Monday, November 15, 2010

Ireland - is this the crunch week for the Euro?

Little sensible coverage in the UK press this morning on the day of reckoning which is inexorably heading towards Iberia, although I did enjoy this description of Ireland's plight by Jeremy Warner in the Daily Telegraph, linked here:

In the blink of an eye, Europe has in any case moved from a position where no act of default would be allowed, with the funding to make good this promise apparently in place, to one where some sort of undefined default has now been officially sanctioned.

Markets have reacted accordingly, by driving up rates to a level where the costs of refinancing and servicing Ireland’s national debt would make default virtually inevitable. If Ireland wasn’t bust before, it is now. Other peripheral eurozone economies could follow.

The Irish people have been betrayed by their European “friends” as surely as was Britain during the fiasco of the ERM in the early 1990s. Unfortunately for Ireland, there is no similarly obvious escape route. It cannot devalue its way back to growth. It is as permanently imprisoned in its eurozone sarcophagus as an Egyptian mummy in the Valley of the Kings. (Blog editor's emphasis)

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