Ireland Bailout Approved
The European Commission, European Central Bank and International Monetary Fund, known as the troika, just approved a new release of $1.3 billion in aid for Ireland.
Ireland has also considered issuing 40 billion euros of 40-year bonds to refinance the bailout of Anglo Irish Bank. The goal is to significantly reduce annual repayments to cover the cost of the bank’s collapse.
Irish bank assistance amounted to 41.7 billion euros at the end of June. That is about a quarter of the Irish economy. Promissory notes -- essentially IOU's -- were included in Irish government debt in 2010, driving a 300% increase in government borrowing over the last five years.
Relief is sorely needed, to say the least. Unfortunately for the Irish, Germany is standing in the way once again.
German Chancellor Angela Merkel made it abundantly clear during an annual post-summer press conference that she is opposed to any agreement that would lower the cost of the 64 billion euro bank bailout.
Ms. Merkel also rejected plans for a new pan-European bank supervisor within the European Central Bank and dismissed the notion that struggling banks might be able to tap the eurozone's new rescue fund.
Struggling periphery nations in the euro zone were hoping the European Stability Mechanism could be used for direct bank aid before a new supervisor is installed.
Due to German resistance and in spite of some signs of recovery and stability, it looks like Ireland will be stuck in a malaise for quite a while longer.-1
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