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Generational Dynamics Web Log for 12-Nov-2010
12-Nov-10 News -- Panic appears to be growing over Ireland's debt

Web Log - November, 2010

12-Nov-10 News -- Panic appears to be growing over Ireland's debt

Huge terrorist bomb attacks Pakistan's 'jugular' in Karachi

Panic appears to be growing over Ireland's debt

Las spring, when I was writing about Greece's debt crisis, I used the "P-word," pointing out there appeared to be a spreading panic over Greek bonds. In fact there was, and the panic was only stopped by the ginormous trillion dollar bailout.

Now the same thing appears to be happening with Ireland's bonds.

Here's the graph of 10-year bond yields up to Thursday, courtesy of FT Alphaville:

Ireland 10-year bond yields for 2010 to the present (FT Alphaville)

Ireland 10-year bond yields for 2010 to the present (FT Alphaville)

As you can see, interest rates have gone parabolic, and are now above 9%. This means that investors are panic selling Ireland's bonds, and unless the EU figures out a way to end the panic, Ireland will go into default.

Furthermore, as happened with Greece, the panic is spreading to other countries, as investors fear "debt contagion." Bond yields for Spain and Portugal are also rising quickly, according to Bloomberg, though they're still several points below Ireland's bond yields.

This is going to be fascinating to watch. The Germans absoluted HATED having to bail out the Greeks, but they did it because there was (figuratively) a gun pointed at their heads. Since Germany has the strongest economy in Europe, they're once again going to be called on to bail Ireland out, and Ireland's bailout would have to be bigger.

The next critical event for Ireland will be the release later this month of its four-year fiscal plan. The Moody's rating service has announced that they will await the release of that plan to decide whether to downgrade Ireland's rating, according to Reuters. The rating will undoubtedly be dependent on how painful the austerity measures are.

Huge terrorist bomb attack in Karachi strikes at the 'jugular' of Pakistan

On Thursday night, a massive truck bomb explosion demolished the front of the supposedly secure head office of the Crime Investigation Department (CID), the government organization leading the fight against terrorism. At 18 were killed, and 120 others were injured, according to The Nation (Pakistan).

"Karachi is the jugular of Pakistan," according to an official quoted by CS Monitor. Karachi is a port city with 160 million people, and it generates more than 60% of Pakistan's GDP.

Pakistan has been a magnet for jihadist groups trained in Pakistan's tribal areas, and Tehrik-e-Taliban Pakistan (TTP), commonly known as the Pakistani Taliban, have claimed responsibility for the attack.

Additional links

Part of Britain's austerity plan includes higher tuition fees for students. Everyone was surprised on Wednesday when a much larger than expected number of students in London took part on Wednesday in demonstrations and protests against the tuition increases. Emboldened by the big turnout, student activist groups are planning major strikes and disruptions on Movember 24. Guardian

Negotiators failed to agree on a new EU budget for the 27-member bloc. With austerity programs going on in most EU nations, national leaders were calling for cuts in the EU budget, while EU officials themselves want to increase their budgets. If no deal is found by Monday, then the EU budget will have to be handed out in monthly stipends. AP

Prime Minister Benjamin Netanyahu's entourage said that progress had been made on efforts to restart Israeli-Palestinian peace talks, but stopped short of saying there had been a breakthrough. Yawn. Haaretz

After a recent confrontation between Japan and China over remote islands in the East China Sea, Japan will deploy about 100 soldiers to remain on the westernmost island, to carry out coastal patrols and surveillance of Chinese naval vessels. China's increased naval presence in the area portends a new military confrontation before long. AFP

(Comments: For reader comments, questions and discussion, see the 12-Nov-10 News -- Panic appears to be growing over Ireland's debt thread of the Generational Dynamics forum. Comments may be posted anonymously.) (12-Nov-2010) Permanent Link
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Generational Dynamics Web Log for 12-Nov-2010 12-Nov-10 News -- Panic appears to be growing over Ireland's debt

Panic appears to be growing over Ireland's debt

Huge terrorist bomb attack in Karachi strikes at the 'jugular' of Pakistan

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Generational Dynamics Web Log for 12-Nov-2010
12-Nov-10 News -- Panic appears to be growing over Ireland's debt