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Fintan
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Joined: 18 Jan 2006
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 Posted: Sun Nov 14, 2010 9:29 pm Post subject: |
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David McWilliams gives a no-bullshit version of
Ireland's financial issues. It's amazing how closely
the situation is a mirror of that created by the Fed
and Obama in the USA.
| Quote: | Government must cut deal
that gives the people hope
November 10, 2010 - by David McWilliams
...Painting the IMF as an occupying force, may well prove more in tune with the populace than the over-the-top welcome given to (European Commissioner for Economic and Financial Affairs) Olli Rehn by the Irish political elite — many of whom were directly party to the destruction of the country.
In fact, the elite’s al fresco sycophancy towards Rehn was a lesson in unrivalled post-colonial forelock tugging and it reveals what path the elite is likely to take in the next couple of months. That path can best be summed up by “what do we have to do for you to love us”.
The fact is that Rehn will not save Ireland. On the contrary, he will use the Irish people to save the German banks.
Let’s cut to the chase to see what is really going on here. Ireland’s banks owe German banks alone €127bn. Looked at from another perspective, the German banks are in the hole to Irish banks and developers to the tune of close to 90pc of Irish GNP. By rubberstamping the Irish elite’s bank bailout, the European Commission has saved the reckless German banks — who don’t deserve to be saved — and punished the ordinary Irish citizen, who doesn’t — in the main — deserve to be punished.
Rehn knows that the credibility of the euro rests in the Commission preventing a bank default or sovereign default in Ireland; but the choice facing the country now if we do nothing, is either we default eventually or, worse, we experience a slow run on the banks as the middle classes take their money out of the banking system because they simply do not trust the authorities any more.
Only by negotiating a restructuring of private debt can we avoid this eventuality. But it can be done.
The ‘bank crisis’ that lead to the guarantee being introduced is still rumbling on. Financial crises tend to come in waves. This first wave was a bank-funding crisis sparked when the German financiers panicked and refused to lend any more to the Irish banks. This turned into a debt crisis caused by developer loans going south. Now we have the third wave, the coming domestic mortgage crisis.
Let’s be clear, this is all one big crisis. As each domino falls, the desperation of our situation becomes more obvious. But once the first domino (the bank funding crisis) had fallen, there was no stopping the process. The guarantee was supposed to make this process easier. The endgame is always an unpleasant deal with creditors where they lose. We could have used the guarantee to do this, but we chose not to. Our elite chose to pay every cent to delinquent lenders.
The first wave of the crisis, the bank funding crisis, used up all of the Government’s reputation and credibility. The second wave, the large borrowers going bust, used up all of the Government’s money. The third part, the residential mortgage crisis, is going to use up what’s left. But the Government has no reputation left — they can’t offer another guarantee because it will not be credible. We all know they are broke, so they can’t offer a bailout.
So, what does that leave? There are, believe it or not, several options still open, even at this late stage. We can decide that the mortgage holders who are in trouble are being rightly “punished” for their sins. Last week, this column tried to make it clear why this ‘do nothing for the little people’ policy will lead us all into the mire.
By doing nothing, we will condemn our whole society to years of zero growth, depression (the psychological kind, as well as the economic kind) and mass emigration. The generation that the Irish State would be giving up on, reacts by giving up on Ireland.
All the while as the Government’s bankruptcy is laid bare, the middle classes with savings will panic and get their cash out of the country.
If we want to avoid a bank run we have to give some form of debt amnesty. It might be that the banks would have to write down the value of outstanding mortgages before they are defaulted on, rather than after. It could come through changes in the mortgage contracts so the mortgage becomes tied to the property rather than to the borrower. It could even come through changes in our bankruptcy laws so people who are in dire straits can draw a line under their past and have some chance of starting afresh.
Currently, none of the alternatives are being discussed. Yet it is clear that people are struggling with their debts and as time goes on, more will fall into the trap. The Government’s excuse for inaction is that writing down the value of mortgages will leave the banks in more trouble, and by extension, the Government.
This excuse might hold water, except for one thing. The write-downs are going to happen anyway. Whether the Government is willing to admit it or not, there will be mortgage defaults in Ireland. Ignoring the problem will not make it go away. Dealing with it is the only solution.
But won’t moving more debt on to the national balance sheet just make Ireland’s situation worse? Yes and no. True, government debt will grow bigger when it has to bail out the banks again to cover the mortgage losses, but it is important to remember that this debt already exists in the economy. We will just be moving it around a bit through some creative accountancy (and anyone who read the government press release last week on the promissory notes will know this Government is not afraid of a little creative accountancy).
Of course, this will put more pressure on our bonds, as government debt would rise again, but not if we did a deal with our creditors to restructure all our debt at the same time. The deal with mortgage holders would be paid for by a similar but more severe deal with the creditors.
The fact that the main creditor is now the ECB, actually makes renegotiation easier. What bit of “lender of last resort” does Mr Trichet not understand? In fact, what bit of “bank run” does he not understand?
There is a deal to be done which puts the Irish people first. It is not the deal that Rehn came here to do, but it is the only deal that will give the average Irish person hope. And if politics isn’t about hope in the future, what is it about?
http://www.davidmcwilliams.ie/2010/11/10/government-must-cut-deal-that-gives-the-people-hope |
Here's a revealing video of the
Kilkenomics stars in action on TV:
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Fintan
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| Posted: Sun Nov 14, 2010 10:26 pm Post subject: |
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Now here's the interesting bit.
There's been a hue and cry in the Anglo-American media
over the last month about Ireland's escalating bond rates.
As if Ireland needed to borrow money. Which it doesn't.
The country has enough hard cash on hand to fund itself up to July of
2011. And it has even more money in a Pension Reserve Fund. It could
fund itself until early 2012.
Something wrong with this picture? A technically-bankrupt, debtor nation
--with a pile of cash in the bank! Amazing but true. Y'see during all those
years of Celtic Tiger, the Irish State was salting billions away in it's
various rainy day funds.
That's analogous to the situation of a person who just got laid off from a
good job --and who now faces an income shortfall in making credit card
payments --but who nevertheless has about $150,000 in their personal
bank account. Ok, it's a bummer - but not a crisis for a while yet....
So the whole Ireland thing, just like the Greece crisis before,
is more a currency/bond play by financial market vultures.
Here's another angle.
As the saying goes: when you owe the bank $5,000 you have
a problem. When you owe the bank $5,000 Million --then it is
the BANK who has the problem.
Ireland has enough cash to tough it out while a broader market
solution emerges. The EU can't force Ireland to apply for loans
from the EFSF or the IMF. The EU can't pull the credit lines of
the Irish banks because it would undermine banks in Spain, in
Portugal and in Greece.
So the Irish can sit tight and and demand a sweetheart deal to come
in from their well-funded position. Or sit and watch the growing support
in many countries for debt haircuts which would relieve the pressure.
The EU may be preparing to allow some haircuts --even if this wrecks
the most diseased of their banks. For no other reason than that they
can take the balance sheet hit now in a way they couldn't in 2008.
Soon the international focus on troubled debtors will have broadened
to include concerns about the US Federal Gov. and US States.
So Ireland and Greece won't be such easy scapegoats any longer.
Fundamentally the EU can fund the borrowing requirements of
all it's poor performing peripheral countries. Fundamentally the EU is
avoiding the QE2-style inflation and currency destruction 'solution' --
which is no solution at all.
The EU is at least dealing with the stinking mess in the can.
The USA is kicking the can down the road.
In the longer term...........
you can guess how that works out....
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atm
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MichaelC
Joined: 06 Jul 2006
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| Posted: Mon Nov 15, 2010 6:09 am Post subject: |
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When I first visited Dublin I went to the stock exchange and the options exchange looking for a job. I noticed that most of the traders were americans. They made it clear that they were sort of opening branches of the Chicago exchanges in Ireland.
What a turnoff that was for me, but it was perhaps a good illustration of the interconnection of the irish and usa markets.
I didn't get hired - they were looking only for people trading for proprietary accounts. |
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Neil
Joined: 24 Aug 2006
Posts: 99
Location: Finland
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| Posted: Mon Nov 15, 2010 11:40 am Post subject: Time to reclaim the land that is rightfully ours... |
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Another cracker yesterday from Tom McGurk Fintan  -
| Quote: | TOM MCGURK
Time to reclaim the land that is rightfully ours
14 November 2010 By Tom McGurk Sunday Business Post
Ireland invented the boycott during the land wars, and perhaps it is time to take this effective weapon of resistance down from the thatch to deal with repossessions and resales. Despite the spiralling economic crisis we are in, there was, last week, an epiphany at a small auction in Co Meath.
A 67-acre farm in Crossakiel, which had been repossessed by ACC bank, was up for sale. Despite a reasonable attendance by local farmers at the auction, there was only one derisory bid of €1.
There was, according to some present, ‘‘an atmosphere’’ in the room, and the auctioneer later told the Irish Times that ‘‘there was no question but that people weren’t bidding because it was being sold by the bank’’.
At one stage, one person present questioned whether the land was being sold with the goodwill of the owner - and was told that the bank had the authority to sell the land.
The owner of the land had reached this financial crisis after using the land to raise funds for a property development which then crashed. The farm remains unsold.
It is not difficult to imagine the historical ghosts which haunted that Meath auction room, and I make no excuse for returning yet again to the personal debt crisis that I have been writing about for some weeks now.
One result of this issue has been the emergence of the New Beginning organisation, a group of some 50 barristers, businesspeople and citizens who are prepared to give free legal support to those facing repossession. And three cheers for them.
The failed land sale in Meath is yet another sign that, if the banks think they can regain the high financial ground over the thousands to whom they over-loaned in a reckless fashion by repossessing land, they may have to think again.
This applies equally to the government, which scooped up so many million euro in stamp duty.
Given Ireland’s history, those silent farmers in the auction room in Co Meath last week would have had a far better sense of where all of this will lead than the men running our banks. If the banks and the political and financial establishment think that our current bank repossession methods and laws on debt and bankruptcy are adequate for the forthcoming crisis, they had better think again. Parallels with the land and eviction crisis of the 19th century are beginning to look pertinent, particularly when one considers that, by late next year, almost 20 per cent of Irish home ownership may be in negative equity.
At the outset of this crisis, most people didn’t really understand what had happened and were prepared to let the government get on with saving the banks since they were essential - so the government argued - to safeguarding our economic future. Well, we did that, but the economy is still in crisis.
As the months have passed, the government’s financial targets have been missed, the debt crisis has grown and the public mood has changed. The realisation that thousands of families in this country are so in debt to the banks, that their children and unborn children will be paying it off, is slowly sinking in.
The auction in Meath last week may prove to have been be a significant turning point.
There have been two recent significant interventions in this debate. Professor Morgan Kelly of UCD warned in an Irish Times article that we were headed to what he depicted as a new type of land war between those who could pay their mortgages and those who could not.
He summed up the public mood as follows: ‘‘The perception growing among borrowers is that, while they played by the rules, the banks certainly did not, cynically persuading them into mortgages that they had no hope of affording.
‘‘Facing a choice between obligations to the banks and to their families’ mortgage or food, growing numbers are choosing the latter,” he wrote.
Last Thursday, a group of ten leading economists wrote to the Irish Times, arguing that some form of mortgage debt forgiveness was not only essential for our society, but also for the economy.
The group argued that, were mortgage debt forgiveness not introduced - and radical reform not introduced to our debt and bankruptcy laws - then our financial crisis would only deepen. At the core of their argument was the following assertion: ‘‘As there are three parties to the problem - the banks, the regulator (ie the state) and the individual - these three must also be part of the solution.”
With the government having insisted on a year’s grace for home repossessions by the banks, we are currently in some sort of unreal financial hiatus. It means that the full dimensions of the crisis to come are still hidden.
But late next year,when property and water taxes have been introduced - and when interest rates begin to rise, as they surely must - then the personal debt crisis has the potential to become the most serious crisis in the history of the state.
If the banks attempt a process of mass repossession next year, then they must be met by organised citizens’ action. Boycotting was invented in 19th century Ireland, and the time to use it again may be now.
Like the Tea Party movement in the US, which was organised on the internet and through websites and social networking, people in Ireland now have the organisational resources in their living rooms to bring the full power of the boycott against bank repossessions and attempted resales.
Boycott.ie - when it is set up - should be the rallying point to help those facing eviction. It could lead to the organised boycott of anyone involved in the eviction and, most especially, the auction of repossessed property. In the forthcoming general election, independent candidates fighting the repossession crisis should be put up through Boycott.ie.
It seems that, in this crisis, everyone except the taxpayers and homeowners of Ireland were allowed to make up the rules as they went along.
Now is the time for the citizens of the Republic to take back control of their lives and their finances and, like the Meath farmers, bond together in an unbreakable moral crusade for justice.
Our great-grandfathers and great-grandmothers did this before, and we can do it again. |
http://www.sbpost.ie/post/pages/p/wholestory.aspx-qqqt=TOM+MCGURK-qqqs=commentandanalysis-qqqsectionid=3-qqqc=5.3.0.0-qqqn=1-qqqx=1.asp
Have to post this one and run but looking forward to the upcoming audio on all this and G20 etc. etc. Interesting times coming... 
Cheers,
Neil.
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'Essayons de ne pas rire avant la fin d'Hamlet'-'Let us try not to laugh before the end of Hamlet'- Pierre Desproges. |
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Fintan
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| Posted: Mon Nov 15, 2010 3:01 pm Post subject: |
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Fantastic! Tom McGurk really gets it.
I notice he equates the current situation in Ireland to the Tea Party USA.
I've also been stressing that angle. It's the mood I'm sensing now.
It's not that Irish people buy in to the fiscal politics and conservatism of
the Tea Party. It's more that they like their 'Up Yours' attitude
to Big Governments, Bailouts and Bankers -versus- the Middle Class.
I get on well with Tom and he's previously intervened in my favor
with the Irish media elite over the way I was getting sidelined.
He's Ok. And he's got his finger on the pulse.
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arkestra
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Location: The Forest.
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arkestra
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| Posted: Tue Nov 16, 2010 2:05 pm Post subject: |
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I miss the Punt and our mythical goddess Medhb
The currency of poets, dreamers and drinkers ha.
Its aesthetic value sure reigns over that
bureaucrats toilet paper the Euro, down
the JACKS it will go with your treatys too.
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Fintan
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| Posted: Tue Nov 16, 2010 4:28 pm Post subject: |
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That Tweedle Tit & Tweedle Twat video above.....
Priceless!
The UK Guardian is running a live blog on developments:
| Quote: | Ireland v the world:
Time for geo-political hardball
The world's gaze continues to be on Ireland for all the wrong reasons with
a make-or-break meeting tonight of European finance ministers.
It's a big day for Ireland and, as your comments yesterday show,
feelings are running high. It's not surprising. Ireland is at an historic
cross-roads and what happens over the next 48 hours will be critical...
LIVE BLOG HERE |
That lead-in headline above speaks of geo-political hardball.
Yes, it's time for the Irish to play some hardball on the geo-political field.
But the hidden story is that this crisis is Geo-Political Hardball
pitting the money-printing US Fed -versus- EU taxpayers and
EU fiscal conservatives who won't print like the Fed.
(With supporting roles being played by Wall St.; Hedge Funds
private speculators; Austrian banking and media propaganda.)
The Fed is desperate to gain cover for it's QE2 printing orgy.
Because it stands to lose reserve currency value to the Euro.
So both financial and mass media hysteria has been deployed
to drive up Irish bond yields and try scare the Eurozone
into a bailout which would damage the Euro.
The Fed/Wall St. is also fighting German taxpayers whose firm
rejection of bailout economics has prompted German leader
Angela Merkel to begin speaking of haircuts for bondholders!
So far it's been taxpayers taking the big financial hits in the
US and Europe, but if this talk of bondholder haircuts spreads
it means implosion of NWO banking assets and loss of bond
income for pension funds and wealthy NWO investors.
The European Central bank is lined up on the side of the Fed
against taxpayers, but Merkel's CDU party is dancing to the
tune of it's voting taxpayers' frustration.
In the wings is China --which recently cozyed up to Greece and
Portugal and signaled it will defend Europe against Fed attacks.
Indeed the G19 (G20 minus USA) are united against the Fed.
Boy are there a lot of balls in the air over the next 24hrs.
This is BIG money, and BIG global stakes.
And Ireland... in the center of this geopolitical storm.
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Fintan
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| Posted: Tue Nov 16, 2010 7:21 pm Post subject: |
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| Quote: | No bailout plan for Ireland at Eurogroup meeting
English.news.cn - 2010-11-17
BRUSSELS, Nov. 16 (Xinhua) -- No bailout plan for Ireland was activated after Eurozone finance ministers ended their monthly meeting here on Tuesday night, but officials said that talks will intensify to prepare for possible help to the country's troubled banking sector.
European Commissioner for Economic and Monetary Affairs Olli Rehn told a press conference after the meeting that it's up to the Irish government to decide whether to ask for external help.......
http://news.xinhuanet.com/english2010/world/2010-11/17/c_13609775.htm |
So, officially the Irish have not requested aid and there is no bailout.
Unoficially, planning is advancing for a very limited $27 Billion bailout
of the Irish banks - recapitalizing them and taking the strain off the
Irish Gov. debt financing. Ireland will still proceed with severe budget
cuts to public spending and not default or restructure sovereign debt.
And even that $27 Billion is not a sure thing. Just talk.
The Irish and the EU are using talk of a partial bailout to take the heat off.
They're kicking the can down the road and playing the long game.
Cute. It means the Fed/WallSt. hysteria mob
now have to try sustain that hysteria in the
longer term.
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Fintan
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| Posted: Tue Nov 16, 2010 7:29 pm Post subject: |
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On face value, this reads like a 'F**k You' to
the bond market, speculators, Fed and Wall St.
| Quote: | COMMENTS BY IRISH FINANCE
MINISTER BRIAN LENIHAN
On Irish banking system:
"Any assistance in relation to resolving the problem of the Irish banking system will be most welcome."
On financial assistance:
"Financial aid to Ireland is not inevitable."
"The question of direct assistance or transferring money to Ireland immediately did not arise and does not arise, but we do have to examine security and stability that can be brought into the system."
"I wouldn't say I came under intense pressure to accept a bailout, or under pressure to do anything. I had a clear mandate from the Irish government."
On sovereignty:
"When you borrow you lose a little bit of sovereignty, no matter who you are, but we share sovereignty in the euro zone. It's Germany's currency as much as it is Ireland's."
On market fluctuations in the euro zone:
"It is clearly important that those who wish to help us will look at all the facts on the ground. There are serious market disturbances that jeopardise not just Ireland but the euro zone." "We are guaranteed the stability and support of the ECB." |
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atm
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| Posted: Tue Nov 16, 2010 11:07 pm Post subject: |
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| Quote: |
Ireland has already lost part of its sovereignty, says Dublin thinktank
TASC predicts Irish government will take up bailout in January
Tuesday 16 November 2010 17.00 GMT
http://www.guardian.co.uk/business/2010/nov/16/dublin-thinktank-on-irish-sovereignty
Ireland has already lost part of its national sovereignty and will embrace the EU's offer of a multibillion euro rescue plan by the end of January, TASC, a leading economic thinktank in Dublin predicted today.
http://www.tascnet.ie/showPage.php?ID=1
The policy institute said the international bond markets were already dictating Irish fiscal policy during the present crisis taking control out of the hands of Irish taxpayers and voters.
Tom McDonnell, senior economic policy analyst at TASC, said the odds were stacked in favour of Ireland taking up the bailout by early next year.
"We have already pumped €50bn into the banking system, €25bn of which went into the notorious Anglo Irish Bank and the rest into the other Irish banks.
It is likely that figure will rise as more money is needed to shore up the Irish banking system. Our overall GDP is around €157bn so it is obvious you can't cover all those costs on your own. The European Central Bank is going to be our lender of last resort," he said.
McDonnell believes that the Irish government will wait to see what impact next month's budget, in which €6bn cuts in public spending will be announced, has.
One of the biggest fears in Dublin is that an EU bailout might threaten a key driver of Ireland's economic boom from the late 1990s.
The Republic still enjoys one of the lowest capital taxation rates in the developed world at just 12.5%. The rate has attracted numerous hi-tech multinational corporations to Ireland.
The sector continues to generate jobs with 7,000 created in 2010 out of 67 foreign direct investment projects.
Overall 70 of Fortune's top 100 global corporations have their European headquarters in Ireland.
Mike Smyth, an economist who sits as an adviser on the EU's economic and social committee in Brussels, stressed that protecting this low capital taxation is of paramount importance to the Irish government.
"One of the main reasons why the Irish government is reluctant to accept an EU bailout is that the quid pro quo for billions of European aid would the revision of Ireland's low capital tax rates.
They fear that the EU will ask the Irish to review their low taxation rates for corporations. Even if news broke out that there would to be a revision that could be enough to spook chief executives all around the world who were thinking of investing in the Republic," he said.
Smyth said the removal of Ireland's right to impose its own capital taxation rate would be a serious blow to the country's overall national sovereignty.
The sense of crisis has been as urgent in Dublin as it has been in Brussels where eurozone finance ministers were discussing the Republic's dire financial situation. Newspaper billboards screamed: "Only 48 hours to save the euro."
Jim Power, senior economist of the Irish Financial Services Centre, said it was now "inevitable" that the government would seek a bailout. Power predicted that this handout would be "dressed up" as a bank rescue plan. Irish banks need further recapitalisation to the tune of more than €40bn
The massive cost of saving the Irish banking system has pushed national debt to an unprecedented 32% of the Republic's GDP.
The banks failed because during the Celtic Tiger boom they doled out billions to builders and developers on the promise that Irish property prices would continue to soar. With the credit crunch and recession those prices collapsed leaving the banks with enormous debts.
As finance minister Brian Lenihan beat a path to Brussels to persuade fellow Europeans that they can handle this crisis without surrendering sovereignty, an Irish government report revealed the existence of more than 2,800 so-called "ghost estates" across the country.
These are private housing developments built during the bank-fuelled property boom that now lie empty, areas of desolation and economic loss, the most potent symbols arguably of Ireland's fall from Celtic Tiger prosperity to a nation going with its begging bowl to its European partners for a multibillion bailout. |
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MichaelC
Joined: 06 Jul 2006
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| Posted: Wed Nov 17, 2010 5:32 am Post subject: |
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| Quote: | The Republic still enjoys one of the lowest capital taxation rates in the developed world at just 12.5%. The rate has attracted numerous hi-tech multinational corporations to Ireland.
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This has been a thorn in the side of NWO socialists for quite some time. These Irish plolicies encourage the development of small and medium size business enterprises - which is something that NWO folks are determined to stamp out. |
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Fintan
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| Posted: Wed Nov 17, 2010 9:31 am Post subject: |
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Irish policies are completely toxic to small and medium business.
These low capital tax rates benefit the multinational corporations.
| Quote: | Brian Lenihan, Ireland’s finance minister, said it was the “attack”
on the euro that had prompted Ireland to seek assistance from the
European Union and the International Monetary Fund.
“Ireland has been the point of the attack on that currency in recent weeks and it’s important that we build up our defence and ensure that the currency itself is protected. And for that reason, the Irish government will fully engage with this process and work with the mission to ensure that everything possible is done to secure the Irish banking system” |
Read that carefully.
In all the hysteria about the IMF taking over Ireland etc., what is being
missed is that European leaders know that the Fed/Wall St. is behind
this crisis. So for now in Europe, it's all for one, and one for all.
(Though the Fed has many moles/shills in our system)
The EU is going to drag out the process. Y'see the sooner it fixes the
Irish situation, the sooner the sharks move on to target Portugal and
then Spain. Pure financial cannibalism, of course.
The EU will also deploy the minimum funding required to patch the Irish
leak, because it does not to set a precedent for wholesale IMF intervention.
Here's the Irish Finance Minister again:
| Quote: | He said the Irish government and its EU partners were still examining “options” on what shape a package of financial assistance might take. But he said: “There is no question of loading on to the Irish sovereign and the Irish state some kind of unspecified burden. That’s why the government took great care not to make a formal application at this stage but to engage in intensive discussions to see exactly what the options are.”
He said what “may be required may not in fact be an actual transfer of money now, but a demonstration of how much money can be made available if further difficulties materialise”. |
So the Eu preference is for a loan line to be set up, against
which the Irish banks can draw down when needed.
I can see Ireland opening up the issue of bondholders taking haircuts.
Angela Merkel raised it an an issue to be addressed from 2013 onwards.
But if bondholders taking a hit is just and fair in 2013,
then Ireland can assert that it is just and fair right now!
Bad news for bondholders, NWO banks and the Wall St. mob.
There are many levels to this situation.
Geopolitical, political, financial, social.
This is just one aspect.
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Fintan
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| Posted: Thu Nov 18, 2010 8:44 pm Post subject: |
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Blowback?
Did somebody say "Blowback" ?
| Quote: | Emerald Isle and the Golden State
by Bruce Krasting on 11/18/2010 15:03 -0500
There is an eerie calm that has descended on the Irish story. IMF and EU folks are ‘up country’ taking a look-see and kicking some bank tires. The market for Irish debt has stabilized and the local equity index has improved at the prospect of some sort of deal that will “fix” the problem. Even the Euro has had its head lifted at the prospect.
I understand that a bailout of Ireland and Portugal is better for the markets than a crash and burn, but I am surprised at the euphoric atmosphere as we get closer to the biggest sovereign blow up in a very long time.
Speaking of sovereign blowups there is one happening in the
US Muni market.
There are a number of factors hitting Muni’s of late. Some are technical, some yield curve related. But there is more happening than just these things. It reminds me a bit of what happened to Ireland before they were forced to fold. Some things hanging on the market:
-There is a large 30 day supply of ~$23b. The highest in seven years.
-Treasury long-term yields have seen a very big back up since the announcement of QE-2.
-Philadelphia and San Francisco have been downgraded. This is very “upsetting” to Muni players.
-There is uncertainty regarding what the tax brackets will be in 40 days. If you don’t know what your tax rate is it is hard to figure if you should invest in Muni’s.
-There is uncertainty regarding the Build America Now Bond program. The uncertainty (it also expires in 40 days) is adding to the anxiety in the market.
READ ON........ |
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