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So what is the logic of the Irish Government guaranteeing virtually all debt, and does that not undermine the credibility of the guarantee - not top mention the safety of Irish Government Bonds?

Given a current debt/GDP ration of c. 30%, - you could see a situation where the Government could survive that going up to (say) 50% - though not without a lot of pain for taxpayers and at some cost to future growth,  But that would fund only 10% of the liabilities being taken on - and wouldn't cover a situation where those liabilities became much greater because of - say - property markets going down by another 50%.

So aren't Irish citizens now not exposed to a massively higher level of risk - indeed Ireland Inc. has been turned into a massive insurance company - which is fine and profitable when claims are at a "normal" level but has the potential to bankrupt Irish citizens rather than just the shareholders in those companies?

Vote McCain for war without gain

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Fri Oct 3rd, 2008 at 07:51:20 AM EST
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