The success of the program will depend crucially on the market reactions. Here you can see a snapshot of the bond markets this morning, as compared to Friday morning. The yield spread – the measure of risk is unchanged in the case of Ireland and Spain, and it is marginally low for Greece and Portugal. But the spread is only a difference. German yields themselves rose further, to 2.76% this morning, which reflects market concerns about the bailout burden on Germany, but without alleviating the concerns about default risk in the periphery. It is a kind of the worst of both worlds scenarios.
This is an exceptionally bad reaction to the deal, especially as a lot of questions are now answered. To us, this suggests that the markets are concerned about Ireland’s fundamental solvency, something no bailout package can ever address. And we cannot see how interest rates at 6% are consistent with solvency.