A bank run in Ireland!!!

[Copper Catcher]

This is what happens when you in constant denial of a problem. It gets on top of you. The FT reports this morning that corporate customers have been pulling out their deposits from Irish banks, amid signs of fading confidence in the banking system. Irish Life & Permanent said corporate customers had withdrawn €600m, more than 11% of total deposits, during August and September. The FT report says there is evidence that another deposit crunch is happening right now, as confidence faded that the Irish banking sector is able to fund itself if, and when the ECB scales backs its emergency funding. But even the ECB funding had not been sufficient as Irish central bank had to provide €20bn in exceptional liquidity assistance outside the ECB programme. And, wait for it, Brian Lenihan, the Irish finance ministers, tells the world that the Irish banks had no funding difficulties.

The Irish government, meanwhile, is still playing hard to get on the EFSF programme, though it is now certainth that Ireland will ask for the money as an EU/ECB/IMF delegation descends on Dublin today. The issue, it seems, is how to sell it politically. This is now only about political presentation, no longer about substance. Ireland is broke. There is no real choice.

Portugal : First signs of difficulty to access debt markets

Portugal is showing the first signs of rising difficulty in accessing debt markets, a situation that if it were to drag on until the beginning of next year will jeopardize the solvency of the state, writes Jornal de Negocios. The auction for 12 months treasury bills achieved to place all debt they wanted to raise but at a high additional cost, for an interest rate of 4.8%.

FT: Europe’s grandiose mismanagement of the crisis

The FT’s editorial on the Irish crisis says that Ireland has to choose between the solvency of its banks, and its own solvency, a choice that may soon be confronted by other European countries. There is little hope, the editorial says, that the EU will be able to disarm the other ticking time bombs. The immediate issue at stake now is the solvency of the Irish banks. If Irish banks collapse, this would trigger bank failures across the European continent. This, not sovereign default, is the real threat in the short term.

This is the perceptive conclusion of a brilliant editorial: “Europe does not yet seem willing to give up a diabolical bargain that has core states lend to peripheral ones so that they can support their banks, all to save financial institutions in the core from losses. This game of bail-outs on the sly cannot be sustained for much longer.”

http://www.eurointelligence.com/index.p ... a576628d79