€400bn bailout - A welcome and decisive move

The United States Congress balked at a rescue package worth $700 billion (€485bn) on Monday, because of the implications of providing government support for bad private investments. The Irish Government, on the other hand, effectively drew up a guarantee for the banks of €400bn, or $570bn.

In comparison with the rejected American rescue package, the Irish rescue measure was breathtaking in its scope. It could amount to more than 10 times the national debt, which is estimated at €45bn, or more than twice the country’s Gross Domestic Product.

It was a brave, positive move, all the braver when one considers that it could also be deemed reckless, because the Government will be, in effect, writing a blank cheque to protect the Irish banking system. It could be compared to an individual mortgaging the family home, business and in a sense the family’s future, but the Government has acted on a national scale with the financial future of all of us in mind.