Photo: Shalaco, Flickr
If it weren’t the fate of a nation, and the wellbeing of millions of people, at stake, the situation in Ireland would be hysterical right now.After weeks of dithering, the Irish government officially requests the bailout that everyone else knew was necessary, and which everyone figured was only a matter of time.
As expected, stocks went up, and the euro rose because for the moment all is good.
Bondholders, of course, appeared set for a haircut-free bailout, until… Ireland torpedoed its own bailout.
See, you could make a good moral hazard bet presuming that the rest of Europe would prop up Ireland, but what you might not have guessed was that the countries politicians would threaten to break up the government, and block the budget that’s a crucial part of making the whole thing work.
When the begger won’t even except the cash, betting on the kindness of counterparts becomes a very dicey bet.