Here’s an
interesting chart from the Fiscal Monitor update released by the IMF yesterday
that is worth some attention on its own (see more analysis here).
Basically,
this shows that in 2008-2010 period, Irish bonds valuations were not as much
divorced from the immediate fiscal sustainability fundamentals as our politicos
claimed. If anything, they were virtually in line with the fundamentals,
pricing almost no longer-term structural underperformance of the economy.
This is not
to say that we lack in the room for structural reforms, or that we were well on
the way to delivering such reforms. Markets perception of Ireland even during
the deeply crisis-ridden days of 2008-2010 seemed to have been much better than
that of Portugal, Italy and Spain. Whether that was justifiable or not – is an
entirely different question. But what is clear is that compared to other
peripherals, our Government had no one else but itself to blame for our bonds
spreads.
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