Ireland will send the Euro into a death spiral

Sure the ECB will support the EUR and there will be dip buying as short position cover, but civil unrest Irish style is on the cards and the European Union being one for all and all for one, we should see civil unrest, protest, riots extend across Europe. A major sell pressure will form on the EUR if a country leaves or is kicked out.

from NYT

"DUBLIN — Acting to secure a $114 billion international bailout, the Irish government announced plans on Wednesday for steep tax increases and sharp cutbacks in its social welfare state.

The austerity measures, which would slash public spending by $20 billion over four years, would help pay for a severe banking crisis that has depleted the country’s finances and led to a dramatic weakening in the government that is likely to see Prime Minister Brian Cowen ousted from office early next year. A crucial, separate 2011 budget is to come to a vote on Dec. 7.

A throng of protesters shouted outside the Finance Ministry as Mr. Cowen and Finance Minister Brian Lenihan unveiled details of how the government planned to slash the deficit to 3 percent of domestic gross product in 2014, from 32 percent. Details of the plan were released as the government prepared to effectively nationalize two troubled banks that have bled the state of money, and as Standard & Poor’s lowered Ireland’s credit rating, citing concerns about how much the government was borrowing and about the vast amounts needed to shore up the country’s banking system.

In a speech Wednesday afternoon aimed at bolstering national morale, Mr. Cowen urged Ireland to “pull together as a people to confront this challenge, and do so in a united way.” He said the four-year plan would raise money mainly by taxing those who earned more, while going easier on those who had less. But he also warned that the “size of the crisis means no one can be sheltered.”

Mr. Cowen refused to answer questions about when he might step aside, an outcome that has gained momentum as opposition politicians press for his removal and the electorate blames his government for wrecking Ireland’s economy.

The prospect of political chaos in Ireland, and fears that a splintered government might roll back deficit-cutting measures amid public ire, had worried European officials and financial markets. The events in Ireland have led investors to turn their attention to the troubled economies of Spain and, in particular, Portugal. On Wednesday, Portuguese workers staged a huge strike to protest government austerity measures designed to get the nation’s finances under control.

In Ireland, trade unions were also warning of “civil unrest” and planned protests in Dublin on Saturday"