Irish head toward bailout; Portugal next in line?

[one...two...tree 2,762]

DUBLIN – The governor of the Central Bank of Ireland says he expects his debt-crippled country to accept a loan worth tens of billions of euros (dollars) from the European Union and International Monetary Fund.

Patrick Honohan made his comments Thursday as forensic accountants from Brussels and Washington opened talks in Dublin with Department of Finance, Central Bank and treasury and regulatory officials.

The EU-IMF mission seeks to identify the size of the hole in state and bank finances and the measures needed to reassure markets that Ireland won't default on debts.

Honohan, speaking in Frankfurt, said he expected the EU-IMF loan — if approved by the Irish government — would provide a financial "buffer" for Irish banks that would not be used.

The Dublin talks are expected to last several days.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

European officials geared up to travel to Ireland and lift the lid on just how bad the country's banking woes are, as EU finance ministers struggled Wednesday to come up with a rescue plan that will keep bond market turmoil from spreading to Portugal and Spain.

Irish and European Union officials had vowed the day before to stabilize the banks at the center of the country's financial crisis to restore confidence in the wider 16-nation eurozone, but fell short of agreeing on a bailout. On Wednesday, Britain — which has made savage austerity cuts to avoid a debt crisis of its own — also offered help to protect Ireland's heavily exposed banks.

Ireland insists it does not want a bailout because it has enough money through the middle of next year and is wary of the strings attached to a rescue by the International Monetary Fund.

But EU countries are worried that the turmoil is spreading to affect other highly-indebted countries like Portugal and threatening the stability of the common euro currency.

A ?750 billion ($1 trillion) backstop — set up this spring by eurozone countries and the International Monetary Fund — stands ready to help Ireland and other nations that run out of money, EU officials stressed again Wednesday.

Representatives of the EU, the European Central Bank and the IMF will be in Dublin on Thursday to examine both the government and banks' accounting books. Irish Finance Minister Brian Lenihan said there wouldn't be a decision on whether to request aid for the banks before then.

"The engagement now takes place, that's what's important. It begins later this week," Lenihan said. "Let's look at the facts and make our decision based on that."

Europe's debt troubles have been weighing on stock and bond markets and attracting investor concern well beyond Europe.

In Washington, White House press secretary Robert Gibbs said U.S. officials "continue to believe, as we did with Greece, that Europe has the ability to deal with the crisis in Ireland and possibly in other countries."

British Finance Minister George Osborne Wednesday offered support on top of any that might come from the eurozone, saying his country "stands ready to support Ireland" in whatever it needs to do to stabilize its banking system. The U.K. is a member of the EU but not of the eurozone.

Ireland has nationalized three banks and is expected to take over more in a bailout that has already reached ?45 billion ($61 billion) and likely will push the nation's 2010 deficit to a staggering 32 percent of GDP — ten times the level allowed under EU rules.

In addition to the government bailout, Irish banks are also drawing billions of euros from the European Central Bank's liquidity support program, but EU monetary affairs chief Olli Rehn suggested that additional funds might have to come from other sources.

"I am quite confident that it will be very difficult for the ECB to go further than now in the providing of liquidity to some banks in the member states," Rehn said.

The priority for European leaders is containing the Irish woes from spreading to other vulnerable countries in the eurozone, and many think a concrete response is the only solution.

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[^_^ 5,021]

Europe is fu c k ed

[spookyturtle 9,466]

Europe is fu c k ed

No they're not. They are way better than the US and have more countries with a higher quality of life ranking and place substantially higher in international rankings and studies. Charts and graphs to follow.

[one...two...tree 2,762]

Europe is fu c k ed

Not entirely. Ireland chose austerity over spending and are now seeking a bailout. Germany, on the other hand, chose to stimulate its economy with spending and consequently is doing quite well economically.

Edited November 18, 2010 by 8TBVBN

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Shut up, commies.

[one...two...tree 2,762]

Shut up, commies.

Have some bratwurst and enjoy the show.

[Mr. Big Dog 10,747]

Not entirely. Ireland chose austerity over spending and are now seeking a bailout. Germany, on the other hand, chose to stimulate its economy with spending and consequently is doing quite well economically.

Yep. Looking at those two European nations, it seems fairly clear that one pursued a policy that works - as it has in the past - and the other chose a policy that doesn't - and hasn't. What's important to notice, though, is that Germany not only benefited from the stimulus they provided for the economy but also from quite drastic reforms to it's welfare system that the left there pushed through years ago - to their political disadvantage at the time. They did the right thing for the country and suffered losses in popularity as a result. Sound familiar?

Also important to notice, however, is that Germany has now begun to address the deficit and debt problem that resulted from the weak economy and the stimulus package. They'll remain in a stronger position that way. Keynes 360 - spend when the economy needs it and then shore up that budget and reduce that debt so that next time around, you won't stand there with empty pockets.