The Stupid Economy: Debt Relief

It is hoped that this year Ireland will formally exit the Troika bailout programme and return to international bond markets. This will be a major victory for advocates of austerity and place Ireland as Europe’s poster child. Free of the bailout, Ireland will be able to finance itself by issuing sovereign debt. And the markets seem comfortable with this prospect, yields on Irish government bonds maturing in 2020 fell from 8.5% at the start of 2012 to 4.5% by the end of the year. Renewed appetite for Irish debt allowed the government to regain partial access to bond markets in 2012 and the NTMA plans to raise €10 billion by issuing bonds in 2013. However, while a return to the markets is in the interests of the entire European Union, it will need to be set in motion by a deal on relief for some of €64 billion in bank related debt. Why do we need a deal and why do we deserve some relief? Continue reading