Anglo may halt some debt payments

Nationalization has not proven an escape route from some difficult decisions that Anglo-Irish Bank has to make.  Signs of the calculus are a little clearer with today’s announcement that it may stop making recurring payments on some of its lower-priority debt.  It hopes to buy back the debt, and the evaporating likelihood that it would ever paid in full makes the buyback cheaper than it would otherwise be.  But the government now needs to hope that the financial market and rating agency gods, who it always seems eager to appease, understand the difference between a government owned bank pulling a move like this and the government doing it with regard to its own debt.  Luckily, it seems that they do.  One other wrinkle: since Anglo is now likely in technical default, we get to find out how many contracts out are out there written as bets on Anglo debt.  Credit default swaps and all that.  See Bradford & Bingley.