\"\"

Wall Street Journal warns that Ireland could be Europe's next basket case

\"\"

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.
 

COMMENTS

Log in with your social accounts:

Or, log in with your IrishCentral account:

Forgot your password ?

Don't have an account yet? Register now !

Join IrishCentral with your social accounts:


Already have an account ?

For Newsletter Subscribers – Draw for 1 Prize on December 31st.

Prize: Your Piece of Ireland – a Square of Land in the heart of the Glens of Antrim, Ireland

More details here (or you can buy a little piece of Ireland directly): http://bit.ly/1zew9ox

Terms & Conditions

Or, sign up for an IrishCentral account below:

By clicking above you are indicating that you have read & agree to our Terms and Privacy Policy.


Make sure we gathered the correct information from you

By clicking above you are indicating that you have read & agree to our Terms and Privacy Policy.


You already have an account on IrishCentral! Please confirm you're the owner.


Our new policy requires our users to save a first and last name. Please update your account: