Ireland

"What hurts me the most is why is the taxpayer paying for the IMF. Why are we bailing out the banks. These are the people who took the risk, let them take the hurt, let them feel the hurt." That is the common refrain of the tens of thousands of people who took to the streets today in Dublin, protesting against the government's rescue of various European banks (and Goldman Sachs) investment losses. More from RTE: "Gardaí said that around 10,000 people started the march, however the crowd swelled to around 50,000 people as it moved down the quays. Speakers at the march had estimated that the crowd was between 100,000 and 150,000. A small group of around 400 protestors are currently at the front gates of Leinster House. Some 60 gardaí are lining the footpath in front of the building, with crash barriers erected in front of them."

Update: Irish Times is quick to quell the public fury by reporting that while it has no clue what the interest rate will be, a "source" has said it will be lower than the 6.7%. In other words, just like the Greek bailout package started at $500 billion early in the day on that fateful Sunday in May only to progress to $1 trillion based on the futures reaction, so the IMF now will likely determine just what the final interest rate on the rescue loan will be based on the degree of public mauling of various elected officials over the weekend.

RTE reports that the IMF/EU Irish rescue package will come with a whopping 6.7% rate for nine year money. Per the RTE article, it is unclear if that will be an APR or some multi-year blended effective annual yield: "The Government's four year plan assumes that by 2014, interest payments
will have increased from €2.5 billion to €8.4 billion a year - around
one fifth of all tax revenue." Regardles of how it is calculated, newspaper tomorrow will be blasting the 6.7% number, which is 150 bps wide of what Greece is paying on backstopped paper, and will only create further resentment at the fact that not only is Europe split into a core and PIIGS, but that it is now apparent that not all PIIGS are treated as equals. How Irish citizens will react once they find out that the EU believes they are less creditworthy than even the Greeks, only the IRA can predict.

As if the global capital markets hadn’t suffered enough shocks lately -- artillery fire in Korea, meltdown in Ireland, Eva Longoria Parker’s divorce filing -- life just threw America’s hedge-fund masters a beanball. It appears the government wants to toss many of them in jail. This week the Federal Bureau of Investigation executed search warrants at three large hedge funds’ offices as part of a widening insider-trading investigation. Several other funds, including SAC Capital Advisors, got subpoenas for documents. What does this crisis mean for the industry? We already can guess the first question that must have leaped to the mind of every self-respecting wealth maximizer: “How can I use this information to make enough money to buy myself a jet?” The answer, of course, is that it pays to be on the inside. This raises an even more intriguing existential question. Is it possible for a hedge fund to profit off its own imminent collapse? A little role-playing exercise shows it’s not only possible -- it’s preordained.

As soon as the ink dries on the IMF loans, the second occupation of Ireland will begin, only this time there won't be armored cars and Paramilitaries in fatigues, but nerdy-looking bureaucrats trained in the art of spreading misery.

Since once again we may have been a little too far ahead of the curve in demonstrating just who the biggest beneficiaries of the Irish taxpayer funded bailout are, we would like to repost an analysis from over a month ago presenting the key bondholders in Anglo Irish bank, who incidentally happen to be the cross-holders across most of the Irish capital structure, and which banks will likely be next in line for the bailout wagon. Not surprisingly, there are some names here (especially one) which Zero Hedge readers are all too familiar with.

Once Spain tumbles, the costs of bail-outs will become astronomical and overwhelm the cohesion of the Euro-zone. Things will get out of control quickly if only for the unavoidable bank runs (depositors in weak countries withdrawing their Euro deposits before a mandatory exchange into a new currency). Government “guarantees” of deposits will become worthless once the government is bankrupt, too (as seen in Ireland). Equity investors have an admirable lightheartedness amidst an outlook which can only be described as dire. Do they understand they are the last asset class to get paid back? When a company cannot pay back its debt, the equity is usually worthless. The same applies on a national level. Before a country goes bankrupt, it will apprehend all available profits (if any) and funds at companies in its jurisdiction. Surely some profits can be stashed away at foreign subsidies, but which investors will rely on those when pictures of rioting masses are dominating the headlines?

The biggest news of the day is that in what has to be one of the most inexplicable moves by the financial oligarchy, the Irish Times reports that EU and IMF missions in Dublin are looking at ways to impair Senior bondholders in Ireland - the first time such a move is even being considered. Whether this will actually occur is open to much debate as banker rhetoric of guaranteed "end of the world" intensifies as the possibility of reduced year end bonuses (particularly for European banks) becomes all too real, and the time will come to revert to the trusty old stand-by threat that deep down bankers are just much smarter than all of us, and if they don't get their way the apocalypse is sure to follow. Yet even assuming this proposal passes, the next (long overdue) question is just how will such an impairment take place? After all, we have progressed over 2 years in the depressionary crisis without one institution being forced to restructure its balance sheet in an out of court fashion. And as Paul Mason of the BBC summarizes it best, the real unknown will be one of "proper venue" - just under whose jurisdiction will such a restructuring occur? When one considers the complete cllusterfuck of a foreign bank operating out of Dublin, whose senior debt holders are tens of international banks, most of which based in various European countries, a problem further compounded by the fact that Irish law has no relevant provisions for impairment, just what is correct jurisdiction? If Europe relents and banks are at least on paper forced to take haircuts, what will be the last bastion before an all out domino collapse? Why millions of lawyers of course.

The BoomBustBlog contagion model easily predicted the actions of the UK and Sweden in aiding Ireland 9 months ago. To date, the model has been quite accurate and has some dire predictions for the near future. Here's how we predicted the chain of events of Ireland, the UK and Sweden to date, and sneak peek of what we see is in store for the near future.

CLSA's Chris Wood has released his latest outlook on the world is out, and it is getting progressively gloomy: when even a banker says that he is "aghast" at the "grotesque" extent to which senior creditors are being bailed out left and right in Europe, one has to stop and wonder. Judging by the frequency of protests, even the most rudimentary levels of European society seem to be realizing that with each passing day it is they that are funding decades of greed and foolish, not to mention wrong, decision making on behalf of the kleptoklass. And as such each rescued country is one more straw on the camel's back of public patience, which will probably run out just as, or after, Spain is rescued, which should be within a few weeks, the reprieve for Europe's fantastically intertwined cross creditors is shortly running out. In terms of trades, Wood recommends shorting Europe with an emphasis on Spain. On the other hand, his pro Asian bias is still here, although with ever louder rumors of tightening out of China, even that has been curbed somewhat. Looking into 2011, the CLSA strategist sees increasing signs of weakness in the US, borne out of the muni space. Of course, should senior bondholders in Europe be impaired, the weakness will come far sooner due to the extremely interconnected nature of global financial balance sheet where a writedown for one will promptly trickle down via a domino-like effect into massive haircuts for all.

Famous euroskeptic Nigel Farage (as seen previously here), in just under 4 brief minutes tells more truth about the entire European experiment than all European bankers, commissioners, and politicians have done in the past decade. As we have already said pretty much all of this before, we present it without commentary: "Good morning Mr. van Rompuy, you've been in office for one year, and in that time the whole edifice is beginning to crumble, there's chaos, the money's running out, I should thank you - you should perhaps be the pinup boy of the euroskeptic movement. But just look around this chamber this morning, look at these faces, look at the fear, look at the anger. Poor Barroso here looks like he's seen a ghost. They're beginning to understand that the game is up. And yet in their desperation to preserve their dream, they want to remove any remaining traces of democracy from the system. And it's pretty clear that none of you have learned anything. When you yourself Mr. van Rompuy say that the euro has brought us stability, I supposed I could applaud you for having a sense of humor, but isn't this really just the bunker [or banker?] mentality. Your fanaticism is out in the open. You talk about the fact that it was a lie to believe that the nation state could exist in the 21st century globalized world. Well, that may be true in the case of Belgium who haven't had a government for 6 months, but for the rest of us, right across every member state in this union, increasingly people are saying, "We don't want that flag, we don't want the anthem, we don't want this political class, we want the whole thing consigned to the dustbin of history." We had the Greek tragedy earlier on this year, and now we have the situation in Ireland. I know that the stupidity and greed of Irish politicians has a lot to do with this: they should never, ever have joined the euro. They suffered with low interest rates, a false boom and a massive bust. But look at your response to them: what they are being told as their government is collapsing is that it would be inappropriate for them to have a general election. In fact commissioner Rehn here said they had to agree to a budget first before they are allowed to have a general election. Just who the hell do you think you people are. You are very, very dangerous people indeed: your obsession with creating this European state means that you are happy to destroy democracy, you appear to be happy with millions and millions of people to be unemployed and to be poor. Untold millions will suffer so that your euro dream can continue. Well it won't work, cause its Portugal next with their debt levels of 325% of GDP they are the next ones on the list, and after that I suspect it will be Spain, and the bailout for Spain will be 7 times the size of Ireland, and at that moment all the bailout money will is gone - there won't be any more. But it's even more serious than economics, because if you rob people of their identity, if you rob them of their democracy, then all they are left with is nationalism and violence. I can only hope and pray that the euro project is destroyed by the markets before that really happens."

A few weeks ago, Hitler realized he was in deep doodoo when the fraudclosure scandal was refusing to go away. Well it still hasn't, although for the time being it has been brushed under the carpet, courtesy of Europe which once again dominates the airwaves with its sad existence. Today, a far more industrious Hitler presents his plan to save Ireland. Oddly enough, it just may work.

Who would have thought a little pre-thankgsiving truth that the EFSF is missing a zero would set off such a firestorm of protest. From Die Welt (google translated): "The EU Commission wants to double the rescue to calm the markets. But so far, the federal government off against the proposal."

Rosie enters the "future of the euro" speculation race, and sees a "devastating deflationary shock" when Europe finally accepts the inevitable: "U.S. companies would likely confront a huge appreciation in the dollar, which would cut into their foreign-derived earnings base. Commodity prices would undoubtedly correct and safe-haven flows would certainly redress the loonie’s overvaluation gap. Treasuries would rally big-time." Stocks, of course, would plummet, and "Gold would remain bid — yesterday’s rally in the face of the USD rally is a case in point." On the other hand, the fact that we are starting to see traces of Krugman in Rosie's thinking is very. very worrisome.

After we noted earlier that the latest trending topic regarding Europe's insolvency was that the €440 billion EFSF rescue facility will likely not have enough cash to bail out Spain, the ECB immediately came to the rhetorical rescue, with Governing Council member and Bundesbank head Axel Weber speaking at a conference in Paris, telling participants that "The European Financial Stability Fund should be
sufficient to dissuade markets from speculating against the solvency of
Eurozone member countries, and if not, more money will be provided." Lamenting the market's idiocy, which refuses to stop punishing bankrupt stats, Weber further added that markets suffer from "limited rationality" and players
often follow market movements to the neglect of "fundamentals." Of course the same should be said for all those who are buying into this rally, which is driven exclusively by the genocidal desire of central bankers to ramp up stocks, kill currencies, and make the cost of living unbearable for half their constituencies. But nobody has ever accused central bankers of objectivity, or ever doing something that puts the interests of a few billionaire "Jenny 20" rejects over a billion or so filthy peasants.

Ireland's new austerity measures are cutting into everything, including public pensions and Hungary is moving one step closer to nationalizing pensions...