4 ms·

For me, the most shocking thing in the web is that Ireland and its banks owe $867 billion. That's approximately $188,000 for every man, woman, and child in Irel

by donaldc 15y ago

For me, the most shocking thing in the web is that Ireland and its banks owe $867 billion. That's approximately $188,000 for every man, woman, and child in Ireland.

justincormack 15y ago
This was largely shifted from the banks to the Irish government, as the bank bailout was Euro 100,000 per head. All the fallout from a property boom.
dhughes 15y ago
Ireland has (or had?) a pretty good economy too with well paying aerospace and other tech industry jobs.
- sudonim 15y ago
  I think what you're seeing now is the cost of that "good economy".
- barry-cotter 15y ago
  Not that many although the tech industry doesn't seem to be going anywhere thank fate. Still, it's not like those jobs are even theoretically available to more than maybe a quarter of the population. One thing that surprised me when I read it[0] was the huge difference in profitability of domestic and multinational firms in Ireland per employee in the same sector. Twice as productive, twice. [0]http://www.gillmacmillan.ie/economics/economics/economy-of-ireland-11th-edition http://www.gillmacmillan.ie/economics/economics/economy-of-i...
  - barrkel 15y ago
    This is largely a product of booking European profits through Irish subsidiaries. (Irishman myself, FWIW.)
    - dhughes 15y ago
      Google's European head office in Ireland would be a great example of that, as well as the shell office in The Netherlands.
- rmc 15y ago
  The tech industry in Ireland is still going quite well. Talk to a tech recruiter in Dublin (or a tech company) and they'll tell you how hard it is to hire people. It's the construction sector that's not so good now.
feral 15y ago
Its difficult to know what the figures on that chart mean, after casual inspection. Is it gross debt? Debt net of assets? How are they calculating the debt? There are more subtle issues, too. Its very hard to know what to count as Irish sovereign debt. Do you count 'working capital' on loan from the ECB? How do you value the assets of the nationalised banks, which perhaps count against debt? Also, adding to the confusion, is that countries have an incentive to use various accounting strategies to minimise the figures. So its very hard to come up with an estimate that everyone agrees on. One of the Irish economic commentators, generally thought to hold the most pessimistic outlook, is academic economist Morgan Kelly; he wrote an article in the Irish times, in May, where he estimated the debt at 250B euro (~$340B) (http://www.irishtimes.com/newspaper/opinion/2011/0507/1224296372123.html http://www.irishtimes.com/newspaper/opinion/2011/0507/122429... - pretty grim reading). Obviously a terrible amount of debt, but its half the amount quoted in the NYT. How did Ireland get like this? A comment elsewhere on this article has a pretty good summary: http://news.ycombinator.com/item?id=3230142 http://news.ycombinator.com/item?id=3230142 Basically, we had a housing bubble in Ireland, some very careless bank management (like the rest of the world) and a political failure to either A) regulate the banks properly, or B) to deal with the consequent bank failures properly. When things started to go south in September 2008, the government of the day made a decision to guarantee much of the debts of the main Irish banks. This turned out to be a very bad decision. Its also a decision that the ECB and other EU countries won't let Ireland wriggle out of, as many of the creditors of the Irish banking system are other EU financial institutions (worried about systemic risk) - to the extent that Ireland recently paid off a controversial unguaranteed bank loan, under pressure from the ECB. So this is why the Irish sovereign debt is so high. The fundamentals of the economy could have been better - there was too much building construction, for a start - but they weren't bad; the state functions, people pay their taxes, Irelands a good place to do business, and is becoming a very friendly place for startups; so the scenario is very different from Greece; but the level of debt is sadly huge.
brc 15y ago
Yes, but that's the book value of the debt, not the real value. In reality creditors will never be remunerated with this. A political and economic fantasy persists that the creditors will not lose out of this, that they will be made whole. But each loan involves a debtor and a creditor, both will end up accepting losses. The faster this is done, the better it will be for all involved.

by donaldc 15y ago

For me, the most shocking thing in the web is that Ireland and its banks owe $867 billion. That's approximately $188,000 for every man, woman, and child in Ireland.

justincormack 15y ago

This was largely shifted from the banks to the Irish government, as the bank bailout was Euro 100,000 per head. All the fallout from a property boom.

dhughes 15y ago

Ireland has (or had?) a pretty good economy too with well paying aerospace and other tech industry jobs.

sudonim 15y ago
I think what you're seeing now is the cost of that "good economy".
barry-cotter 15y ago
Not that many although the tech industry doesn't seem to be going anywhere thank fate. Still, it's not like those jobs are even theoretically available to more than maybe a quarter of the population. One thing that surprised me when I read it[0] was the huge difference in profitability of domestic and multinational firms in Ireland per employee in the same sector. Twice as productive, twice. [0]http://www.gillmacmillan.ie/economics/economics/economy-of-ireland-11th-edition http://www.gillmacmillan.ie/economics/economics/economy-of-i...
- barrkel 15y ago
  This is largely a product of booking European profits through Irish subsidiaries. (Irishman myself, FWIW.)
  - dhughes 15y ago
    Google's European head office in Ireland would be a great example of that, as well as the shell office in The Netherlands.
rmc 15y ago
The tech industry in Ireland is still going quite well. Talk to a tech recruiter in Dublin (or a tech company) and they'll tell you how hard it is to hire people. It's the construction sector that's not so good now.

feral 15y ago

Its difficult to know what the figures on that chart mean, after casual inspection. Is it gross debt? Debt net of assets? How are they calculating the debt? There are more subtle issues, too. Its very hard to know what to count as Irish sovereign debt. Do you count 'working capital' on loan from the ECB? How do you value the assets of the nationalised banks, which perhaps count against debt? Also, adding to the confusion, is that countries have an incentive to use various accounting strategies to minimise the figures. So its very hard to come up with an estimate that everyone agrees on. One of the Irish economic commentators, generally thought to hold the most pessimistic outlook, is academic economist Morgan Kelly; he wrote an article in the Irish times, in May, where he estimated the debt at 250B euro (~$340B) (http://www.irishtimes.com/newspaper/opinion/2011/0507/1224296372123.html http://www.irishtimes.com/newspaper/opinion/2011/0507/122429... - pretty grim reading). Obviously a terrible amount of debt, but its half the amount quoted in the NYT. How did Ireland get like this? A comment elsewhere on this article has a pretty good summary: http://news.ycombinator.com/item?id=3230142 http://news.ycombinator.com/item?id=3230142 Basically, we had a housing bubble in Ireland, some very careless bank management (like the rest of the world) and a political failure to either A) regulate the banks properly, or B) to deal with the consequent bank failures properly. When things started to go south in September 2008, the government of the day made a decision to guarantee much of the debts of the main Irish banks. This turned out to be a very bad decision. Its also a decision that the ECB and other EU countries won't let Ireland wriggle out of, as many of the creditors of the Irish banking system are other EU financial institutions (worried about systemic risk) - to the extent that Ireland recently paid off a controversial unguaranteed bank loan, under pressure from the ECB. So this is why the Irish sovereign debt is so high. The fundamentals of the economy could have been better - there was too much building construction, for a start - but they weren't bad; the state functions, people pay their taxes, Irelands a good place to do business, and is becoming a very friendly place for startups; so the scenario is very different from Greece; but the level of debt is sadly huge.

brc 15y ago

Yes, but that's the book value of the debt, not the real value. In reality creditors will never be remunerated with this. A political and economic fantasy persists that the creditors will not lose out of this, that they will be made whole. But each loan involves a debtor and a creditor, both will end up accepting losses. The faster this is done, the better it will be for all involved.