Portugal ‘down to last €5Billion in cash’
Van Rompuy insists ‘fundamentals are sound’
Update: 16.42, RTE reports along with the Irish Times that the amount of capital required is ‘in fact’ €24 billion. It is a miracle, a sign of Divine intervention, either by St Trichet de Bankfurt or perhaps St Rompuy de Pumpy.
But mainly, it’s a lie. The real number is around €30-35 billion. I was told this by people in a position to (a) know and (b) add up with a reasonable degree of skill.
Lest we forget, there are markets to be encouraged here. It’s an old trick, and it won’t work.
The Slog has learned that the EU stress test will show Irish banks need a further €32.5 billion of capital injection to cover losses, and enable them to continue trading. Anglo Irish Bank in particular has reported a loss of €17.7 billion for 2010, the bank having recorded almost €8 billion in impairment charges, and lost some €11.5 billion on loans transferred to the National Asset Management Agency.
It is also reported that the Portuguese Government has slightly over €5 billion left in cash altogether, and needs to pay more than this in May alone to avoid default. A bailout there can thus now be considered a certainty. Portuguese two-year notes pushed yields to the highest since before the introduction of the euro – up four basis points to 8.07%, the most since 1996, as of 8:37 a.m. in London.
On his BBC blog earlier today, Robert Peston suggested that total loans by taxpayers (or institutions backed by them) around the eurozone to Irish banks now stand at €208bn. 6% of ALL Irish homeowners are more than three months behind on their mortgages. Dublin sources told The Slog that, in the light of these numbers, Irish Prime Minister Enda Kenny will have a stronger hand to play in renegotiating the bailout deal for his country. The same sources insist that Kenny will use the nuclear option – instructing the key banks to default – unless the ECB and Brussels move substantially away from the position they’re currently taking on loan costs.
With all the endless cobbled together funds from the politicos and bureaucrats – stabilisation this and stability mechanism that – we’re all left wondering why things are still so, well, unstable. In fact over the last fortnight, all the major ratings agencies have emphatically stated that the sovereign debts of Greece, Ireland, Portugal or Spain are as near to junk bonds as damnit. The markets too have lost confidence in the eurozone’s ability to avoid debt restructuring on a grand scale. This is reflected in Greek two-year bond yields rising to 15% from 8.75%, and Irish bonds to 10.00% from 2.44% in the same 10 months….even though these have EU and IMF guarantees.
We EU citizens now have a European Financial Stabilization Mechanism, a European Financial Stability Facility, a forthcoming European Stability Mechanism….before the near €80 billion of ECB money spent “stabilising” government bond markets is even counted in. Danny Kaye would’ve had a field day with it: “The stability facility is a recognition of the mechanism in the substantial financial in the fund of the Bund and the pond of the bond”. It’s all bollocks.
But to listen to the top brass, you’d think getting out of this hole was a cinch. EU Council President Herman Van Rompuy (remember him?) praised the “sound fundamentals” of the eurozone economies in Norway this morning, stressing the growth rate average in the eurozone of 2%. He summed the situation up as “high growth in the Euro-core, crisis in the periphery” – which is, I suppose, one way of describing a rotten apple.
Meanwhile, the FT has David Cameron writing to fellow EU leaders urging them to “unleash the forces of enterprise”.
Give me strength.