IRISH TAXPAYER (Séan): “I am really furious right now, Helmut…”

As I mentioned yesterday, the markets were distinctly unimpressed with the details of Ireland’s bail-out.

Although banking stocks rose yesterday, global stock markets closed lower as markets failed to be convinced that the €85 billion package for Ireland would solve the euro zone debt crisis.

EU economic and monetary affairs commissioner Olli Rehn said yesterday that Spain may need further austerity measures to reduce its deficit if growth was lower than forecast next year.

And the paper adds in a seperate [borrowed] report

The focus was on Italy and Spain, two of the euro zone’s largest economies, which are dubbed by some investors as “too big to fail”.

The premium both countries pay for their debt above benchmark German interest rates rose to a fresh high since the introduction of the euro a decade ago.

Italy saw some of the biggest moves of the day as it held a €6.8 billion debt auction but paid half a percentage point more than a month ago.

“The crisis is not abating,” said Alan Wilde, head of fixed income and currency at Baring Asset Management. “The euro is being hit, and Italy has now been drawn in with a big fall in its bond markets for the first time.”

And, somewhat related to Mack’s post, Gavin Barrett imagines a conversation on the Clapham omnibus Clontarf dart – also from the Irish Times

[Helmut:] Like I said, it’s in nobody’s interest to see Ireland bankrupted – although it is fair that you feel quite a bit of economic pain for your really irresponsible behaviour. You can’t seriously expect us to lend you money while you instigate a panic with your “bondholder- burning” that would wreck our banking system and our currency.

Seán: We won’t pay this. We can’t pay it. It’s too much.

Helmut: I am afraid you will have to, Seán. If you don’t accept the terms on offer you have absolutely no way of financing your ongoing budget deficit. Plus your banks will collapse because, well, you’ll have nothing to finance them with.

Seán: We could just refuse the loan and bring you down too.

Helmut: I don’t think you would dare. For a start, another major crisis in the euro zone is in nobody’s interest – least of all Ireland’s. Secondly, Ireland would collapse financially first, not anyone else. Your problem, Seán, is that you are looking at things the wrong way. You are supposing a moral duty on other countries to help Ireland out to an extraordinary degree. I don’t accept the existence of any such duty. The reality is that every state in the euro zone, and indeed in the EU, is there, for the most part, for its own benefit: out of enlightened self-interest.

Seán: You have a strange idea of EU these days.

Helmut: Is it so very different from yours? I don’t recall too many Irish people on either side of the Lisbon Treaty debate in Ireland ever talking about Europe’s interests. On the contrary, that debate was all about Ireland, Ireland, Ireland. It strikes me that people who accuse Germans of not being very good Europeans should look into their own hearts a bit more.