I know some readers may have thought I was joking when I said that I thought the IMF would be called in this year. I wasn’t. Ireland is essentially bankrupt. That Cowen is using it as a threat to public service unions is incidental – IMF intervention is a very real possibility.
The lads over on the pin are having a field day with this one. As Blaker says: “If you work on the basis that what politicians actually say in public tends to be quite a bit less dramatic than what is actually happening then I would suggest that we are quite a way towards this actually happening.”
I also like the way politicians talk about public sector pay cuts as if they themselves are not part of the public sector. I also like how RTE report on public sector cuts as if they themselves are not publicly funded.
Cowen should be more careful though. When news of the comments came out, the CDS on Ireland rose by 5 basis points. That’s effectively the cost to insure Irish debt. The euro also fell against the dollar on his comments. Indeed, next time Ireland goes looking to borrow money, it may be more expensive to borrow thanks to Cowen’s comment this morning.
More broadly, the euro is looking increasingly vulnerable. Spain, Italy and Greece are all facing serious problems with debt and debt ratings.
And by standards set by our former esteemed leader, Bertie Ahern, Cowen is talking down the economy. We all know what Ahern thinks of those people.
Update: Cowen denies it. Not surprising.