Thursday is an important day for Ireland and, in the end, another reminder that Ireland’s economic woes and the measures taken to alleviate them don’t offer much of an example for other countries or their governments.
The Irish government is going to have to announce its plan for bailing out (or not) Anglo Irish Bank’s bondholders. None of the options – outlined by the FT here – seem attractive. The political cost of meeting the bond market’s hopes will be severe; the economic cost of not doing so could be equally horrendous.
Robert Peston has a good post explaining just why the Irish economic elite is so out of touch with the views of the man on the Drumcondra omnibus:
Ireland’s dependence on credit from abroad is so great that the economic consequences of that credit being withdrawn would be catastrophic.
[…] Total foreign bank exposure to Ireland’s economy is $844bn, or five times the value of Ireland’s GDP or economic output.
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