After months of trying to go it alone, Irish officials have relented and are officially asking Europe for a bailout that could top the $110 billion dished out to stave off bankruptcy for Greece. The funds will come out of the $1 trillion vehicle established by the EU and IMF in an effort to prevent a zone-wide collapse.
Irish PM Brian Cowen said the money would be split into two funds — one to shore up failing banks and another to allow the Irish government to continue operations without issuing new and expensive debt. More from the NYT:*
The request for help was a humbling turnabout for Ireland, which just last week was insisting it could manage its own finances. It does not view itself as being as profligate or irresponsible as Greece was in running up deficits, and has been preparing a four-year budget plan filled with sharp cutbacks that is intended reduce its deficit from 32 percent of gross domestic product to 3 percent.
But the government has been sinking further and further into debt since its 2008 decision to protect its banks from all losses. The banking system had become so weakened that it could not afford to wait any longer for help.
“This is a difficult time for the country,” Mr. Cowen said. “We have seen abnormal market conditions so we have had to step out of the markets. We are determined to deal with the issues that have arisen and we will soon have our public finance in order.”
Europe is reportedly welcoming the request, and both the euro and S&P 500 futures are up on the news.
*As of posting, the Times article linked is full of editors’ mark-up in all caps — e.g. “RIGHT WORD?” and “DID HE STATE THAT THEY WOULD GET LOANS FROM BRITAIN AND SWEDEN, OR JUS THAT IT WAS POSSIBLE?” Kinda funny.
Well if Ireland is serious about correcting the problems, it would be a good thing. We will have to wait and see if they do it.
Reply to this commentLinkReport AbuseThat 2nd quoted paragraph says it all, doesn't it? The banks were so protected that they could no longer stand on their own. In other words, if you don't have to be strong, you won't be. Why do so many financial geniuses find that so hard to understand?
Reply to this commentLinkReport AbuseAnother viewpoint--the Irish tax payers are being put on the hook to pay for poorly researched loans by UK, German and US banks.
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I visited Ireland in 1994 and instantly fell in love with a country not quite yet a Celtic Tiger. The Irish are the friendliest people in the world (in my humble experience of 22 countries) and have perhaps the most beautiful country, especially in the west. In 1994 it did not seem all that far removed from John Ford's idyllic and apocryphal tale in The Quiet Man.
When we returned in 2002, much had changed. We were amazed to see the new and numerous housing estates of Irish McMansions encircling many of the quaint country towns. The landscape itself had changed. Even in Ireland, the world had moved on, even if us tourists did not want it to. But it's hardly fair for the world to tell anyone they must remain quaint simply because we need a nice holiday location.
I wish them well. As far as I can tell, they were not as profligate as the Greeks, but too many bad loans can sink any country, especially when done for PC reasons as in the US. Slainte Ireland.
Reply to this commentLinkReport AbuseAs stage directions for vaudeville:
Ireland: "Please help, I'm drowning!"
EU representative: "Here, catch this"
Ireland: "But, that's a 500 lb. anchor with a chain attached!"
EU: "That's OK, the chain is around my neck"
Rimshot, fade-out.
Reply to this commentLinkReport AbuseOMG, panic, I love it!
Reply to this commentLinkReport Abuse“We have seen abnormal market conditions so we have had to step out of the markets" is Gaelic for "We perceive that the market is now punishing fiscal irresponsibility, and we prefer to remain irresponsible."
Never bail out the banks. Stenchless corpses provide no example.
Reply to this commentLinkReport AbuseSpeaking as an Irishman I need to make one minor correction to your vaudeville play extract there Panic:
Ireland didn't ask the EU for aid - the EU came to Ireland and pretty much begged us to take the aid in order to bolster the euro. You see, by giving the EU the impression that we didn't want their help despite the detrimental effect it might have on the euro they offered us much better terms to take the loan than would have been offered if we went begging cap-in-hand to them.
Althought there is very strong sentiment over here to lynch some of our politicians for surrendering our sovereignity to the EU this was at least one thing they got right.
Reply to this commentLinkReport AbuseNice one panic.
So many of the solutions offered to the economic crises we have had, are having, and will soon have, seem to be based on a misunderstanding of the problem. I don't see any way that we'll be able to address the deep systemic problems that underlie much of the world's economies. Too many people are committed to the left/progressive/statist power structures.
Even if we aren't as badly screwed in America, it will still be incredibly painful because we have one of the biggest economies and thus have farther to fall.
Reply to this commentLinkReport AbuseIt's not a good thing... it's the death knell for Irish independence within the EU. Why not bail out the banks themselves? They need a leash on the Irish dog.
We will never see another Irish "no" vote in the EU context. Mark the day... Brussels hegemony lost its last enemy today.
Reply to this commentLinkReport AbuseRunnik,
The EU begging Ireland to take the money is a classic "Bre'r Rabbit" moment. They were begging you lot to throw them in the briar patch and you obliged.
Reply to this commentLinkReport AbuseWhat do you know? Fractional reserve banking failed once again. It always does. Banks lend too much, cause inflation, create a boom, which leads to a bust, and then they go to their political cronies for a bailout. A better solution would be to eliminate the privelege banks enjoy to lend out demand deposits. If banks actually had to lend out their own capital, these problems would be exceedingly rare. And moreover, the Fed must be destroyed.
Reply to this commentLinkReport Abuse"the government has been sinking further and further into debt since its 2008 decision to protect its banks from all losses."
Reversing this idiotic decision was for some reason not considered an option.
Reply to this commentLinkReport Abusethe good news: millions of irish coming to the usa illegally....SPEAKING ENGLISH!
Reply to this commentLinkReport AbuseSince the population of Ireland is (a) under 4.5 million and (b) separated from the USA by a wide ocean, I feel confident in predicting that "millions of Irish" are not coming here, either legally or illegally.
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