RTE News: Personal Insolvency Bill, January 2012

Paul Colgan from RTE covered this story about the proposed Personal Insolvency Bill which will update Ireland’s dated debt legislation. This is a more humane approach to dealing with debt issues and we are pleased to see it coming to fruition. Any legislation will have teething issues and will not be perfect, but this is definitely a step in the right direction.

Our foremost concern (as echoed in the clip) is about the regulation and oversight of any plan.

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Irish debt, third most likely to default in the world?

Credit Default Swaps hit a record high yesterday for Irish Sovereign Debt. CNBC spoke to Brian Cowen on this topic yesterday, our Student Protests got a mention at the very start, Mr. Cowen believes this is short term sentiment, and while you can use a cyclical argument against Ireland, there is a secular argument about our debt: that it will be more expensive in the future (forever).

Using credit default swaps we are placing ahead (as in more risky) than Pakistan, Argentina and Iraq! Behind only Venezuela and Greece, interesting times….

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Irish Credit: Downgraded two notches at once.

Fitch, the credit rating agency, has just downgraded the sovereign debt ratings for the Republic of Ireland from AA+ to AA-.  That is two notches and is proof-positive that the ratings agencies are worried about the hole in Dublin’s finances.

The rating agency Fitch has downgraded Irish sovereign debt from AA+ to AA-. That is two notches (AA+ to AA, then down again to AA-), and while it means our debt is still considered investment grade, it will put increased pressure on our future national debt servicing, buyers will want increased reward to reflect the risk.

This was visible as 10-year Irish bond yields rose, widening the spread against EMU benchmark [German Bunds] by 2 basis points bringing the gap to to 148 basis points after the Fitch news broke.

Five-year Credit Default Swaps, which price the cost of insuring Irish bonds, widened to 144.7 basis points from 142.4 basis points, monitor CMA DataVision said.

More happy news from the emerald isle!

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Let down by a writedown, the cost of nationalisation

Today we have had our sovereign rating downgraded yet again. A part of me is slightly miffed that the same ratings agencies who were rating CDO’s as ‘AAA’ a few years back are decidedly prudent now.

The level of Irish debt has soared, our situation is tough, but we are nowhere near the size of deficits (as a % of GDP) of many other countries and that includes the USA, the UK, Hungary, Greece, Japan, Italy, Singapore and many others.

It is the stunning upward trajectory perhaps that spooks markets the most because where you end up is sometimes decided by the direction the deficit runs.

What I mean by that is: Some countries have had massive debt gdp ratios, the USA after the 2nd World War was up at 125% and back down to 25% by 1980. The UK, after the Napoleonic wars was at 270% but fell to 20% by the end of the 1800’s, these nations recovered well. Other …

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