Come with me, my payee / To the sea . . . the sea of debt / I want to tell you / How much I owe you
Do you remember when we met? / That’s the day I went into debt/ I want to tell you / How much I owe you
With apologies to Phil Philips but his great song came to mind when I read this little stat in the Fiscal Council’s latest publication, The Government’s Balance Sheet after the Crisis: A Comprehensive Perspective
‘Ireland had the fourth highest debt ratio in the Euro Area in 2012, whereas in 2007 Ireland had the second lowest ratio. (Only three Euro Area countries had debt-to-GDP ratios in excess of Ireland’s at end-2012 according to Eurostat estimates: Greece (156.9 per cent), Italy (127.0 per cent) and Portugal (123.6 per cent).’
Well, I guess that’s what happens when you bail-out insolvent businesses while at the same time pursuing austerity policies that actually increase the debt. But I’m afraid it’s worse than the bald numbers the Fiscal Council presents.
There are different ways to measure debt – as a percentage of GDP, GNP, etc. But let’s measure it as a burden on people – for its people who pay off debt. When we look at debt per capita this is what we find:
Ireland is at the top, head and shoulders above all other countries – in particular, Italy, Greece and Portugal which the Fiscal Council refers to as countries with a higher debt when measured as a percentage of GDP. Why the difference?