The Republic of Ireland has taken a lot of stick from the market in recent months and last week the beating ratcheted up a few more points. Not good. The headlines said the country now had to pay around 8 per cent for its debt, way up from levels of even a week or two ago.
The reason for the new bout of concern was twofold. It was partly fears that the government would not be able to get its (certainly tough) budget through. The opposition had accepted the big numbers but said it would like to achieve them differently, which was fair enough but it upset the markets. The other trigger for higher rates was technical. For legal reasons associated with the country's plight, some funds are no longer able to hold Irish government stock. So they had to dump it, and as yet there is not enough vulture money around, ready to bet on a turnabout.
Inevitably, there were new fears that the country might have to go cap in hand to the EU and IMF for a bailout. Terms would be harsh and the Irish brand devalued for a decade or longer – a Greek tragedy you might say.
But is this right? By coincidence, last week I happened to have a chat with a senior member of the Irish government and three points were quite clear.
One is that the government is well funded. It will need to go back to the markets next summer, but not before. So the fact that it is, in effect, closed may be embarrassing but has little real impact. Two: the government has been very open. There are no fiddles in the public finances. Three: the core economy, especially exports, is doing relatively well. Domestic demand remains weak but external demand has been strong. Foreign investors are increasing employment.
It is fashionable to "diss" Ireland and those of us who have been more optimistic do worry about our judgement. But turning points are impossible to spot in advance.