EUR: Euro newly vulnerable because of the debts of the peripheral countries

After countless meetings of the Central Bank and the data on wages in America, the forex market returned its focus to the efforts and concerns of the European periphery. The euro fell below 1.3850 the night. Ireland was the focus of Monday because of the report Irish Times, which suggested that the ultimate cost saving Anglo Irish / AIB / Bank close to 70 billion euros, compared with 15 billion euros of the current cost-cutting, which is now called "a waste time ". In fact, the profitability of Irish bonds grows not out of fear before start the Irish government to reduce budgetary imbalances, and because of the inability to do so, given the cost of bank rescue. Ireland's obligations are so huge that the country has no real means to pay. Irish banks have been supported since the ECB has provided cheap financing at a time when access to the wholesale market was completely closed.

Cause for concern for the ECB is the way in which Ireland will return the debt, since all the large proportion of mortgage loans actually does not work (according to the report - one in eight, and the ratio is likely to grow next quarter). Irish bond holders are desperately trying to get in a growing likelihood that the mechanism will be adopted by the German crisis of permits (requires the owners of the bonds making some discounts for the state going to default). The spread between the Irish ten-year bonds and comparable German Bunds widened to a record 550 points on Monday. Against Portugal should also pay attention, because the spread on ten-year Bund widened by 30 points to 444, which was maximum in 1997. In an interesting postscript, the Chinese Prime Minister Hu Jintao, apparently, is seen China's promise to help Portugal as the country is experiencing serious difficulty in dealing with the financial crisis. Euro newly vulnerable.

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