Brady Bonds For the Eurozone

Today’s conventional view of the eurozone is that the crisis is over – the intense, often existential concern earlier this year about the common currency’s future has been assuaged, and everything now is back under control.
By the end of 2008, Ireland’s three main banks had lent more than three times the country’s national income. The crash came in 2009, as Ireland’s real estate boom turned to bust, leaving the country with large insolvent banks, a collapse in budget revenues, and Europe’s largest budget deficit.
This is disconcertingly reminiscent of the spring – when Jean-Claude Trichet, the ECB president, lashed out at a skeptical bond market and declared a Greek default unfathomable. But markets today think there is a 50% chance that Greece will default within the next five years – and a 25% chance that Ireland will do so. The reason is simple: both Greece and Ireland are likely insolvent.