Burden of Irish debt could yet eclipse that of Greece

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emordnilap
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Burden of Irish debt could yet eclipse that of Greece

Post by emordnilap »

A quite honest opinion of the Irish state.

Full text here.
Dermot Kelly wrote:It is no longer a question of whether Ireland will go bust, but when. Unlike Greece, our woes do not stem from government debt, but instead from the government’s open-ended guarantee to cover the losses of the banking system out of its citizens’ wallets.
I tend to agree with him; it was a shabby move. There were better ways of bailing out - or otherwise - the banks.

Any comments on this article?
I experience pleasure and pains, and pursue goals in service of them, so I cannot reasonably deny the right of other sentient agents to do the same - Steven Pinker
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Quintus
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Post by Quintus »

The bank guarantee may have looked like “the cheapest bailout in the world, so far” in September 2008, but it is not looking that way now.

Adding these bank losses on to the national debt means we are facing a debt by late 2012 of 115 per cent of GDP ...

snip ... While for most countries the two measures are the same, in Ireland GDP is a quarter larger than GNP. This means our optimistic debt to GDP forecast of 115 per cent translates into a debt to GNP ratio of 140 per cent, worse than where Greece is now.
Oops, time to close my post office account.

It's hard to say which countries in Europe are worse off, even Germany will be worried having invested heavily in indebted countries and (like China) having used a strategy of lending money to broke people to buy its own goods.
Blue Peter
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Post by Blue Peter »

Here's a good one on Ireland:
Ireland’s problems are, sadly, far deeper than the need for simple fiscal austerity. The Celtic tiger’s impressive reported growth over the past decades was in part based on its aggressive attempts to help major corporations in the United States reduce their tax bills. The Irish government set corporate taxes at just 12.5 percent of profits, thus attracting all sorts of businesses — from computer services such as Google and Yahoo, to drug companies such as Forest Labs — that set up corporate bases and washed profits through Ireland to keep them out of the hands of the Internal Revenue Service.

The remarkable success of this tax haven means that roughly 20 percent of Irish gross domestic product (G.D.P.) is actually “profit transfers” that raise little tax for Ireland and are owned by foreign companies. Since most of these profits are subject to the tax code, they are accounted for in Ireland where they are lightly taxed; they should not be counted as part of Ireland’s potential tax base. A more robust cross-country comparison would be to examine Ireland’s financial condition ignoring these transfers. This is easy to do: a nation’s gross national product excludes the profits of foreign residents. For most nations, gross national product and G.D.P. are near-identical, but in Ireland they are not.

When we adjust Ireland’s figures accordingly, the situation is dire. The budget deficit was about 17.9 percent of G.N.P. in 2009, and based on European Commission projections (and assuming the G.N.P.-G.D.P. gap remains the same) it will be roughly 14.6 percent in 2010 and 15.1 percent in 2011, while the debt-to-G.N.P. ratio at the end of this year is expected – by our calculation – to be 97 percent, and 109 percent at the end of 2011. These numbers make Ireland look similarly troubled to Greece, with a much higher budget deficit but lower levels of public debt.

Peter.
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emordnilap
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Post by emordnilap »

Truly mind boggling.

And no-one (in the general population) questioned what was going on. They were on a high.

I always knew the 'direct foreign investment' bullshit was just that and bound to end in tears. Look at Dell, bailed out in advance. They were bankrolled to set up here and of course it was all about 'creating jobs'.

When a better prospect came up (Poland), off they went, leaving hundreds without jobs which were never really there

Dell are being subsidised yet again until some other suckers fall for their line.
I experience pleasure and pains, and pursue goals in service of them, so I cannot reasonably deny the right of other sentient agents to do the same - Steven Pinker
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emordnilap
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Post by emordnilap »

Official. Recession ended. ('Probably')
I experience pleasure and pains, and pursue goals in service of them, so I cannot reasonably deny the right of other sentient agents to do the same - Steven Pinker
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