Now its Ireland's turn

As a small economy Ireland has not yet attracted the same attention as Greece but it is now looking in an even worse plight. The terms of the EU/IMF Greek bailout ensure that holders of Greek bonds maturing in the next 3 years, mainly Sarkozy's French banks will be paid out in full if Greece runs out of Euros. No problem there then thanks to the three Musketeers, Sarky (France), Trichet (ECB) and Strauss-Kahn (IMF). All for one and one for all in la belle France.

Holders of Paddy bonds, and that includes many British banks, have no such EU/IMF guarantee. Dr Frau Merkel has put her jackboot down. Paddy bond holders must share the pain. That does not of course affect the Franco Prussian banks only the despised and craven Anglo Saxons headed by Old Etonian  bum licker Cameron.

Worse, its now becoming a sure bet in the markets to short Paddy bonds. The price goes down, the yield goes up, 8%+, and as Werner von Braun that other fine Prussian used to say, who cares where they come down, its not my department! Hence the LCH that clears inter-bank repo trades is now demanding a whopping 15% margin on Irish bond repo to protect the LCH from an Irish default. This of course just encourages the dumping of Irish bonds and  increases the Irish bond yields. Ireland will be effectively shut out of the capital markets and will have to rely on Trichet at the ECB for cash.

Not only is the Irish economy in a mess but their banks are on their third or fourth bail out and are complete basket cases. This is worse than in Greece where thanks to naked French self interest Greek banks are OK for the next three years. The Greek economy is however in a similar state to Ireland's, F***ed you might say.

Reuters report today RBS who through their Ulster bank subsidiary are exposed to the Irish economy fell 2.5% today. Irish bank shares also fell sharply, reflecting renewed jitters about their exposure to the country's wrecked property market, with Allied Irish Banks (ALBK.I) shedding 7 percent and Bank of Ireland (BKIR.I) off 8.4 percent.

The EU said it was ready to act should the humbled former "Celtic Tiger" require a rescue from its euro partners. The Irish government following its many austerity packages is deeply unpopular. It will need rescue so get paddling Barroso.


Doug Dawson sent me a link to a clip on our rioting students. The interesting EU bit is right at the end and comes from the media person who had been talking to some of the students. Click here Today the Irish tomorrow the UK and more than windows will be broken.

Maybe the cost of EU membership is creeping onto the UK public radar. Meanwhile our useless MEPs have been rubber stamping another EU commission proposal for more financial regulation of hedge funds. Buy Zurich office space now!