Good news for Irish sovereign debt
After this week's report by Barclays Capital suggested that the Irish government and the Irish economy may need outside assistance if the financial rescue package becomes any more expensive, there was some relief yesterday with news that Credit Suisse believes that the economy and government finances are strong enough to see the country through this troubled patch.
However, it must be noted that the yield on the Irish sovereign debt bonds has now edged up to over 6% with Ireland and Portugal apparently the two major worries within the European Union. The "spread" on German sovereign debt bonds is 3.7% which reflects the confidence in Germany as opposed to the confidence in the Irish economy. There is no doubt that the authorities in Ireland will need to ride through this ongoing rough patch although lingering doubts remain in the background with regards to the short to medium term outlook for the economy.
Historically it has been investors around the world who have dictated concerns and potential problems in every area of the worldwide economy and this time seems to be no different. Investor concerns are in direct contrast to the IMF and other major authorities around the world who do not believe that the Irish economy and Irish government will need to be bailed out.
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