February 14, 2011

Euro Crisis Update

Irish Debt Rating Cut to Junk by Moody’s
Moody’s cut the ratings of Irish banks to junk status on Friday following Dublin’s decision to defer previously agreed capital increases until after this month’s general election.

Irish parties pledge to re-negotiate EU-IMF bailout
As Ireland’s election campaign heats up, the prospects of success in a battle to ease the terms of a massive EU-IMF bailout have become a key issue, even as Brussels insists it is non-negotiable.

To a humiliated nation, the opposition parties are holding out the hope that they can re-negotiate the terms of the 85 billion euro ($115 billion) bailout package if they gain power after the February 25 vote.

Candidates are meeting the full force of the hostility to the bailout terms and the question of why taxpayers have to pay for the mistakes of bankers.

Bank Losses Could Outstrip Rescue Funds; Political Threats



On Wednesday, Ireland's departing finance minister postponed an injection of cash into the banks that was planned for the end of February, saying a new government should make the decision. Top opposition officials are far less keen to bolster banks.

While the next government appears eager to get a better bailout deal, talks with its primary funder, the European Union, will be delicate. Other EU countries, particularly France, are keen to extract a pound of flesh by eroding Ireland's low corporate-tax rate. The major Irish parties are united in their zeal to preserve it.
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