Markets Fear Ireland Is Another Greece

So soon after Greece's economic crisis erupted earlier this year, one cannot but help getting a déjà vu. Markets have begun to ask questions about Ireland's solvency, but European policymakers appear to be in the same sort of denial as were their Greek counterparts. This denial may be the prelude to the same sort of grave policy mistakes that characterised last May's Greek bail-out package from the International Monetary Fund and European Union.

Until very recently, markets turned a blind eye to Ireland's highly compromised public finances and to the massive potential cost to the Irish exchequer of its blanket bank-guarantee programme. But since August 2010, there has been an abrupt turnround in market sentiment--triggered by a further downgrading of Ireland by Standard and Poors.

The market was particularly taken aback by S&P's estimate that Ireland's bank-guarantee programme could, in the end, cost the Irish government between a staggering 50 and 58 per cent of Ireland's gross domestic product--which could raise the country's public debt level to a level not very different from that now prevailing in Greece. . . .

This article is available in full with free registration from the Financial Times.

Desmond Lachman is a resident fellow at AEI.

Photo Credit: Flickr User GothPhil/Creative Commons

Also Visit
AEIdeas Blog The American Magazine
About the Author

 

Desmond
Lachman

What's new on AEI

Holder will regret his refusal to obey the Constitution
image 'Flood Wall Street' climate protesters take aim at their corporate allies
image 3 opportunities for better US-India defense ties
image Is Nicolás Maduro Latin America's new man at the United Nations?
AEI on Facebook
Events Calendar
  • 29
    MON
  • 30
    TUE
  • 01
    WED
  • 02
    THU
  • 03
    FRI
Thursday, October 02, 2014 | 9:00 a.m. – 10:30 a.m.
Campbell Brown talks teacher tenure

We welcome you to join us as Brown shares her perspective on the role of the courts in seeking educational justice and advocating for continued reform.

Friday, October 03, 2014 | 12:00 p.m. – 1:00 p.m.
Harnessing the power of markets to tackle global poverty: A conversation with Jacqueline Novogratz

AEI welcomes you to this Philanthropic Freedom Project event, in which Novogratz will describe her work investing in early-stage enterprises, what she has learned at the helm of Acumen, and the role entrepreneurship can play in the fight against global poverty.

No events scheduled this day.
No events scheduled this day.
No events scheduled this day.
No events scheduled today.
No events scheduled this day.
No events scheduled this day.