Today the Irish government has unveiled a 10 billion euro plan to recapitalise its outsized banking sector. I have posted a number of times about the depth of woes in Ireland including the high debt-to-gdp level, the crashing property sector and the steep decline in government revenues. I have also highlighted the fragility of the Irish banking sector. Ireland is a small nation that is heavily dependent on financial services as an economic engine. It’s financial sector is much larger than the government can reasonably support. This makes the country very vulnerable to a loss of confidence in its banking sector.

You think things are bad where you were. Well, then, take a look at Ireland. Irish punters are really taking it on the chin. Stocks are down 75% from their peak in February 2007. This makes 2008 the worst year for Irish equities since 1793, according to a report from Bloxham Stockbrokers.

Today’s round-up is going to principally be about the three CCC’s of Countries, Citigroup and Corporates.  But I also have some tidbits on other topics as well.  So let’s jump right in.
Yesterday sucked. Markets fell everywhere from Australia to Hong Kong to France to the U.S.  The U.S. fell to a 11-year low (adjusted for [...]

Just a few moments ago I caught a very interesting post on Alice Cook’s site UK Bubble. The gist of the post was that things are falling apart in Ireland very quickly. Given what we saw with Iceland, I have to ask: is Ireland next?

I wouldn’t suppose that things are this fragile but we cannot dismiss out of hand talk of Ireland going the way of Iceland. Here is what Alice posted:

When the Euro was formed, bond traders looked askance at Southern European sovereign debt, which trade at a considerable premium to debt from Germany, France and the Netherlands. In those days, the Southern European countries developed the offensive nickname PIGS (for Portgual, Italy, Greece, and Spain). But after EMU, those bonds converged to yield [...]

Along with American and British banks, Irish banks have been under heavy attack due to the turmoil in the financial services sector. The government has finally had enough and stepped in with a blanket guarantee for six institutions of both deposits and bank debts.
This is a move that is identical to what the Swedes [...]

Further evidence that the housing slump has spilled over into the real economy in Ireland comes from Irish unemployment numbers today, up the most in 41 years of data. Ireland looks to be one of the hardest hit countries in Europe. In all likelihood, Ireland already is in recession with data like this.
Irish [...]

According to the Irish Independent, the recent fall in Irish bank shares is due to a loss of faith in their bad debt provisions. On Tuesday, Bank of Ireland fell 14%, the largest amount in 20 years.

After last week’s dive in their share prices, the Irish banks are under pressure as never before. [...]

This is a story about how the ECB move affects individuals. As much as I support the ECB rate hike, one has to remember that real people are very much affected by these policy decisions. This is what makes these decisions difficult.
From the Independent Ireland:

By Ben Sills and Fergal O’Brien
Friday July 04 2008

Jose [...]

As I have said in prior posts, I am a bit of a eurosceptic. It is my view that the Euro is a political construct just as the expanded European Union has been and just as the reunification of East and West Germany on a 1 for 1 currency basis was. When politics come before economics, bad things happen.

And so it is for Ireland. But is the bust actually the Euro’s fault? And if so, is that a bad thing?