If you’re having a hard time wrapping your head around the drama regarding Ireland’s national zombie Anglo Irish Bank, and why the government can’t just backstop it and end all the uncertainty, read this editorial in the Irish Times demanding that the ECB just take care of Anglo Irish itself.
As the paper sees it, the only reason Anglo Irish Bank hasn’t been allowed to fail already is because the government wants to appease the ECB, which has decided that no eurozone bank be allowed to fail, lest that create a crisis of confidence across the already-fragile system.
Strip away the drivel and the spinning and this is the one truth left standing. At least if we clarify this much, we can also clarify the nature of the decision that now faces us.
The choice is now stark: do we go on being “good Europeans” at the cost of destroying our own society or do we become “bad Europeans”, lose the trust of some of our European partners, but save ourselves?
There are costs to be paid whichever choice we make, but we know which side we have to pick. In the appalling state we’re in, there is just one rational course of action: tell the ECB that if it wants Anglo to survive, it can save it.
Otherwise, we are calling in the bondholders and negotiating a debt-for-equity swap in which this brat becomes their baby.
So you see, in addition to the pure maths of whether the Irish government can bail out Anglo Irish or not (we’re guessing it probably can), it’s obviously hitting a raw spot with regards to the country’s relationship with Europe.
Of course, that’s what we saw, also, in Greece, when, during the worst of its crisis, politicians blamed Germans for all of its problems (somehow we suspect that when the Irish are telling Europe to shove it, what they really mean is that they want Germans to shove it).
And of course, that’s why you’re seeing opeds like the latest from Martin Wolf, arguing that the Germans need to realise that the EU is good for them, because increasingly the feeling from everyone else is that the Germans are acting aloof, and unneighborly.
Remember, during the TARP debate, the 2008 Presidential elections made things even trickier than they would have been. Here the political divides literally threaten to upend the whole political system.