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As ECB, IMF Leave Ireland To Hang, Spreads Surge Again, Pass 630bps, 64 Wider

Tyler Durden's picture





 

The endgame for Ireland is at most a week away: outcome is simple - bailout or failure. One wonders which the central bankers will pick...

  • Honohan: IMF Package Would Look Same As Current Policies
  • Honohan: Irish Bank Borrowing From ECB Exceptionally Large
  • Honohan: ECB Would Like Irish Banks To Get Back To Self Reliance.
  • Honohan: ECB Won't Curtail Irish Banks' Access To Financing.

The Irish Bunds spread has now surged to 631, +64 bps on the day!

 


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Wed, 11/10/2010 - 12:21 | Link to Comment pile of poop
pile of poop's picture

That's worth at least +10 for ES

Wed, 11/10/2010 - 12:41 | Link to Comment Popo
Popo's picture

Well, it's certainly good for the USD.  Because I can't imagine the ECB *not* creating currency (because that pretty much sums up the so-called "art" of central banking).  And that means the Euro is heading for the shitter.

Even though the USD is f*cked long-term, I'm thinking we see a very strong dollar rally in 10...9...8...

 

Wed, 11/10/2010 - 12:52 | Link to Comment pile of poop
pile of poop's picture

Strong dollar *should* be negative for the ES.  I think you have your correlations inverted.

Wed, 11/10/2010 - 12:24 | Link to Comment hedgeless_horseman
hedgeless_horseman's picture

Buy your children some dominoes to learn while they play.  I am glad my parents did.

Wed, 11/10/2010 - 12:24 | Link to Comment hedgeless_horseman
hedgeless_horseman's picture

Damn sensitive enter key.

Wed, 11/10/2010 - 12:25 | Link to Comment SheepDog-One
SheepDog-One's picture

Buy a harmonica too, and some oil burning lamps to read the 401K statements.

Wed, 11/10/2010 - 12:24 | Link to Comment Dan_Sylveste
Dan_Sylveste's picture

Yes that's all well and good but WHO IS GOOSING THE YEN???

Wed, 11/10/2010 - 12:41 | Link to Comment firstdivision
firstdivision's picture

China with probable Russian support. Both are not happy with Japan over those island disputes. 

Wed, 11/10/2010 - 12:25 | Link to Comment gwar5
gwar5's picture

How can they ever pay that back?

I hope they have a Leprechaun in their pockets.

Celtic crises brewing.

Wed, 11/10/2010 - 12:25 | Link to Comment SpeakerFTD
SpeakerFTD's picture

The upside of all this as that there will be some great drinking songs to come out of it.  

Wed, 11/10/2010 - 12:26 | Link to Comment HarryWanger
HarryWanger's picture

But just yesterday they said there was "absolutely no way" they would need a bailout. Never trust a drunken Irishman I suppose.

Wed, 11/10/2010 - 12:28 | Link to Comment Deep
Deep's picture

And never trust a Harry Wanker

Wed, 11/10/2010 - 12:31 | Link to Comment 1100-TACTICAL-12
1100-TACTICAL-12's picture

Mabye they can pay it back in potatoes...

Wed, 11/10/2010 - 12:30 | Link to Comment SheepDog-One
SheepDog-One's picture

I hear that, best to just skip over the HarryWanger posts. 

Wed, 11/10/2010 - 13:23 | Link to Comment masterinchancery
masterinchancery's picture

Or an Irish politician, drunk or sober.

Wed, 11/10/2010 - 12:29 | Link to Comment qussl3
qussl3's picture

Bizzarro world today, possible sovereign default and the PMs hardly move, while the traditional safe haven - yen, get kicked to the curb.

Wacky world.

Feels like something is about to give.

Wed, 11/10/2010 - 12:33 | Link to Comment SheepDog-One
SheepDog-One's picture

Watch this 30 year auction later, if that shows poorly then its a big body blow. 

Surprised no ZH article yet on gas inventories, prices shooting up and the poor crop reports.

Forget all about stocks and bonds, if gas goes up another buck, we are in a serious shitstorm that no amount of Bernanke papering over can contain.

Wed, 11/10/2010 - 12:35 | Link to Comment HarryWanger
HarryWanger's picture

if gas goes up another buck, we are in a serious shitstorm that no amount of Bernanke papering over can contain.

Thanks, we needed another "if/when" scenario this morning. Gas prices will not tank the economy until they hit over $5.00/gallon in the heartland. Otherwise, nobody cares.

Wed, 11/10/2010 - 12:46 | Link to Comment firstdivision
firstdivision's picture

Where do you get your $5/gal mark?  I would say once it stays above $3.20/gal for more than a few days people will start to change their habits. 

Wed, 11/10/2010 - 13:04 | Link to Comment HarryWanger
HarryWanger's picture

Been over $3/gallon in Seattle area for quite some time. Hasn't stopped anyone from getting into their Prius to line up at the Apple store for the release of some new iGadget. 

Wed, 11/10/2010 - 13:22 | Link to Comment firstdivision
firstdivision's picture

When you said "Heartland" I assumed you meant here in the mid-west.  We are still under $3/gal here in Cleveland, but looking to break that $3 mark in a few days.

Wed, 11/10/2010 - 15:10 | Link to Comment ElvisDog
ElvisDog's picture

Hmmm, I agree with Harry. We've already seen $4/gallon gas so the psychological impact won't be as great. But $5/gallon would be a scary round number and would break new ground. But don't worry, green energy, wind turbine factories, and biofuels will save the day.

Wed, 11/10/2010 - 12:46 | Link to Comment Shameful
Shameful's picture

See and here I thought it would not tank the economy because there is no real economy. Just debt, trading, and banking, the perfect service economy :)

Wed, 11/10/2010 - 12:50 | Link to Comment geminiRX
geminiRX's picture

As much as zerohedge loves to predict when volcanoes will explode and when BP will go bankrupt - the site adds essential balance to much of the disinformation reported in the mainstream media. Tyler has picked up on some great scoops in the past. This site is one of the best on the web.

Wed, 11/10/2010 - 12:59 | Link to Comment HarryWanger
HarryWanger's picture

I agree. Sometimes it's like the National Enquirer with sensationalizing the impact of minor stories (Dagong downgrade) or posting three different stories about a "jet contrail" but overall, it's the best place to pick up world economic news. Just have to wade through. The only other site that comes close is Calculated Risk. Only there, it's not as sensational and purely economic data.

Wed, 11/10/2010 - 12:57 | Link to Comment Vampyroteuthis ...
Vampyroteuthis infernalis's picture

You make this analysis on what? Farting unicorns and leprechauns telling you so?

Wed, 11/10/2010 - 13:00 | Link to Comment HarryWanger
HarryWanger's picture

Nope. Remember the last time gas was going to "ruin consumer spending" about three years ago? Just about every study showed that consumers when polled said $5.00/gal would impact their lives or spending habits. That's when oil was skying at $140+.

That's where I got that number.

Wed, 11/10/2010 - 13:24 | Link to Comment firstdivision
firstdivision's picture

Just remember that 3 years ago, 20% of the population was not unemployed.  With every staple going up here soon, wages flat to negative, and locked up credit.  I would easily wager that the breaking point of gas consumption is below $4 now.

Wed, 11/10/2010 - 14:38 | Link to Comment VegasBD
VegasBD's picture

I spend $25/day in gas going to/from work. At $5 gallon unemployment looks much more attractive to me than working.

"I got 99 paychecks and a job aint one." -not JayZ

Wed, 11/10/2010 - 12:29 | Link to Comment LongSoupLine
LongSoupLine's picture

Support Ireland!  Drink Guinness!

Wed, 11/10/2010 - 12:43 | Link to Comment DCon
DCon's picture

Guinness is owned by Diageo, a UK company.

 

 

Wed, 11/10/2010 - 12:49 | Link to Comment cswjr
cswjr's picture

Lol, that sums up the predicament pretty well.  Many of Ireland's productive assets aren't owned by the Irish.  Anyway, Guinness is a pretty good foodstuff, plus the sorrow-numbing benefits; pushing the Irish to drink Guinness for sustenance would probably be accretive to earnings.

Wed, 11/10/2010 - 12:46 | Link to Comment THE DORK OF CORK
THE DORK OF CORK's picture

The ECB own the bulk of the Irish bank bonds now - the question now is what is to become of them or indeed us as a banking juristication and ward of the CBs.

They may decide to dump us but I doubt it - the ECB can monetize via Irish debt.

The Germans are no more sovergin then we are - they are just making the mistake of believing their own bullshit - they will do whatever the CBs tell them.

PS Guinness is a multinational organisation - little revenue is absorbed into the Irish state - it is only consumed in Irishman's guts and the irish states exchequer via high alcohol consumption taxes

Wed, 11/10/2010 - 12:33 | Link to Comment Rick64
Rick64's picture

 If they take the IMF and ECB loans they will face the same dilemma in the future, and if they don't they will have to go thru some serious pain but will probably emerge much stronger financially.

Wed, 11/10/2010 - 12:34 | Link to Comment RobotTrader
RobotTrader's picture

Hard to say which is going up faster?

Irish bond spreads?

Or consumer discretionary stocks?

Wed, 11/10/2010 - 12:44 | Link to Comment HarryWanger
HarryWanger's picture

Holiday shoppers don't give a rat's ass about Irish bonds, QE2, Euro austerity, 30-yr auctions - they just want to buy iGadgets before the stores are out of stock. Now they look at their recent "gains" in their 401k's and feel rich again. 

Wed, 11/10/2010 - 12:35 | Link to Comment Id fight Gandhi
Id fight Gandhi's picture

So its bailout or default. It'll go bailout. Seems kinda dumb they've been running the euro indexes to year highs.

Wed, 11/10/2010 - 12:37 | Link to Comment Lord Welligton
Lord Welligton's picture

The Irish State has guaranteed pretty much all the liabilities of its domestic banks.

If Ireland goes into IMF receivership the gaurantees will be usless.

Anglo Irish and Irish Nationwide will be thrown to the dogs.

Wed, 11/10/2010 - 14:43 | Link to Comment M.B. Drapier
M.B. Drapier's picture

If we were going to go through a normal IMF intervention this would likely be true. But we're headed for a copy of the Greek rescue, the whole purpose of which was to prop up financial institutions elsewhere in the Eurozone (and of course local worthies). So don't bet on it yet.

Wed, 11/10/2010 - 12:39 | Link to Comment prophet
prophet's picture

If anything people should be more worried if LCH and other clearing houses start asking bigger haircuts on bonds, as this is a lot more significant since it puts pressure on bond prices which are not fundamentally sound.

Margin boost, other woes hammer Irish bonds

http://www.marketwatch.com/story/margin-boost-other-woes-hammer-irish-bonds-2010-11-10

Wed, 11/10/2010 - 12:40 | Link to Comment Lord Peter Pipsqueak
Lord Peter Pipsqueak's picture

So the entire Irish banking system is bust right? - right,the Irish Government is bust right? - right,all caused by a housing bubble. So rather than let house prices fall to levels where people can actually afford them, lets allow those who cannot pay their mortgage to stay in the property and the "interest" on the loan will be paid by the taxpayer - brilliant,that way houses do not have to be foreclosed or reposessed and so can remain ludicrously overvalued,the taxpayer won't complain - he's going to have to pay around 70 billion Euros to bail out the banks so what's another few billion?

Shure did ye yanks think ye had a monopoly on crazy ideas?Try reading these:

http://www.irishtimes.com/newspaper/opinion/2010/1108/1224282865400.html?via=mr

http://www.independent.ie/national-news/hardhit-homeowners-may-park-part-of-loan-2412561.html

Wed, 11/10/2010 - 12:43 | Link to Comment LeBalance
LeBalance's picture

"Honohan: ECB Would Like Irish Banks To Get Back To Self Reliance."

Get Back?  Get Back! Get Back to where you once belonged!

Seriously, no fractional reserve bank has ever been self reliant, who is Honohan (disinformation specialist extraordinaire) think he's kinding?

Wed, 11/10/2010 - 12:50 | Link to Comment plocequ1
plocequ1's picture

Im very depressed. I think i will down  a couple of loaves of Irish soda bread and a box of Lucky Charms while i stare at the kitchen clock waiting for the Evil leprechaun to arrive.

Wed, 11/10/2010 - 13:13 | Link to Comment Rogerwilco
Rogerwilco's picture

Bill O'Reilly's show comes on weeknights at 6PM.

Wed, 11/10/2010 - 12:49 | Link to Comment hugolp
hugolp's picture

In Trichet we Trust. :D

Wed, 11/10/2010 - 12:50 | Link to Comment sheeple
sheeple's picture

QE to infinity - Sinclair

Wed, 11/10/2010 - 12:54 | Link to Comment dildo o flaherty
dildo o flaherty's picture

 The Irish have always made good slaves.

Wed, 11/10/2010 - 12:59 | Link to Comment Bruno the Bear
Bruno the Bear's picture

Will St. Patrick's Day be canceled underva new austerity plan? I hope not.

Wed, 11/10/2010 - 13:00 | Link to Comment Vampyroteuthis ...
Vampyroteuthis infernalis's picture

This is the ECB's reply to Helicopter Ben printing all of those USD. Here, we have a sovereign default. Watch the Euro crash. Eat that!

I think the Irish might have wised up to the IMF game and feel that defaulting might be a better option.

Wed, 11/10/2010 - 13:03 | Link to Comment HarryWanger
HarryWanger's picture

So much for that "European crisis" - dollar heading back below $78.00. 

Wed, 11/10/2010 - 13:17 | Link to Comment Rogerwilco
Rogerwilco's picture

POMO today, POMO.

Wed, 11/10/2010 - 13:04 | Link to Comment e_u_r_o
e_u_r_o's picture

if Ireland defaults, what exactly does this mean? :)

Wed, 11/10/2010 - 13:36 | Link to Comment plocequ1
plocequ1's picture

.

Wed, 11/10/2010 - 13:36 | Link to Comment plocequ1
plocequ1's picture

Captian Jack McCarthy is spinning his grave right now. I have the urge to watch Popeye

Wed, 11/10/2010 - 13:39 | Link to Comment huckman
huckman's picture

Go to the Independent Strategy website and watch the interview with Davis Roche & Julian Robertson where you'll see praise for Ireland's decision to clear the bad assets off the bank balance sheets. 

Wed, 11/10/2010 - 22:50 | Link to Comment Buck Johnson
Buck Johnson's picture

You're right, they decided to let them hang.  They keep finding more and more and it's getting to the point that eventually you have to let what will happen happen.  The ECB can't monetize because their members aren't states like the 50 states in our country, but countries themselves.  So they can't easily monetize to make one country safe but hurt the others who would veto the solution or put conditions on it.  Just as US with the drop of a hat 750 billion here, 750 billion their and 1 trillion everywhere they get the money and use it.  With the ECB it's alot harder and most of the less hurt countries don't want to subsidize another countries problems.

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