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Officials in Europe appear to be protesting too much concerning the possibility that Ireland may or may not need an international bailout. Billion-dollar estimates are floating around, but the Irish Finance Ministry said Sunday Ireland "has made no application for external support," The New York Times reported.
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This meant Finance Minister Brian Lenihan was confident an austerity budget alone would do the trick in Ireland where bank failures have stretched the government's budget beyond the breaking point. To bail out its banks, the bill under some estimates comes to about $50,000 per person.
But French Finance Minister Christine Lagarde also denied any request has been made for assistance.
Ireland will submit its austerity budget for EU review this week before a presentation set for Dec. 7 for the Irish Parliament. This beggars the question of why Ireland is testing the European Union's reaction before its own Legislature -- although, incidentally, a spokesman for EU Commissioner for Economic and Monetary Affairs Amedeu Altafaj said Monday that Sunday's meeting did not constitute a negotiation for a bailout.
The private sector is not so diplomatic. Analysts at Barclays Capital said it would require up to $116 billion to shore up confidence in Ireland's finances.
The goal, ostensibly, is to reduce Ireland's deficit from 32 percent of its gross domestic product to 3 percent by 2014.
Eurostat, meanwhile, said last week that the gross domestic product for the European Union grew 0.4 percent in the third quarter with the largest contraction in Greece where the GDP fell 1.1 percent. Data from Ireland was insufficient to come up with a third quarter estimate but no matter what shape the combination of ambition and austerity takes in Ireland, its GDP dropped 1.2 percent in the second quarter and has dropped two of the past three quarters, falling 2.5 percent in the fourth quarter of 2009.
In international stock markets Monday, Asian indexes were mixed while markets in Europe generally rose despite "extreme tension that has been prevailing in the financial markets, especially concerning the ability of Ireland to achieve a sustainable fiscal path by going it alone," Barclays Capital researchers Julian Callow and Antonio Garcia Pascual said.
However, proclamations that Ireland can make it on its own are a thin ice approach when it comes to credibility. Investors will be judging Ireland's budget this week, then second guessing the country's ability to accomplish its goals. The good news appears to be Ireland can make it without any loans. The bad news that some investors would prefer Ireland make it and not fake it.
In Japan on Monday, the Nikkei 225 index gained 1.06 percent while the Shanghai composite index in China rose 0.97 percent. The Hang Seng index in Hong Kong fell 0.81 percent while the Sensex in India added 0.76 percent.
In Australia, the S&P/ASX 200 lost 0.1 percent.
In midday trading in Europe, the FTSE 100 index in Britain added 0.37 percent while the DAX 30 in Germany rose 0.66 percent. The CAC 40 in France rose 0.55 percent while the Stoxx Europe 600 gained 0.5 percent.
