Irish Eyes Are Crying, Part 2

The whole world cries with you.  Lot of nice, pretty green to be burned here as the Greek Fire spreads to the Emerald Isles. Tyler D has the goods:

And the euro seemed so happy after its recent surge, that it completely forgot it is backed by an insolvent continent. Luckily, here's Ireland to remind us stuff is much, much worse than expected. According to the Irish Independent the Labour Party, Eamon Gilmore, came very close to suggesting that Ireland is considering defaulting on its debts "when he talked about the Government "negotiating'' with bondholders in Anglo Irish Bank." Additionally, the same newspaper also reported that Ireland is on the verge of calling in the IMF for a bailout, citing "a report from Barclays, one of Europe's largest banks, said Ireland may yet need financial help from the IMF or the EU if conditions got any worse. But a spokesman for Finance Minister Brian Lenihan said last night: "The Government's strategy for dealing with the economic and financial challenges has been commended by the EU Commission, the European Central Bank and many other international experts." In other words, domino #2 has at most a few more days. Net result of all this: Irish-Bund spread explode, and gold hits a new all time high of $1,282.

So, odds are very good that within the week, and very possibly over the weekend, that Ireland will be waving the white flag instead of the green, white, and orange one.

Remember folks, it was Ireland's steep austerity plan that was supposed to prevent any need for a bailout, It was held up as a plan that the Austerity Hysterics here said we needed to follow immediately or that we would drown in a Keynesian catastrophe.  Spending cuts now!

But as I've been saying for months now, Ireland's austerity plan has failed miserably.  They are now trapped in a deflationary spiral along with plummeting real estate values, and the spending cuts have all but locked up the economy like an engine with no oil.  They've been at it for two years now, and it's gotten to the point where they need a major infusion of spending or the Irish economy is going to have a fatal heart attack.

Ireland now is where we would be without the Obama stimulus:  on the verge of needing a major IMF bailout that will dwarf Greece's hundreds of billions of Euros.  Our mistake was we went with half a tank of gas instead of no gas like Ireland and we're coasting on fumes again.  Ireland on the other hand is about to come to a complete halt.

Keep a careful eye on Ireland for the rest of the month.  The bailout is coming, and it's not going to be pretty.

On the other hand, all bets are off on the Irish bailout should Portugal need a bailout first...