Ireland Is Second Euro Nation to Seek Aid as Banks Wobble

http://www.bloomberg.com/news/2010-11-22/ireland-seeks-european-union-rescue-as-outsized-crisis-overwhelms-nation.html

Ireland Is Second Euro Nation to Seek Aid as Banks Wobble
Joe Brennan and Dara Doyle
Nov 22, 2010

Ireland became the second euro country to seek a rescue as the cost of saving its banks threatened a rerun of the Greek debt crisis that destabilized the currency.

The euro erased gains and Irish bonds pared an early advance after Moody’s Investors Service said a “ multi-notch” downgrade in Ireland’s Aa2 credit rating was “most likely.” The prospect of January elections loomed as the Green Party said it would pull out of Prime Minister Brian Cowen’s coalition.

A package that Goldman Sachs Group Inc. estimates may total 95 billion euros ($130 billion) failed to damp speculation that Portugal and Spain would need to tap the emergency fund set up by the European Union and International Monetary Fund after the Greece rescue.

“It probably won’t halt contagion. The sovereign crisis isn’t yet over,” said Sylvain Broyer, chief euro-region economist at Natixis in Frankfurt. “Ireland is in the middle of a difficult crisis.”

The aid, which Irish officials said as recently as Nov. 15 they didn’t need, marks the latest blow to an economy that more than doubled in the decade ending in 2006. The bursting of the real-estate bubble in 2008 plunged the country into a recession and brought its banks close to collapse. With Irish bond yields near a record high, policy makers are trying to keep the crisis from spreading.

Threat to Euro

“Clearly because of the size of their loan books, the huge risks they took, they became a threat not only to the state but to the” entire euro region, Finance Minister Brian Lenihan told Dublin-based RTE radio in an interview today. “The banks will be downsized to the real needs of the Irish economy” to “Irish consumers and Irish businesses. That has to be the primary focus of Irish banks.”

The euro slid 0.3 percent to $1.3633 at 1:30 p.m. in London. The yield on Irish 10-year notes fell 5 basis points to 8.30 percent after falling as low as 8.11 percent.

The U.K. and Sweden may contribute bilateral loans, the EU said in a statement. Lenihan declined to say how big the package will be, saying that it will be less than 100 billion euros. Goldman Sachs Chief European Economist Erik Nielsen said yesterday the government needs 65 billion euros to fund itself for the next three years and 30 billion euros for the banks.

Deficit, Banks

Talks will focus on the government’s deficit cutting plans and restructuring the banking system, the EU said in a statement. Cowen who spoke at the same press briefing as Lenihan, said the banks will be stress tested. Ireland nationalized Anglo Irish Bank Corp. in 2009 and is preparing to take a majority stake in Allied Irish Banks Plc, the second- largest bank.

Irish banks may get immediate capital injections, Matthew Elderfield, the country’s head of financial regulation, said in a speech today. The country’s two biggest lenders need at least 5 billion euros immediately, Ciaran Callaghan, an analyst with NCB Stockbrokers, wrote in a note to clients on Nov. 18.

The package for Ireland will total as much as 60 percent of gross domestic product, compared with 47 percent for Greece.

Cowen plans to announce the government’s four-year budget plan this week and said an agreement with the EU and the IMF will come “in the next few weeks.”

The Green Party said today it will quit the government after the budget is passed, leaving Cowen without a majority in parliament. Irish voters “feel misled” by the government, leader John Gormley said at a press conference in Dublin.

No ‘Bogeyman’

Irish officials initially resisted pressure from the EU to take any aid, saying they were fully funded until the middle of 2011. European leaders sought to head off contagion from Ireland and reduce pressure on the European Central Bank to prop up the country’s lenders by providing them with unlimited liquidity.

Cowen defended his reversal on the need for aid. “I don’t accept I’m the bogeyman,” he said. “Now circumstances have changed, we’ve changed our policies.”

The bailout follows two years of budget cuts that failed to restore market confidence as the cost of shoring up the financial industry soared.

Lenihan cancelled bond auctions for October and November and announced 6 billion euros of austerity measures for 2011 on Nov. 4 in a bid to restore investor confidence. Those efforts failed after German Chancellor Angela Merkel triggered an investor exodus by saying bondholders should foot some of the bill in any future bailout.

Irish Spread

The risk premium on Ireland’s 10-year debt over German bunds, Europe’s benchmark, fell to 523 basis points today. It widened to a record 652 basis points on Nov. 11, with the yield reaching a record 9.1 percent. In 2007, it cost Ireland less than Germany to borrow. Its 10-year spread then fell to as low as 77 basis points less than bunds. The ISEQ stock index has plunged 70 percent from its record in 2007.

Ireland will draw on the 750-billion-euro fund set up by the EU and IMF in May as part of the Greek bailout to protect the currency shared by 16 countries.

Yields on bonds of Spain and Portugal have jumped amid concern that fallout from Ireland would spread. The extra yield that investors demand to hold Portuguese 10-year bonds instead of German bunds climbed to a record 484 basis points on Nov. 11.

“Speculative actions against Portugal and Spain are not justified, though it can’t be excluded,” Luxembourg Prime Minister Jean-Claude Juncker said today on RTL Luxembourg radio. “In a moment where financial markets have an excessive tendency to punish those countries that didn’t stick 100 percent to an orthodox consolidation, one can never exclude that similar things will happen.”

To contact the reporters on this story: Joe Brennan in Dublin at jbrennan29@bloomberg.net; Dara Doyle at ddoyle1@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

Corned Beef and Cabbage Pizza

http://www.abcnews.go.com/GMA/Recipes/story?id=7094559

Corned Beef and Cabbage Pizza
Celebrate St. Patrick's Day With Irish Pizza
March 17, 2009

Ireland isn't known for its fine cuisine, but perhaps if you indulge in enough Guinness this St. Patrick's Day, you'll be more inclined to try this Irish-themed pizza.

The Corned Beef and Cabbage Pizza is a holiday favorite at Boston's Penguin Pizza restaurant.

Corned Beef and Cabbage Pizza
Prep Time: 35 minutes
Cook Time: 1 hour
Serves: 2 medium (14-inch) pies

Ingredients

For the dough:
2 teaspoons sugar
1 package active dry yeast
3 tablespoons extra-virgin olive oil, plus more for the bowl
3 cups all-purpose flour, or 2¾ cups plus ¼ cup whole-wheat flour, plus more for dusting
1 teaspoon fine salt

For the toppings:
5 tablespoons extra-virgin olive oil, plus more for the pan
3 cups sliced green cabbage
Kosher salt
1 teaspoon pickling spices, tied securely in cheesecloth
1 large potato, peeled and thinly sliced
Freshly ground pepper
2 cups shredded mozzarella cheese
¾ cup shredded monterey jack cheese
½ cup freshly grated Parmesan cheese
6 ounces sliced corned beef

Directions

Make the dough:

Whisk 1 cup warm water (105 degrees) with the sugar in a bowl; scatter the yeast over the top and set aside until foamy, about 10 minutes. Stir in the olive oil.

Whisk the flour and salt in a large bowl. Make a well in the center and pour in the yeast mixture. Gradually stir the dry ingredients into the wet ingredients to make a rough, shaggy dough.

Turn out onto a floured surface and knead until smooth and elastic, about 5 minutes. (Add more flour to prevent sticking, if necessary.) Form the dough into a ball; place in a large oiled bowl, turning to coat with oil. Cover the bowl with plastic wrap and set aside at room temperature until the dough has doubled in size, about 90 minutes.

Meanwhile, prepare the toppings:

Heat 1 tablespoon olive oil in a skillet over medium-high heat. Add the cabbage, season with salt and cook until just soft, about 5 minutes. Add the pickling spices and just enough water to cover. Simmer over low heat, covered, until the cabbage is tender, about 20 minutes. Drain the cabbage and set aside (discard spices).

Place a pizza stone in the oven, if you have one, and preheat to 500 degrees.

Toss the potato with 2 tablespoons olive oil and season with salt and pepper. Roast in a single layer on a baking sheet until golden, about 15 minutes.

Divide the dough into 2 equal pieces. Roll one into a 14-inch round (keep the remaining dough covered). Place the round on a floured pizza peel (if baking on a stone) or a large oiled pizza pan; drizzle with 2 tablespoons olive oil.

Scatter half of each of the cheeses, corned beef, cabbage and potatoes on top. Season with salt and pepper. Carefully slip the pizza onto the hot stone, if using one, or place the pan in the oven. Cook until golden and crispy, 10 to 15 minutes. Repeat with the remaining dough and toppings.

Recipe adapted from Penguin Pizza, Boston, for Food Network Magazine.