More market reaction to Ireland’s emergency budget

After the precipitous fall noted earlier Irish bank shares recovered somewhat by the end of the day with Bank of Ireland at a reported 86 cent, down 10%, and AIB at €1.19, down 7 per cent. Meanwhile, although the Irish Times reported that

The 10-year Irish/Bund yield spread, a crucial measure of the market’s assessment of the quality of Irish public debt, was broadly steady yesterday afternoon in a range of 205-207 basis points. This was marginally up on the 202 spread seen earlier yesterday.

The Guardian has noted that today

There was also turmoil in the Irish bond market, however, where dealers sold Irish government bonds heavily. That in turn pushed the yield on them to a hefty 2.18 percentage point premium to benchmark German bonds. That so-called “spread” represents growing fears that Ireland could follow Iceland into financial collapse.

Adds More from the Guardian and from Bloomberg.

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  • George

    Bank of Ireland up 10% on Tuesday, down 10% on Wednesday to close at 86 cents. Down at 20 cents two months ago.

    Credit default swaps at 205-207 base points on Wednesday, up from 202 points on Monday but down from 224 points on Tuesday. Ireland’s CDS was tipping 400 two months ago.

    Growing fears? Compared to the grimness of February this is a walk in the park for us southerners.

    Spring is in the air, the Grand Slam is in the cupboard and Dublin might even beat Antrim in the hurling.

    People have even stopped talking about taking their money out of banks.

  • Scaramoosh

    Yes, and people have even almost forgotten about the Anglo Irish Golden Circle..

    The Irish are great at trying to talk themselves out of things and equally great at trying to sweep things under the carpet.

    On this occasion, however, neither tactic may work.

    Welcome to the lost decade Irish style!

  • Itwas SammyMcNally whatdoneit

    Money is being pumped inot the banks even though the government still admits that they dont know the extent of losses. Would like to see a full breakdown of so-called toxic debts/loans by sector and foreign country.

    Not sure why depositors could not be protected and banks wound up with good loans transferred to Anglo Irish which is already nationalised. Obviously would require leigislation but but as there is no confidence in Irish financial system just dump the banks and as soon as there is breathing space the government.

  • George

    Scaramoosh,
    it’s our decade and we’ll lose it if we want to.

    What’s the worst that can happen? No worse than what went before in the 30s 50s and 80s.

    My grandfather was left a pauper, my dad was locked up for a year in a sanitorium in the battle to beat TB, and I might be out of a job.

    The nation will survive. I wouldn’t swap it for the world.

  • Dave

    “The Irish are great at trying to talk themselves out of things and equally great at trying to sweep things under the carpet.”

    On the contrary, they’re great at falling for media campaigns (directed by external agencies) to hold public inquiries into this, that and the other with the intention of maximising any and every financial irregularity into a scandal that is designed to discredit Ireland’s reputation abroad, whilst our counterparts (and competitors) across the water have the good sense to sweep a mountain of chicanery under the proverbial carpet. It’s a shame we don’t have intelligence agencies that operate in the same way.

  • John

    The way the English press are gloating at the Irish economy’s supposed demise, you’d think they’d just won the Grand Slam. My advice to them is to enjoy it while it lasts. Because, it won’t last.

    First, in the last 50 years, the Irish economy has grown faster than the British economy in 39 of those years, and slower in just 11. Of those 11, as many as 6 were in the decade when N. Sea oil production was building up. In other words, excluding the freak period of the N. Sea oil build-up, years in which the British economy grows faster than the Irish economy are rarer than years in which Ireland wins the Triple Crown.

    Second, the devaluation of sterling to parity with the Bongoland Gum Bead, while conferring undoubted temporary advantages on the British economy, is also destined to lead eventually to massive inflation in Britain. Its actually now starting to happen, particularily for goods. Goods inflation in Britain is now running at +2.3%. In Ireland, at -3.7%. A gap of 6%, which will grow each month for the next couple of years, as the effect of the British devaluation works through. Unless Britain carries out yet another devaluation in the meantime, there will be a lot fewer shoppers in Newry next Christmas than last.

    Third, despite the sterling devaluation, British manufacturing is continuing its 40-year decline. Figures out just this week. In February, Irish manufacturing output down 1.7% on last year. In Britain, down 13.7% on last year. Heaven knows what it would have been if they hadn’t devalued.

    Fourth, despite all the scaremongering in the British press about Ireland going bankrupt (probably intended to ensure that no pro-Euro movement gets off the ground and to persuade the Scots that they’d be better off being governed from England), The British budget deficit of 11% of GDP is actually higher than Ireland’s. Plus, Ireland is moving into balance-of-payments surplus, while Britain remains in deficit. The difference is: Ireland is tacking its budget deficit NOW, while Britain will take no remedial action until after the election in June 2010.