From Bruno Waterfield at the Telegraph – German-Irish brinkmanship raises EMU stakes:
Ireland is paying 5.9pc on the EU chunk of its loans, far above the EU funding cost of 2.6pc. Jens Larsen, Europe strategist at RBC and a former IMF director, said the policy makes no sense… Mr Kenny’s problem is that this hawkish view reflects broad German opinion. His other problem is what happens as recovery pushes up bond yields across the board, lifting rates on Ireland’s loan package pari passu. His trump card is to threaten ‘haircuts’ on senior bank creditors if the EU refuses to compromise, a move that might set off EMU-wide contagion and inflict big losses on German Landesbanken. To play to such a card would enrage Europe, but not to play it might test patience of an aggrieved Irish nation.