It was the best of times… it was the worst of times…

Well, okay, not literally… but some of us might, I think, have been forgiven for being puzzled at the small debate over the economy that raged for the last day or two in the media.

Pity the hapless Dan Murphy, general secretary of the Public Service Executive Union who had the temerity to suggest that the economic situation was no so severe that it might necessitate of the guys from the IMF arriving briefcases in hand to shut down the Irish state. This information he had, or so the story went, gleaned at a meeting between Brian Cowen and the unions last Friday. The implication that the bould Brian had made the inference, or the averred to it, or bloody hell, had actually said it.

Cue horror and misery, particularly on the part of the financial markets…

The value of the euro dropped more than a cent against the dollar early yesterday but recovered after the Government moved to clarify its position. “I have never said that,” said Mr Cowen later yesterday. “We are a member of the euro area and we have the best-performing economy in the last 10 years in the European Union.”

And so awful was this happening that the Irish Times even devoted an editorial to it today where it thundered (under the heading Mr. Cowen is wronged)…

THE LAST thing a busy Taoiseach engaged on an important trade mission abroad needs is to have to deny remarks that he never made at home when they are wrong and deeply damaging for Ireland and the euro.

But also that:

This unfortunate misunderstanding about Mr Cowen’s remarks could hardly have come at a less opportune time for the Government or for the economy. The ratings agency Standard Poor’s (SP) last week warned that it may cut Ireland’s triple-A rating for its sovereign debt due to the sharp deterioration in the public finances. This warning of a credit downgrade was followed up some days later by the agency issuing similar warnings to Spain, Greece and Portugal. SP downgraded Greece’s sovereign debt yesterday, citing declining competitiveness and a rising fiscal deficit as reasons. For the euro zone bloc this is a serious development. It puts the currency under pressure. It will also raise investor concerns about the euro’s future, prompt market speculation and generate currency volatility. Moody’s became the third agency to talk of reviewing Ireland’s rating yesterday.

And curiously the Department of Finance was in a much more upbeat mood than the media:

The Department of Finance also moved quickly to correct the reference to the IMF in reports yesterday, with a statement that pointed out that Ireland’s debt position of 20 per cent of GDP at the end of 2008 is relatively low by international standards.

“Those briefings, which made no reference to the IMF, set out what the fiscal position will be if no corrective action is taken,” said the statement. “In those briefings, the Taoiseach stated clearly that the Government is determined to take the necessary action so as to ensure the stability and sustainability of the Irish public finances,” it added.

So, who could be responsible for this unfortunate series of events, how could Dan Murphy have got it so wrong? Surely not the Irish media and political class who have loudly proclaimed that the severity of the situation is so awful that the Irish public and the social partners have yet to understand just how bad things are going to get…

Surely not.

Meanwhile some pretty intriguing rumours of a serious event about to take place in the Irish financial sector have reached the ears of the Lounge.

Surely not squared… 😉