Krugman has this short piece on his blog this morning, dumping very cold water on the notion that Ireland is beginning to recover.
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October 25, 2011, 9:28 am
Irish Reality Check
There have been a number of articles and blog posts lately claiming that Ireland is over the hump, that it’s all coming right; see for example this recent piece by Henry Kaspar. But I was checking to see if it was still true that Icelandic CDS prices — the cost of insuring against default — were much lower than Ireland’s. And given what we’ve been hearing, the Irish CDS story comes as something of a shock:
Prices are down from a spike last summer, but still very high. And for the record: as of posting time, the Irish 5-year CDS was 776, the Icelandic 5-year CDS 280.
Part of what’s happening, I think, is that the apparent good news on Ireland isn’t as good once you look at it closely: for example, pharma exports are up, but they contribute very little to GNP (as opposed to GDP) because they generate very little income for the Irish.
Anyway, it’s always a mistake to base your views about what’s happening on the conventional buzz. If you believed that, you’d think that Latvia was booming and Argentina a disaster. And the recent Irish boosterism is just more of the same.
krugman.blogs.nytimes.com |
