Save do not save around Ireland, the end of the 17 euro-zone and EU finance ministers emerged monthly regular meeting puzzling scene: one side is the debt situation is grim determined not to help the Irish, while the EU forced the Irish to accept help. Find the money to pay for, so the situation is rare. Ireland can persist in the end, avoid becoming the second Greek, you can see the outcome shortly.

Save the government or to save banks

Ireland, as investors questioned the solvency of its recent rising bond yields, 11 is a record since the birth of the euro since 1999, the highest on record. Ireland has become the Greeks, the most likely to fall in the debt crisis in the second euro-zone countries.

Faced with this grim situation, Ireland has withstand pressure from all sides, start at the EU finance ministers meeting to reject rescue mechanism behind its own considerations.

First, the Irish government insists that he did not point to the need for relief. And Greece is different is that the Irish government is expected before the middle of next year is not short of money to repay, a debt fears Ireland will breach some of the reactions early.

Secondly, the Irish refused to accept the aid is out of domestic political factors. There is no free lunch, the Irish Government is worried that, once received assistance, the same as Greece would accept the harsh conditions attached, while Ireland is likely to be required to raise corporate taxes. Ireland’s corporate tax as low as 12.5% has been the magic of the country to attract foreign investment and economic development is the lifeblood, it must not give up. Moreover, any loss of economic sovereignty of the people at home practice will lead to resentment, which will usher in parliamentary by-election after a week in Ireland is very unfavorable ruling.

Of course, this does not mean that Ireland’s debt problem is not serious, the crux of the problem lies in the banking industry. As the financial crisis led to the real estate bubble burst, the Irish banking system has accumulated a huge amount of bad debt, the financial system at risk, which became the lead culprit in the debt problems of Ireland.

The end of September this year, the Irish government announced that five major banks as its highest possible salvage cost 50 billion euros, is expected deficit this year will be surging to 32% of GDP, the EU provides more than 10 times the upper limit, Ireland became the outside world The focus of concern. While the Irish government itself is not short of money, but the banking crisis is a bottomless pit, stretched the Irish government should weak.

Because of this, the Irish Finance Minister Han said the Irish government does not need aid, but added the banking sector may need outside help. It can be said to find foreign aid for domestic banks, and not sacrifice economic sovereignty for the Government to accept assistance in advance, is the Irish Government’s current choice.

EU worried about spillover effects

Ireland has been reluctant to start the rescue mechanism, the EU was on pins and needles, because the EU is concerned, Ireland delayed the stability of financial markets will only play a role even worse, spread to Portugal and Spain, and other serious debt problems the euro area countries within the euro zone set off a broader crisis.

After the situation was critical of Ireland, Portugal and Spain also significantly rising bond yields, infectious to have begun. Although the EU and member states officials have refused to publicly acknowledge pressure, but the Irish did in the European Union is facing pressure to start as soon as possible rescue mechanism, a good calm market fears, which contain the crisis spread. The security commander of the strategy the euro area as a whole for the maintenance of financial stability is regarded as a last resort option.

It is estimated that the amount of assistance may be required for Ireland in the 45 to 90 billion euros, while Portugal, Ireland and the cost of relief is approximately 200 billion euros, if spread to Spain, then the consequences would be disastrous, because Spain is the fourth largest economy in the euro area, economies of scale is equivalent to three times the sum of Ireland and Portugal, when the joint International Monetary Fund, the European Union in May this year, just passed the 750 billion euros in Europe I’m afraid not enough stability mechanism.

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