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Ireland would be better off going bust than taking a loan. The conditions attached to a rescue aren’t worth it: Once it takes EU money, it will never get off the hook. And the Irish banks aren’t worth saving anyway. Defaulting on your debts is a far less scary prospect than usually portrayed.
The real question is whether Ireland’s politicians have the courage to take that step.
The EU may demand an end to Ireland’s low corporate-tax rate...
Even if it isn’t explicitly part of the rescue deal, Ireland will come under pressure over the next few years to raise its corporate taxes, which take companies, government revenue and jobs from Ireland’s neighbors.
Second, the EU-IMF rescue looks like financial methadone. It numbs the pain and gets you off drugs, but it’s addictive.
Third, this is mostly about rescuing EU financial institutions. It is the Irish banks that are in trouble, and if they go down, it will cause massive losses at other European lenders. But why should the Irish people worry about that? If French, German or British banks suffer big write-downs, let their governments deal with them. Ireland could just close its banks -- such a small country doesn’t need its own finance industry any more than it needs its own carmakers.
Fourth, Ireland risks tipping into an economic spiral
Five, going bust isn’t so bad. Russia and Argentina defaulted on their debts. It wasn’t the end of the world.
If it defaults on its debts, Ireland can bounce back fairly quickly. If it accepts an EU bailout, it will be stuck in recession for a generation.
Bust Is Better Than Bailout for Irish Patient: Matthew Lynn - Bloomberg
<Mod> This thread has been merged with "Defaulting-a good option?" </Mod>