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Ireland has lost control of its financial fate and its future is now in the hands of the markets, one of Europe's leading sovereign bond commentators has said.
Luca Cazzulani, deputy head of fixed income at Italian-German bank UniCredit, said the Irish and Portuguese governments could do little to influence their fate because the markets had signaled them out from the so-called PIIGS - Portugal Ireland, Italy, Greece and Spain - for extreme scrutiny.
He forecast that key sovereign interest rates in Ireland and Portugal, which rose last week to more than 5.5%, were "unlikely" to fall back below 5% because markets were not anticipating good news from Europe.
"If anything, we are likely to get further bad news," Cazzulani warned.
Irish and Portuguese sovereign interest rates could stay "very high" for five or six months. "If so, then we are going to face a series of stresses because these levels are clearly unsustainable," Cazzulani said. "Investors will start to realise that it makes no sense to lend to those countries because they will not be able to pay back in the long run."
Following Spain's successful debt, Ireland and Portugal last week stood out in the eurozone for the high interest rates they face in refinancing and raising new debt.
Cazzulani said that Italy, one of the euro peripheral countries the markets perceived to be in trouble, was now best placed paying "quite low" interest rate on its debt of 4%. Spain is paying 4.6%.
Ireland and Portugal interest rates are "by no way a sustainable rate for either because neither of the two countries can meet a growth rate in line with that yield. For example Portugal is paying 5.6%, which is basically the highest yield ever and the picture for Ireland is fairly much unchanged," he said.
But Chris Pryce, the senior analyst who sets the credit ratings for Ireland at Fitch, told the Sunday Tribune that the agency's rating for Ireland had been stable "for most of this year and will continue to be stable." He added: "I do not think that Ireland is in danger of losing access to the markets. That has not been our experience these last few months."
He said Ireland was "very slowly" emerging from recession and the economy was "probably past the bottom".
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What happened to Lenihan's boast that this, "is one of the cheapest bank bailouts in the world". What happened to the idea of making NAMA, the only game in town, a Special Purpose Vehicle to make sure the debt did not show up on the books of the sovereign? What happened to the 23bn that was incinerated in Anglo.
Why is NAMA already flogging off the LTEV assets (long term economic value) the ones we were told it would hold onto for a few years until they came up in value? NAMA was to get credit flowing again we were told. Has it?
Why are Irish businesses going bust at the rate of 6 every day? What is the plan to save them? Increase their rates, water charges, hit their customers who try to reach them by car, meter them and pile on some more red tape.
The true measure of Irelands fiscal management is that there is nobody willing to lend to us save the ECB lender of last resort. The I saved the economy claim is utter nonsense. Sounds more like "I shrunk the economy" then it was not big enough to pay the public sector and service sovereign debt then it finally died and the parasites died with it.