# CNBC - Ireland: the worlds biggest Debtor Nation



## CorkGuy12 (23 Apr 2009)

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?


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## Sunny (23 Apr 2009)

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.


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## rgfuller (23 Apr 2009)

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.


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## NHG (23 Apr 2009)

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


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## jpd (23 Apr 2009)

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.


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## Sunny (23 Apr 2009)

jpd said:


> 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.


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## Elphaba (28 Apr 2009)

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


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## extopia (28 Apr 2009)

Elphaba said:


> 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.


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## shnaek (29 Apr 2009)

Elphaba said:


> 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?


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## ccbkd (29 Apr 2009)

shnaek said:


> 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


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## Mommah (29 Apr 2009)

shnaek said:


> 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!


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## shnaek (29 Apr 2009)

Mommah said:


> 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.
> 
> ...



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.


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## Elphaba (29 Apr 2009)

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!


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## mainasia (1 May 2009)

Mommah said:


> 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.
> 
> ...


 
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.


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## Strathspey (1 May 2009)

Sunny said:


> 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.


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## askalot (1 May 2009)

NHG said:


> 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!


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## Sunny (1 May 2009)

Strathspey said:


> 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.


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## z109 (4 May 2009)

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?


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## Sunny (5 May 2009)

yoganmahew said:


> 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.


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## z109 (5 May 2009)

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...


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## Sunny (5 May 2009)

yoganmahew said:


> 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...


 
http://www.tribune.ie/business/news...over-cnbc-survey-that-exaggerated-irish-debt/

I agree with you but I would imagine the borrowings of IFSC operations have a much bigger impact on gross debt figures, than what the IFSC contributes to GDP. Could be wrong though. And by the way, I am not arguing against the general point about Ireland's indebteness. Especially in Households and I am not saying we have a low debt:GDP. I am simply suggesting that CNBC should not use figures like this without looking at who is indebted rather than just taking a total figure and suggesting that each man, woman and child is liable for that debt. 

I will try and find figures for the IFSC.

By the way I struggle to accept that Luxembourg is better than us in this regard but I can't find an external debt figure for them so not sure.


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## z109 (5 May 2009)

Luxembourg external debt:
[broken link removed]
(excel file)
1.4 tn euro

GDP at end 2007 was 36 bn euro
[broken link removed]

I make that 3,867%?


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## Sunny (5 May 2009)

yoganmahew said:


> Luxembourg external debt:
> [broken link removed]
> (excel file)
> 1.4 tn euro
> ...


 
Kind of what I would expect alright. I don't know how the people of Luxembourg sleep at night!


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## z109 (5 May 2009)

I imagine Monaco, Lichtenstein, Andorra (?), the IOM, the Channel Islands, the Caymans, Bermuda and all the other tin-pot tax havens have the same outcome. Still, it's not exactly stellar company...


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## ninsaga (14 May 2009)

..and now today's CNN's Money article adds more fuel to the fire.


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## Chocks away (18 May 2009)

Ms T said:


> I quote:
> "We'll leave the last word for O'Leary of Ryanair. For all his contempt for government policies, O'Leary is a huge fan of Irish ingenuity. He's an exemplar himself: He bought his own private Mercedes taxi so that he can ride in special commuter lanes and not have to sit in traffic. "Maybe we drink too much, but the Irish are brilliant people," he declares. And they'll need all their blarney and brilliance to get through this crisis."
> 
> 
> We'll get through this crisis..


Financial hacks from The Torygraph, Economist, NY Times et al, take note.


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## onq (21 May 2009)

shnaek said:


> <snip>
> 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?




I have no problem with your advocating accountability - as far as it goes - but what we need is a way out of this mess, not empty heads only good at trading on a rising market thinking they're brilliant.

This includes the banks, the civil servants running the departments, the developers, Cowan, McCreevey and Bertie, who were all just surfing the waves as far as I can see [with no real handle on the underlying situation] and who weren't watching out for the reef.

And unless you haven't bought a house in the last decade and a half or haven't been in business here using credit facilities, you are part of it.

I certainly am, having done both.

As for Dr. Doom...

Public sentiment feeds into a recession like nothing else - as fewer and fewer people buy goods and services to the previous extent and cut back to bare essentials the economy goes into a diminishing spiral.

With Eddie Hobbs merely showing us means to get richer, McWilliams selling books and warning that credit "would become dearer because the Germans are going to stop saving and start buying" and George lee merely reporting the continuing rise in our fortunes without attempting much in the way of cautionary criticism until it wa sfar, far too late, it seems none of the above economic pundits have covered themselves in glory.

Presenting a balanced view with upside and downside is excellent journalism, but one cannot help feel there is a biased view against the government as if they have somehow perosnally benefited from the celtic tigers largesse, as opposed to just taking their salaries and pensions.

Incompetence in the face of a crisis of this nature is understandable.

Unforgivable but understandable.

Our politicians are largely parish pump professionals, not global economic mandarins, and we've seen that even the Wall Street Big Boys could become technically insolvent.

So by all means seek accountability, by all means plug a few holes to stop the leaks for a while, but the me feiner gombeen man mentality is as much a part of us today as it ever was and that's one of the reasons we are where we are today.

What we need for the future is a balanced economy, not one that depends overly on agriculture [as we once did in the 40's and 50's] building [as we once did in the 60's] or finance [the current foolishness].
We need strength in depth in all sectors.

We need investment in infrastructure.

We need a healthier lifestyle, not endless binge drinking and drug taking.

And we need greater investment in education to help achieve our aims and supply growing local markets.

In relation to the Nobel Prize winner, where was that 2.5Trillion figure generated?

Half a million each? I personally owe nothing near that. Its a nonsense to spray figures like that about without showing where they are generated.

As a developer I know said recently,

"Have you ever heard of a rich economist?"


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## dafmurray (31 May 2009)

Changing the political party serving as our Government won't change the senior civil servants advising them or most of the existing administrative personnel.  If you assume that Fianna Fail ministers are entirely to blame for ignoring the quality of advice given to them then a change in political party may work.  I would point out that very few people actually warned of the root causes of this economic collapse and if you were reading the newspapers intently you would not have known that this economic collapse was occuring until it became blatantly obvious.  It's not just the Government that needs changing.  Better insight and analysis is needed throughout our society.  I do accept though that Fianna Fail have behaved in a way that merits their removal from power in the best interests of our society.  I do not believe however that any other party is likely to do much better, although the level of corruption would decrease.


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