Debt Disaster – the figures don’t lie

2011 Eurstat will return gross government debt 83% of GDP ie €130

2010 GDP is €160 billion

But NAMA debts and bank bailout excluded

Bank Bailout €50 billion

NAMA Anglo Ist Tranche €9 billion at 55% discount
2nd Tranche €7 billion at 62% discount

Total Anglo loans €36 billion in 2010 at average 60% discount leads to write-off of €21.6 billion in 2010

Anglo’s residual loan book of €35 billion – write-off at 50% = €17.5 billion (impaired loans on this at end of 2009 were 51%

Bank of Scotland (Irl) is winding down €13 billion loan book and will not have a banking licence by end of 2010

Anglo says that €10 to €15 billion will be suitable to transfer to good bank.

Anglo may need up to €40 billion from government ( Damien Kiberd ST 29 Aug)

Irish Nationwide building Society loans to NAMA value €8.7 billion at average discount of 70% (58% and 72% NAMA 1 &2) leaving €6 billion write-off.

INBS has liabilities of €11 billion, – cash of €2 billion, residual loan book of €2.4 billion seriously impaired.

INBS needs another €3 billion along with the already €2.7 billion in promissory notes; about €6 billion is the likely total.

EBS €850 million in promissory notes

AIB + EBS €2 billion (Kiberd) I disagree – AIB will be much bigger.

NAMA discounts : tranche 1, 50%: tranche 2, 55%

Apply an average discount of 55% to €80 billion = exposure of €36 billion.

Where will money come from to buy NAMA assets in Ireland – not the Irish Banks so selling looks like mission impossible in the intermediate term and out of the question now.

Only 25% of NAMA loans are performing.

Kiberd says that a receiver would get a break-up value of the remainder of the NAMA loans of 20% giving back €20 to €25 billion – leaving the state with a loss of €11 to €16 billion The cost of bank recapitalisation and NAMA will be between €59 and €64 billion

At end of 2011, the national debt of €130 billion plus the bank/NAMA debt of €61.5 billion leaves a debt of €191.5 billion – reduce this by National pension Reserve Fund of €20 billion and cash in NTMA and we are left with a debt of €171.5 billion.

It gets worse because we will borrow €13 billion in 2012 and €9.5 billion in 2013

Damien Kiberd believes that General Government Debt in 2014 will be €200 billion.

Interest costs at 4.8 to 5% will be about €10 billion per year and it is equivalent to 33% of the 2010 tax revenue.

This is debt default country and we are no longer a sovereign state