Your comment about Minister Noonan paying money he is not legally bound to is disturbing. One wonders if there is any other finance minister in Europe who would do this. What on earth is it about the Irish psyche that is so addicted to martyrdom?

More broadly, my own view is that the euro is failing because there is not a sufficiently strong sense of identification between the different nation states, & there is therefore an unwillingness to make the financial sacrifices between states that would save the system as a whole.

And this, I think, comes down simply to language. We will help – up to a point – someone with whom we can share a joke or an anecdote. But much less so someone with whom this is impossible.

This problem did not arise in the formation of the USA, or to a far lesser extent.

So we now have the absurd position where our young people in search of work go to Sydney (because there the jokes are the same), while our economy is run from Berlin (where the jokes are of a different kind altogether).

Greece does not have a banking crisis, it has a sovreign crisis which spilled over into the banks.

Ireland on the other hand, had a banking crisis and now 4 years into the mess our sovreign crisis is increasing.

So for Greece, does seperation of the banks from the Sovreign actually mean anything?

The answer is “The European taxpayer will.” As NWL rightly says, if the Germans won’t allow the banks to default. the shortfall has to be repaid. In the end, the only “soft touches” are the European taxpayers. So the debts will be parked, restructured with low to negligible interest rates and paid down over a long time period. And while our exposure will be increased due to Spain and Italy’s debts being spread across the many; ours will also be spread over the whole eurozone rather than just ourselves. We should win out in the arbitrage.

This actually strengthens Ireland’s hand IMO. As Spain will have to get a retrospective reversal of its banking costs, even if this period is only a number of months, rather than a few years like Ireland’s.

How good the ‘deal’ will be is hard to judge at this stage but I think it is very likely that Irish solvency will be improved.

The technical arguments and the terminology can indeed become convoluted.

But to simplify the position, Ireland has debt to pay back. Some is the debt arose because as a nation we’re spending more than we earn, and that came about with the property/bank collapse in 2008. Some of the debt has arisen because we bailed out the banks after the losses in those banks threatened the survival of the banks.

So simply stated, we owe money to people who lent it. The terms on which we must repay the debt are specified, as with any loan.

So, if we are to see some reduction or relief in our debt, there will be an equal and opposite sacrifice made by our creditors.

And our creditors have no motivation to offer such a sacrifice. Our 120% debt:GDP is high but is akin to Italy’s and Portugal’s shortly. It is morally unfair that we have paid back bondholders but many of them were guaranteed by our duly elected government, so we made our bed and we sleep in it. We didn’t have to pay back other bondholders like the €1.1bn paid this week, but seemingly Minister Noonan interpreted a “nod and a wink” and did so anyway. So why should our creditors offer a sacrifice? From what I can see at this stage, there is no offer of a sacrifice on the table, and I am scratching my head as to what yesterday’s “deal” means for Ireland. I hope something positive comes from it, but can’t see it.

So to answer your question, “no” I don’t believe the Germans and French perceive our problem to be sufficiently also their problem to assist to a degree that would make a significant difference to our position. Unless there is unilateral action on our part or threat of unilateral action on our part, I don’t see that changing.

Typical political short termism; rearrange the deckchairs.

Ireland, Greece and Portugal sovereign balance sheets respectively still retains the cost of borrowing for their nations bank’s recapitalisations.

If the Spanish bank recapitalisation was treated in the same way as Ireland/Portugal/Greece, Spain’s borrowing costs would become unsustainable and Spain would default immediately. The scale of Spain’s legacy debt – and the same will apply to Italy if Italian banks asks Italy for a bailout – ensure that a deal had to be struck in order to save Spain from defaulting. I guess it helps that Spain is the Eurozone’s 4th largest economy and the worlds 12th largest economy.

This all to regain access to a market that will lend us really expensive money even at 5% vs what we have to pay now. This will blow our deficit wide open once more