The Irish bailout has failed. That's the stark verdict from Zerohedge, the financial blog, after the euro slipped into negative territory today.
Having rallied early this morning to a high of $1.3785, the European single currency is now down to $1.362. Zerohedge's verdict is clear: "The market now believes the Irish bailout has failed," it said.
Looking around the market, the FTSE 100 is now down by 45 points at 5688. RBS and Lloyds are the biggest fallers, reflecting their exposure to the Ireland banking sector
Government debt is also being hit, particularly that of Portugal. The cost of insuring Portuguese debt has now risen - with five-year credit default swap contracts 40 basis points wider at 452bp (see 10.33am for more detail).
Listening to traders, the new political uncertainty in Ireland appears to have alarmed some in the City. Reuters are quoting an unnamed independent government MP who has said he is unlikely to support next month's budget.
The ruling coalition only has a majority of three at present. If it loses the budget vote, the whole IMF/EU rescue package could unravel.
If this fails we get contagion.
It looks like Portugal is already heading for it.
And this is not just Ireland's fault. It’s Osborne’s too. he’s the man who led the charge against brown’s approach at unified action to bail out Europe. And this is what it has led to.
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The situation seems to be changing by the hour. Oh yeah, I forgot – that’s how they make their money.
things are moving quickly Richard.
I don’t think one analyst’s opinion is sufficient to support that headline.
Things may (or may not) look different by tomorrow.
@Colman Stephenson
When Portugal is now saying it’s not next you know it’s failing
Because it looks like it is
And the Irish government is falling….#
Sorry, but the back lash is happening and it is inevitable
Surely at present no one knows what will happen; the point is, it should never have got to this stage in the first place. The ‘Celtic Tiger’, as Richard pointed out months ago, is not a sustainable economic model.
I agree the Celtic Tiger was a castle built on sand. And Richard was one of the few who called it for what it was all along.
But I do think its too early to say whether the Irish bailout ‘succeeded’ if that means the Irish banks will be stabilised and dismantled in an orderly fashion.
@Colman Stephenson
I hope you’re right
But the FT is swinging my way too I note
And there’s real anger in the House of Commons
The truth is that the tipping point that demands real reform and real investment rather than support for existing creditors of banks has been reached and I don’t think those organising these deals have realised that yet
Irish benefits scroungers – Terrorists. Suicide bankers
http://gco2e.blogspot.com/2010/11/irish-benefits-scroungers.html
Its just an idea, no need to flame me!
Slightly off-topic, but ………sometimes there is justice.
The former Anglo Irish Bank CEO, who earned $3m in 2008, has defaulted on his credit card debt of £2800.
He filed for bankruptcy in the US last month.
http://www.irishcentral.com/news/Former-Anglo-Irish-boss-in-Cape-Cod-home-defaults-on-Discovery-Card-debt-107197508.html
So because things have not gotten better instantly before a penny of bailout has even been drawn down, bailout has failed? Well THAT’S logic I can’t argue with.
In all seriousness – there’s been a MASSIVE amount of political instability in the country today, mainly due to the fecklessness of our political leaders, not economic policy per se. It may be a few days before we know a) if goveernment has votes to pass budget, b) if not when GE will be. No-one is rejecting the IMF bailout, and FG/Lab are basically taking a strong negotiating position here.
There’s something ‘not right’ with Osborne’s Irish loan.
Why was he unwilling to bail out UK banks two years ago, but is now willing to bail-out Irish banks?
Why the sudden change from his position in May?
Why is he increasing UK debt when its is an area on which he’ll be judged?
Why has he opposed Ireland raising its tax rates when they are undercutting investment in UK and making the NI position difficult?
If he is so concerned about Ireland, why has he by-passed the IMF instead of routing his offer via them?
Possible explanations:
Its a profit on interest opportunity? Unlikely.
Its an attempt to bolster UK financial image by showing its in a position to lend? Possible.
It was designed to frustrate a Eurozone attempt to get Ireland to raise its tax rates. Possible.
It reduces the risk to British banks exposed to Irish debt. Unlikely.
Its designed to protect UK’s trading position with Ireland. Possible, but there are more direct measures he could have taken.
Its an offer he doesn’t expect to be taken up. Unlikely.
It gives UK gov. more leverage over Irish gov. in future talks over NI. It does increase influence – but to what end?