The reason I bring this up, is that in my view, debt is debt no matter where it is concentrated. In a balance sheet recession, the debt disappears through pay downs or defaults. And as I have said before, our money comes from debt. Therefore with double entry book keeping, a liability on one side of the ledger that vanishes, takes away the corresponding asset on the other side of the ledger.
For example: you "own" a house with a mortgage. The mortgage loan is a liability to you, but for the bank, it is an asset. If you default on the loan, the bank's asset loses its value, actually, if you are upside down on the loan, the asset's value "vanishes." The same concept applies to corporate, financial, and sovereign debt. Sovereign debt is owed by a nation, but shows up as an asset in another nation or investor's balance sheet. As debt implodes, so too does wealth, and the ability for an economy to grow.
But back to Ireland, from Bloomberg:
Irish central bank Governor Patrick Honohan said he expects the country to ask for a bailout from the European Union and the International Monetary Fund worth “tens of billions” of euros to rescue its battered banks.Full article HERE.
Ireland will probably pay an interest rate close to 5 percent, he said in an interview with Irish state broadcaster RTE today. A final decision hasn’t been reached, he said. A 5 percent rate would be similar to that offered to Greece when it requested a bailout in April.
“It is my expectation that will happen, absolutely,” said Honohan, who was speaking from Frankfurt, where he is attending a regular European Central Bank Governing Council meeting. “It will be a large loan because the purpose of the amount to be advanced, or to be made available, is to show Ireland has sufficient firepower to deal with any concerns of the market. We’re talking about a substantial loan.”
So add more one more domino that is precariously toppling - only to be (temporarily) suspended by the artificial power of the EU and IMF - the last bastions of debt money creation. This solves nothing, it only delays an inevitable reckoning and creates more useless credit in a system that is already choking on credit.