Ireland, Greece and Portugal are labouring under debt-to-income ratios of more than 300%, according to figures that expose the indebtedness of eurozone governments in relation to their government revenues.

The measure, intended to show governments’ abilities to pay debts, shows Ireland’s total debt in 2012 was €192bn (£163.1bn), or 340% of the government’s income. Ireland came a narrow second in the table to fellow bail-out recipient Greece, which has amassed an even worse debt-to-revenue total of 351%. Portugal – which has also received aid from the troika of the International Monetary Fund, the European commission and the European Central Bank – came third with a debt-to-revenue ratio of 302%, while Britain was sixth last year on the list of 27 European Unionmember states, with a debt-to-revenue ratio of 212%, according to calculations based on European commission figures.

Debt figures are usually calculated as a ratio of a country’s national income and expressed as a proportion of GDP. But national income figures reflect activity across the whole economy, in both the public and private sectors. governments must pay debts from tax receipts and other government income, not the income for the economy as a whole. Some analysts argue a government’s debt-to-revenue ratio provides a clearer picture of its ability to fund annual debt payments once interest rates are taken into account. >> Read More

-A total of 52% of listed Japanese companies, excluding financial institutions, were debt-free as of the end of fiscal 2012, marking the first time the figure has topped 50% since firms were required to adopt consolidated accounting rules fiscal 2000.

Automakers and companies heavily reliant on domestic demand have been using their remarkable earnings recoveries to pay off their debts so as to better buffer themselves against disasters, such as the kind seen with the collapse of Lehman Brothers and the Great East Japan Earthquake. Their focus now is on how to best use their rich cash reserves to promote growth.

The figure was obtained by comparing the cash reserves, including cash and short-term securities holdings, and interest-bearing debts of listed firms for fiscal 2012. >> Read More

And there it is folks. The age of austerity is over.

 In an interview given on Sunday, French Finance Minister Pierre Moscovici said: “Austerity is over, but we remain serious,” according to Reuters.

The “we remain serious” part seems to refer to the country’s dedication to hit deficit targets. But those targets have been loosened, Moscovici obviously believes that Europe has reached an end of budget cutting for the sake of budget cutting.

There’s been an incredible collapse in the last month of the pro-austerity movement.

The UK has been rebuked by IMF officials. Reinhart and Rogoff have imploded publicly. Niall Ferguson stuck his foot in his mouth equating Keynes’s economic philosophy with his sexual orientation. Bill Gross has blasted the UK. The new Italian Prime Minister has said austerity is over.

The whole facade of trying to stimulate the economy (or even reduce debts) by cutting spending is collapsing.

Gold has been taking a battering all day. Gold is off 8.5% to $1,373.80 an ounce.

 Commodities guru Jim Rogers isn’t buying gold yet.

He told Business Insider there were four key things driving the sell-off.

1. India - The country hiked its gold import tax rate by 50% to 6% at the start of the year. This has curbed gold demand. >> Read More

Hey, if you can pay your debts by robbing bank deposits, then you can still pay your debts.

The current rating is ‘CCC’ which is ‘extremely speculative’.

• In an interview, Soros praised China’s system of financial regulation
• But warned that Beijing faces near term “exceptional difficulties” in its economic transition

Soros has an interesting view of China banking:

“The Chinese regulators have a much closer and more intimate knowledge of what goes on inside the banks,” he said. “The lack of detailed knowledge in the West is quite amazing. And that was the reason why things went so wrong”

• Says its unlikely local governments will default on their debts
• He cautioned investors to stay away from Chinese real estate in the short term

Good weekend reading, and important background information for AUD traders.

George Soros tempers praise for Beijing with warning on risks

Osborne’s statement was prepared well in advance, which means Moody’s action was not only prepared and distributed long ago but it got the blessing of both the UK government and Goldman Sachs. And why not: so far it has achieved precisely what it was intended to: crush the Pound. The next question: when does talk of GBP-EUR parity begin?

 

 

Moodys has just downgraded Britain’s credit rating from AAA to Aa1

 

The Chancellor George Osborne released the following statement after the UK lost its AAA credit rating with agency Moody’s:

 

Tonight we have a stark reminder of the debt problems facing our country – and the clearest possible warning to anyone who thinks we can run away from dealing with those problems.

 

Far from weakening our resolve to deliver our economic recovery plan, this decision redoubles it. >> Read More

Ratings agency Standard & Poor’s has warned that there’s a growing danger of Cyprus defaulting on its debts.

S&P said the risk of a Cypriot sovereign default was “material and rising”, as the country prepares to vote for its next president this weekend.

With the country’s financial aid package still to be agreed, S&P cautioned investors that Cyprus could soon be downgraded from CCC+ (just three notches above default). This would happen if bailout talks fail, or if the next government cannot implement the financial reforms demanded by lenders.

S&P’s head of EMEA sovereign ratings Moritz Kraemer said in a report: >> Read More

Japan’s 10 listed power companies will likely have total interest-bearing liabilities of 26 trillion yen for the year ending March, an increase of about 4 trillion yen compared with fiscal 2009, before the earthquake and tsunami hit the Tohoku region in March 2011, The Nikkei learned Tuesday.

The utilities held combined debts of about 25.3 trillion yen at the end of last year. That was equal to about 14% of the 184 trillion yen in debt held by all listed firms whose fiscal year ends in March, excluding financial institutions and start-ups.

When this fiscal year ends in March, the 10 power companies are expected to have total debts of 26 trillion yen, an increase of nearly 1.5 trillion yen on the year. The rise is largely due to higher imports of liquefied natural gas and oil for thermal power stations. Nearly all of Japan’s nuclear plants are off-line for safety checks in the wake of the Fukushima Daiichi meltdown.

In April-December of last year, the 10 utilities spent roughly 5.1 trillion yen on fuel, a year-on-year rise of about 1.2 trillion yen. They have been unable to pay the higher fuel bills through electricity tariffs alone, forcing them to borrow money to make up the difference. >> Read More

An economist at BNP tells Bloomberg that the US debt rating will likely be downgraded.

Anyone who relies on Moody’s or S&P to analyze the US’s ability to repay its debts needs to have its head examined. Markets do nothing but make that judgement every moment of every day. This isn’t some one-traffic light municipality in Nebraska we’re talking about, it’s the Big Kahuna…

Would risk sell-off on a US downgrade? You bet. But within 24 hours we’d be back to business as usual. The ratings are of more politically important than they are economic…