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Ireland Bailout Fails To Calm Nervy Spain And Portugal

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http://www.guardian.co.uk/business/2010/nov/29/ireland-bailout-fails-to-excite-markets

The cost of insuring Spanish and Portuguese government debt hit record levels this morning as the €85bn Irish bailout failed to calm the financial markets.

An early share rally also quickly ran out of steam, amid fears that the eurozone crisis will spread.

Credit default swaps (CDS) – the contracts used to insure government debt against collapse – showed that the financial markets still had little confidence that some countries would avoid bailout, or default.

The five-year Portuguese CDS – which insures Portugal's debt until 2015 – jumped by 45 basis points this morning to 545 bps, a record high. This followed an underwhelming auction of €5.5bn of Italian debt this morning.

Nouriel Roubini, economics professor and chairman of Roubini Global Economics, believes that the Lisbon government should seek a rescue deal quickly.

"Like it or not, Portugal is reaching the critical point," Roubini told Portuguese newspaper Diario Economico. "Perhaps it could be a good idea to ask for a bailout in a preventative manner."

The Spanish five-year CDS also hit a new all-time high of 350 basis points, up 43bps. Italian, Hungarian and Polish CDS all rose, while the cost of insuring Irish and Greek government bonds against default fell slightly.

Irish banks had surged in early trading, with Bank of Ireland jumping 17% and Allied Irish Banks up 8%. As part of the bailout some €10bn is to be poured into Ireland's banks in the coming months, plus a €25bn contingency fund.

Excellent containment, Portugal certainly appears next in line.

Another bailout needed before Christmas or will everyone continue denying this until the new year?

Nice to see someone's make a huge killing in shares of the insolvent Irish banks. Nice work if you can find it.

You don't get contagion when it's contained.

Viva bailouts.

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http://www.guardian.co.uk/business/2010/nov/28/irish-bailout-stuns-experts

The €35bn (£29.8bn) going into Ireland's banks shocked experts, who feared bailout might or might not help Ireland, but in any case might not contain contagion elsewhere in the eurozone.

Brian Lucey, associate professor of finance at Trinity College Dublin was "stunned" at the cash poured in: "We've already put at least €32bn into them, so that's going to be €67bn, which is 50% of GNP, that's a world record". He also warned that a new government next year could rip up the deal. "Sovereign governments have a right to effectively do whatever they want," he said.

The EU authorities hope the Irish bailout would draw a line in the sand and halt the threat of Spain and Portugal needing international assistance. But tonight, investors and analysts were far from certain this could be achieved.

Ashok Shah, chief investment officer at investment firm London & Capital, said Ireland might now enjoy some "temporary relief", but bond investors' concerns could switch to Portugal and Spain.

"Portugal is already in the borderline, it will have to be rescued soon, maybe within a matter of weeks."

Tick tock.

Excellent the Irish have a world record of pumping billions into one huge blackhole.

At what point will they realise they banks can't be bailed out?

I wonder what would happen if the Irish govt is removed and the new govt have campaigned on defaulting?

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http://www.telegraph.co.uk/finance/financetopics/financialcrisis/8167644/Roubini-tells-Portugal-to-seek-bailout-as-markets-slide.html

Mr Roubini, the economist who predicted the financial crisis, told daily paper Diario Economico it is "increasingly likely" Portugal will require international assistance.

He said the country is approaching "a critical point" due to it high debt load and weak growth and there were ample funds to shore up Portugal, one of the eurozone's smaller countries which contributes less than 2pc to the 16-nation bloc's gross domestic product.

However, he said neighboring Spain, Europe's fourth-largest economy, is "too big to bail out."

More from Dr Doom at the link.

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All we need is one more bailout and it will all be sorted, just one more, pleeease...

Of course that will finally contain the problem.

If that doesn't work of course we'll need another bailout to fix the problem. Then if that doesn't work we'll have another bailout to contain it....

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The solution to debt is obviously more debt, all we need is more debt, debt is wealth, the Irish are now even wealthier than before...

Nothing can possibly go wrong, the system is fine, it won't break down, there is always money for another bailout...

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Of course that will finally contain the problem.

If that doesn't work of course we'll need another bailout to fix the problem. Then if that doesn't work we'll have another bailout to contain it....

Yes but the trick is to only ever ask for one at a time, if you let the cat out of the bag by saying you'll need another one then that is not playing the game. Same goes for QE, we just need one more injection and we'll be right as rain...

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http://www.guardian.co.uk/business/2010/nov/28/irish-bailout-stuns-experts

Tick tock.

Excellent the Irish have a world record of pumping billions into one huge blackhole.

At what point will they realise they banks can't be bailed out?

I wonder what would happen if the Irish govt is removed and the new govt have campaigned on defaulting?

I was minded of this on the way into work. The Irish are to pay a further 20% of gdp in interest on the bail out deal. That's 20% LESS to spend on everything else. They were already running a deficit of 32% weren't they? Are they going to be the first country in history who use 100% of their income to pay the debt interest and STILL not declare that they cannot afford to pay?

The records are being set on a weekly basis at the minute!

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http://www.telegraph...kets-slide.html

More from Dr Doom at the link.

From the start of the crisis Roubini went from 'insightful' to 'media prostitute' today. You may do well to ignore just about every single word he utters.

Here's a link from hotairmail for some useful perspective;

http://www.marketora...ticle24588.html

Edited by _w_

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I was minded of this on the way into work. The Irish are to pay a further 20% of gdp in interest on the bail out deal. That's 20% LESS to spend on everything else. They were already running a deficit of 32% weren't they? Are they going to be the first country in history who use 100% of their income to pay the debt interest and STILL not declare that they cannot afford to pay?

The records are being set on a weekly basis at the minute!

This is a test of the power of X-factor and the like to anaesthetise the Irish people.

If they're awake, they'll elect a government that will default.

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This is a test of the power of X-factor and the like to anaesthetise the Irish people.

If they're awake, they'll elect a government that will default.

Just like we did in May.

Mind you, all the major parties stood on a platform of a sleepwalk towards default, even if they didnt say that.

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Just like we did in May.

Mind you, all the major parties stood on a platform of a sleepwalk towards default, even if they didnt say that.

I meant the Irish should elect a government that will campaign on the basis of defaulting and do so immediately.

What the current lot have agreed is treason.

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Ireland seems to have calmed down. CDS dipping banks shares rising etc. The Eurozone leaders don't seem to have grasped that the problem is not contagion.

The problem is structural, investors have woken up to the massive risk in lending money to heavily indebted countries that have zero growth prospects and high unemployment. Yields are rising to reflect the high chance of eventual default.

We could see end game when Spain comes to refinance €200bn~ of debt in the next 12 months.

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I meant the Irish should elect a government that will campaign on the basis of defaulting and do so immediately.

Countries can't default. they can only inflate away debts or renegotiate the terms.

Ireland can't inflate as it doesn't print it's own money.

The only option it to renegotiate over longer terms.

If the government just refuses to pay, the debts don't go away.

They will still be there, gathering interest and penalty charges.

The irish government may refuse to pay the debt, it may even declare them null, but that only applies inside Ireland.

The first time Ireland buys some oil or gas, (and it will have to pay cash up front in future) that oil or gas will be seized in whatever country it is in and sold to pay Irelands debts under the laws of THAT country, as while Ireland may say the debt is invalid, it's only invalid in Ireland... in every other country it IS still valid.

Ignoring a problem doesn't make it go away... it just leaves the problem to fester and slowly get worse. We are all taught this as children.

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Countries can't default. they can only inflate away debts or renegotiate the terms.

Ignoring a problem doesn't make it go away... it just leaves the problem to fester and slowly get worse. We are all taught this as children.

Renegotiation may include haircuts + restructuring, which would be a partial default

Are you sure no sovereign nations have ever defaulted on their debt? Did you learn history as a child?

Edited by mdman

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  • 142 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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