A SMALL POINT BUT WORTH NOTING

Some wingers calls for a drastic reduction in the corporate income tax rate because they believe that will pull us out of the slump and they often mention Ireland as a role model.

Here's the truth about Ireland:

Spreads highlight Ireland fears
By William L. Watts, MarketWatch
Last update: 12:37 p.m. EST Feb. 16, 2009


LONDON (MarketWatch) -- Fears that Ireland's banking woes will send the Emerald Isle the way of Iceland has sent the cost of insuring sovereign Irish debt against default to record levels.

Spreads on Ireland's five-year credit default swaps rose to a record 377 basis points on Friday, analysts said. That means it would cost $377,000 a year to insure a notional $10 million of debt against default. That's up from around just $24,000 a year ago.

Ireland's fiscal position has eroded sharply due to a steep economic slump. On top of that, add in the effective nationalization of the country's three largest banks and expectations for further outlays.

Economist Dermot O'Leary at Goodbody Stockbrokers in Dublin estimate the cost could total near 9 billion euros, but noted that much of the cost could be recouped in the future.

Meanwhile, a deep recession is also playing havoc with the country's fiscal balance sheet. The Irish economy could contract by 6% in 2009 and a further 2.5% in 2010, according to Goodbody.