Governments discovers that money is money and has the wrong bank policy

Eurostat has forced the government to add €4 billion given to Anglo Irish to the 2009 deficit raising the deficit from €19.35 to €23.35 billion. That means that the 2010 deficit will be €40 billion because the €18 billion for Anglo will have to be added. The EU treats the €18 billion investment in Anglo as spending and not an investment because there will be no return on all or part of it. In March €8.2 billion was put into Anglo. The same rationale applies to Irish Nationwide where €2.7 billion is involved.

Our debt to GDP ratio is supposed to be reduced to 3% by 2014 from a current value of 14.3%. If Anglo is included in the 2010 figure the deficit will soar to 20% plus for one year as the full recapitalisation of Anglo hits the books. This will be for one year as presumably the Anglo “investment” will not recur in 2011.

Why did the government guarantee and then nationalise Anglo Irish Bank and Irish Nationwide Building Society? Then Nama???

What will the bond markets do now?

As a country, we have to invest in jobs to get economic activity up and generate income and consumption taxes.

TAKE HOME MESSAGE – Money is money and spending borrowed money adds to debts. Things only get worse as Greek default gets nearer.