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Countdown to €/£ parity | 102 comments (102 topical, editorial, 0 hidden)
Re: Countdown to €/£ parity (4.00 / 5)
The true extent of Britain's debt | Coffee House
P.S. To answer CoffeeHousers' query, this is "external debt" by the IMF definition, which is gross. (And does not include contingent liability, just debt). One must take into account that Britain is likely to have proportionately greater net assets whose value would be amplified by sterling's plunge. But how much greater? I'll keep hunting. Every crisis is different, and each has its own metrics. It was our concentration on the metrics of the last crisis (inflation) that blinded so many to the causes of this crisis (debt).
by Metatone (metatone [a|t] gmail (dot) com) on Fri Dec 12th, 2008 at 09:20:13 AM EST
[ Parent ]
Re: Countdown to €/£ parity (4.00 / 3)
The key issue is the value of the assets Britain can set against its 400% of GDP external debt mountain.  If those assets are in quality profitable companies, then fine.  If they are in derivatives, dodgy mortgages and other asset bubbles and Ponzi schemes, then you are looking at a massive default.

notes from no w here
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Fri Dec 12th, 2008 at 09:39:29 AM EST
[ Parent ]
Re: Countdown to €/£ parity (4.00 / 3)
If they are in derivatives, dodgy mortgages and other asset bubbles and Ponzi schemes, then you are looking at a massive default.

As always the bottom line is income. Repayment is dependent on income, irrespective of sources. Of course, many of us are watching in wonder as central bankers connive QoQ by ForEx and mineral reserves to "ease" the obligations of their most favored clientele.

Diversity is the key to economic and political evolution.

by Cat on Fri Dec 12th, 2008 at 10:29:16 AM EST
[ Parent ]
Re: Countdown to €/£ parity (4.00 / 4)
Stumbling and Mumbling: UK overseas debt scare
Fraser Nelson is trying to scare us by pointing out that the UK's external debt is equivalent to 400% of our GDP.
Actually, on the most obvious measure, he understates the true amount. National Statistics say our external liabilities were £6.7 trillion in Q2 - 461% of our annualized GDP. (Tables D and K of this pdf).
What he doesn't say is that our overseas assets are also big. They`re £6.4 trillion. So our net overseas liabilities are just £309.4bn, 21.2% of annualized GDP. This is largely a reflection of the fact that we've been running  small current account deficits for ages.
by Metatone (metatone [a|t] gmail (dot) com) on Fri Dec 12th, 2008 at 04:19:09 PM EST
[ Parent ]
Re: Countdown to €/£ parity (4.00 / 5)
Gross external debt by country, per capita, % of GNP
List of countries by external debt - Wikipedia, the free encyclopedia
 United States[1] $13,703,567 6/30/2008 $42,343 31-March-08 99.95%
2  United Kingdom $10,450,000 6/30/2007 $189,855 Q4 2007 376.82%
3  Germany $4,489,000 6/30/2007 $54,604 30-Jun-07 159.92%
4  France $4,396,000 6/30/2007 $68,183 30-Jun-07 211.86%
5  Netherlands $2,277,000 6/30/2007 $136,795 30-Jun-07 352.75%
6  Ireland $1,841,000 6/30/2007 $448,032 30-Jun-08 960.86%
7  Japan $1,492,000 6/30/2007 $45,287 30-Jun-07 34.93%
8  Switzerland $1,340,000 6/30/2007 $509,529 30-Jun-07 441.95%
9  Belgium $1,313,000 6/30/2007 $126,202 30-Jun-07 348.74%
10  Spain $1,084,000 6/30/2007 $176,019 30 June 2007 est. 79.65%
11  Italy $996,300 12/31/2007 $124,049 30-Jun-07 55.35%

Wow, 6th. in the whole world for gross external debt, for such a small country!!

Looks like Ireland has a much bigger problem, although, again, we don't know what the NET debt is, and the degree of currency risk involved.

notes from no w here

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Fri Dec 12th, 2008 at 04:52:19 PM EST
[ Parent ]
Re: Countdown to €/£ parity (4.00 / 3)
I was at first surprised to find Sweden at number 15 as the public debt has been mortgaged quite a bit since it skyrocketed during the 90ies crisis. Seeing Norway with its oil wealth at number 18 was also a bit curios.

Then I looked at the definition:

List of countries by external debt - Wikipedia, the free encyclopedia

"External debt" is defined as the total public and private debt owed to nonresidents repayable in foreign currency, goods, or services

Small countries has more international trade per capita, as borders are passed more often. Trade yields debt, and if trade is equal then debt is equally on both sides of the border, giving both countries more external (as opposed to internal) debt. A country can be on the top of the external debt list and have no problems at all if it has assets to cover every one of those debts on a moments notice.

So I would say that external debt in it self says very little.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Fri Dec 12th, 2008 at 07:37:38 PM EST
[ Parent ]
Yes, of far more interest ... (4.00 / 3)
... would be the balances on short term and long term external debt payable in foreign currency. Those are the values that can explode in domestic currency terms during a FXR melt-down, as many SE Asian nations discovered in the 90's.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
by BruceMcF (agila61 at netscape dot net) on Fri Dec 12th, 2008 at 10:48:30 PM EST
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Re: Countdown to €/£ parity (none / 0)
Ha. Marke-to-market.

Diversity is the key to economic and political evolution.
by Cat on Sun Dec 14th, 2008 at 10:15:37 AM EST
[ Parent ]

Countdown to €/£ parity | 102 comments (102 topical, 0 editorial, 0 hidden)
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