Jew'Berg News: Ireland Urged to Take Aid by Officials Amid Debt Crisis

[CrackSmokeRepublican]

Ireland Urged to Take Aid by Officials Amid Debt Crisis
By Meera Louis, Simon Kennedy and Dara Doyle - Nov 12, 2010 6:25 PM ET

JPMorgan's Kelly Discusses Ireland's Debt Crisis, Fed
 

Nov. 12 (Bloomberg) -- David Kelly, who helps oversee $445 billion as chief market strategist for JPMorgan Funds, talks about the debt crisis in Ireland and other European nations, and the Federal Reserve's second round of unconventional monetary easing. Kelly speaks with Carol Massar and Matt Miller on Bloomberg Television's "Street Smart." (Source: Bloomberg)
Ireland Debt Default Predicted in Global Investor Poll
 
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Nov. 12 (Bloomberg) -- A majority of global investors predict Ireland will default on its sovereign debt. As the Irish government puts the finishing touches on a plan to find 15 billion euros ($20.5 billion) in savings, 51 percent of respondents in the latest Bloomberg Global Poll say they regard a default as likely, compared with 42 percent who say it is unlikely. Bloomberg's Erik Schatzker. (Source: Bloomberg)

Ireland is being urged by European policy makers to take emergency aid to contain a debt crisis rattling their markets, according to a person briefed on the discussions.

In a conference call of European Central Bank officials around noon Frankfurt time yesterday, Ireland was pressed to seek outside help within days, the person said on condition of anonymity. Separately, a European Union official said a request for assistance was likely even as Irish Finance Minister Brian Lenihan told RTE Radio that such a call "makes no sense" as the government is fully funded to mid-2011.

Irish bonds rose from a record low yesterday, gaining for the first time in 14 days as traders bet a bailout was near. Prime Minister Brian Cowen said for the first time that he is working with fellow EU leaders as "there are issues affecting the wider euro area" and that they are trying to "ensure that the bond markets respond positively to the euro." He reiterated that his debt-strapped country has not sought cash.

"It seems difficult for Ireland to avoid tapping the fund unless they have new rabbits to pull out their hat," said Julian Callow, chief European economist at Barclays Capital in London.

An ECB spokeswoman declined to comment and the Finance Ministry in Dublin said no talks on emergency funds were under way.

Ireland could draw on the 60 billion euro ($82 billion) segment of the broader 750-billion-euro fund set up by the EU and International Monetary Fund in May, Irish state broadcaster RTE said, without saying where it obtained the information. The smaller pool is funded directly by the European Commission, the EU's Brussels-based executive branch.

Brussels Meeting

Luxembourg Prime Minister Jean-Claude Juncker, who chairs the panel of euro-area finance ministers, said yesterday there was "no immediate reason" to think Ireland will request cash and that officials would not meet before regular monthly talks in Brussels next week.

The premium that investors demand to hold Irish 10-year sovereign bonds over the benchmark German bonds was 564 basis points at 3:59 p.m. in London, down from a record 646 points yesterday.

Yields on bonds of Spain and Portugal jumped earlier in the week amid concern that fallout from Ireland would spread. The extra yield that investors demand to hold Portuguese 10-year bonds instead of German bunds climbed to a record 484 basis points on Nov. 11.

'Circuit Breaker'

A decision by Ireland to use the European Financial Stability Facility would be a "circuit breaker" for the market turmoil and boost the euro, Emma Lawson, a Hong Kong-based currency strategist at Morgan Stanley, said in a report yesterday.

At the end of European trading yesterday the euro was poised for its biggest weekly loss since August although it climbed yesterday from a six-week low against the dollar.

Ireland's woes formed part of the debate at the Seoul summit of Group of 20 leaders, from which the finance chiefs of Germany, France, the U.K., Spain and Italy successfully cooled market concerns by saying in a statement that a plan being debated to have investors cover future bailout costs would have "no impact whatsoever" on existing debt.

The drafting of that crisis program hasn't "been helpful," Cowen said in an interview with the Irish Independent newspaper published yesterday. German Chancellor Angela Merkel rejected such criticism, saying in Seoul yesterday "the future crisis mechanism has nothing to do with the debate going on right now."

"Clarification was needed and it is good news it's now out there," said Erik Nielsen, chief European economist at Goldman Sachs Group Inc.

Bailout Fund

EU countries established the bailout fund in May to protect the euro area from the fallout of the Greek-led debt crisis. Speculation has grown that Ireland would need it after a housing-led recession and the need to save its biggest lenders plunged it into fiscal turmoil.

Bailing out Ireland's financial system could cost as much as 50 billion euros under a "stress case" scenario compiled by the Finance Ministry and central bank. The country's gross funding need for 2011 will be 23.5 billion euros, falling to 18.6 billion euros in 2014, the nation's debt agency said yesterday.

Irish officials have indicated they hope a 2011 budget, due for release on Dec. 7, will placate markets as they try to cut a budget deficit which will be about 12 percent of gross domestic product this year, or 32 percent when the costs of the banking rescue are included. Lenihan's plan includes 6 billion euros of spending cuts and tax increases next year.

Time Needed

"The more time elapses, the bigger is the chance that the results of fiscal policies will show," said Holger Schmieding, chief economist at Joh Berenberg Gossler & Co. in London. "The more time elapses before a country taps the fund the better."

Ireland's banks are nevertheless becoming more dependent on the European Central Bank after it said in September saving its lenders may cost as much as 50 billion euros as the state sinks more funds into nationalized Anglo Irish Bank Corp. and other lenders. Lenders' borrowings from the ECB rose 7 percent last month, according to statistics published on the central bank's website yesterday.

"The chances are rather big that at some point they need to ask for financial assistance just to calm down the situation," Aline Schuiling, an economist at ABN Amro Bank NV in Amsterdam, said yesterday. "There will have to be a solution."

To contact the reporters on this story: Dara Doyle in Dublin at mlouis1@bloomberg.net Simon Kennedy in London at jhertling@bloomberg.net Kevin Costelloe at http://www.bloomberg.com/news/2010-11-1 ... egion.html

[Panoptimist]

Chalk it up to another nation owned by Jews that really doesn't give a shit.