Tuesday, April 27, 2010

Economics 27/04/2010: Greece - the end is tragic!

2-year yields close of today:
EU = 0.7%
Ireland = 3.6%
Greece = 16.4%
This is it, folks. No where else to run. Greek interest on public debt would swallow over 19 percent of their GDP annually!

Clearly, Ireland should do what Greece did, according to the folks at Tasc, the Irish Times and in the Siptu building. Ramp up borrowing to stimulate economy...


Unknown said...

I've just found your blog and know little about economics.
But could you try to explain the figures in this site.
Seems to me the position of Ireland is hopeless

Mack said...

Desmond -

According to this €789.1 bn of the €1.1trn debt is held by entities in the IFSC.


TrueEconomics said...

Mack, Desmond - overall, roughly speaking 55% of our external debt is held by IFSC entities that are not affiliated with Irish institutions. One has to be aware that IFSC includes subsidiaries of virtually all major Irish credit institutions. In addition, it is fallacious to assume that a default by IFSC institutions on their debts will not have adverse impact on Ireland. A year ago in my column in Business & Finance I estimated that IFSC contributes over €2 billion (directly and indirectly) to the Exchequer. In addition, there is significant reputational component to the IFSC - Dublin (and Irish) financial services (including domestic banks) in effect are linked to the fortunes of the IFSC through the international perception of Dublin as a general Financial Services hub. This is why, for example, Dublin has fallen only to the 32nd place in international rankings of financial services centres this year. Absent positive perception from IFSC, it would be in the 50s...

So overall, my estimation, our true debt exposure - private, public and quasi-public, such as Nama - is much higher than Finfacts estimates (see http://tinyurl.com/34e6vw6).

Unknown said...

Aren't we already running a stimulus package via government borrowing?