Europe Approves Irish Bailout
The New York Times reports:
Fighting to prevent an accelerating euro crisis from engulfing Portugal and Spain, Europe’s finance ministers Sunday agreed to an €85 billion bailout for Ireland that would require the government to pay billions of its own money to shore up its ailing banks, while sparing most private investors from contributing to the bailout.
With the European Union engaged in a high-stakes battle with financial markets, however, the officials announced that they would start requiring private investors in any future European debt crises after 2013 to contribute to the costs of a bailout, as politicians in Germany, France and other European nations face a rising tide of anger from taxpayers who are now footing the bill for investors’ gambles. Any such decisions would be made on a case by case basis, the ministers said, and would not be automatic.
Officials rushed to announce the details of Ireland’s financial rescue package before financial markets opened Monday, in a bid to relieve pressure on Portugal and Spain, the economies seen as the next most vulnerable after Ireland. But it remained unclear whether enough had been done enough to quell the fears gripping markets.
Despite the announcement of a bailout package for Ireland one week ago, the financial markets have continued to threaten the stability of the euro, and 10-year bond yields climbed in Greece, Ireland, Portugal, Spain and Italy last week.
The agreement Sunday marks a significant moment in Europe’s debt crisis: Now, politicians are laying down a marker and letting private sector investors know officially that they may pick up part of the tab in the future — albeit not until after 2013.
The euro gained in early Asian trading after the announcement, strengthening to $1.3296 on Monday compared with $1.3242 in late U.S. trading Friday.
The total €85 billion, or $113 billion, rescue for Ireland will include a contribution of €17.5 billion by Ireland itself through money it has already raised. Of the rest, €22.5 billion will come from the International Monetary Fund. The remaining €45 billion will come from bilateral loans from European nations and two E.U. rescue funds set up this past spring in the wake of the Greek budget crisis.
Click here to read more.
