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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pile of poop's picture

That's worth at least +10 for ES

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...


pile of poop's picture

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

hedgeless_horseman's picture

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

hedgeless_horseman's picture

Damn sensitive enter key.

SheepDog-One's picture

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

Dan_Sylveste's picture

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

firstdivision's picture

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

gwar5's picture

How can they ever pay that back?

I hope they have a Leprechaun in their pockets.

Celtic crises brewing.

SpeakerFTD's picture

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

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.

Deep's picture

And never trust a Harry Wanker

1100-TACTICAL-12's picture

Mabye they can pay it back in potatoes...

SheepDog-One's picture

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

masterinchancery's picture

Or an Irish politician, drunk or sober.

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.

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.

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.

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. 

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. 

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.

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.

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 :)

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.

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.

Vampyroteuthis infernalis's picture

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

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.

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.

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

LongSoupLine's picture

Support Ireland!  Drink Guinness!

DCon's picture

Guinness is owned by Diageo, a UK company.



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.

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

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.

RobotTrader's picture

Hard to say which is going up faster?

Irish bond spreads?

Or consumer discretionary stocks?

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. 

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.

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.

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.

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

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:

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?

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.

Rogerwilco's picture

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

hugolp's picture

In Trichet we Trust. :D

sheeple's picture

QE to infinity - Sinclair

dildo o flaherty's picture

 The Irish have always made good slaves.

Bruno the Bear's picture

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

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.

HarryWanger's picture

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