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bongo
07 Jul 15 20:18
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Date Joined: 12 May 01
| Topic/replies: 5,934 | Blogger: bongo's blog
I was idly sticking some numbers in a spreadsheet to see if there was a better way of telling if a country was fecked than measuring debt to GDP.
Most simplistic approaches fail, but compaing foreign debt held by general government to exports for gave this table which probably won't come out right:

        General Government External       
Rank    Country    Debt billions of USD    Exports billions of USD    Ratio
    Source:    World Bank    Wikipedia   

1    Greece    322.99    27.2    11.9
2    Cyprus    15.11    1.9    8.0
3    United States    6213.59    1640.0    3.8
4    Portugal    204.56    70.2    2.9
5    France    1625.01    567.5    2.9
6    Armenia    3.36    1.5    2.2
7    Italy    986.32    474.0    2.1
8    Spain    601.55    317.3    1.9
9    Austria    299.03    163.1    1.8
10    Ireland    158.53    89.0    1.8

Wow, we all know Greece is a wreck, but many think Cyprus is just half-wrecked and the loans and bailouts they had from Russia and the Trotska are inching the place back to normality.

I had a look at when they'll be back needing to borrow more to roll over what they can't afford to repay and a lot of it seems to fall in the second half of 2016 and 2017.

These Eurozone problems in Cyprus will be back for sure - they are like Keith Richards on a never-ending solo - ugly, and the only way to pretend things are ok is to out your ear-plugs in.
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Report G1_Jockey_4 July 19, 2015 3:36 PM BST
america look in good nick Laugh
Report egner July 24, 2015 10:46 AM BST
..as I predicted.......

QE 4 from the fed is just a matter of time......

....and anyone who thinks interest rates will ever rise....let alone go back to normal are misguided.
Report bongo July 25, 2015 8:49 PM BST
Just some musings - all figures in local currency.
QE in the US has been 4.5tn, their economy is about 17.4tn, so QE has been about 1/4 of one year's national income.
QE in the UK has been 375bn, UK economy is about 1900bn, so QE has been about 1/5 of one year's national income.
QE in the EZ is set to be 1.1tn at the moment, the EZ economy is about 12.2tn, so QE is set to be about 1/11 of one year's zonal income.

The US govt has declared they have no plan to EVER balance a budget (.https://www.cbo.gov/publication/49892) and I think egner is right that the US will be back to the well for some QE4 ( another 0.7tn or so is a guess ), but they have already had the most. The EZ isn't planning nearly enough on the numbers so far.
Report bongo July 25, 2015 9:01 PM BST
Correction to that last post:
QE in the US has been around 3.8tn, their economy is about 17.4tn, so QE has been about 2/9ths of one year's national income.

According to wiki - 4.5tn is the total holdings by the Fed but some 700bn or so was held before 2007.
Report sidthekid February 11, 2016 12:27 PM GMT
How is Cyprus doing now?,
A man I know sells property there, to Would be Expat Brits,
Retired Government employee`s are rolling up with Large Deposits and £100K ++ per annum pensions.
Report bongo May 1, 2016 10:29 PM BST
Decided to update these figures.
For the General Government External Debt I used the World Bank final Quarter of 2015
And for the value of exports I used the CIA world fact book estimates for 2015

The countries with the biggest ratios of foreign debts to exports came out as follows:

Rank    Country    Debt billions of USD    Exports billions of USD    Ratio
1    Greece    284.59    25.3    11.2
2    Cyprus    15.71    1.8    8.6
3    Kyrgyzstan    8.03    1.933    4.2
4    United States    6279.80    1598.0    3.9
5    Portugal    179.58    57.2    3.1
6    France    1441.56    509.1    2.8
7    Armenia    3.85    1.5    2.6
8    Spain    600.47    277.3    2.2
9    Uruguay    15.65    7.7    2.0
10    Italy    913.01    454.6    2.0

So notionally, Cyprus could clear its government external debt in 8-9 years if the government could have all its export earnings, and had no imports in that time period.
Kyrgyzstan which is really a tiny place enters the worst 10 mainly due to a crash in its exchange rate. Uruguay is the other new entrant.
Austria and Ireland drop out, presumably benefitting from QE being used to buy some of their foreign debts.
Report bongo March 11, 2017 9:12 PM GMT
I'm grateful to the excellent economics journalist Tim Worstall for the principles behind the following:

So Cyprus exports about 150m Euro of goods and services a month
And Cyprus imports about 500m Euro of goods and services a month

That looks like Cyprus has a massive problem - it's importing over 3 units for every 1 of exports. Surely this can't last forever. For comparison the UK imports about 1.1 units for every 1.0 of exports. So Cyprus is going to be goosed, because that cannot be sustained or so I thought.

But trade has to balance - that trade deficit of 350m a month has to be offset by something - loans, remittances, purchases of bonds, buildings or other assets in Cyprus ( unless you're going to hide your Euros under the mattress ). And this is what happens. If the data for 'Gross Fixed Capital Formation' for Cyprus on its own showed a surplus of more than 350m Euro a month then Cyprus could continue to run this sort of trade deficit for ever. Examples in the GFCF figure would be building plush apartments and hotels and then selling them to foreigners, but it could also include other capital formation such as new businesses and selling the shares to foreigners.
Alas the GFCF numbers for Cyprus are around the 200-250m Euro a month mark, so less than the trade deficit. These are round numbers. New-builds as well as existing property will be sold to foreign buyers, but a gruesome day of reckoning will come as the day when foreigners own nearly everything that can be nailed down approaches.

But GFCF for the USA far exceeds the trade deficit, so the country of Friedman, Ford and Trump can continue their trade deficit for as long as they wish, as long as they remain part of a system that allows trade in goods as well as capital.

Imv of course
Report bongo May 15, 2017 9:35 PM BST
An update on the numbers:

        General Government External       
    Source:    World Bank    CIA World Fact Book   
        2016 Q4    2016   
Rank    Country    Debt billions of USD    Exports billions of USD    Ratio
1    Greece    284.97    21.9    13.0
2    Cyprus    16.19    2.6    6.1
3    Kyrgyzstan    7.87    1.453    5.4
4    United States    6239.01    1471.0    4.2
5    Portugal    154.67    52.2    3.0
6    France    1387.10    505.4    2.7
7    Armenia    4.41    1.7    2.6
8    Spain    582.62    266.3    2.2
9    Finland    112.15    57.1    2.0
10    Argentina    114.41    58.4    2.0

Finland and Argentina enter the top 10 for this. But way out in front is Greece still who would have to have no imports for 13 years to notionally clear the government's external debt from what the country exports. When they run out of saleable assets, they will be surely done for.
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