Monday, July 18, 2011

Zero Hour: Ireland

Time to call zero hour for Ireland, the second of the PIIGS nations to fall, now with 2-year bonds selling for 23%, and skyrocketing drastically. Even 10 year bonds are reaching 20% for Greece and Ireland.

Of the remaining PIIGS nations, after Greece and Ireland, Spanish and Italian government bonds are still selling in the reasonable range of 5%, and Portuguese bonds are not listed in the quoted article, but my guess is are somewhere in the middle.

The Germans and French can keep bailing out Greece alone, and if push comes to shove can probably do it for both Ireland and Greece, in order to keep the Euro afloat. It is unfortunate that German and French taxpayers would have to do that, or accept the inflationary consequences of such policies, but they can. We will have to see where it stops. Maybe they will add Portugal to the pile in order to keep the Euro alive.

But if zero hour happens to Spain and Italy, that is end-game, and I see no solution to that other than massive inflation of the Euro, or widespread default on European government debt.