Prime Time on the Euro

Last night’s Prime Time contained some interesting material.  A reader has provided a summary of some of  the main points, reproduced below:

Transcripts below of  remarkable comments by the ECB’s Executive Board
member, Lorenzo Bini-Smaghi, and  Fine Gael’s Leo Varadkar.

The stark contrast in the two viewpoints is a good summary of today’s
difficulties in Europe… Something has got to give, will give. And
probably in favour of the governments generally, not the ECB.

Leo Varadkar was asked on Prime Time what Ireland’s opposition Fine Gael
will be saying to the European Commission at their meeting today in

Leo Varadkar  – “They will be saying that Ireland does want to pay, that
we do want to take responsibility for our sovereign debt. They are going to
be saying that is a European problem, not just an Irish problem, that there
are flaws in the system in Europe. We are making it very clear to them,
which is very important, that at the current rate of 6%, we won’t be able
to pay. If they insist on this deal, on this interest rate, there will come
a point when Ireland won’t be able to honour its debts. And the money that
has been lent to us, we will be unable to pay, you know”.

Lorenzo Bini-Smaghi was interviewed by Prime Time –
“The amount of senior bonds is so small compared to the overall amount that
if you give a haircut to the bonds, immediately you would have a run on the
banks, by the Irish themselves by the way, because they would not trust
anymore their liabilities, their assets held in the banks are safe. So you
would have immediately a run on the bank, a collapse of the banking system
so the banks would not lend anymore to corporations. They would have to
restructure their own liabilities with the Irish citizens. So the Irish
people in the end would pay, pay for it, in the same way as the Americans
paid for the collapse of Lehman”.
“The government engages a country when it signs a agreement. .. The
programme is there has been signed and has to be implemented”