There’s a sideshow going on in Ireland. As Bloomberg reports: “Gerry Adams, president of Irish nationalist party Sinn Fein, is selling a clear message ahead of Ireland´s election this month: burn the bank bondholders and send the International Monetary Fund home. His stance appears to be winning voters, at least according to opinion polls ahead of the Feb. 25 vote. Sinn Fein, the political wing of the Irish Republican Army before the group laid down its arms, may double support to about 14 per cent. That leaves it vying for third place with Fianna Fail, the party in government and the lightening rod for Irish ire over the country´s financial demise.”
Then there’s reality. The reality is that Ireland is insolvent. It took on all the liabilities of its banks and in so doing went bust. The Irish population, courtesy of its government, now owes a debt that can only be paid off over a generation (or perhaps two generations, or perhaps 100 years).
The only country in the Eurozone that can bridge the gap for Ireland is Germany. The German political leadership is said to be open to the idea of some kind of massive, long-term loan. But German voters want no part of it. If no loan can be arranged, then Ireland will have to withdraw from the Euro and devalue. That will be the end of Ireland for at least a generation. It will also likely be the beginning of the end of the Euro.
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