If you are a newer reader, the U.S. actually has a worse fiscal condition than Ireland... and barely trails Greece. [Feb 5, 2010: Sovereign Risk Chart - Where Would the US Fit in, on Europe's Scale?] But unlike those countries who are avoiding the "Zimbabwe" solution since they are stuck in a shared currency, the U.S. can 'print its way out of every problem'.
- Shares in Ireland's banks hit record lows and national borrowing costs reached new euro-era highs Monday as the government presented its latest plans for financial survival to the European Union's economic commissioner, who has the power to order changes. Investors are shunning Ireland's government and bank debt in expectation that the country will eventually require a bailout by the EU and International Monetary Fund, as happened to Greece in May.
- The interest rates charged on the treasuries of Ireland, as well as fellow indebted euro-zone members Portugal and Spain, have been rising ever since German Chancellor Angela Merkel last month said she expected any future EU bailouts to come with new rules requiring bondholders to absorb some losses.
- The yield, or interest rate, on Ireland's 10-year treasuries rose to another record Monday of 7.87%, breaking the previous record of 7.82% set last week. The spread versus equivalent German bonds also reached an unprecedented 5.6%. In the 16-nation euro zone, only Greece's bonds command a higher premium of 11.%.
- As the traditional owners of Irish treasuries -- chiefly banks in Britain, Germany, the United States and France -- seek to dump them because of their falling value and increased perceived risk, new sellers can be attracted only by offering higher yields. Traders say the main buyer of Irish bonds in recent weeks has been the European Central Bank.
- The Frankfurt-based central bank confirmed Monday it bought euro711 million ($988 million) of euro-zone countries' bonds last week. It declined to specify how much of that figure involved Irish treasuries.
- The cost of insuring Irish debt on the world's credit-default markets also rose to new heights Monday. Credit data agency CMA said contracts to insure Ireland's debt against default jumped to 610 points from Friday's record close of 578 points. Buyers of the derivatives, called credit-default swaps, are betting that Ireland will be ordered to renegotiate debts with bondholders as part of a future EU-IMF rescue package.