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.