“A Budget tells us what we can’t afford, but it doesn’t keep us from buying it.”
- William Feather.
“In emerging economies, public debt of more than 40% of GDP is considered dangerous. That is less than half the ratio in much of the euro zone.”
- The Economist Magazine, 4th December 2010.
Last week, the Financial Times confirmed that the EU, with support from the IMF, had finalised the latest, and almost certainly not the last, European sovereign bail-out. Ireland will receive external financing of €67.5bn from her fellow EU members, a figure that includes bilateral loans from Norway, Sweden, Denmark and her erstwhile foe Britain. Her sovereign wealth fund is being forced to liquidate a well balanced, diversified portfolio and make around €10bn (41% of its assets) available should the Irish government continue its reckless spending. The remainder will be sourced from “other domestic cash resources”. The misallocation of thousands of workers’ savings, which will leave the funds’ participants with an irresponsible level of exposure to their government’s debts, is strangely apt. The National Pension Reserve Fund, like the Irish state, is no longer either sovereign, nor wealthy.
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