One of the disappointing things about the bailout and associated adjustment programme is that it has done little to lower the perceived probability of an eventual Irish default. I know that many readers believe Ireland is fundamentally insolvent, and so are not overly surprised. At this stage, however, there is growing recognition that the structure of the European bailouts also makes it difficult for countries to regain market access. Key European policy makers have indicated a willingness to revisit the arrangements, though this will have to go beyond the relatively straightforward option of increasing the size of the support funds.
I grapple with the reasons why the current structure of the bailouts is itself an impediment to regaining creditworthiness in a piece for the business section of today’s Irish Times (article here).