Saturday, January 19, 2013

19/1/2013: Ireland's cost of funding

An interesting chart in today's IMF review of Greece:

Now, that's right - prior to Bailout 2.0, Greece led the euro area in terms of its overall Government debt financing burden as % of GDP and Ireland ranked 3rd in these dubious (in virtue) rankings. After Bailout 2.0, Greece funding costs are now below euro area average (ranked 7th) and Irish ones are ranked 2nd highest after Italy.

Now, note that this means that Ireland has the highest debt financing costs of all countries in Troika bailouts. In other words, with hefty subsidy to our cost of funding via EFSF et al, we are coming out very poorly. What will happen if we 'regain access to the markets' at costs higher than those under the Troika bailout?..

Although approximate, a deal to bring Irish debt financing costs to euro area average would see the Government benefiting from savings of ca 2.3% of our GDP annually or ca EUR3.73 billion making measures passed in Budget 2013 in their entirety unnecessary.


Anonymous said...

To me this says one thing: Stop borrowing. Its time to take a drastic look at the cost involved in propping up asset prices.

Fungus the Photo! said...

Comment is correct, except as usual, s/he is playing fair in an unfair world!

Borrow as much as possible as soon as possible at whatever cost, as those lending will soon disappear. The end game is approaching, the Wizard is about to reveal all the assets of those financial companies are now in the form of debt owed by .... other financial companies! All the real assets have been extracted and the sooner they collapse asset values, the sooner these thieves can buy up all around them!

Remember the IFSC!

Fungus the Photo! said...

When all lending collapses, what will the ECB do?

Direct money creation rigged to infrastructure projects has worked in the past, and will again. After all, the thieves will have left then, won't they?????

Anonymous said...

I would blame it on people themselves. Bad things only happen when we ask government to free us from risk & I dont mean qe. I mean everyday things like social welfare, pensions and other govt programmes. Every time we ask for more protection govt get more power from us.
My answer to all of this is very simple. Govt should only spend money it taxes.This way people would know the cost of all this protection and would not seek it.
I hope the era of personal responsibility is coming back.