Same deal. If the original bailout wasn't legal, the government debt isn't binding. Putting Cowen in jail would help make that point.

If the UK etc didn't practice due diligence in assessing the creditworthiness of the Irish government when there were obviously questionable deals happening - and no one sane is going to argue that taking on the private debt was a necessity - the foreign banks shouldn't be surprised by a haircut.

Of course they were loan sharking and profiteering. So sympathy will be in short supply.

Internationally, they can't do much to a sovereign state except kick Ireland out of the Euro - which will be threatened, but isn't likely in practice - and refuses to lend in future.

As Jake says, their idea of future times out after 18 months or so, as Argentina, Russia, Iceland and others have proven already.