I want to be reincarnated as the Bond Market

8th February, 2009

This is what James Carville, the American Democatic campaigner said after the early months of the Clinton White House. They found that all of their campaign plans had to be ditched because the global bond markets would not finance them.

I am reminded of this when I read the article in this week’s Economist regarding the European bond market and the Irish economy. One article details the prospects for European governments looking to finance new debt issues. The other article is simply titled ‘Reykjavik on the Liffey’.

What both articles show is that our ability to sell our national debt might weaken severely during 09. Given that we borrow €50 million per day this would be an aweful problem for us.

James Milner from Aston Villa said on Match of the Day this morning that confidence is crucial in modern football teams. This is far more true of global finance. If international investors believe that we cannot tackle
our public finance problems then we will have to offer them more interest to buy our bonds. Commentary, like this week’s Ecomomist, remind us of how plausible this terrible scenario could be.