It would seem that the government is going to bail out the banks once again.
This is the reason why Fianna Fail is not in power. The Irish people voted so that we would not have to keep bailing out the banks, but the new government is breaking it’s first promise and they are going to be sinking 24 Billion of borrowed money into them.
Here’s my 2 cents worth.
The PIIGS as we are called (Portugal,Ireland, Italy, Greece and Spain) are all struggling with national debt, for us it’s bank debt turned into National sovereign debt.
Everyone and their granny know that ireland cannot pay back all the money owed by us to the ECB, our biggest bond holder to date. So what to do?
Well If I were ECB trying to stop a massive bailout of 4 huge countries, I would allow the smaller of the countries take all the pain (Ireland) as it would be the least costly.
After this, the hope would be that the European economy would recover sufficiently and that the other countries get there national debt in order.
So what would happen in a few years if other members of the PIIGS club do not need a bailout ? well, I would slowly let Ireland default on some of the debt, the markets hopefully will be in a better condition at that time and as it’s the ECB’s money they will write all the money down as a bad loan, Ireland will be free of the debt burden over time, slow enough as to not rock the boat.
This is my thoughts on the whole mess!