Losing sight of the big picture is folly
Our political chaos is overshadowed by the prospect of eurozone meltdown, writes Ronan Fanning
'The best thing about the Irish right now", wrote Paul Krugman, the Nobel Prize-winning economist in the opening sentence of a recent column in The New York Times, "is that there are so few of them. By itself, Ireland can't do all that much damage to Europe's prospects. The same can be said of Greece and Portugal . . . But then there's Spain. The others are tapas: Spain is the main course".
Even this bleak assessment already seems optimistic. Little Ireland's bailout package so melodramatically announced last Sunday night failed utterly to restore confidence in Monday's markets. Pressure was not confined to Portugal and Spain but spread to Belgium and, more ominously, to Italy, which was sucked into the crisis when its bond markets fell significantly for the first time. Italy has the most massive outstanding debt in Europe -- € 1,300bn -- and, like Spain, has so far been regarded by most investment analysts as too big to fail.
On Tuesday the pressure intensified on Portugal, Spain, Belgium and Italy and the euro sank to its lowest level since the current crisis began amid speculation that even France was beginning to feel the strain. The markets next sought comfort in the shape of a more dramatic initiative at Thursday's monthly press conference of the European Central Bank's president, Jean-Claude Trichet. But comfort came there none.