For those of us who missed this good overview of Ireland’s options in the Independent last week, this article clearly sets out the critical path that the government is negotiating These options should be clearly explicated for any social partner that thinks there is a ‘get out jail free card’ for the Irish economy.
Berlin bailout could be the best worst-case scenario for Ireland
By Brendan Keenan @ the Independent, Thursday March 05 2009
In the euro area, the idea of ‘federal’ bonds issued by a central euro authority, from which countries would take their individual borrowing requirements, has also been ruled out.
All the plans are still hypothetical and all calls for hard cash — even from the commission — have fallen on deaf ears in the major capitals. So it is far from clear that any ‘rescue’ will actually take place.
But if it did, the political architecture in which Ireland would find itself would be transformed. Former Taoiseach Garret FitzGerald has already said the country risks losing its independence, which seems a fair description of any likely rescue package.
It might partly depend on what it was we were being rescued from. The general assumption is that it would be the fiscal crisis. Even that can take two forms, however. The Irish Government might be to blame, because it was unable or unwilling to impose enough tax rises and spending cuts to reduce the budget deficit, even to dangerous levels, from the present impossible ones.
In that case, any rescuer, be it Berlin or the IMF, would impose the same cutbacks, and a bit more, in return for providing the cash just to pay the public-sector wages and bills.
That is why it is so pointless to resist the necessary measures. They will come anyway. But all history shows that does not stop people resisting them.
Berlin, though, can be expected to impose more conditions than Washington in such circumstances.
