Irish Borrowing Catastrophic

Figures for June 2010 from the Bank of International Settlements show Ireland’s total $731 billion government, bank and private international debt exposure distributed as follows: Britain $149 billion; Germany $138 billion; US $69 billion; Belgium $54 billion; France $50 billion; Japan $27 billion; Others $244 billion.
It is instructive to track the concerns expressed about Ireland’s liquidity/solvency by George Osborne, Wolfgang Schaüble, Timothy Geithner, Van Rompuy and Christine Lagarde against these figures. Their sheer scale is best appreciated when compared to Spain’s total debt exposure of $876 billion, Greece’s $175 billion and Portugal’s $235 billion. One can readily see from this that the EU’s €750 billion fund agreed in May could (just about) cover a combined crisis in Ireland, Greece and Portugal, but not a threat to Spain as well.
A drying up of international credit and a withdrawal of corporate deposits from Irish banks triggered the EU’s decision to call in the IMF this week. The European Central Bank was exposed to €130 billion at the end of October compared to €95 billion at the beginning of August, 25 per cent of its total. Because of the bank guarantee in 2008 this is seen as public not private debt, a reality spelled out by the Brussels-based economist Daniel Gros: “You and your banks are one thing.”