So the question becomes - was the Government just plain stupid, or why did the Bank managements hold so much influence over them.  You could argue that the management did a good job for their shareholders as well, and the Irish government (and more particularly, the Civil Service,  is ideologically opposed to dismissing management or senior staff except in the case of moral turpitude (and even then, not really).

So it comes down to one great big bet that we can ride out the storm - in which case taxpayers may get some marginal benefits in the form of debt insurance payments - in return for taking on enormous risk.

Ireland is probably getter placed to take on this risk - with a 30% debt/GDP ration - and becoming very dependent on international financial services.  So it was probably also a calculation that the guarantee would give Ireland a competitive advantage vis a sis (say) Greece with a much higher national debt.

The really interesting question is the impact on the big boys - UK, Germany, France - who are probably extremely annoyed at the substance, never mind the manner of the move.  It puts them in a very difficult position.   One more example of how globalisation has moved ahead of the Global regulatory frameworks required to manage it.

Somebody could get seriously hurt here - and it will probably be the financially smallest and weakest (as usual).  It certainly looks like high stakes poker.  What's to prevent the Irish Banks from investing their huge inflows of money in a speculative way?

Vote McCain for war without gain