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.