Irish Trouble

From Bloomberg:

Ireland’s long-term sovereign credit rating was cut one step to AA- from AA by Standard & Poor’s, which cited the projected cost of supporting the nation’s financial sector.

“The negative outlook reflects our view that a further downgrade is possible if the fiscal cost of supporting the banking sector rises further, or if other adverse economic developments weaken the government’s ability to meet its medium- term fiscal objectives,” S&P said today in a statement.

S&P said its new projections suggest that Ireland’s net general government debt will rise toward 113 percent of gross domestic product in 2012.


Zombie banks are very expensive to keep in business.

Ask Japan that went down the path in 1990 and still has not recovered.

Like the brain munching villains of B grade horror flicks, these insolvent banks just keep consuming more and more money. The problem is, they just don't get better, they, like the undead, are never satiated.

My question is, how long can this continue?

How long will the pathological state support this sovereign robbery?

Perhaps the bond market vigilantes will save us from this menace, and begin to demand higher yields to force a day of reckoning, finally putting us back on the path of true recovery.