Sovereign Debt: A Threat To The Entire Financial System

Bill Bonner
The Daily Reckoning
Business Insider

“Ireland is broke,” said our taxi driver.

We like to ask cab drivers about the economy. Not that they understand anything any better than the average central bank economist. But they talk to people. Without cameras or tape recorders in the background. And they have their own businesses too. When times are good, people take cabs. When they are bad, they take the bus.

“My bloody income is down by 50%. Most of my fares are people coming or going on business…or just people going to work. But now, who’s doing business? Who’s working?

“The developers and the bankers ruined this country. They pushed up prices. And then, what was the government doing? They haven’t a clue. The guy who is head of Ireland’s financial affairs is a former schoolteacher. I’ve got nothing against schoolteachers, but what does he know of finance? And he’s over there negotiating with the Germans.

“The Germans know what they’re doing. They don’t want to finance our mistakes. And who can blame them?”…

…The Irish dream big. The republic is not big enough for them. So they go abroad. Only 4 million of them are left on the island. Some 60 million of their descendants – the Irish diaspora – live in America, Canada, Australia, Argentina and elsewhere. Your editor is one of them.

For the first time in more than a decade, the Irish are emigrating again.

“If you’re a smart young man or woman, what else can you do? It’s sad for their families. But Ireland has nothing to offer them. They have to leave. And usually, they don’t come back.”

Yesterday, we went to open an account at the Bank of Ireland.

“They must have been glad to see you,” said a colleague. “You must be the first person to open an account in years. The rest of us are taking our money out. Every bank in Ireland is insolvent, and everybody knows it.”…

Read the entire article at Business Insider

Related: Britain at risk of another financial crisis, Bank of England chief warns

Britain risks suffering another financial crisis without reform of the country’s banks, the Governor of the Bank of England warns today.

In an interview with The Daily Telegraph, Mervyn King says that “imbalances” in the banking system remain and are “beginning to grow again”…

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