Bailing out Bono

I don't really have that much beyond I told you so to say about Ireland's new bailout.  I continue to find it amazing that people can get up in the morning, look at themselves in the mirror, and wonder with a straight face whether knocking down this domino will have any effect on the others.

In Ireland's case, using the fund has proved to be much more difficult than anyone had anticipated. Instead of welcoming the aid, Ireland—reluctant to give up control of its tax and spending policies—caught other EU nations off guard by fiercely resisting help. Rather than setting an example of how the bailout mechanism could lay concerns to rest, the process unsettled markets and exposed the difficulty Europe has in showing a united front. That has fueled concerns that investors will now begin to batter the euro zone's other weak members, especially Portugal and Spain.

It occurs to me that if the equity markets are like a small nervous animal by turns afraid of its own shadow and emboldened by how big it looks when its hair stands on end, the credit markets would be a sort of dim witted lumbering pack of sheep surprised every morning by the brilliance of the sun.

The real question is still just who gets to pay for this.  I'm getting ready to bet that the EU has found a conveniently deep and foreign pocket to pick, and it's called American high tech multinationals.

The Irish government bowed over the weekend to the rising pressure from the EU and financial markets, conceding it needs outside help to shore up its public finances and ailing banks. But Irish officials said they hadn't backed away from their insistence that the country be allowed to preserve its 12.5% corporate tax rate—which German and France view as an unfair way of luring companies to Ireland at other European countries' expense.