When you squeeze a balloon it just bulges out at a different place, that seems to be happening to the PIIGS (although now it is just PIS because I & G have been ‘sorted out’). Look at the prices on Irish banks coming down in some cases by an impressive near 1%, that’s a giant step for a single day. All of our major institutions are dropping – and that means the fear of something happening to our banks is subsiding from the perspective of those holding bond risk. Which makes Dolmens ‘sell all’ call on AIB LT2’s a little odd.

Then look at sovereigns

And you see that our problem has now become a Portuguese problem, the bond market will start to lean on them next. I have said for some time that we will watch the domino effect until at some point we get to Spain and at that point it isn’t a game any more.

Many thanks to CMA for the charts

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