Turning down the lender of last resort not an option
The banks would close down and government cheques would bounce without IMF/EU support, writes Colm McCarthy
The 31st Dail is set to assemble on March 9 and the new government will be faced immediately with a critical European summit at the end of March. This summit is intended to agree a new and hopefully more coherent response to the European banking and sovereign debt crises, including decisions about enlarging the bailout fund and tighter fiscal rules for eurozone member states.
From an Irish perspective, what matters most is whether this summit decides to address the bank insolvency problem on a pan-European basis or continues to expect individual members to recompense bank bondholders even where this runs the risk of sovereign default.
Detailed proposals are emerging for a new regime post-2013, intended to equip Europe to deal with the next crisis. Meanwhile, the current crisis lumbers on unaddressed. After a week of general election campaigning, the critical issues to be decided in Brussels at the end of March have received very little air-time. Indeed some of the proposals floating around are escapist and divorced from the practical realities.