WSJ on Govt negotiating position

This WSJ piece gives a decent outline of the position the Government finds itself in (though I think the poker analogy – now in use everywhere – is really soulless. I know, I know, it’s the WSJ.).

[…] This game is due to be played out over the rest of this week, with European Union and International Monetary Fund officials descending on Dublin to thrash out a deal. Ireland has signaled it is willing to consider a deal to recapitalize its banks, allowing them to borrow again in private markets.

That suits the Irish because it enables them to claim the government itself remains solvent and so shouldn’t be subject to any external fiscal oversight that might put its tax arrangements at risk. Legally and practically, this argument is nonsense, because any bailout needs to be channeled via the government, giving the lenders the right to impose any conditions they wish.

That may point to an extended standoff between Ireland and the rest of the EU. If so, this crisis simply would be following the path of every other period of stress over the past three years in Europe and elsewhere. But eventually, the market will succeed in pressuring policy makers into the response it is seeking.

I still can’t see business taxes remaining as they are now. It’s not politically possible for a German – or French – government to sell a bailout for Ireland to its public while Ireland poaches business from them due to its tax haven status.

Also, for the record; if we access the EFSF the euro will be gone within five years. It’s bloody awfully designed. More on this in a later post.

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