What the package means for economy
Q: So, tell me the worst. How much are we borrowing?
A: That depends on how much it costs to bail out out the banks. The headline figure is €85bn -- but that includes a €25bn fund which can be raided to help pay for any future cash injections. In other words, it may or may not be used.
Q: So, do the banks get anything straight away?
A: Yes, the Government has set aside €10bn which will be put into the banks immediately. The remaining €25bn will be used if needed while we will use the rest to keep the country going on a day-to-day basis.
Q: Why? I thought we had already poured a fortune into the banks?
A: We have, but they need more. Irish banks don't have much money in the kitty compared with foreign banks. That's one of the reasons nobody trusts them. The Government will give them this money so Irish banks have a reassuringly large kitty or a Core Tier 1 capital ratio in banker jargon.
Q: What's in it for us?
A: The banks will continue to operate and the State will end up owning most of them but not much else really. The banks will be told to sell everything that is not essential to survival and we will probably see a lot of mergers and the like -- but the main reason for all this is to bolster the banks' kitties. This is all about international market confidence and the euro. We won't see any extra lending for some time.
Q: So not much chance of a new mortgage next year. So who is giving us this €85bn?
A: The Government has put its hands down the back of the sofa to raise €17.5 by raiding the National Pension Reserve Fund and a few other piggy banks. The rest, which could be as much as €67.5bn, will come from the eurozone states' bailout fund, the IMF, Britain, Sweden and Denmark.
Q: God bless their respective kings and queens. So what sort of interest will be have to pay their highnesses and the other bailout funds?
A: It's fairly high I'm afraid. At 5.83pc, it is more than the Greeks are paying for a similar bailout. Still, it's better than the 9pc or so which the bond markets want these days.
Q: Why are they charging so much? Sure all they have to do is print a little bit more money. The ECB is lending to the banks at a much cheaper rate?
A: In a nutshell, they don't want us to get used to cheap money. They want us to return to the bond markets as soon as possible.
Q: When might that happen?
A: Well, we don't know for sure but the Taoiseach ruled out returning to the markets next year. The entire programme agreed yesterday means we don't have to go back for a couple of years.
Q: Sounds like we are going to be paying a lot of tax just to pay off interest.
A: The Government calculates that we will soon be handing over one in five tax euros just to pay the interest on our borrowing. That sounds awful but we paid one in three pounds in interest repayments back in the 1980s.
Q: Anything else of interest?
A: We've been given an extra year to ensure that we bring our borrowing under 3pc of gross domestic product.
Q: Well, that's a relief! Can we forget about that nasty four-year plan and devise a somewhat less painful plan?
A: Not so quick! We still have to take €15bn out of the economy over the next four years but we get a little wiggle room in case the economy doesn't grow as quickly as the 2.75pc every year which the plan foresees.
Q: Any good news?
A: Well, we're not going to have to pay for bailing out Greece anymore which will save us €1bn. Also anybody working for a multi- national, or indeed a local company, was probably very happy to hear Brian Cowen say that the 12.5pc corporation tax rate will stay.
Q: That's a relief. How did Brian Cowen do last night? Any sign of hoarseness?
A: He was very much on top of his brief and managed to make it sound at times like he was doing the eurozone a favour.
Q: And what is the opposition saying about all this?
A: Labour's Joan Burton was the most succinct when she stated unequivocally that: "Ireland's banjaxed."