CNBC - Ireland: the worlds biggest Debtor Nation

[CorkGuy12]

Sorry if this has been posted already, but, we're number one in the world according to CNBC.

See here: http://www.cnbc.com/id/30308959?slide=16

Gross external debt: $2.311 trillion (Q4 2008)
2008 GDP: $285 billion

Our dept is 811% of GDP. Apparently, we all owe $549,819 each.

Anybody know where the $2.311 trillion figure comes from, or can anybody shed some lights on these figures?

 

[Sunny]

No idea where they get the figures but I would be sceptical. Ireland is unique in that we have are such a small economy and the IFSC and multi-national activities probably distort the figures. I take these things with a pinch of salt.

 

[rgfuller]

Here's the CSO info on Ireland's Gross External Debt as at 31/12/2008 (1.661 trillion euro), [broken link removed]
it's obviously increased since then, and when converted to $ must be near the 2.3 amount mentioned in the cnbc article.

 

[NHG]

Are we going to get a digital display like they have in N.Y. showing their national debt?

 

[jpd]

Gross external debt is not a very informative statistic. You need to look at a net figure or at least have some idea of the assets standing behind the debt to come to any reasonable conclusion.

If I have a mortgage of € 100,000,000 which is the biggest in the country but own assets worth € 150,000,000 this isn't a problem. If someone else owes me € 200,000,000 then I'm OK as well.

 

[Sunny]

Gross external debt is not a very informative statistic. You need to look at a net figure or at least have some idea of the assets standing behind the debt to come to any reasonable conclusion.

If I have a mortgage of € 100,000,000 which is the biggest in the country but own assets worth € 150,000,000 this isn't a problem. If someone else owes me € 200,000,000 then I'm OK as well.

Yeah its a pointless list. CNBC do have a tendency to go down the tabloid journalism route.

 

[Elphaba]

Yes, Im afraid we are great news fodder at the moment, with a recent new york times article entitled 'Erin go broke'. (USA's debt is over 12 trillion?)
The pen is mightier than the sword

 

[extopia]

Yes, Im afraid we are great news fodder at the moment, with a recent new york times article entitled 'Erin go broke'. (USA's debt is over 12 trillion?)

Yes, but the USA is 50 times the size of Ireland, in terms of population.

 

[shnaek]

a recent new york times article entitled 'Erin go broke'.

That article was written by a guy called Krugman, a guy with far better credentials than Cowen or Lenihan, or many of our glorious leaders. This guy won the Nobel prize for economics! This is the type of guy we need to listen to, not some government spin doctors, or some teacher dressed up as a minister. We really have to wake up here to the fact that we are so badly served by our politicians and the leaders in our various government departments. So badly served. Not just the politicians, but the heads of departments. Look at the department of finance? How can the managers there still retain credibility? They have made such a mess of running the country, particularly in the last ten years, and these people are still in charge! My god, if that isn’t scarier than ‘The Exorcist’ then I don’t know what is.

So instead of knocking Nobel prize winning economists, or calling George Lee and his ilk ‘doctor doom’, we should be looking for the heads of those who have run this country into the ground. We need those heads, so this never happens again. If there’s no sanction for destroying an economy and hundreds of thousands of lives, then how can there be sanction for anything?

 

[ccbkd]

That article was written by a guy called Krugman, a guy with far better credentials than Cowen or Lenihan, or many of our glorious leaders. This guy won the Nobel prize for economics! This is the type of guy we need to listen to, not some government spin doctors, or some teacher dressed up as a minister. We really have to wake up here to the fact that we are so badly served by our politicians and the leaders in our various government departments. So badly served. Not just the politicians, but the heads of departments. Look at the department of finance? How can the managers there still retain credibility? They have made such a mess of running the country, particularly in the last ten years, and these people are still in charge! My god, if that isn’t scarier than ‘The Exorcist’ then I don’t know what is.

So instead of knocking Nobel prize winning economists, or calling George Lee and his ilk ‘doctor doom’, we should be looking for the heads of those who have run this country into the ground. We need those heads, so this never happens again. If there’s no sanction for destroying an economy and hundreds of thousands of lives, then how can there be sanction for anything?

GREAT E-MAIL VERY TRUE. we are heading for 500,000 unemployed next year.. this is staggering and the effect both socially and economically is devastating. we really need a clean out of the government departments and the present leadership needs to sacked very shortly

 

[Mommah]

We need those heads, so this never happens again. If there’s no sanction for destroying an economy and hundreds of thousands of lives, then how can there be sanction for anything?

If we fire every civil servant, banker, builder, developer and FF voter.
(i'm not on the list BTW)
If we put them on a ship to say Tasmania.

How are we any better off.

The Americans learned an expensive lesson when they invaded Iraq and dismissed all the existing infrastructure. Police, army etc.

Its time to stop the blame game and move forward!

 

[shnaek]

If we fire every civil servant, banker, builder, developer and FF voter.
(i'm not on the list BTW)
If we put them on a ship to say Tasmania.

How are we any better off.

The Americans learned an expensive lesson when they invaded Iraq and dismissed all the existing infrastructure. Police, army etc.

Its time to stop the blame game and move forward!

This is no game, I assure you. I amn't suggesting firing everyone en-masse. But we need to fire, or demote, those responsible. And responsibility comes from the top down.

How can we give a huge payout to a regulator who stood over the financial ruin of the country and retain credibility as a democratic nation? How can a man who ran up €400,000 on a FAS credit card still be working for FAS? How can the heads of banks which have lost 90% of their value still be in their jobs? How can the heads of the department of finance still be in their jobs and earning huge salaries when it is obvious that they are incompetant?

Let the HEADS roll, that's what I said above. The heads of departments, the heads of banks and the ministers in government who allowed our country to become the sick man of the world.

 

[Elphaba]

Very true, its more serious than a blame game, someone needs to be held accountable for the corruption and misdeeds of our leaders. And over the time the truth will prevail. New ideas, parties will be born, everyone will remember. Fianna Fail's days are seriously numbered. They are history. Our grandchildren will read of their misdeeds in the history books, and our national debt may not be cleared by then!

 

[mainasia]

If we fire every civil servant, banker, builder, developer and FF voter.
(i'm not on the list BTW)
If we put them on a ship to say Tasmania.

How are we any better off.

The Americans learned an expensive lesson when they invaded Iraq and dismissed all the existing infrastructure. Police, army etc.

Its time to stop the blame game and move forward!

You never heard the phrase 'the buck stops here'?
Who is responsible, the leadership that's who!

All succcessful nations like the US regularly change their leadership, when they screw up the voters royally boot their asses out! No excuses...

Political leaders and financial leaders, they need to own up , they weren't good enough (they were worse than that!) and now they need to go.

Exit stage left and time to start anew.

 

[Strathspey]

No idea where they get the figures but I would be sceptical. Ireland is unique in that we have are such a small economy and the IFSC and multi-national activities probably distort the figures. I take these things with a pinch of salt.

That is such a load of bollocks.....the size of the financial sector in relation to the size of the economy is far bigger in a country like Switzerland and Luxembourg. No big tears being poured in those two countries....in that sense, Ireland is unique.

 

[askalot]

Are we going to get a digital display like they have in N.Y. showing their national debt?

Good idea. We could float on the surface of the Liffey like the Millennium countdown clock. Oh, maybe not!

 

[Sunny]

That is such a load of bollocks.....the size of the financial sector in relation to the size of the economy is far bigger in a country like Switzerland and Luxembourg. No big tears being poured in those two countries....in that sense, Ireland is unique.

First off, mind the language. Second of all, the financial sector in Ireland is different to Luxembourg and Switzerland. A lot of foreign banks have set up their treasury units in Ireland where all the funding goes through which distorts the figure. This is not the case in Switzerland and Luxembourg where funds and private banking are the main activities. And there are tears being poured in these Countries. They just don't have a property crash to deal with like Ireland.

 

[z109]

Nevertheless, Sunny, the point still stands that other countries have large financial centres. They just aren't larger than the host economy they are attached to. Should we have a crisis of confidence and those treasury operations decide to move elsewhere, we would experience capital flight on an unprecedented scale (relative to GDP/GNP). I am sure that is part of the reasoning behind the governments decision to leave corporation tax unchanged - we are effectively locked into the current rate. I accept that the sort of operations that are in the IFSC have different elements, but some of them are the same as elsewhere - the listing of bonds/funds on the IFSC, for example.

Any idea what proportion of GDP/GNP the IFSC represents?

 

[Sunny]

Nevertheless, Sunny, the point still stands that other countries have large financial centres. They just aren't larger than the host economy they are attached to. Should we have a crisis of confidence and those treasury operations decide to move elsewhere, we would experience capital flight on an unprecedented scale (relative to GDP/GNP). I am sure that is part of the reasoning behind the governments decision to leave corporation tax unchanged - we are effectively locked into the current rate. I accept that the sort of operations that are in the IFSC have different elements, but some of them are the same as elsewhere - the listing of bonds/funds on the IFSC, for example.

Any idea what proportion of GDP/GNP the IFSC represents?

Thats the point I was making. Irelands financial sector is disproportionately large compared to the size of its economy and this distorts figures such as back of the envelope calculations on things such Ireland's indebteness especially when they ignore the asset side of the calculation and simply use gross figures.
I don't know off hand how much the IFSC represents of GNP/GDP. I will try to find out.
A good example of how these figures can be bandied about without any consideration is by looking at Countries who have taken the biggest advantage of repo operations with the ECB. If you remember it was shown that Irish banks had the second largest level of borrowings behind Spain at something like €68.2 billion and JP Morgan came out with an analyst note saying Irish Bank Borrowings with the ECB were almost 40% of GDP. What they didn't point out was that, the Irish clearing banks only accounted for about €9 billion of this. The vast majority of the rest was due to IFSC operations.

 

[z109]

If you can find the figures Sunny, it would be great. It's clear that GDP (and probably GNP?) are being boosted by the presence of this money that comes and goes. But we can't really have it both ways - we can't claim that the external debt figure is meaningless as it includes the IFSC while at the same time saying we have a low debt:GDP (when GDP is artificially boosted by that same IFSC money we've just disowned...