Euro in `Exceptionally Serious' Situation Amid Irish Bailout, Merkel Says

[marmar]

Nov. 23 (Bloomberg) -- German Chancellor Angela Merkel said the prospect of serial European bailouts was “exceptionally serious,” sending the euro to a three-month low as officials estimated saving Ireland will cost 85 billion euros ($114 billion).

Irish bonds dropped and the premium that investors demand to hold Spanish debt over German counterparts jumped to a euro- era record as the relief rallies triggered by Ireland’s Nov. 21 aid request evaporated. Traders are now betting the turmoil that started in Greece a year ago will spread to Portugal and Spain.

“The markets currently have virtually zero confidence that the bailout in Ireland will solve the European crisis,” Charles Diebel and David Page, fixed-income strategists at Lloyds TSB Corporate Markets in London, said in a note today. “With markets effectively in a position to dictate policy, the risk is that the credibility crisis shifts to more sizeable European Union countries and thereby poses a greater risk to the system as a whole.”

Contagion is spreading through the euro region as Ireland hammers out an aid package with the EU and the International Monetary Fund to save its banking system. The European Commission estimates Ireland may need 85 billion euros, according to two officials who were on a Nov. 21 conference call of finance ministers. Of the total, 35 billion euros would go to banks and 50 billion euros to help finance the government. ...........(more)

The complete piece is at: http://noir.bloomberg.com/apps/news?pid=20601087&sid=ajpEIBgUYQto&pos=1

[CJCRANE]

1. The global banking lending frenzy is the gift that keeps on giving.

The banks have literally created country-size financial black holes into which they can pour taxpayers' money.

[leftstreet]

2. I'd change that to "the gift that keeps us giving"

to them