Tuesday, March 30, 2010

“Others believe in us”

Minister for Finance, Brian Lenihan, concluded his statement to the Dail today by saying:

[O]thers believe in us. We must now begin to believe in ourselves.

He used quotes from some external commentators to support this view. A short extract from his statement shows this.

Our determination to deal with this imbalance in our public finances through firm and decisive action has engendered real confidence in our economy on the international stage. The world out there believes in us and in our ability to work our way through our difficulties and return to growth.

Jean Claude Trichet said: "In the case of Ireland very, very tough decisions have been taken by the government and rightly so,"

More recently, Mr Trichet’s colleague, Jose Manuel Gonzalez-Paramo on the ECB said: “The Irish measures are very courageous. They are going in the right direction.”

The French Finance Minister, Christine Lagarde said: "Ireland has set the high standard the rest of us must follow".

On a recent visit to Ireland, the German Minister for European Affairs, Dr. Werner Hoyer said: “I think there is a deeply rooted trust and confidence in this country’s ability to sort out its problems. … There is a fundamental belief that the Irish are going to solve it.”

Already, we have reaped the benefits of this growing confidence. Since last April’s Supplementary Budget and the announcement of the decision to establish NAMA, borrowing costs have fallen and our bond spreads have halved.

We have wondered about this before with some posts under the banner ‘they like us, they really like us’.  See here and here for examples.

This week has seen more pieces in the international media along similar patterns.  For example, today Bloomberg carries a piece under the heading ‘Ireland Breaks From Greece to Lead Europe Bond Gains’.   The piece was written before the NAMA announcement was made.  The first paragraph begins the positive view that pervades through the entire piece.

Ireland’s bonds are poised to outperform those of every other euro member except Austria this quarter as investors bet it will be more successful than countries such as Greece in cutting its budget deficit.

Further on in the piece an economist from Ignis Asset Management declares that “Ireland has left the pigsty for the time being and it has come out smelling of roses”.

The Financial Times have already given their view on the state of the nation and even predict the quick return of the Celtic Tiger!  In a piece called ‘Signs of Celtic Tiger clawing back growth’ they start:

After almost two years of unrelieved misery during which Ireland had sometimes appeared, in local parlance, to have lost the run of itself, a battered and moth-eaten Celtic Tiger may be picking itself up.

And this piece finishes:

Taken together, and with the right policy tweaks, this could offer Ireland a route back to the authentically Tigerish 1990s rather than the long recession of the 1980s.

You can listen to the author of the above piece make the case in an interview with Tom McGurk from 4FM here.

The Minister is absolutely right.  Others do believe in us.  But why? 

How will the “others believe in us” quote fare in comparison to the way the Minister finished his Budget speech last December?

Our plan is working.

We have turned the corner.

I commend this Budget to the House.

It is clear that “turning the corner” has not gone to plan.  How long will the “others believe in us” mantra last?

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