Why is Ireland borrowing money?

mx888882

Maybe someone can give a simple explanation, we are supposedly a broke nation at the mercy of the IMF & co, yet little Ireland is the 13th largest holder of US TREASURY SECURITIES worth a total of $121.2 billion.
From june 2012 to june 2013 we bought $30 billion of US Treasury Securities, are we borrowing money from the Troika to then purchase US Treasury's?

http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt

Why don't the government cash them in? Sell them on the market, get cash that we wont be charged interest on.

Are we not allowed to sell?
Would a aircraft carrier be sighted of Dublin bay if we did?
Would WMD's suddenly be found in the possession of the Irish army?

Can anyone give me a simple answer, i'm not trying to be smart, i genuinely don't understand.

Aka Ishur

Is it possible that this is private banks based in Ireland holding them?

beeftotheheels

Apple meet pear. Pear meet Apple.

Because the treasuries are being held in Ireland does not mean they're being held by the Irish State. For the most part they're being held by Irish companies, and one would assume that those Irish companies are, for the most part, Irish subsidiaries of US companies.

So Google, or Microsoft, or Apple have Irish subsidiaries. Those subsidiaries incorporated in Ireland have surplus cash; owning, as they generally do, all the non-US IP of their respective businesses. In a risk averse environment there are many reasons why you would want to invest that surplus cash in "risk free" "home state" government bonds which don't expose you to foreign exchange risks rather than put the cash in the bank.

For Google, and Apple, and Microsoft they invest in US treasuries since their operating currency is the US $ and they have faith in the US to repay its debts (more so than they may have in us to repay ours).

The Irish Government certainly does not have $121 billion in US Treasuries. "Irish companies" may but that is a testament to our success in the global tax competition market, if you read footnote one the table clearly includes a "significant" amount of non Governmental holdings - talk of "custodians" is testament to the fact that they're discussing private holdings here.

mx888882

Thanks for the nice simple explanation, it's not the irish government but company's based in Ireland who have the US treasury bonds.

beeftotheheels

mx888882 wrote: »

Thanks for the nice simple explanation, it's not the irish government but company's based in Ireland who have the US treasury bonds.

Exactly. The comment as to custodians makes no sense if the statistics represent Governments as distinct from companies located in those countries as Governments don't use custodians, companies and other private sector players such as private sector pension schemes do.

Hence the relatively high holdings in the Caribbean banking sectors, Luxembourg, Switzerland and Ireland (and to a lesser extent the UK) among others can be explained by US foreign direct investment given we don't run a huge balance of payments surplus with the US.

China, Japan and to a lesser but recently appreciating extent Brazil and Russia would run a huge balance of payments surplus' with the US and thus one would expect their Central Banks or Governments to have large holdings for foreign exchange purposes.

hfallada

The IFSC manages 15 times the economic output of Ireland( just over $3 TRILLION). There is a huge amount of amounts of money being managed in the IFSC. A majority of Mitt Romneys money was held in Ireland.