# Eire has highest % risk of Bankruptcy



## ALBERT* (15 Apr 2010)

"All countries are on the path towards bankruptcy, to measure where a  country   stands along this path it is critical to look beyond official  statistics that   focus primarily on public sector net debt and the  annual budget deficit in terms   of % of GDP.
 The key item missing from most commentary on this subject matter is  debt and   liabilities that are denominated in foreign currencies as  that can mask a   stealth trend towards potentially imminent bankruptcy  that can suddenly blow up   in the face of a countries citizens who had  been previously mislead by official   statistics into thinking that the  debt situation was under control, much as   Icelanders experienced  during 2008 where one day they enjoyed one of the highest   standards of  living amongst westerners to next day wake up to be bankrupt and    poorer in terms of purchasing power than many third world countries. *The    key driver for state bankruptcy and currency collapse is the amount a  country   owes or is liable to foreigners*, as debt denominated  in foreign   currencies cannot be inflated away as governments can do  with domestic debt so   it is one of the primary driving forces for a  country going bankrupt as it is   unable to meet the increasing interest  payments due in foreign currency as its   own currency falls.


The following graph attempts to paint an accurate picture of the current    relative state of the trend towards bankruptcy of the worlds major  economies   which takes into account public and private debt, unfunded  liabilities, budget   deficits, and debt denominated in foreign  currencies, as well as taking into   account the historic track record  of the countries in dealing with past debt   crisis. The results are  shown as a % of the countries risk of going bankrupt   where Iceland  would be at 100% following its defacto debt default.








*Whilst the mainstream press these past two months has been obsessed with  the   Greek debt crisis, the above graph clearly illustrates that a far  larger debt   crisis looms in Ireland that could soon transplant Greece  in the debt crisis   headlines over the coming months*, similarly a  number of other Euro Zone   countries head the risk towards bankruptcy  league table with Belgium and   Portugal not far behind Greece. The  price that these countries pay for being   stuck in the Euro single  currency is that they cannot devalue to try and gain   some competitive  advantage for their economies and therefore try and grow and   inflate  their way out of a high debt burden that stifles economic activity. "


http://www.marketoracle.co.uk/Article18622.html


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## tiger (15 Apr 2010)

Yes, but in the case of the Euro foreigners <> foreign currency.
David McWilliams has argued that we should leave the Euro for this reason.
However unless we're planning to do this, premise for the article is a faulty one.


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## ringledman (15 Apr 2010)

I like Nadeem Walayat's analysis in general.

However I had to question that graph. What is is showing?

What is the scale showing? Amount of external foreign owned debt?

If so in what currency is the debt totalled??

The graph is rather subjective I feel although fairly correct in order of countries.


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## callybags (16 Apr 2010)

I stopped reading after the first 8 words.


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## Sunny (16 Apr 2010)

What a load of complete rubbish.


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## Sunny (16 Apr 2010)

ringledman said:


> The graph is rather subjective I feel although fairly correct in order of countries.


 
So you think there is a bigger chance of the USA going bankrupt than Brazil?


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## csirl (16 Apr 2010)

There are so many holes in this I wouldnt know where to start!


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## callybags (16 Apr 2010)

Maybe that well known economist, Constantin Gruyere could help...


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## ringledman (16 Apr 2010)

Sunny said:


> So you think there is a bigger chance of the USA going bankrupt than Brazil?


 
Yes without a doubt! The USA has one of the worst set of economic fundamentals in the world and Brazil one of the best.

The USA is the world's biggest debtor nation, owing more debt to the greatest number of countries ever recorded.

Of course the US will go bankrupt at some point. With its global reserve currency it will take a while (around 10 years or so); but bust it certainly will be.

There is a strange perception in the West that somehow we are immune from insolvency. How wrong. 

When you look at unfunded public liabilities of 350%/gdp and upwards, 10-12% budget deficits; official debt of 80%/gdp and rising, no foreign currency reserves; huge trade deficits -

If this is not a sign of insolvency then somone please tell me what is?!!!

I am surprised the USA is not further up the list of bankrupt coutries. It should be. 

Ireland, UK, USA, Spain, Portugal, Greece, Italy - All Insolvent.

The question is what form will the bankruptcy take?

For the USA I don't see any sort of IMF bailout. Most likely a hyperinflationary collapse and default or debasement of their debt to foreign holders. 

This willl then create massive geo-political tensions and possibly some sort of war.

For the rest of the bust West - A series of IMF bailouts, currency collapses and defaults...


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## ringledman (16 Apr 2010)

Someone please show me a better definition of bankrupt that this -

[broken link removed]


http://www.chrismartenson.com/system/files/u4/Debt_to_GDP_with_light_blue_arrow.jpg


And the USA's debt is growing at an amarming rate. 500% of GDP soon...

As Marc Faber says - they will never repay their debt. They simply cannot and are past the point of no return.

The West is flush broke.

Huge shift in global power East occuring over the next 25 years.


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## onq (2 May 2010)

I see no-one has yet rebutted the graph, just expressed contrary opinions.

Greece has a worse relationship between its national debt and its GDP than we do.

Europe appreciates our austerity measures, is worried about Greece and yet  we're highest.

Doesn't make sense.

ONQ.


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## Chocks away (2 May 2010)

Absolute tosh! Most economists should be treated with the same reverance as astrologers. The parameters within which they make forecasts are often faulty or can be too easily skewed by outside forces. Then there is the "Economist's" agenda. For that reason, they choose to earn a crust from writing/spinning/tipping, rather than putting their money where their mouths are. And those who do/did, welllllllllll, ........ . Lehman Bros, Enron, AIG, Goldmans. The market finds you out. Remember Posiedon? Or closer to home - Paul Singer's philately club, IOS, Barings. But this does not stop both "safe" investors and suckers from dipping their toes in the investment pond. This can result in riches or fool's gold. Wipeouts come around a few times in one's lifetime. Timing is all important and IMPOSSIBLE to work out. Selling at the right time is LUCK ......... barring insider dealings. So, back to the OP, you may as well read the financial pages of Old Moore's Almanac.


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## Bonafide (9 Jun 2010)

Chocks away said:


> Absolute tosh! Most economists should be treated with the same reverance as astrologers. The parameters within which they make forecasts are often faulty or can be too easily skewed by outside forces. Then there is the "Economist's" agenda. For that reason, they choose to earn a crust from writing/spinning/tipping, rather than putting their money where their mouths are. And those who do/did, welllllllllll, ........ . Lehman Bros, Enron, AIG, Goldmans. The market finds you out. Remember Posiedon? Or closer to home - Paul Singer's philately club, IOS, Barings. But this does not stop both "safe" investors and suckers from dipping their toes in the investment pond. This can result in riches or fool's gold. Wipeouts come around a few times in one's lifetime. Timing is all important and IMPOSSIBLE to work out. Selling at the right time is LUCK ......... barring insider dealings. So, back to the OP, you may as well read the financial pages of Old Moore's Almanac.


 
Well said!


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