Irish Eyes Are NOT Smiling

From the Economist - AT THE height of the banking crisis two years ago, Ireland’s government thought it was calling the market’s bluff when it rashly promised to back all of the debts accumulated by its overheated banking sector. Stand firm, and the speculators will fold, was the wisdom of the day. As it turns out, it was the government itself that had the weaker hand, and now its bluff has been called. Having tried valiantly to restore stability to the public finances through impressively harsh austerity measures, the Irish government has been dragged down by the sheer weight of the bad loans on the balance-sheets of its banks. On November 21st, having abandoned its earlier insistence that it was not in need of a bail-out, the Irish government agreed to ask for help from its European neighbours. Its request came after a tumultuous two weeks in which the trade in Irish government bonds and those of some other European states almost dried up, and the cost of borrowing surged to unsustainable levels. Read here:

Irish Eyes Are NOT Smiling