessive.”

The authors set out to answer a simple question: When does the level of debt go from good to bad? ‘Bad’ as in producing the effect of lowering long term economic growth in the economy.”

Debt becomes bad when it can’t be paid back; also when it
becomes a drag on growth. But this is not true in every case, so care must be taken in regard to global formulae applicable in every instance, for example, levels above 80%
are therefore inherently bad.

Consider Japan above, its level of debt is funded largely from within Japan.

“Japanese Yen Even though the Japanese yen has a huge sovereign debt problem, with the country’s current debt-to-GDP ratio standing at 200% it is considered to be the best safe-haven currency. This is because Japan is funding its own debt, so the demand for bonds is mostly internal. It has had a consistent current account surplus since 1988 and is steadily benefiting from the repatriation flows, as Japanese companies and investors bring funds home. One hurdle in the yen’s growth is the intervention by the Bank of Japan; however, this is not going to affect the yen in the long-term.”

http://bit.ly/z4Bj4R

A small economy might discover oil and require investment
needing borrowing to rise to eg 200% of gdp levels.

If you are a Keynessian, you would invest in a downturn and save during a boom.

So a more subtle understanding of the Rogoff analysis is required than at first may appear to be the case

For us, if we wrote off the banking debt alone, particularly the Anglo disastrous mistake, we have an infrastructure that is still intact with opportunity to build out our economy to levels 3/4 times what we see now.

This would be a good time to invest to provide jobs for young people. Savers will spend their money if the debt overhang is properly addressed; and a forward looking 5 year economic investment plan built involving all sectors of the economy.

The German model of wage restraint would have to be strictly adhered to and present unsavoury levels of public pay a la Croke Park said goodbye to

The problem is gombeens in the Department of Finance, NTMA, useless leadership….so I have to continually guard myself against my own optimism

Dutch Finance Minister Jan Kees de Jager (last night): “There was an emerging consensus that time is running out. Greece must now finally move decisively with structural reforms and generate growth…”

By/How…? Getting the money fairy to sprinkle her sparkly magic dust on the country?

4. We are in an dire economic crisis which demands more dramatic actions to get recovery in motion. Accordingly, a shorter bankruptcy period is required than would otherwise be the case.

+ 1

Maybe an amnesty period of one year or even 6 months before returning to a 3 year bankruptcy period with stronger conditions to help deal with tsunami of meltdown.

It seems the big difference between your figures and those produced by the Dept of finance for the minister is mainly the amount you are allowing for business debt.
This is outlined in the following article on Constantin Gurdgievs blog.

http://trueeconomics.blogspot.com/2011/09/26092011-irelands-debt-overhang.html

Your “Credit extended to private sector enterprises of €99 billion” and the departments “Non Financial corporations had outstanding loans of €264 billion”

Is it the case that the department are including non financial MNC Debt and you are not?

If that is the case I think you have a point.

However even using your figures it would put us in a similar position to Japan in 2000 and worse than any other listed country on the same blog post. Only Portugal comes close.

It should Also be noted that Greece had a mere 273% (not sure if the figures were taken before or after the Greeks fessed up to hiding debt)

Still I think there is a general case to be made for the idea that smaller economies are probably less able to carry as large burdens as bigger countries. Also the general trend of rapidly increasing mean debt levels over 10 years for the countries listed is quite shocking.
It is almost as though the Financial industries have increased levels of debt approaching the levels in japan so the global economy is in a state of permanent paralysis. Even with a long stint of Austerity Japans debt levels have also increased in the last 10 years.

http://www.askaboutmoney.com/showthread.php?t=150911

The discussion on this blog re ELA/PN has teased out 3 here (one of the comments to above), so I’ll just add the comment for reference

3 Central Bank Liquidity Funding
This money actually earns us interest. It is not secured on assets, so we could lose it if all the banks go bust. But the same people who argue this, argue that the NPRF money invested in AIB and Bank of Ireland will not be recovered. This investment was to supercapitalize the banks to provide a buffer against future losses. It is very unlikely that this money will not eventually be repaid to the Central Bank

5 The EU-IMF funding of €66 billion
This does not show up in the above table as it’s in the future. €40 billion relates to funding our exchequer deficit over the next three years. €26 billion will be used to replace maturing debt and pay the Promissory Notes which are included in the General Government Debt figure at 2 above.

@ S Coffey

“Irish Loans in NAMA: c. €50 billion” NAMA more like ¢30 bn

RE

Household Debt: €186 billion
Government Debt (ex Prom Notes): €139 billion
Credit extended to Irish Private Sector Enterprises: €99 billion
Bank of Scotland (Ireland) commercial loans: c. €15 billion
Irish non-financial corporate bonds: c. €10 billion
Irish Loans in NAMA: c. €50 billion

Obviously, it would be good to have a detailed account of the makeup of the above items on a loan by loan basis, not possible; though stats should go deeper into these. But, the problem is confusion is made between good and bad assets upon which above debt is based; also loans which are toxic, and loans which are not. For example, the figure ‘credit extended to Irish Private Sector Enterprises’ to me is a fascinating figure I’d be very interested in lots of more data upon.

IT should be possible to separate out from all these figures
lending which is funded on a good asset base that will make a return on investment, or lending that will make a return on investment even though the asset upon which is based is eroded; from lending whose asset base has disappeared and will never be repaid.

It appears easy enough for the Greeks to identify a debt write down of ¢100 bn, good luck to them this week. But for us it seems impossible to even come to agreement on a figure for debt writedown.

So, we have the ridiculous and ludicrous situation of Noonan meeting with Ollie et al today and its on debt writedown, but we have no figures on what we want on the table.

I’ve posed a figure of bn 42 bn based on a writedown of ELA, I’ve seen other figures go to ¢50 bn and ¢75 bn

I, for one, would like more data substantiating the view that the figure of debt writedown is a minimum figure total based solely on verifiable evidence that this figure represents what cannot be repaid

“Zhou,
Since there will be no debt relief from abroad, what you propose is a wealth transfer from those who were financially responsible in the boom years to those who are victims of the downturn and those who were down right irresponsible. Helping the former under certain conditions is necessary but helping the latter will draw the ire of vast swathes of the population.”

This is the essence of the stupidity that pervades the debate around bankruptcy reform.

I would make the following points:

1. The losses have occurred - stop fooling yourself that there is blood in the stone.

2. Longer bankruptcy periods will hamper debt recovery and wealth generation in the future.

3. Apart from those who did not take on too much debt (myself included), there are a lot of children who should not be paying for the sins of the reckless.

4. We are in an dire economic crisis which demands more dramatic actions to get recovery in motion. Accordingly, a shorter bankruptcy period is required than would otherwise be the case.

There are always people who will look first to their self-interest and the high esteem in which they hold themselves, and who will thereafter happily cut off their own nose rather than see their next door neighbour escape decapitation.

It is the responsibility of Government to recognise and explain the errors of these ways and to ensure correct action is taken.

A sobering assessment of the situation from Der Spiegel and of the now near total isolation of Merkel.

http://www.spiegel.de/international/europe/0,1518,810806,00.html

The latest news is that the suggestion of Draghi - to combine the remaining funds of the EFSF with those of the ESM for a total of €750 billion - is likely to be accepted by Berlin.

The only taxpayer cash cost to Germany hitherto has been in respect of her own banks. The constant foot-dragging by Merkel, and the misrepresentation of the costs and benefits to Germany, has resulted in a likely final bill which will surpass anything that might have been the case had action been taken earlier (a point made repeatedly by the SPD opposition).

The figures provided to Peter Mathews suffer from the same difficulties as those used here. In fact there are the same. If asked to pin down the level of debt at the end of 2011 I would go with:

Household Debt: €186 billion
Government Debt (ex Prom Notes): €139 billion
Credit extended to Irish Private Sector Enterprises: €99 billion
Bank of Scotland (Ireland) commercial loans: c. €15 billion
Irish non-financial corporate bonds: c. €10 billion
Irish Loans in NAMA: c. €50 billion

Any figure preceded with “c.” is a bit of a guess. If the Promissory Notes are included as part of government debt I would change the amount attributed to NAMA to the consideration it paid for the Irish loans (c. €20 billion).

The total is around €500 billion which is 320% of GDP and 390% of GNP. This is a higher level of debt than the countries shown above.

This destruction is a very managed process.
You can make multiple killings from these massive inflation / deflation cycles - especially if you control the spice………….oil.

Zhou,
Since there will be no debt relief from abroad, what you propose is a wealth transfer from those who were financially responsible in the boom years to those who are victims of the downturn and those who were down right irresponsible. Helping the former under certain conditions is necessary but helping the latter will draw the ire of vast swathes of the population.

If I become an FF Borgia can I have a dig out.

its not peak oil your average person in this country is worried about its “peak taxation”

Indeed.

Also BIS data collection criteria (upon which the chart is likely sourced) are hopelessly outmoded due to:
1) Increased globalisation
2) Financial sophistication: lots of hedging goes on, and nett positions often lower than gross

Very little attention has been paid to improving economic stats in order to keep pace with globalisation. I think it would be helpful if this blog was to campaign for:
1) Improved BIS standards (which effectively govern much CBI/ECB standards)
and
2) Increased domestic data collection

Such things take years to achieve…and it would be nice to have richer data soon