Monday, November 08, 2010

Ireland Update: "Relying on the kindness of strangers"

by Calculated Risk on 11/08/2010 08:49:00 AM

The yield on the Ireland 10-year bond hit a record 7.75% this morning.

From Bloomberg: Irish Fight to End Bond `Buyers Strike' as EU Examines Budget

EU Economic and Monetary Affairs Commissioner Olli Rehn arrives in Dublin today for a two-day visit ... Ireland has the funds to avert the need for an immediate rescue, its cash may run out in the middle of next year unless it can raise money from the bond market in 2011.
...
Erik Nielsen, chief European economist at Goldman Sachs Group Inc., said Ireland may need help from the European Stability Fund and the IMF in Washington in early 2011.

“This is starting to feel like a tsunami of new concerns,” Nielsen said “There is a considerable probability that the alphabet soup will get involved in financing Ireland and Portugal early next year.”
And a long piece from Professor Morgan Kelly (Ireland's "Doctor Doom"): If you thought the bank bailout was bad, wait until the mortgage defaults hit home. He is definitely pessimistic, and concludes:
Ireland faced a painful choice between imposing a resolution on banks that were too big to save or becoming insolvent, and, for whatever reason, chose the latter. Sovereign nations get to make policy choices, and we are no longer a sovereign nation in any meaningful sense of that term.

From here on, for better or worse, we can only rely on the kindness of strangers.