Thursday 21 September 2017

Stephen Kinsella: Forget about bonds and house prices, the best guard against poverty in this world is a job

Michael Douglas depicted traders as greedy and immoral in the 1987 movie Wall Street
Michael Douglas depicted traders as greedy and immoral in the 1987 movie Wall Street
Stephen Kinsella

Stephen Kinsella

I spoke to a bond trader this week. Thoughtful, calm, polite, educated in classics at Oxford, he is not at all like the priapic, red suspender-wearing Wall Street parody you might have in your minds when you think about people who work in the markets.

I asked him why he thought Ireland's recent bond issue was such a roaring success. He actually wanted to buy some of the debt issue, but didn't win in the auction. Potential investors bid over €14bn for a bond that matures in 2024. In the end, the Government sold only €3.75bn, meaning the bond issue was oversubscribed by about three to one.

The cost of the State borrowing from private investors has fallen from around 15pc in 2011 to around 3pc today. This is a reversion to the pre-crisis cost of borrowing, and at times recently the markets have seen Ireland as less of a risk than the UK, which is remarkable.

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