Should Irish Voters Follow the Example Set by Icelandic Voters?

Voters in Iceland have rejected their government’s attempt to foist on them the costs of bailing out foreign creditors. Should voters in Ireland too

Ireland Cut By Moody’s to One Notch Above Junk

Moody’s, the rating agency, has cut the credit rating for the Republic of Ireland two notches from Baa1 to Baa3, which is the lowest investment grade rating. They also left the outlook for further rate cuts as negative, meaning that more downgrades are expected. The biggest news in the Euro zone periphery comes from Greece,

Simon Johnson: U.S. Banks Need More Capital

The Vickers report came out in Britain identifying areas where Britain’s banking system needed to alter its regulatory structure. Simon Johnson talked to Bloomberg about this report and banking regulation in general. His view is that first and foremost large globe-spanning banks are too large. Johnson believes a 25% equity financing level is the right amount. That would give banks four-to-one leverage (discounting the embedded leverage of derivatives, of course).

It’s All About Spain

I was on CNBC’s Power Lunch yesterday talking about European debt markets in the wake of the Irish stress tests. I certainly think the Irish stress tests were a significant event. But the Euro Crisis is really all about Spain

The Irish stress tests and euro zone options: monetisation, default, or break-up

The results of the Irish stress tests are going to be released this afternoon at 430PM Irish time. I will be talking about the implications for investors in European markets on CNBC’s Power Lunch show.

I think one has to be cautious about the sovereign debt of any of the periphery countries at this point. I also think haircuts on Irish bank debt is coming as well as a Portuguese bailout. But there are a lot of unsolved issues concerning Spanish banks and as well as the German, British and French holders of Irish bank debt. Here’s the background to what I will say on the show

Fiddling while the Periphery Burns

After more than a year since the European debt crisis began, officials have still failed to resolve it. They raised expectations for a “grand bargain” only to crash them on the shoals of political reality. The March 24-25 Summit was to finally provide closure and yet the situation remains fundamentally unresolved.

Thoughts on Austerity

Yesterday, Paul Krugman wrote: Portugal’s government has just fallen in a dispute over austerity proposals. Irish bond yields have topped 10 percent for the first time. And the British government has just marked its economic forecast down and its deficit forecast up. What do these events have in common? They’re all evidence that slashing spending

No Crisis Unless Spain Falls?

The resilience of the euro in the face of seemingly incontrovertible evidence that Portugal will need to get assistance and that very same program and approach has not been enough to stabilize the Greek and Irish situation is amazing.

It can be arguably explained by two considerations. First that come hell or high water, the ECB, which does not pre commit has all be indicated a rate hike at the April 7 meeting. Second, existing facilities and liquidity provisions are good enough provided that Spain does not come under attack.

European officials hoped to build a firewall around Greece. It did not work. Then Ireland. It did not work with either. Portugal very soon. But these are small countries in terms of GDP relative to the euro zone. Spain is bigger than all three and then Italy looms even larger on the horizon

Parry and Feint: Outlines of Europe’s Next Chapter

European officials have reached an agreement in principle that falls well shy of the “comprehensive plan” officials had promised and is unlikely to provide investors with a sense of closure to the debt crisis that began in late 2009. Yet progress was sufficient that the debt crisis is unlikely to override the divergence of US

From Dublin to Tripoli

The Absolute Return Letter, March 2011 By Niels Jensen “Experience is the name everyone gives to their mistakes” Oscar Wilde A remarkable month Two remarkable events unfolded during the month of February. One cleared the front pages all over the world. The other one barely got a mention – outside of its home country that

Spain’s bank nationalisation and the euro zone crisis

On Monday I first learned that Spain was to partially nationalise its banking system via the Financial Times Deutschland. The title of this article is the most appropriate I have seen discussing the issue, "Madrid riskiert für Cajas seine Staatsfinanzen", which means "Madrid risks state finances for savings banks". Appropriately, the article began with a

Some Thoughts On The Ratings Agencies

While the Moody’s downgrade of Ireland isn’t any surprise, coming on the heels of S&P’s move last week from A+ to BBB+, the sheer magnitude of five notches warrants a mention.  We haven’t seen anything like this since the Asian crisis, when S&P took Korea down by four notches on December 22 1997 from BBB-