Irish turmoil sends market lower
Research for Online Investors

by John Dalt

11/22/10

Ireland requested the bailout everyone knew they needed on Sunday.  We mistakenly reported elections were Saturday.   We can’t find the story now, but the timing fits what we anticipated for a rescue package announcement.

The ruling party didn’t want to accept any help from the IMF or European Central Bank (ECB) because of their perilous political situation.  It appears financial pressure built until they could not resist any further.

Earlier today, their support began to unravel. The current coalition has a three-seat majority and is made up of three different coalition partners. The Green Party has six members and has called for elections in January. Fianna Fall and independents make up the balance of the coalition. The main opposition party, Fine Gael, has called for immediate elections. The Labour Party is also in opposition and has called for immediate elections.

According to Reuters, the cost of insuring Irish debt is back up to 5.3% this morning!

Irish Prime Minister Brian Cowen has announced he will call for elections after presenting a budget on Dec. 7.  He hopes to stay long enough to see the budget adopted, but the sharks are circling.

The Federal Open Market Committee (FOMC) minutes will be released Tuesday afternoon.  These are always important to traders, as they will look for changes in wording that hints at future action.  The Financial Times reports the Fed will forecast slower growth and higher unemployment for the U.S. economy.

The F.T. reports that some Fed members believe the high unemployment has now become ‘structural’ and will take years to come down.  Sandra Pianalto, president of the Cleveland Fed, was quoted from a speech last week, “Because I expect hiring to strengthen only gradually, the unemployment rate is likely to remain elevated for quite some time.  In fact, I do not expect it to fall below 8 percent before 2013.”

Thanks to gulch member G.L. for sending in a political test of our knowledge of current events.  Would you like to see if you follow the news and know current political news?  How do you stack up against other quiz takers?  Look at results for other respondents…remember they get to vote too! Here is my score!

Yes, I only took it once!

The market is down this morning. We are facing a shortened week. The market will be closed for the holiday on Thursday and open for a shortened session Friday morning. We have a lot of economic information Tuesday and Wednesday. It could be a wild ride, with more pressure down than up.

I expected precious metals to fall on news that Ireland would accept bailout funds.  Precious metals are up this morning, as the contagion on fixed assets seems likely to spread to Portugal and Spain.

Our letters are going to be short this week, and we may take a few days off.  The girls are coming home from college.  Our oldest daughter (the road warrior) came to visit for the week.  There will be more activity in the house than in quite some time!  Good times.

The mailbag:
I went to see Inside Job (the movie).  Very informative.  Most people have not followed this whole mess.  It would be eye opening for them.---paid up subscriber T.M.

John’s comment:  The movie is not playing here, yet.  I hope to take the girls to see it over the holiday weekend.

The information presented in this newsletter is based on generally available news releases, corporate filings, current events, interviews and the editor’s opinions.  It may contain errors and you should not make investment decisions based solely on what you believe you have read here.  Do your own research, it is your money.  If you lose it, it is your responsibility, not ours or your grandmothers!  The editor may or may not have a position in any securities discussed.  The editor may have held a position in a security earlier, or in the future.

MarketToday Archive

Back to Top