One of the headlines of the Irish Times today (29 September 2010) reads: “Ireland will not need emergency funding, says EU commissioner.” That’s according to Olli Rehn, European Economics commissioner, who does not foresee the need for the Irish government to seek emergency financial aid from supranational institutions such as the EU or the IMF to rebuild the international investors’ confidence in the country. An optimism shared by Taoiseach Brian Cowen who also dismissed the idea yesterday that Ireland will need to resort to external financial help to sort out its economy. So Ireland does not appear in such a bad situation from the EU standpoint, compared to, say, Greece or Spain, for example.
That may not be the case for long if we are to judge by another headline of today’s Irish Times (ironically placed right next to the other one cited above on the printed edition – see on the right-hand side) which warns that “Anglo Irish ‘worst case’ bill may top €30bn.” I thought the ‘worst case’ scenario was a €20bn bill, or maybe it was €25bn? My confusion probably comes from the fact this figure (and others) keeps changing, and seems to be always on the rise. So can we take that €30bn seriously? In the same Irish Times article, financial correspondent Simon Carswell points out that “this will meet minimum capital rules up to the end of 2012 but the banks may need more capital beyond this date should losses rise.” How and where would we find more capitalat that point? More bonds? But how can we afford issuing more government bonds when interest rates on 10-year bonds have already risen close to 7%? So, I wonder, can we completely dismiss the idea that Ireland may need to seek help from the EU and/or the IMF at some point?