Goldman Calls For Bail Out Of Portugal And Ireland So Everyone Can Go Back To Buying Amazon And Ebay

The more things are bankrupt, the more things stay the same. Evidence #1: Goldman's FUG (Francesco U. Garzarelli) sends a letter to clients in which he implies that Europe should promptly add Portugal and Ireland to its list of wards of the state, so that the Dow can go back to targeting 36,000 on short notice. Apparently this latest European nuisance (punctuated by the Irish Bund spread passing 600 bps) is too much for Goldman strategists, who are perplexed by this stunning inability of the ECB and EMU to grasp that in this market where the only buyer of everything are Central Banks and no market risk is supposed to exist, that Europe still has refused to step up to the plate and debase their currency by a few hundred bips. And after all, the only reason the EURUSD is trading where it is, is so that it has a whole lot of buffer room to fall.

Video Footage Of Protests In Ireland, Ministry Of Finance Besieged

Contrary to convention wisdom, while Irish bond yields were surging to all time highs, the local population was not merrily drinking itself into oblivion, but was taking matters into its own hands. So far every bankrupt European government has at least managed to get its population on the streets, to protest something, and in the case of Greece, caused Waddell and Reed to sell a few SPOOS leading to the biggest crash in capital markets history. Only the most bankrupt nation of all, the United States, continues to see its 300+ million cowering at home, watching sitcom reruns.

An Angry Ireland Calls Out Europe On Its Bullshit Stress Test

Remember when the pathetic farce that was the stress test presumably prevented Europe's collapse, and served as the inflection point preventing the EUR from hitting parity with the USD? Well, one of the banks that the "stress test" uncovered to be solvent was the recently insolvent Allied Irish Bank, which earlier this month needed a taxpayer injection of billions to presumably make sure that European creditors (and likely Goldman Sachs, very much like the case in Anglo Irish) never see even one dime lost. And today, an Irish Member of the European Parliament Alan Kelly said he intends to write to the EU Competition Commissioner to discover just how it is that one of Ireland's top banks slipped through the stress test cracks only to require a bail out mere months later. It appears that slowly everyone in Europe is starting to turn against the trillions in German bank liabilities that stand to be impaired, and lead to a systemic collapse, unless local taxpayers dutifully reach into their back pocket and make sure fat bankers continue their worry-free existence.

Is Ireland About To Impair Bank Senior Debtholders (And Boldly Go Where America Was So Terrified To Venture)?

The biggest piece of news this evening is, surprisingly, not the latest monsoon season suddenly to hit Manhattan, but comes from a few thousand miles to the East, out of Ireland to be specific, where we learn via the FT that the country "has opened the door to a renegotiation with senior bondholders of its two nationalised banks despite previously opposing any such move for fear of drawing the wrath of creditors around the world." This would be a huge change in strategy, and if effectuated, would mean that Ireland (for lack of an alternative) would be forced to do what the US was terrified of doing when Citi, Fannie and all the other still-bankrupt companies were on the brink. While the US never impaired the senior debt, for fear of enraging creditors (mostly China) who would have experienced their first capital loss on US-debt, it seems the dominoes are about to topple for Ireland as Irish eyes are about to stop smiling and take their bitter medicine, which our own Uncle Sam will avoid until well past the bitter end. Alternatively, this would also mean the end of the strong EUR regime once again, as the ping-ponging burden of proof of solvency shifts once again to Europe.

Fitch Downgrades Ireland From AA- To A+, Outlook Negative

After much posturing, Fitch has finally downgraded Ireland from AA- to A+, with a negative outlook. Net result: bund spread blows out to 415, up 5bps on the day, and will likely continue blowing out. We expect the FinMin to hold another conference call with Citi to reassure everyone how nothing is fucked here, which this time will be recorded by everyone in anticipation of another "mute button malfunction." Elsewhere Irish consumer confidence has plunged from 61.4 to 52.4. The two are speculated to be related.

ECB Purchases Of Sovereign Bonds Surge Tenfold Compared To Prior Week, Hit €1.4 Billion, On Continuing Ireland, Portugal Fears

After dropping to a modest €134 million last week, ECB purchases of sovereign debt exploded tenfold in the last ended week to €1.384 billion, confirming that the ECB continues to bid up all Portuguese and Irish bonds available for sale, so the market does not crash. As Reuters notes, this is the highest weekly amount purchase since early July. Once again it is up to the European Fed-equivalent to be the buyer of only resort. And Europe's continued central bank facilitated life support comes on the heels of the latest joke in recession timing: per Dow Jones, the Center for Economic Policy Research Monday said its Euro Area Business Cycle Dating Committee had determined that the currency area's recession began in January 2008 and ended in April 2009, lasting a total of 15 months and reducing gross domestic product by 5.5%. Some recovery there, when half the PIIGS have no access to capital markets, have their Prime Ministers mocked during conference calls, and are fighting with an exchange rate last seen long before Greece, Portugal, Spain and Ireland had to be rescued. We wonder what the CEPR's timing on the end of the European depression will end up being?

Ireland Cancels All Remaining 2010 Bond Auctions Due To Market "Turbulence"

Apparently in Ireland, a global stock market that surges up 10% in a month to celebrate the latest obliteration of the purchasing power of the American middle class is considered "turbulence." This is precisely the excuse given by Irish PM Brian Cowen when asked why he has cancelled all bond auctions for the rest of the year. Surely, the market is buying it. Cowen also added that he doesn't need funds at rates of 6.8 to 6.9%. What is hilarious is that he will need the funds much more in 3 months when the rates are double that, now that the country is openly nationalizing each and every bank, and will fund these "acquisitions" with tens of billions it doesn't have.

ECB Stepped In To Rescue Ireland

Another sovereign bankruptcy, another stick save by the ECB. The FT has confirmed Friday's rumors that it was just the ECB's intervention that prevented domino number two - Ireland - from toppling, and taking with it all of Europe. "The European Central Bank intervened to stabilise the Irish bond markets on Friday after a report by a leading UK bank triggered investor fears that the country might turn to the international community for a multibillion-euro bail-out." As readers will recall, the half a percent spike in Irish bond yields was precipitated by a Barclays report that the IMF would be needed to rescue the Emerald Isle, coupled with confirmation that the Irish government was negotiating with AIB bondholders about an imminent bankruptcy. At least now it is doubtless that domino #2 is now on a ventilator, in the critical condition ward, and should Doctor ECB's attention be diverted elsewhere, say to quell riotous mutiny in Greece, that the house of cards will finally fall.

Risk Off On News Ireland Negotiating With Bondholders Over Anglo Irish Default, As Country Prepares To Call In IMF

And the euro seemed so happy after its recent surge, that it completely forgot it is backed by an insolvent continent. Luckily, here's Ireland to remind us stuff is much, much worse than expected. According to the Irish Independent the Labour Party, Eamon Gilmore, came very close to suggesting that Ireland is considering defaulting on its debts "when he talked about the Government "negotiating'' with bondholders in Anglo Irish Bank." Additionally, the same newspaper also reported that Ireland is on the verge of calling in the IMF for a bailout, citing "a report from Barclays, one of Europe's largest banks, said Ireland may yet need financial help from the IMF or the EU if conditions got any worse. But a spokesman for Finance Minister Brian Lenihan said last night: "The Government's strategy for dealing with the economic and financial challenges has been commended by the EU Commission, the European Central Bank and many other international experts." In other words, domino #2 has at most a few more days. Net result of all this: Irish-Bund spread explode, and gold hits a new all time high of $1,282.

Domino #2, Ireland, Set To Topple?

The Irish-Bund spread is going nuts on reports that the ECB is bidding up sovereign debt once again, together with a WSJ report that the Stress Test was, as everyone with half a brain knew all too well, a blatant lie, and sovereign debt was misrepresented. Earlier, a report in the FT Deutschland suggested that the bailout of Anglo Irish alone, (not to mention AIB and Irish Nationwide) would be sufficient to threaten the country's solvency. Things domestically are no better, after a poll in the Sunday Independent found that 74% of respondents believed the country would default, and preceded earlier news that Irish consumer confidence plunged from 66.2 to 61.4. The IMF's recent expansion and creation of credit facilities is now roundly seen as having focused on Ireland, but many now believe that it may be too late and a Greek-type rescue is in the works as the second domino is about to topple. Hopefully the Irish will figure out the Ambrose Evans-Pritchard was right all along, and that the time to riot is now if they hope to get the same preferential treatment by the ECB/EU/IMF as was afforded to Greece... Because we all know what the endgame is now.

Ireland Seeks To Extend European Commission Bank Guarantees As Top Banks See €25 Billion In Maturities This Month

Even as the melt up continues with the US economy double dipping, things in Europe are just getting plain worse by the day. First it was the disappointing series of PMI data out of the old continents, with a focus on the periphery, where pretty much every number missed expectations. Now Reuters is reporting that due to refinancing requirements to the tune of €25 billion by its two most insolvent banks Anglo Irish and Allied Irish, the banks, and the government of Ireland itself, has quietly request an extension of the European Commission bank guarantee program which bailed out the country back in 2008, and which is needed to bail it out all over again. "Ireland's guarantee, which is set to run out at the end of the year, saved its financial system from collapse when it was first issued in September 2008 and has continued to be a lifeline for lenders since the Greek crisis shut off their supply of term funding. Both Anglo Irish and Allied Irish Banks, the country's second-largest lender, have called for the guarantee to be extended and the government said it was in discussions with Brussels about its future." In other words, nothing continues to work in the European banking world, except that which is explicitly backed by the ECB, which in turn is implicitly backstopped by the Fed. If there was a reason for the melt up to surge another 3-4%, this is it.

Europe Prepares for Bloodbath Open After Ireland Lowered By S&P To AA- From AA, Outlook Negative

On Aug. 24, 2010, Standard & Poor's Ratings Services lowered its long-term sovereign credit rating on the Republic of Ireland to 'AA-' from 'AA'. At the same time, the 'A-1+' short-term rating on the Republic was affirmed. The downgrade reflects our opinion that the rising budgetary cost of supporting the Irish financial sector will further weaken the government's fiscal flexibility over the medium term. In light of the recent announcement of new capital injections into Anglo Irish Bank Corp. Ltd. (BBB/Watch Neg/A-2), our updated projections suggest that Ireland's net general government debt will rise toward 113% of GDP in 2012. This is more than 1.5x the median for the average of eurozone sovereigns, and well above the debt burdens we project for similarly rated eurozone sovereigns such as Belgium (98%; Kingdom of; AA+/Stable/A-1+) and Spain (65%; Kingdom of; AA/Negative/A-1+).

Breaking: Bank Protesters Storm Irish Parliament - Yesterday Greece, Today Ireland, Tomorrow ?

Banks protesters storm Irish parliament

Protesters have stormed parliament during a march against government plans to inject billions of euros into the country's banks.

Dozens of people broke away from the march and ran at the gates of the parliament's main building, Leinster House.

They wrestled with police, who tried to force them back and secure the gate.

At least one man suffered a head injury during the scuffles with organisers appealing for calm.