Ireland “Especially Exposed” To “International Shocks” – Central Bank

Ireland remains especially exposed to another financial shock because of the extremely high levels of public and private debt, the open nature of the economy and Brexit.  Irish Central Bank Governor Philip Lane has warned in a pre-budget letter to Minister for Finance, Michael Noonan.

“Ireland is especially exposed due to the legacy of high public and private debt levels, the sensitivity of small, highly-open economies to international shocks and Brexit-related vulnerabilities,” Ireland’s Central Bank Governor said.

The letter was covered in the Irish Independent, Irish Times and Irish Examiner. This is something we covered in our interview with Max Keiser last week – see here.

There are many potential international financial and geopolitical shocks today which have the potential to derail the very fragile economic recovery or indeed contribute to a new global debt crisis.

Geopolitical risk remains very high. ‘Brexit’ has created a whole new set of risks to Ireland, the UK and the Eurozone itself. The Middle East remains a powder keg and tensions with Russia remain very real. There is the real risk of conflict and the consequent effect on oil prices, global markets and the global economy.

The governor’s warnings come in the wake of similar warnings from the former deputy governor of the Central Bank who warned in an op-ed in a leading international financial publication, Project Syndicate, that Ireland is at risk of another housing market crash.

There have also been warnings regarding deposit bail-in risks from the CEO of FDB, one of Ireland’s largest insurance companies. The insurance company has been moving cash out of Irish bank deposits and into bonds. In order to read more about Stefan Gerlach’s warning and Fiona Muldoon’s concerns –   read Deposit Bail-in and Property Crash Warnings In Ireland here.

These risks are set to impact savers and investors in the coming years. Ignoring them and pretending they have no financial implications for people’s personal finances is imprudent.

Today Dr Constantin Gurdgiev, Dr Brian Lucey, Eddie Hobbs, Jim Power, Cormac Lucy, Jill Kerby and others are all advocating diversification into gold again. Diversification remains important and an allocation to physical gold will again protect in the coming crisis.