Why does our Minister for Finance own German (and not Irish) Government bonds?

23 May, 2011

Another item to be filed under “Am I the only person who finds this bizarre?”

According to the most recent Register of Interests of Members of Dáil Éireann, our Minister for Finance, Michael Noonan, thinks it is a good idea to own German Government bonds.  Under the heading “Shares”, this is what he discloses for holdings at 31 December 2010: 

    1. I-shares FTSE 100 ETF;
    2. Lyxor  Eurostoxx 50 ETF;
    3. SPDR KBWUSBanks ETF;
    4. Lyxor MSCIIndia ETF;
    5. Lyxor ChinaEnterprise ETF;
    6. Ipath S&P 500 VIX ETF;
    7. German Government Bond 1.75% (15/04/2020);
    8. SPDR Metals & Mining ETF

So, besides some exchange-traded funds, the only investment Mr Noonan holds is in a bond issued by another member of the Eurozone.  He is in fact sacrificing quite a yield difference by holding German, as opposed to Irish, government bonds.  Does he know something we don’t?  I think we should be told.

Seriously though, at a time when the Irish Government is trying to stem the flow of deposits from Irish banks, and the flow of money out of Ireland generally, it’s bizarre that Mr Noonan sees nothing wrong (apparently) in this state of affairs.  Here we have the Minister for Finance keeping a chunk of his money in what has become the safe haven of choice for those who fear for either the solvency of the Irish State, or our ability to remain in the Eurozone.  What a message!

Incidentally, his register of interests as at 31 December 2009 shows no holding of German Government bonds, so Mr Noonan actually bought them last year, at a time when he was opposition spokeperson for Finance, and when capital flight from the banks and the country became a serious issue.  What a depressingly stupid thing for him to do.

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