On Bloomberg this morning it was stated by Mark Grant managing director at Southwest Securities Inc that Ireland had only three months funding left to run the country. This is utter nonsense. The country is well funded until July 2011. In addition it has 24 billion euro left in the Pension Reserve Fund which could be tapped in an emergency. Mark Grant was talking through his hat.
The Government of FF and the Greens together with Ireland's main opposition party FG are in agreement with the EU on the TARGET of a €6 billion adjustment in the upcoming budget-on November 7- comprised of tax increases and public expenditure cuts. On Bloomberg this morning it was further stated that Ireland was going bankrupt. Whilst Ireland has very serious economic problems this is somewhat of an exaggeration.
The big bang approach of a major sharp budget adjustment carries risks but on balance it is probably the correct approach. However it must be accompanied by an economic stimulus package as advocated by FG.
If consumers feel that most of the heavy lifting is out of the way confidence will return.
One of the major problems is that consumers are afraid to spend.
In the interests of fairness Bloomberg needs to correct the mistaken impression conveyed this morning. It should first ascertain the facts from the NTMA before disseminating half-baked economic data in relation to Ireland.