Who are 'they'?

Sorry if that seems obvious but I'm doing my best to keep up!

I've just discovered this blog and I'm really impressed. You seem to be a straight-talker.

By the look of it it's a done deal anyway and the bailout will be signed off tomorrow. The banks get to live another day courtesy of us taxpayers.

I hope they're grateful.

Like you I have no real data to go on but I did have the same thought as you. I think various sovereign funds will have bnought them up as well as the banks. I feel pretty sure Irish Banks were asked to step in and buy up at various times so as to avoid it looking as if there were no buyers.

Every time people started to sell it would look like a crisis was on its way and each time I am sure there would have been the temptation to think it a good, even a responsible idea, to ask Irish banks to 'rescue' the situation and 'avoid' a melt down by stepping in to buy. They would then have tenedered them to the Irish Central bank who would have off-loaded them to the ECB whenever they could.

The only problem was not to buy too easily or too many as that would have had the opposite effect of 'telling' the market there was a sucker around who would buy any and all. SO they must have had to judge it carefully and disguise who was buying as much as they could.

I think various other banks would have like the look of the volatility over the last few months as a way of making a quick profit gettin in and out again quick. I think many of them are still exposed. Citi, JP Morgan Chase, Bank of NY Mellon, BoA via Merill Lynch, and Deutsche all of whom are also still holding, I think, lots of senior tranches of CDOs and synthetic CDOs as well.

Like you I expect it to be the banks who are sitting on it. I think London is exposed as much as anyone. But we are exposed to the original loans.

All this talk of changing the corporation tax is running against Ireland's great hope of recovery which is in part to attract what they hope will be a ressurgence of CDO creation. They want Ireland to re-emerge as the SIV capital of europe.

I think there is more thatn a bit of self serving in the German arguments. They would quite like Ireland to lose some of that business when/if it returns and wouldn't mind if it came Frankfurt's way.

Personally I think Ireland needs to play hard ball with its EU 'partners'. I also still think Ireland is being urged to accept a bail out more for the well being of European banks than for the health and well being of her own citizens.

I also think the consequences of Ireland restructuring on her own terms would hurt other nation much more than it would hurt Ireland. But none of them have the balls. Not the Irish, not the Brits not the rest of Europe either. And the Yanks have no balls at all. I'm talking polticial class here you understand not the people.

Anyway, like you I satnd on the outside looking in.

Been reading a lot of CiF comments today and there seems to be a lot of speculation over who exactly is holding Irish sovereign debt.
Your reply to wirplit above would suggest to me that the institutional bondholders (pension funds etc) would have sold off their bonds in the previous months to avoid risking any loss and protect their investors. Can't imagine them hanging on and hoping for things to get better. For the banks however, it may have been wiser to hang on to and possibly even buy up Irish bonds in order to have more leverage over the Irish politicians when it comes to demanding bailouts.
What do you think about this? Can we deduce by this reasoning that the banks in need of bailing out are by far the major holders of Irish sovereign debt or would they just not have had the cash to buy up the bonds abandoned by the pension funds et al?
If the banks are by far the major holders it makes the case for default all the stronger as there would be a more contained fallout, right?
I know no concrete data is available – I'm just trying to 'read the game'.

The bonds do go up and down in value exactly like a stock. So as fear iof default increases the bond will lose their value and trade for less and less.

But people will still trades them so long as threr is a chance of even temporary recovery of sentiment. Don't forget bonds are traded as stocks are not simly bought as an investment to be held to maturity.

So someone might buy because they have heard a rumour that, fopr example, a prominent German politician is going to suggest that the German push for a debt restrcturing is going to be far more generous thatn it might have been thought – well such a rumour might ease the fears surrounding Irish debt and its value will creep up a little bit.

It doesn't matter to the trader is the end game is still default as long as he can buy a hundred million in Irish bondsat a low poijt and resell them after the hopeful rumour.

As for the ECB waiting for the bonds to bottom and then buying them up this would indeed be a viable solution. The solution you suggest is tantamount to telling the bond holders they are going to have to take what everone always refers to as a 'ahir cut' – a loss.

The problem is that this is the policy the bond holders (aka banks et al) don't want because it makes them take their lumps. So if they think things are gong in this direction they a) lobby like hell with carrot and stick), b) put the frighteners on the politicians by doing their best to force up CDS/insurance costs on not only Ireland but other vulnerable countries as well. In this case mainly Portugal.

The bond holder's strategy, and don't forget the bond holders are in many cases the same big banks who ALSO stand to lose on the bad debts as well (ie they hold the bad debts and the bonds) – their strategy is to make dealing with any single problem impossible by tying it to other problems – or to put it another way, they try to ensure all problems appear to be systemic so that none of them get dealt with.

Our leaders and or central banks may be in sympathy with their school fellows in the private banks but we don't need to imagine a conspiracy – just ordinary cowardice will suffice.

Plenty of economic news. But none of it looks good to me.