Today's meeting: what is likely to happen
Published 16/11/2010 | 05:00
So, what happens today?
All we know for sure is that Brian Lenihan and the other EU finance ministers are due to meet in Brussels for one of their regular meetings, known as Ecofin meetings. They will discuss Ireland's problems tonight and tomorrow.
What is the bould Brian likely to say or do at this meeting?
He will try and persuade the rest of Europe to lend us money to bail out the banks. His officials have been doing the same thing for the past few days.
But I thought the European Central Bank was already propping up our financial system? Sure, aren't they lending more than €130bn to our wretched banks already?
The ECB is helping on a week-by-week basis but we need more stability. Bank of Ireland warned last week that things were far bleaker than they had previously admitted because borrowers are withdrawing their savings to stash away elsewhere. AIB is likely to say something similar this week. The ECB's help is meant to be temporary and could theoretically be switched off quite quickly. That idea sends a chill through the markets.
That make's sense. So will Wolfgang, Christine and the others agree to Brian Lenihan's request to chip in and help the banks alone?
It seems very unlikely. There is no mechanism to bail out the banks in the present system, cobbled together after the Greeks ran into problems. What they can to is lend the money to the State and then let the Government tell the world that this cash will be used to save the banks.
Where will the money come from?
It will come from the €450bn European Financial Stability Facility.
What difference does it make whether the money is used directly to help the banks or by the State?
None at all; this is all about pride and bragging rights. The present Government don't want to be the first Irish leaders since Dermot McMorrough to have handed over the day-to-day running of the economy to somebody else. Whether the money pays off bank debts or sovereign debts makes no more difference than whether you pay off your gas bill or your electricity bill. It all comes from the same source and is used for the same purpose.
Is it a racing certainty that the finance ministers will bail us out?
There's no doubt about the help in the short term although there could be a few hurdles down the road. The German Constitutional Court may strike down Berlin's participation in the safety net when it rules on the issue sometime in the middle of next year. That's one of the reasons the Germans are so anxious to make the bondholders suffer a bit.
Will it take long to sort this out?
No, it could be very quick. The deputy head of the ECB said yesterday that everything is ready and all that has to happen is for the Government to make a request.
Why are they all so eager to help when Cowen and the rest of our leaders have been telling them that their help is not wanted?
They don't really care any more what we want and they are looking at a much bigger picture than we are. Their fear is about contagion. Everybody believes Portugal could be next to go after Ireland, followed by Spain -- which would be too expensive to save and could trigger the collapse of the euro. This would set back European integration by a generation. Very few people want that right now.