Tradefair & Financials
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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.
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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..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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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
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
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.
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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