Ireland Update

• Posted by DynamicHedge
• on November 10th, 2010

Clearing Houses are now raising the effective margin rates to trade Irish sovereign debt.  Things are looking pretty dire as the ECB aka the buyer of last resort is apparently stepping back and taking their bid out of the market.  There was heavy selling across the curve today.  Spreads to German debt are now insanely wide.

Please click over and read the entire article.  This isn’t recession porn.  This is a reminder that there are real risks still in the market.

The fact remains that bull markets are forged in deep negative sentiment, riding the wall of worry.

THE BIG PICTURE: Ireland is effectively insolvent – the next crisis will be mass home mortgage default, writes MORGAN KELLY

SAD NEWS just in from Our Lady of the Eurozone Hospital: After a sudden worsening in her condition, the Irish Patient, formerly known as the Irish Republic, has been moved into intensive care and put on artificial ventilation. While a hospital spokesman, Jean-Claude Trichet, tried to sound upbeat, there is no prospect that the Patient will recover.

It will be remembered that, after a lengthy period of poverty following her acrimonious divorce from her English partner, in the 1990s Ireland succeeded in turning her life around, educating herself, and holding down a steady job. Although her increasingly riotous lifestyle over the last decade had raised some concerns, the Irish Patient’s fate was sealed by a botched emergency intervention on September 29th, 2008 followed by repeated misdiagnoses of the ensuing complications.

With the Irish Patient now clinically dead, her grieving European relatives face the melancholy task of deciding when to remove her from life support, and how to deal with the extraordinary debts she ran up in the last months of her life . . .

WHEN I wrote in The Irish Times last May showing how the bank guarantee would lead to national insolvency, I did not expect the financial collapse to be anywhere near as swift or as deep as has now occurred. During September, the Irish Republic quietly ceased to exist as an autonomous fiscal entity, and became a ward of the European Central Bank.

If you thought the bank bailout was bad, wait until the mortgage defaults hit home The Irish Times

HT Conrad for the article and update.

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