The $100 billion-plus bailout of Ireland, which followed the $100 billion-plus bailout of Greece, seems at first to validate the standard U.S. view of Europe - that it's a bunch of backward, socialist countries that will be washed away by the tide of history.
According to this view, one European country after another will succumb to the "Greek disease," until the continent ultimately runs out of bailout money.
The conventional wisdom is that U.S. investors should just avoid the European Union (EU) in its entirety.
But U.S. investors who embrace this view - and ignore the economic muscle that exists in key European market economies - will end up leaving an awful lot of money on the table.
Ireland
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Four Ways to Sidestep Ireland's Woes and Profit from the EU's Economic Muscle
For four investment plays that will let investors profit from the EU, please read on...
How the Dollar and Europe's Ireland Moves Will Steer Fate of U.S. Stocks
Stocks retreated over the past week following an earnings warning from tech giant Cisco Systems Inc. (Nasdaq: CSCO), renewed tensions in Europe over the ability of Ireland to pay its debts and a surge in the U.S. dollar.
Overlaying the action was word out of South Korea that the G-20 meeting of leaders of the world's largest economies was not going well, with European and Asian leaders expressing exasperation with U.S. monetary stimulus and a distaste for U.S. President Barack Obama's scolding tone on export targets.
In prior decades American trade policy makers did not have to pay much more than lip service to overseas financial leaders because we held an unparalleled position atop the global dog pile. But now we are deeply, deeply in debt to China, Japan and Germany, and these creditors feel increasingly entitled to look down their nose at us with a mixture of disbelief and distrust.
To read more about what's in store for the United States and its global economic partners, click here
Overlaying the action was word out of South Korea that the G-20 meeting of leaders of the world's largest economies was not going well, with European and Asian leaders expressing exasperation with U.S. monetary stimulus and a distaste for U.S. President Barack Obama's scolding tone on export targets.
In prior decades American trade policy makers did not have to pay much more than lip service to overseas financial leaders because we held an unparalleled position atop the global dog pile. But now we are deeply, deeply in debt to China, Japan and Germany, and these creditors feel increasingly entitled to look down their nose at us with a mixture of disbelief and distrust.
To read more about what's in store for the United States and its global economic partners, click here
More Investors Betting Ireland Will Go the Way of Greece
The cost to insure Irish bonds against a government default jumped to a record yesterday (Tuesday) after Standard & Poor's said the cost of bailing out nationalized lender Anglo Irish Bank Corp. could exceed $47 billion.
Contracts on credit default swaps (CDS) on Anglo Irish bonds rose 1.5 basis points to 937.5, implying a 56% probability of default within five years, after earlier climbing to an all-time high of 960.5.
Credit-default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements. Increasing prices signal deteriorating credit quality.
Contracts on credit default swaps (CDS) on Anglo Irish bonds rose 1.5 basis points to 937.5, implying a 56% probability of default within five years, after earlier climbing to an all-time high of 960.5.
Credit-default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements. Increasing prices signal deteriorating credit quality.
Irish Banks Get Bailout as Ireland Continues Drastic Moves to Leave PIGS Behind
Ireland's government will extend more aid to the nation's banks in an effort to salvage the economy and avoid going down the same path as struggling Greece.
The Irish government has set up a "bad bank" to help the banking sector rebound from massive losses on loans to property developers. The National Asset Management Agency (NAMA) will apply an average discount of 47% to $21.5 billion (16 billion euros) of loans in the first tranche. The bank will take over a total of $107 billion ($80 billion euros) of loans, transferring the debt from the balance sheets of Ireland's biggest banks - Allied Irish Banks, PLC (NYSE ADR: AIB) and Bank of Ireland (NYSE ADR: IRE).
"It looks like they are going to try and take all the pain now," said Stephen Taylor, strategist at Dolmen Securities. "It looks likely that at this stage the state is going to have to increase its ownership of the banks."
The Irish government has set up a "bad bank" to help the banking sector rebound from massive losses on loans to property developers. The National Asset Management Agency (NAMA) will apply an average discount of 47% to $21.5 billion (16 billion euros) of loans in the first tranche. The bank will take over a total of $107 billion ($80 billion euros) of loans, transferring the debt from the balance sheets of Ireland's biggest banks - Allied Irish Banks, PLC (NYSE ADR: AIB) and Bank of Ireland (NYSE ADR: IRE).
"It looks like they are going to try and take all the pain now," said Stephen Taylor, strategist at Dolmen Securities. "It looks likely that at this stage the state is going to have to increase its ownership of the banks."
Billonaire Investor George Soros Questions the Euro's Future
In an editorial penned for the Financial Times, billionaire investing icon George Soros said that while Greece could be salvaged by a makeshift financial-rescue package, bigger problems lie ahead for the euro.
According to weekend news reports, Germany's finance ministry has sketched out a plan under which countries using the euro currency will provide between $27 billion and $33.7 billion (20 billion and 25 billion euros) in aid for Greece, which is teetering on the brink of default.
Soros says that "a makeshift assistance should be enough for Greece," but warns that the growing threats posed by other debt-laden, euro-member countries - particularly Spain, Italy, Portugal and Ireland - could prove overwhelming.
According to weekend news reports, Germany's finance ministry has sketched out a plan under which countries using the euro currency will provide between $27 billion and $33.7 billion (20 billion and 25 billion euros) in aid for Greece, which is teetering on the brink of default.
Soros says that "a makeshift assistance should be enough for Greece," but warns that the growing threats posed by other debt-laden, euro-member countries - particularly Spain, Italy, Portugal and Ireland - could prove overwhelming.
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CRH eyes possible $4.5 billion buyout of Cemex operations
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