From Midas Letter:
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.
The downgrade means the unguaranteed unsecured senior bonds at Ireland’s six banks are now rated as non-investment grade, or junk…
What is happening here is that the Irish people are not having any of this – they are not, that is, about to have themselves taxed in to poverty in order to bail out banksters who made idiotic investments. Sure, the people of Ireland are partially responsible for their plight – they bought the notion of easy money and get-rich-quick. But that notion was sold to them by the banks who are now bankrupt and demanding taxpayer funds.
What effect this will have first on the Eurozone and then on the rest of the world remains to be seen. The problem is that the EU is keeping itself afloat on the perception that the financial crisis has been managed and no one will default…not Greece, not Ireland, not Portugal, not Spain, not anyone. But this perception is based upon the assumption that, in the end, the people of Europe will continue to play the part of sucker. I think that in Ireland, at least, they have decided not to be fooled any longer. Reports indicate that the center-right opposition party, Fine Gael, is pledged to ditch the bailout and is rising high in the polls, with the election scheduled for February 25th (as a side note, the party’s finance spokesman is a man named Michael Noonan – showing that we Noonans are (a) all alike and (b) continuing our centuries long plan for taking over the whole world).
As Mish points out, the best outcome here is for Ireland to go ahead with their “go to heck” to the European Union and then have a real negotiation in which everyone, not just Ireland’s taxpayers, pays the price for the economic folly. It is either that, or Ireland just flat out defaults and the bond holders lose everything – if this election goes as hoped in Ireland, then we might finally see a people taking a distinct advantage over the bankers…for once, the bankers will have to dance to someone else’s tune, and that would be a good thing.
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