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Ireland: no longer one of the PIGS


G

Gadjodilo

I'm genuinely bewildered by the disconnect between politics.ie folk and economic analysts worldwide regarding the Irish economy. Who has it wrong?

Ireland Breaks From Greece, Spain to Lead European Bond Gains

March 30 (Bloomberg) -- Ireland’s bonds are poised to outperform those of every other euro member except Austria this quarter as investors bet it will be more successful than countries such as Greece in cutting its budget deficit.

The nation’s debt returned 3.2 percent this year, according to Bloomberg/EFFAS indexes. Yields on 10-year Irish bonds fell to within 128 basis points of those on German bunds on March 12, a 14-month low. Credit Agricole Corporate and Investment Bank and Royal Bank of Scotland Group Plc anticipate that spread may drop to about 65 basis points by the end of 2010 as the bonds keep rising.
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“Ireland has left the pigsty for the time being and it has come out smelling of roses,” said Stuart Thomson, who helps oversee more than $100 billion as chief market economist at Ignis Asset Management.


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The Irish 10-year bond yield will drop to about 100 basis points more than the bund by the end of June and to 65 basis by 2011, according to Harvinder Sian, a senior fixed-income strategist at Royal Bank of Scotland. Credit Agricole forecasts the year-end spread at 60 basis points.

Much more here:
Ireland Breaks From Greece, Spain to Lead European Bond Gains - BusinessWeek
 

Ecoguy

Well-known member
Joined
Mar 12, 2009
Messages
393
March 30 (Bloomberg) -- Ireland’s bonds are poised to outperform those of every other euro member except Austria this quarter as investors bet .
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There certainly is a disconnect - the markets seem to be buying into "we've turned the corner" stuff from Lenny and are overlooking the situation with the banks and the general state of the economy and public finances. How long this can go on is the question - most of the focus has been on Greece which has deflected alot of attention away from the other PIGS including Portugal who's credit rating was recently downgraded - the outlook for the UK finances also remains on negative watch. This status quo though could change rapidly if Lenny magic tricks are exposed by further deteriorations in the Irish economy and the ongoing large risk of an emergency budget.

PS: One needs to be wary too of analysists logic on such things as this story illustrates Goldman Capitulation on Dollar Shows Reversal on U.S. (Update3) - Bloomberg.com
 

PaddyJoe McGillycuddy

Active member
Joined
Apr 30, 2009
Messages
206
Not all economic analysts are so impressed with Ireland. See Simon Johnson
Ireland’s perceived “success” is partly due to its draconian fiscal cuts. The government has cut take home pay of public sector workers by roughly 20% since 2008 through lower wages, higher taxes, and increased pension payments. As the head of the National Treasury Management Agency John Corrigan proudly advised the Greeks (and everyone else): “You have to talk the talk and walk the walk”.

So is Ireland truly a model for Greece and other potential problems in Europe and elsewhere? Definitely not – but it does provide a cautionary tale regarding what could go wrong for all of us
But the Irish state was also carrying a large off-balance sheet liability, in the form of three huge banks that were seriously out of control. When the crash came, the scale and nature of the bank bailouts meant that all this changed. Even with their now famous public wage cuts, the government budget deficit will be an eye-popping 12.5% of GDP in 2010
Ireland had more prudent choices. They could have avoided taking on private bank debts by forcing the creditors of these banks to share the burden – and this is now what some sensible voices within the main opposition party have called for. However, a strong lobby of real estate developers, the investors who bought the bank bonds, and politicians with links to the failed developments (and their bankers), have managed to ensure that taxpayers rather than creditors will pay
Investors may wish to remain pleased today with Ireland, but Ireland’s “austerity” – reflecting an unwillingness to make creditors pay for their past mistakes – hardly seems a good lesson for Greece, the eurozone, or anyone else.
When Irish-type banks fail, you have a dramatic and unpleasant choice. Either takeover the banks’ debts – and create a very real burden on taxpayers and a drag on growth. Or restructure these debts – forcing creditors to take a hit. If the banks are bigger, more powerful politically, and better connected in the corridors of power, you will find the creditors’ potential losses more fully shifted onto the shoulders of taxpayers.
Could The US Become Another Ireland? The Baseline Scenario
 

Ecoguy

Well-known member
Joined
Mar 12, 2009
Messages
393
Snake oil etc.

So we are supposed to put value on the word of the same spivs and parasites who didn't see the crash coming in the first place?...
It appears most of the recent rally in world stock markets is based on the utterings of these same people who's own self interest is neatly tied in with their own "predictions" - It also appears investors world-wide continue to be suckers for this kind of thing despite their Dan McLaughlin-like predictions just before Lehmens collapsed. They also seem to be overlooking the fact that world-wide governments have taken on the massive debts of their corporate buddies by direct bail-outs, printing money, low interest etc. that are set to gripple the budgets of many countries including the US and UK for years to come and could well generate the next big financial crisis.:(
 

yayo

Well-known member
Joined
Jan 9, 2008
Messages
2,050
So we are supposed to put value on the word of the same spivs and parasites who didn't see the crash coming in the first place?...
Spiv? Back to the UK with you, Brit.

The word "spiv" would never enter an Irish mans vocabulary.
 
Joined
Jun 9, 2007
Messages
19,084
Well, you could explain why, in your view, they all have it so wrong?
Well, for a start, include NAMA in the debt/GDP ratio, then ignore the bullsh1t about the property market being at the bottom, and you have further massive write-downs to come - taking the figure much higher. Only fools believe the spin that current market values are as low as they can go (the government has already been proved to be wrong once on that score, how many more times?). We are using 266% of our GDP (and that's the conservative figure in advance of tomorrow) propping up financial institutions when tinpot third world countries average something like 50%, while the other so-called PIGS are at about 13%. We are deflating our economy just when everyone else is trying to kick-start theirs. We are propping up banks that should be long since dead and buried. We are entering a decade of sheer pain, we have the mother of all parties to pay for, and we haven't even begun to properly clean up yet...
 
G

Gadjodilo

There certainly is a disconnect - the markets seem to be buying into "we've turned the corner" stuff from Lenny and are overlooking the situation with the banks and the general state of the economy and public finances.
Do you believe that's all analysts do? Read the spin by finance ministers? Surely then they'd be swallowing what other countries' fin mins are saying too.

Before ye all start panicking, no-one is saying we're out of the woods or that the crisis is over - just that we're in a better position than our erstwhile PIGS colleagues and if the article below is to be believed might soon find our position taken by the UK.

What Ireland can teach us about spending cuts - Telegraph
 
G

Gadjodilo

Well, for a start, include NAMA in the debt/GDP ratio, then ignore the bullsh1t about the property market being at the bottom, and you have further massive write-downs to come - taking the figure much higher. Only fools believe the spin that current market values are as low as they can go (the government has already been proved to be wrong once on that score, how many more times?). We are using 266% of our GDP (and that's the conservative figure in advance of tomorrow) propping up financial institutions when tinpot third world countries average something like 50%, while the other so-called PIGS are at about 13%. We are deflating our economy just when everyone else is trying to kick-start theirs. We are propping up banks that should be long since dead and buried. We are entering a decade of sheer pain, we have the mother of all parties to pay for, and we haven't even begun to properly clean up yet...
The performance of the property market is not what's driving their analyses. As for the other figures you quote above, they're all in the public domain and have been for some time - even if the Sindo gets bored and tries to dress them up as a New Crisis once every two months or so.

Anyway, do you seriously think that none of these analysts are aware of the figures you quote and that if you approached them and told them they'd be slack-jawed and amazed and would then rush off to downgrade their predictions?
 
Joined
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Messages
19,084
The performance of the property market is not what's driving their analyses. As for the other figures you quote above, they're all in the public domain and have been for some time - even if the Sindo gets bored and tries to dress them up as a New Crisis once every two months or so.

Anyway, do you seriously think that none of these analysts are aware of the figures you quote and that if you approached them and told them they'd be slack-jawed and amazed and would then rush off to downgrade their predictions?

They seem to be writing off the idea of further rises in the debt/GDP figure, further falls in property values, and further massive falls in GNP, tax take, etc. And all on the basis of Lenihan and Cowen saying that we have passed the worst. I get accused of blind faith in Catholicism at times, but that's nothing on the people who follow the words of this government...
 

Ecoguy

Well-known member
Joined
Mar 12, 2009
Messages
393
The performance of the property market is not what's driving their analyses. As for the other figures you quote above, they're all in the public domain and have been for some time - even if the Sindo gets bored and tries to dress them up as a New Crisis once every two months or so.

Anyway, do you seriously think that none of these analysts are aware of the figures you quote and that if you approached them and told them they'd be slack-jawed and amazed and would then rush off to downgrade their predictions?
The reason these type of analysts like Lenny is that he is propping up their corporate buddies in the banks at the expense of people on Social Welfare, lower paid civil servants etc. - these type of financial parasites are the same the world over. The couldn't give a frig about the well-being of ordinary people or of nations, its all about the worship of the Golden Calf of corporate profits, feeding the greed of market speculators etc.
 

Fantasia

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Joined
Nov 5, 2005
Messages
920
Hat tip to B. Lenihan for his gravitas, courage and steady hand (his dad would be proud)
p.s. Get well soon - your country needs you
 

Ecoguy

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Joined
Mar 12, 2009
Messages
393
Hat tip to B. Lenihan for his gravitas, courage and steady hand (his dad would be proud)
p.s. Get well soon - your country needs you
Touching:cry: - meanwhile back in the real world.................................!!!!!!!!!!!!
 

He3

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Dreaded_Estate

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Joined
Sep 5, 2007
Messages
3,719
We are still considered far riskier than Italy or Spain by the markets, so not sure why people think we have left the PIIGS
Code:
Country Spread Change(%) Change(bps) Probability of Default
Italy   108.05 +3.91 +4.06 9.20 
Spain   110.53 +3.88 +4.13 9.36 
Ireland 132.50 +3.87 +4.93 11.17
 

Cassandra Syndrome

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Joined
Aug 23, 2009
Messages
16,908
Ireland's fundamentals are not fully comprehended by investors. Comparing debt to our GDP is futile as our GNP is 20% lower. Our budget deficit to GNP is 18%, but between using GDP and Gross Government Deficit which excludes all the Bank capitalisations this comes back to 11% which is better than the PIGS on paper. Its all a confidence game and no better race on the planet for cute hoorism than the Irish.

Do they know what are real GNP contraction was last year? Do they know our real unemployment rate?
 
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