Irish Prime Minister Brian Cowen just announced the government decided to cancel all bond auctions for the rest of the year because of “market turbulence”. The 10yr yield, after having reached a record 6.8% in recent days, retreated to 6.57%.

Irish 10 year government bond yield. Source: Bloomberg.com

On Thursday, Finance Minister Brian Lenihan revealed the total cost of rescuing the country’s banks (Anglo Irish, Allied Irish, Bank of Ireland, Irish Nationwide Building Society) to reach EUR 50bn – almost one third of GDP. This will lift the 2010 budget deficit to a record 32% of GDP – 10x the recommended limit for Euro-zone members.The debt to GDP ratio, only three years ago at very modest 20%, will suddenly find itself at above 100%.

Nobody knows where and how all this is going to end. The likelihood of some countries being forced out of the Euro (and into default) increases every day.