Do government debts also appear on the asset side of the ledger?

If so, hey it all comes out to 0, so whats to worry about.

How much are these 1.6 trillion in “assets” actually worth?

Whoops…..

“They are worried particularly about government debt, because typically there is no corresponding asset”.

Of course in the case of government debt, the corresponding asset is the population of the country. (I’m joking, but it’s sort of true).

Thanks for the previous clarification.

Enjoyable as ever.

Though could they not be raising two issues (perhaps without realising it):
1. Contagion effect. The “web of debt” highlights that Europe is interconnected through private/public debt, and a default could ripple through the EU through the banking system. The point being that any Greek default could cause a solvency crisis within the EU’s banks, or could at least hinder Europe’s recovery by limiting their banks ability to lend by eating up their “capital”.

2. A liquidity point. I doubt that countries have matched maturity profiles on their balance sheet – so if there assets are long term, and their liabilities short term they could get in a squeeze? So a spike in short term funding rates could push them insolvent.

Just one final clarification: my understanding of the BIS figures is that they measured cross-boarder activity so do not capture any domestic figures. So Ireland bailing out the banks would not appear in the figures unless the Government was unable to raise the sums domestically.

Best,

Ben

Just a quick clarification, the 5% is not 5% of GDP, it’s 5% of the total liabilities in the country which are state-owned.

@John
Honestly, flattery will get you everywhere! The Irish figures are compiled by the Central Statistics Office here – so perhaps it’s worth checking with your equivalent. More generally, your Balance of Payments may have capital accounts details, which could have some of these statistics too. The European Commission also has some stats, for example: http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Household_financial_assets_and_liabilities. Overall, though, the full extent of the point you’d like to make is probably the preserve of a local research institute, as backing out wealth from the black market takes a range of techniques (e.g. using electricity consumption per capita).