Emmet Oliver: Cash injection for banks likely to calm markets
Published 29/11/2010 | 05:00
WHILE providing the Irish banks with as much as €35bn in fresh cash is not going to do much for Ireland's long-term growth prospects, the package announced last night should shore up the euro in the short term and restore the faith of the bond market in European governments.
The decision to give €85bn of fresh funding to Ireland makes a default by this country more remote than a few weeks ago and should boost confidence in those who fund giant deficits across Europe -- US, Asian and European bond buyers.
While not discussed very often, the reason borrowing costs for European governments have surged so much is that many in the market think certain European governments are going to default.