Hail thee EU, salute those who are about to go bankrupt!

Another EU commentary (sorry if this is boring) :

Well, what a difference a day or so makes. After repeatedly denying that Ireland requires a bailout, it now looks like Ireland's proud leaders have been persuaded  bullied into accepting one by the rest of the EU and the EU Commission. Even the UK (outside of the Euro zone) is getting in on the act, by apparently being preparing to cough up £7 billion in support of Ireland The Euro.

A team is apparently going to Dublin to try and solve this crisis. Well good luck. There are a whole load of problems here, but at the root is the stupidity of the Euro in the first place, which was the dreamworld of the Euro-Fundamentalists, who believed that a common currency would unite us 'europeans' in brotherly love forevermore or as we call it in Britain a pure fantasy and now we are unfortunately seeing the whole house of cards collapse around us; after Ireland the focus will be on Portugal and then (the big one) Spain.

There are several issues here :

1) The problem is with the Euro itself : As said before about Ireland is already passing massive austerity measures (on top of high unemployment), but without the help of a devaluation which can help export led growth or the stimulus of monetary policy. So if a rescue does occur, how can Ireland take any more punishment from a further austerity drive, without anything to stimulate the economy.This is madness.

2) The domino effect We are on a roll with this crisis and focus will soon turn to Portugal and then Spain, as these countries are in a similar position to Ireland- but Spain is of course much larger and therefore more of a problem to bailout (see below). So the crisis will not end in Dublin.

3)Does Northern Europe have the cash? In effect the EU and politicians are asking northern Europe (plus the UK) to bailout Southern Europe plus Ireland. You cannot see this at present as the EU is dealing with the crisis inherent in the one size fits all policy of Europe, piecemeal i.e. going from country to country or crisis to crisis rather than tackling this head on. But the end result will be the same; even if Northern Europe could persuade taxpayers/voters to stump up enough money the problem then arises as to how this states will cope with the extra debt levels this would impose. You would find that an ever decreasing amount of states, were bailing out an ever expanding amount of states. 

5) This is another bailout of banks, not of countries. Yes in effect we are not bailing out countries, but as in the case of Ireland their banking system (which is overwhelming the Irish state). Note that this current problem arose because of bondholders worrying about taking cuts to the amount they were expecting to get back, even though countries have gone out of their way to shaft stockholders, the public (via budgets) and just about everyone else except the bondholders. Therefore any rescue will presumably mean that bondholders will get 100% of their money. Who are the bondholders? Banks of course! So yet again the taxpayer has to make good a set of crazy lending decisions, albeit this time to nation states.Note also another impetuous behind this bailout is the insurance contracts, the same type which bought down AIG. There is a lot of worry that should a default occur then banks and insurers will have to pay out, possibly causing another AIG. So for banks (who have insured themselves via this way) are in a win-win situation.

So in summary the Euro was a bad idea to begin with, we are now having to deal with the consequences and there are no easy fixes if you wish to keep the Euro alive. I think that we have to (as said before) grasp the nettle and (somehow) have a controlled  bailout, ejection from the Euro of the weaker states, to allow them time to build up their economies. The Euro is causing more pain than it is worth. If European leaders could see this and plan accordingly then things would get better. But because all of them are wedded to the Euro-federalist nightmare they are prepared to expend massive amounts of public treasure to defend something which cannot be defended and will ultimately fall, one way or another.