• Afghanistan,  Day By Day,  Ireland

    Day by Day November 10, 2010 – Up That Creek

    Day By Day by Chris Muir

    Chris, looks like Zed is being drawn into the quagmire which is Afghanistan under President Obama. Sort of like Ireland and their national debt crisis – sliding into the cesspool abysss.

    Ireland’s financial troubles loomed large Wednesday as investors – betting that the country soon could join Greece in seeking an EU bailout – drove the interest rate on the country’s 10-year borrowing to a new high.

    The yield on 10-year bonds rose above 8 percent for the first time since the launch of the euro, the European Union’s common currency, 11 years ago.

    The cost of funding Irish debt has risen steadily since September, when the government admitted its bailout efforts of five banks would cost at least euro45 billion, equivalent to euro10,000 for every man, woman and child in Ireland. That gargantuan bill, in turn, has made the projected 2010 deficit rise to 32 percent of GDP, the highest in post-war Europe.

    The yield, or interest rate, on 10-year Irish notes rose steadily from 7.94 percent to reach 8.18 percent by midmorning. As the value of bonds fall, buyers demand ever-higher yields as compensation.

    Bond traders increasingly believe that Ireland soon will be forced to tap Europe’s emergency fund for euro-zone nations facing a threat of bankruptcy. The 16 nations of the euro zone created that euro750 billion backstop in May as the EU and International Monetary Fund provided an emergency euro110 billion loan to Greece.

    Another bailout would send more shock waves through the currency union, which has struggled to find ways to keep individual governments from overspending and threatening the currency’s value.

    Might this be a lesson to the new Congress about spending and debt?

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