€90bn Irish Bailout Ends in Turmoil – Now Europe Fears Crisis Will Spread
THE GUARDIAN: Brian Cowen defies calls for resignation / Fears that Portugal and Spain may need aid / International rescue plan does little to calm markets / Datablog: how will the bailout be funded and how exposed is each economy?

Markets thrown into ­turmoil amid fears of a collapse in Ireland’s ­government. Photograph: The Guardian
Financial markets were thrown into turmoil today amid fears that an imminent collapse of Ireland's beleaguered government would have a knock-on effect across the eurozone.

The announcement of the potential €90bn international bailout for debt-laden Ireland – of which the UK could contribute up to £10bn – offered only a temporary respite to nervous markets.

By tonight, concerns that Portugal and even Spain might also need their own rescue packages were rising and sent the euro and shares falling while the risk of holding the debt of potentially vulnerable countries rose alarmingly.

After a tumultuous day in Dublin, where protesters tried to storm the parliament building, the prime minister, Brian Cowen, defied calls for his resignation but conceded he would call an election in the new year. The move was forced upon him after the Green party pulled out of his fragile coalition government, unnerving markets on a day which was supposed to restore confidence in Europe's decade-old single currency.

Instead there was a sense of growing unease in the markets amid evidence that investors felt Portugal would not survive without aid., Dealers said sentiment in the markets was reminiscent of the days after the collapse of Lehman Brothers in September 2008. Read on and comment >>> Jill Treanor, Nicholas Watt and Henry McDonald in Dublin | Monday, November 22, 2010

A Flight to Safety on Wall Street
THE TELEGRAPH: A flight to safety on Wall Street caused yields on 3-month US treasury notes to plummet at the steepest pace since modern records began, eclipsing moves at the height of the 1987 stock market crash.

The big freeze?

Investors fled the $2,500bn (£1,260bn) money market that usually serves as a safe-haven in times of turbulence, responding to reports that funds may be exposed to sub-prime mortgage debt and asset-backed commercial paper. "This is a sign of significant fear in the financial system," said one banker.

However, the Dow, after sinking nearly 100 points in early trading, staged a late rally and ended up 42 points at 13,121, as the pile into treasury notes eased later in the day.

Traders were initially unsettled by news that Deutsche Bank had tapped the credit window of the US Federal Reserve after the emergency half-point cut in the discount rate last Friday. Banks are typically reluctant to use the facility, fearing that it could send off a distress signal. US bond yields plunge at record rate (more) By Ambrose Evans-Pritchard and David Litterick

Mark Alexander