Let's be clear about what's going on today. A small country has attempted to take on the debts of a disproportionately sized banking sector and has been unable to support those debts. It is teetering on the edge of sovereign insolvency. That can't be allowed to happen as, by absorbing the debts of the Irish banks, the Republic finds itself owing huge amounts of money to the British and German banks, and to banks across Europe. Once all the arcane jargon of high finance is stripped away the basic reality is that Ireland cannot possibly pay this money back. It's gone. Kaput.
So the High Priests of European and now World finance are arriving to attempt to avert the crisis whereby rich institutions in rich countries might have to suffer losses. Expectations on this front are lowering: even the editorial in the FT is saying that the centre cannot hold and that its time for those institutions to bear a slice of the pain. But so will Ireland, so will Ireland....
Addendum, from the Irish Times:
SAD NEWS just in from Our Lady of the Eurozone Hospital: After a sudden worsening in her condition, the Irish Patient, formerly known as the Irish Republic, has been moved into intensive care and put on artificial ventilation. While a hospital spokesman, Jean-Claude Trichet, tried to sound upbeat, there is no prospect that the Patient will recover.
It will be remembered that, after a lengthy period of poverty following her acrimonious divorce from her English partner, in the 1990s Ireland succeeded in turning her life around, educating herself, and holding down a steady job. Although her increasingly riotous lifestyle over the last decade had raised some concerns, the Irish Patient’s fate was sealed by a botched emergency intervention on September 29th, 2008 followed by repeated misdiagnoses of the ensuing complications.
With the Irish Patient now clinically dead, her grieving European relatives face the melancholy task of deciding when to remove her from life support, and how to deal with the extraordinary debts she ran up in the last months of her life . . .