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Dermot O'Leary: Greeks' burden sharing is a gift we should use to our advantage - Irish, Business - Independent.ie
Once it became clear that Ireland would need to request external assistance, Honohan hinted that Lenihan had a sense of optimism that an agreement could be reached that would represent a significant step forward in Ireland's fight against the banking and fiscal crises. This optimism turned out to be misplaced, as only a "plain vanilla" programme, as Honohan described it, was agreed.

Lenihan must have believed that the Troika would accept some collective responsibility for Ireland's plight, but as it turns out, all Ireland was provided with was time away from funding markets to get its own house in order. Honohan's description of Lenihan as "crestfallen" following the negotiations is telling.

Although Honohan didn't name names, it is commonly understood that the stance of the ECB on the issue of burden-sharing was the major roadblock to a more comprehensive solution to Ireland's banking problems.

It continues to be the main opponent to meaningful burden-sharing, but recent developments suggest that further private sector participation in the resolution of the crisis in Europe is coming. Having previously been ruled out at a European level until 2013, it is now back on the radar, courtesy of Germany's insistence on involving private sector creditors in the second IMF/EU programme for Greece.

The ECB continues to oppose coercive involvement of the private sector, but Standard & Poor's comments this week, when downgrading Greek debt further into junk territory, indicate that "voluntary restructuring" is actually an oxymoron.

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu Jun 16th, 2011 at 06:19:06 AM EST

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