With Irish Government bond yields still above 6%, the Finance Minister, Brian Lenihan, has told the Oireachtas Finance Committee that an estimate for the cost of the Anglo Irish Bank bailout will be published by the end of the month.
This will “reassure the public and the markets that the costs of restructuring Anglo, while huge, are very manageable,” he told the Oireachtas Finance Committee.
All this means the pressures on Ireland are receiving special attention from the European Commission and the European Central Bank, which is known to be in the market for Irish debt.
While that is a valuable safety buffer, it means today’s auction is something of an artificial exercise in terms of gauging the true level of investor support for Ireland.
For the moment, it appears the European authorities trust the Government to continue taking difficult decisions to balance the books. The difficulty, however, is that control over the situation is largely out of the Government’s hands: it rests with investors who determine the cost of Irish debt.
If Irish yields continue to rise, they would ultimately reach a level at which raising money from the private markets would be impossible.
The pressure is on to re-establish lost market confidence. That is especially difficult. But the alternative is a call on special help from the EU and the IMF, something which see key budget decisions taken away from Dublin. The stakes are that high.