Although EU leaders have said will prevent the salvage of the Irish crisis spread, but investors still turn their attention to Europe. According to the current situation, the crisis will spread to the fire, or that Portugal and Spain, high debt countries.
November 22, Portugal 10 year bond risk premium increased by 3 basis points, if it would have to apply for assistance, the pressure is likely to transfer to neighboring Spain. Spain 23, the risk premium rose by 8 basis points, the country is heavily in debt, and the size of its economy is almost Portugal, Greece and Ireland, and twice as much.
In Portugal, the next is Spain, then Italy, then France and throughout Europe. Barclays Capital economist Pascual first Xinan Ou said, Spain (economies of scale) is too large and difficult to help, (help) may run out of money, and Italy will still be infected, which will lead lead to problems arise in the entire euro area.
In fact, Ireland s rescue plan may be the same as Greece, including a three year emergency financing to avoid the high cost of borrowing in the financial market financing. During this time, Spain will be 1,500 billion euros of bonds due at the same time had to cope with the domestic budget deficit. If you need assistance of Spain, the EU and the IMF had set up 750 billion euros bailout funds will be exhausted in one fell swoop.
When the Irish crisis, many people will feel familiar. Greek crisis a year ago, is also a huge debt with high deficits simultaneously. On the surface, similar to the Irish crisis and the crisis in Greece, but in fact there is a fundamental difference. Greek crisis is unreasonable because the long term result of public finance policy, embodied in its public expenditure is too large, while the tax revenue can not support the huge public expenditure, which is different from the causes of the Irish crisis.
Ireland have their own state of the economy is stronger than Greece. Dublin Business School professor Bruce Qatar, Kazakhstan, said the Irish per capita GDP ranked within the top ten, higher than two percent over Greece, and Ireland has a strong high tech industry, is called European Silicon Valley the real economy in good condition. The Greek economy is too dependent on tourism and shipping industries, the general level of manufacturing industry.
Ireland to seek assistance helped to make the borrowing costs declined, an economist at Deutsche Bank in London, Mo Yike view, this means that investors may have to give up on this market speculation. Since November 11 since the high point of the Irish bond risk premium has declined over 100 basis points.
The market is no longer the unilateral speculation. Moyi Ke said, If the market speculation of another country, then the next course, Portugal.
OECD Secretary General Gu Ruiya 22, said the Irish problem has nothing to do with Portugal, infection should not happen. EU Economic and Monetary Affairs Commissioner Rehn also said that the economic problems of Portugal and Ireland very different , and the Portuguese Government has taken a bold measures to reduce the deficit. However, Ignatius Nice Asset Management fund manager Thomson scoffed. He said: Ryan is simply a comedy, then, for Ireland a few weeks ago he said the same thing.
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