Sunday, Sep 19, 2010
Nothing's fixed
Zero Hedge: European Central Bank Stepped In To Rescue Ireland
The FT has confirmed Friday's rumours that it was just the ECB's intervention that prevented domino number two - Ireland - from toppling, and taking with it all of Europe. "The European Central Bank intervened to stabilise the Irish bond markets on Friday after a report by a leading UK bank triggered investor fears that the country might turn to the international community for a multibillion-euro bail-out."
Posted by devo @ 09:48 PM (1327 views) Add Comment
8 Comments
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1. devo said...
How are those draconian austerity measures working for you, Ireland?
Vince, I think it's time you had a little word with George and Dave.
2. devo said...
A range of factors are pushing up bond yields in Ireland, Greece and Portugal.
Chief among them is that growth in these economies is going to slow, making the burden of their debts even heavier.
Source: http://www.independent.ie/business/irish/ecb-tries-to-stabilise-the-cost-of-irish-borrowing-2330995.html
Thankfully it's different in the UK. The massive cuts to be announced in November are going to give rise to massive GROWTH . Now that's what I call clever.
3. devo said...
This story is growing by the hour...
Ireland has shown what happens when you grasp the fiscal nettle, slashing public wages by 13pc; to applause from EU elites; without offsetting monetary and exchange stimulus. Irish bonds have spiked even higher to a post-EMU record 6.38pc.
This was triggered by two client notes: Barclays said Ireland may need the IMF's help; Citigroup's Willem Buiter said Ireland "may not be able to make whole" creditors of both sovereign debt and the bank. Dr Buiter has also said a default by Greece is "a high probability event".
Two years into its purge, Ireland has a budget deficit near 20pc of GDP. It is 12pc if you strip out the bank rescues, but the reason why the bad debts of Anglo Irish keep spiralling upwards is that the economy keeps spiralling downwards. House prices have fallen 35pc. Nominal GDP has contracted 19pc. "Ireland's debt is ballooning, while its capacity to pay has collapsed," said Simon Johnson, ex-chief economist at the IMF. He said the country has made a Faustian pact with Europe, able to draw ECB loans worth 75pc of GDP so long as Irish taxpayers shield European creditors.
Source: http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/8012175/The-IMF-itself-has-become-the-problem-as-Europes-woes-return.html
4. Crunchy said...
Dr Buiter has also said a default by Greece is "a high probability event".
I would say a "done deal."
5. alan_540 said...
So if the wheels come off the euro, what implication does that have for the UK? Looking on the bright side, holidays in Spain become a lot cheaper. Ole!
6. str 2007 said...
And yet the euro is up against the dollar in early trading - is this story for real or is it a secret no-one knows ?
7. general congreve said...
"Yes!" (strokes golden fleece).
8. Francesca25 said...
This article is like a lot of zerohedge stuff where it makes assertions which it cannot always back up. For example how exactly did the ECB rescue Ireland? The purchases of goverment bonds were very small. Also if Ireland had been rescued the situation today would have been improved and in fact it got worse with Irish government bond yields rising again.
Perhaps the IMF might actually rescue Ireland soon.