Thursday, December 18, 2008

New Blog on the Irish Economy

Thanks to Stepehen Kinsella for pointing me towards the new blog on the Irish economy: Featuring many of Ireland's top macroeconomists, this blog looks like an interesting read, and a valuable source of information on economic developments as they are happening in Ireland.

Macroeconomics and finance don't feature a whole lot on this blog, but the chart below caught my imagination when it was forwarded on by a friend this week. It shows that investing in U.K. government debt is almost twice as risky as buying bonds sold by McDonald’s Corp., based on prices in the credit-default swap market since June. “Talk about ‘McBritain’ is an insult to Ronald’s outfit,” said Sean Corrigan, chief investment strategist at Diapason Commodities Management SA in Lausanne, Switzerland.

I assume that Irish government debt would stack up in a similar position to British govt. bonds. I'm hoping to get some data on this soon; but in the meantime its fascinating to see how financial markets can view a corporation as more of a safe bet than a major European government. I wonder if the average Joe's 'perception of risk' would correspond accordingly. In saying all of that, these are times when Keynesianism may be more appropriate than expanding the monetary base (see here, here, here, here and here), and McDonald's are making sizeable profits during this global recession, as we mentioned before (here).

Update on 19th December:

I got the chart for Ireland's government debt priced in the credit-default swap market for the same time period. Irish govt. debt is considered to be even riskier than the British counterpart, as well as a McDonald's bond.

1 comment:

Martin Ryan said...

It seems like a good time to suggest Keynes' 'General Theory' for the next book club meeting, with a view to Friedman and Schwartz's 'Monetary History' sometime afterwards?

There's nothing like a little 'General Theory' over Christmas...