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Stephen Archer is a speaker with great charisma. By using illustrations and personal experiences and not being afraid to share his own point of view of the current situation and who is to blame for it, he engages the whole audience, at the same time helping us all to understand the credit crunch a little better.

— Warwick Business School

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Ireland’s bad day at the races – whose bet is next to turn bad?

On July 1st I put a positive but cautionary stamp on the Irish recovery. Ireland’s attempt to avoid a rescue deal was always going to fail following Angela Merkal’s recent remarks about private bondholders carrying more risk and the widespread derision last week of Ireland’s attempts at keeping a lid on the problem.

So much for recent history. What next? Will other of the PIIGS require a bail out – Portugal in particular? The ECB needs to asses this question very quickly to prevent the repair job on the Euro being a bandage on a large wreck.

Portugal’s Prime Minister said “there is no connection between Ireland and Portugal”. Perhaps not but it’s the similarities that are worrying. Added to this cocktail is the consideration that the bond markets are nervous following the post rescue discovery in Greece that things were worse than thought. Will Ireland’s strife turn out to be even worse than thought? We need rapid transparency on these matters. Ireland’s GDP is 70% the size of Greece but its rescue package will be a higher percentage of GDP. £90Bilion is a big number for that economy.

Portugal has taken major fiscal steps to cut its debt and its banks seem not to be as badly bruised as Irelands’ but the question remains for Portugal and the other troubled Eurozone countries – “what’s is the end game and how do they get there?”

Devaluation is not an option. Trading their way out will take a long time. Are we staring at decades of debt for them? What kind of Eurozone is that going to give us with so many sick members?


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