Clarity for country and the markets
FOR a long time now, the Government has been propping up its approach to the economy with quotations from foreign media and other commentators professing support for the austerity measures it has been taking, most notably in the last Budget.
But last week the international media and commentators appeared to do a complete U-turn. First, the influential Financial Times was critical of the long-term prospects for Ireland. Then the British investment bank Barclays Capital seemed to suggest that we may yet, at some unspecified time in the future, need the help of the IMF and the EU. This all came on top of the recent gloomy forecast from Standard and Poor's with an accompanying downgrade.
There is, as far as the Government is concerned, no justifiable reason for this sudden burst of international pessimism about our affairs. There is a great deal of truth in this. The panic selling of Irish debt last week and the freakish increase in the return demanded by the market -- a record 6.5 per cent -- was not based on any new information or any appreciable change in our circumstances. It was simply a panic in the markets. The markets -- those international financial institutions on which we depend for the loans that are essential to keep the institutions of state running -- worry on a daily and hourly basis about how good we are, not only for the money they will lend us, but for what they have already invested. Talk of reneging on Anglo bonds makes them nervous.