An Irish bailout might not be the final answer
TEXT OF INTERVIEW
STEVE CHIOTAKIS: Irish banks lost billions of dollars in the real estate bust and global crisis. The country is awash in debt and the Irish government now says it needs help to keep its financial system solvent.
Marketplace’s Stephen Beard is with us live from London with the latest. Hi Stephen.
STEPHEN BEARD: Hello Steve.
CHIOTAKIS: What are the Irish asking for?
BEARD: A package of loans from the European Union and the IMF worth well over $100 billion. As you were suggesting the aim of this is to prevent the country’s heavily indebted banks from collapsing. We don’t know the exact amount or the terms of this package, because they actually haven’t been agreed — all of them yet. They rushed this announcement out last night because they were worried that there would be mayhem in the markets this morning without any agreement at all. That’s how sensitive this issue’s become.
CHIOTAKIS: You know, Stephen, Ireland isn’t even as big in economy as Greece. How did this become such a big story?
BEARD: It’s all about confidence and connectedness. The 16 countries that use the Euro are intimately linked. A big loss of confidence in one of them can quickly spread to some of the others, especially if they’ve got similar problems like Portugal and Spain. And turmoil in four or five Euro countries could rock the whole single currency, which let’s not forget is a major world currency now. If the Euro unraveled, it could knock confidence in the whole global recovery.
CHIOTAKIS: And has news, Stephen, of the bailout calmed any jittery nerves?
BEARD: To some extent, but it has to be in doubt that this has stopped the rot. Here a man who watches the county markets buy the minute, Steve Barrow of Standard Bank.
STEVE BARROW: I think if you look for an example back in the experience of Greece earlier this year. It achieved the bailout — a very big bailout. People thought perhaps that was the end of it. And it wasn’t.
All eye he says are now on the next potential target — Portugal.
CHIOTAKIS: Alright, Stephen thank you.
BEARD: OK Steve.
CHIOTAKIS: Marketplace’s Stephen Beard in London.
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