Rumours of Irish Bailout Sweep Through Financial Markets!
- Ireland isn’t the first and won’t be the last to be bailed out. The dominoes are starting to fall. As the PIIGS go under, the rest of the Eurozone will collapse too. The Illuminists are pulling the plug one at a time.
Rumours of Irish bailout sweep through financial markets
Long-term Irish interest rates soar as austerity cuts seem to have failed to convince international investors.
Fears that Ireland could be forced into a Greek-style bailout by the European Union or the International Monetary Fund swept through financial markets today after the beleaguered country’s borrowing costs soared to levels seen as unsustainable by investors.
Long-term Irish interest rates surged to their highest levels since the launch of the single currency amid growing evidence that repeated bouts of budget austerity have failed to convince international investors that the former Celtic Tiger economy can cope with the banking crisis caused by a boom-and-bust in its housing market.
Attempts by Patrick Honohan, the central bank governor, to reassure investors by stressing that the Irish government was already planning the tough fiscal measures that the IMF would insist upon backfired, and helped push yields on 10-year Irish bonds up 61 basis points to 8.7%.
“Putting Ireland and the IMF in the same sentence can trigger palpitations in the credit markets,” said Gavan Nolan, a credit analyst at Markit. “Speculation that the Irish government and the IMF have already reached an agreement was doing the rounds.”
Ireland admits to ‘serious’ borrowing problems
Irish finance minister Brian Lenihan concedes that republic faces a grave economic crisis as EU says it is ready to help
Ireland admitted today that the surge in its borrowing costs was “very serious” as European commission president José Manuel Barroso said the EU stood ready to ride to the rescue if needed. As Irish 10-year bond yields soared to 9.26% this morning, the highest since the euro was created in 1999, Irish finance minister Brian Lenihan conceded that the republic faced a grave crisis. “The bond spreads are very serious and there is international concern throughout the eurozone about that,” he said in Dublin.
A Reuters poll of economists and bond strategists also ratcheted up the pressure on Dublin, showing that 20 out of 30 respondents thought it was unlikely that the country would make it through the end of 2011 without external assistance.
Speaking in Seoul where he is attending the G20 summit, Barroso earlier said that Ireland would be supported by its fellow eurozone members if its debt crisis escalated. But his words failed to calm the European bond market, with the cost of insuring Irish, Spanish and Portuguese government debt against default hitting all-time highs.
Irish 10-year bond yields soared, along with the premium charged to hold 10-year Irish bonds over German bunds. This European benchmark rose to a record 680 basis points, with traders saying liquidity had dried up. In Portugal, which is also struggling to cope with debt, the spread rose above 500 points for the first time.
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