Indeed, what is remarkable about all of this is, how quickly sentiment has shifted. It is worth remembering that in the last crisis in the Spring, Ireland was left relatively unscathed. At the time, the Irish Government were lauded for having taken quick and decisive action in reducing public spending.
The markets aren't taking any prisoners now with Ireland's 10 year bond chart yield rising dramatically...
With this in mind I decided to take a look at the Cumulative Probabilities of Default (CPD) of European Sovereign Debt as calculated by CMA Datavision.
Source: FT,CMA Datavision, Markets & Culture
In addition, two further points strike me. The first is that the global economy is so correlated now that a change in sentiment over Irish Government Debt can cause significant knock on effects. The second is a deeper thought, which I am going to develop in a future blog post. It is something that has been troubling me for a while. Namely, that modern portfolio theory is predicated on a set of relative evaluations for asset classes, which have Government Debt as a 'risk-free' benchmark. What happens when the 'risk-free' asset is no longer risk free?