The Wall Street Journal says that Ireland could be Europe's next basket case
Neil Shah, who pens the influential market trends column, says investors need to keep a wary eye on Ireland.
Shah lauds the Irish Government for taking what he terms decisive action on the budget deficit "when Greece, Spain, Portugal and Italy were dithering."
But he says that "Ireland’s battered banking system is clearly its Achilles heel at this point."
He says the massive loans doled out to builders during the easy credit years may never be paid back.
And he says that's why another key indicator in the financial markets is picking up.
It now costs $252,000 a year to insure $10 million of Irish government debt for five years while the costs to insure Greece, Portugal and Italy's debt has fallen.
Unfortunately, he does not provide their figures to make the comparison easier to understand.
Still, Shah's comments are worrying.
As he says, investors have largely given Ireland a pass, despite it having the largest budget deficit in the Euro zone, but the banking problems may change all that.
The Irish government is now paying about 2.2 percentage points more than Germany to borrow money from the private markets for 10 years, compared with 1.6 percentage points for Spain.
"That’s nowhere near the 5.4 percentage point premium Greece has to pay, but it’s right around Portugal’s levels," says Shah.