Video: Ireland should escape worst of turmoil because we're different
THE latest crisis in Greece is shaping up to be the worst yet -- for Greece. In contrast Ireland looks increasingly likely to shrug it off, at least in the short term.
It's a huge change. In 2011 every crisis in Greece prompted meltdowns in the global markets.
Every meltdown pushed Ireland's hopes of escaping the bailout further into the realms of fantasy.
It seemed like an unstoppable cycle.
This time it's different. No matter what the outcome is in Athens, Ireland looks set to escape a fresh crisis.
In the financial markets, more analysts than ever think Greece will collapse into a chaotic default in March. But they are fine with it.
In fact, while talks in Greece went down to the wire last night, Irish officials were preparing for a week touring Asian investment capitals.
John Corrigan, the man in charge of the national debt, and his team at the National Treasury Management Agency (NTMA) are visiting Singapore, Kuala Lumpur and Seoul.
Just months ago it would have been a fools' errand. Investors saw Ireland and Greece as inextricably linked. Today it's a credible strategy.
Looking at things from home that might be hard to fathom.
So what's changed?
Well, for one thing, the well-publicised profits being made by investors that have already dived into the Irish government IOUs means our officials will get a good hearing from the Asian investors.
The banks are in better shape and exports are up, but unemployment is high, growth is anaemic and the housing market is still in freefall.
However, the real changes are in Europe.
In December the European Central Bank poured almost €500bn of cheap, long-term credit into eurozone banks.
Having cheap loan money to play with nudged previously hesitant investors to buy risky assets like Irish government IOUs.
It's a no-brainer because the cheap loans mean banks can make back three or four times the cost of borrowing.
That helped stabilise the prices of all kinds of risky investments.
More importantly, the ECB move convinced almost every money manager in the eurozone that policymakers finally take the Greek crisis seriously.
These money men reckon the ECB will be there again, with a flood of cash if and when Greece finally slides into default.
That has made the people that run Europe's banks a lot less nervous, and harder to panic
So far the rising tide is lifting all boats bar two. As far as the markets are concerned, Greece is sinking, and Portugal is being dragged down with it.
Weak as it might be, the economic growth in Ireland combined with the Government's constant hammering home of their determination to repay the national debt, no matter what, is enough to convince the money men that we're different.
Let's hope the money men are right.
- Donal O'Donovan
Irish Independent
