Ireland Seeks EU-Led Bailout, Works To Avert Bank `Collapse’

Posted By on November 21, 2010

Ireland has an unprecedented budget deficit — equaling one-third of its economic output this year!  This bailout is a no-brainer, but up until now Ireland has said they didn’t need any help…..Geez! 

Finance Minister Brian Lenihan said Ireland will apply for a bailout as it sets itself up to be the second euro member to seek a rescue from the European Union and the International Monetary Fund.

“I will be proposing to my colleagues that they should formally apply for a program,” Lenihan said in an interview with state broadcaster RTE in Dublin. “The banks were too big a problem for the country. The key issue all the time for the government is to ensure that we do not have a collapse of the banking sector.”

An accord “should help reduce tension,” said Julian Callow,  London-based chief European economist at Barclays Capital, who estimates a package of about 85 billion euros. “There had been growing concerns about systemic risks from the Irish financial sector and that was linked with the contagion fears that have been welling up.”

The cost of saving Ireland’s banks threatens a rerun of the Greek debt crisis that destabilized the euro region earlier this year. Lenders are reeling from the collapse of the property market in 2008, which resulted in the biggest contraction of any EU nation. An unprecedented budget deficit — equaling one-third of economic output this year — sent bond yields to all-time highs.

More at: www.bloomberg.com

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