The FT on Ireland

The Lex column in today’s print edition of the FT was pretty sniffy about the Irish public finances.  However, it is interesting to read the new contribution by columnist Quentin Peel who does a ‘compare and contrast’ between Ireland and Greece, praising the Irish government for at least trying to face up to its predicament.

8 thoughts on “The FT on Ireland”

  1. Interestingly though, his conclusion is that our good (ok, better than the Greeks) behaviour is recieving no recognition from the bond markets. Is this a point in favour of the thesis that our bond market problems are more bank-related than budget-related?

  2. What is Lex’s evidence for the statement that “raising income tax in next month’s emergency budget would only accelerate a growing exodus of talent” (I am querying the premise that there is indeed a growing exodus of “talent”, whatever that is, as opposed to a growing exodus of people generally).

  3. Back a few weeks ago when we were all worked up about credit default spreads, a key policy objective mentioned repeatedly was that the Irish government have public finances strong enough that it would not default on its debt, which might lead to a wave of defaults in the periphery of the Euro zone.

    We should raise our standards. Ireland should have its public finances in such a strong state that, if Greece or another peripheral nation defaults, Ireland will not be brought down in the subsequent aftershocks.

    My own opinion based on Reinhart-Rogoff’s historical overview is that a Euro-zone default by one or more of the peripheral nations is likely over the next decade. Ireland needs to become strong enough in its public finances that it will not to be brought down by that. So this strengthens the case for strict public finance discipline over coming years, starting immediately.

  4. Unortunately, while sniffy, the article has little wrong in it. Coupled with the lowballing and downplaying of expectations via orchestrated leaks on the upcomin budget, the evidence to me seems to point to a government that is unwilling to grasp the nettle and so will end up “fluffing ” the opportunity to take decisive action on public finances.
    Expect a further “its not a budget” in July…

  5. Ireland’s debt spread at 10 years against the bund has narrowed 35 bp over the last few days, after, I suspect, Quentin Peel’s article was written.

  6. If you think things are bad now, just wait a few months. All these stimulus packages will be spent and there will be continuing deflation.

    A good article is always bound by facts and perceptions of author and reader. The colossal scale of the bubble has yet to be measured by the “experts”. Any who do tend to sell “investments” and buy land to grow food on. He is just filling space to earn a few bob. As the multipliers run down and stop for some, we will be facing an abyss. He is not allowed to write that if he were so inclined. Scenes of the Titanic are being replayed before our eyes.

    Please regard the real world, the real economy. What do we need that we can source in Ireland? Playing with deckchairs gets a few points from umpires, but will not keep us from becoming an Iceland. Once the world has shucked off the fad for finance there will be many empty buildings and even emptier lives. Bonus points will be irrelevant then. Reflation is a mirage. Grab while you can. Build up networks. Review Catherine Austin Fitts and Solari.

    With luck, it won’t be that bad, but the thirties folks considered themselves to be sophisticated and talented. Not much use as old industries which had been sustained by malinvestments amid the “boom” years, disappeared altogether. One of the great uses of the globalization is as a strawman. A focus of blame. There will be more of that soon.

  7. As a non economist, it seems to me that our low credit rating is harsh. I notice that Lex says that we have a budget deficit of 11% which also happens to be the deficit of the UK. Our national debt, although climbing remains below the average of the EU. Alan Matthews seems (with caveats) to be indicating that our balance of payments situation is improving.

    I accept that our banks have been irresponsible, but have they been any more irresponsible than the UK whose government has insured the toxic assets of the banks to the tune of £500bn? This is on top of guarantees to depositors and the billions it has already put in to re-capitalise these banks.

    I don’t doubt that the situation is bad here (I work in manufacturing), but are we making the situation worse (i.e. damaging our credit rating making borrowing more expensive) by allowing ourselves to be compared to the likes of Greece, which has a 100% debt GNP ratio?

    Should Irish economists and the mainstream media be making a more robust challenge to the negative perceptions of our economy?

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