PowerSwitch

Matthew Lynn wrote:the EU-IMF rescue looks like financial methadone. It numbs the pain and gets you off drugs, but it’s addictive. The cure can be worse than the disease. Months have passed since the Greek bailout, and there isn’t much sign of Greece accessing the capital markets. The yield on Greek bonds remains more than 11 percent. It’s a “Hotel California” package: You can check out anytime you like, but you can never leave.

and he also wrote:this is mostly about rescuing EU financial institutions. It is the Irish banks that are in trouble, and if they go down, it will cause massive losses at other European lenders. But why should the Irish people worry about that? If French, German or British banks suffer big write-downs, let their governments deal with them. Ireland could just close its banks -- such a small country doesn’t need its own finance industry any more than it needs its own carmakers.

Irish citizens may bring down the bailout of foreign bank creditors by voting at the ballot box, but if they do not, they will bring about a default of some kind by voting with their feet. We now face a negative spiral in which austerity causes emigration, which increases the burden of the debt, which ultimately leads to more austerity. We need a game-changer to break the cycle, but what might it be? Since the fundamental problem is that Ireland is insolvent, the smart thing to do is to tackle our debt burden head-on, but the Europeans* have vetoed this.