Ireland’s Fine Gael party will take control of the government after winning in yesterday’s elections. A few weeks ago, they were threatening to give haircuts to bank bondholders, but now most “serious” people in government and the media believe this will never actually happen. However, the wildcard in all of this is the Irish people themselves — they’re expecting real change, not half measures. And some of them are openly talking of a “revolution.”
It remains to be seen whether the moment of truth has finally arrived for Ireland’s bank bondholders. As predicted, Ireland’s opposition party, Fine Gael (pronounced “feena gail”), did very well in yesterday’s elections and will likely form a coalition government with Ireland’s Labour party. As we reported earlier, Fine Gael played to voters’ anger over the bailouts by engaging in a good deal of tough talk about unilaterally restructuring the debts of Ireland’s bailed out banks.
However, the tough talk will likely turn out to be nothing but talk. Fine Gael’s pre-election threats to bank bondholders were promised to be carried out only if they were unable to restructure the terms of the IMF “bailout.” Such restructuring would only amount to tinkering around the edges of the agreement, not rejecting it outright. The main point of contention amongst “serious” people has been the 6% interest rate Ireland was saddled with, not the obvious injustice of making the Irish people debt slaves for the benefit of Deutsche Bank and Soc. Gen.
