by Calculated Risk on 11/13/2010 05:30:00 PM

The Financial Times "Eurozone in talks on Ireland bail out" reports that European ministers are currently deliberating whether Ireland needs a bailout before the markets open on Monday. The FT notes that the "the discussions ... are expected to intensify on Sunday".

And from Bloomberg: Ireland Urged to Take Aid by Officials Amid Debt Crisis

Irish Prime Minister Brian Cowen said he is working with fellow European leaders as his nation’s sovereign debt crisis threatens the stability of European markets.

While reiterating that his debt-strapped country has not sought to tap an EU rescue fund, Cowen told reporters today that “there are issues affecting the wider euro area of which we are a member” and that he and his counterparts were working to “ensure that the bond markets respond positively to the euro.”

Leaders in Ireland want to avoid asking for aid from the IMF or using the EFSF, however other European leaders are apparently pushing Ireland to accept aid to contain the financial turbulence.

My guess is if Ireland accepts aid, then Ireland's bonds will rally (and the yield will fall sharply) - however this will probably lead to a "buyers strike" for Portugal's bonds. And then Portugal will have to ask for aid. Then Spain and / or Italy would be next in line ... and I think that is the real concern.