Solution--or Dissolution?

All is not well in the Eurozone.

Will the Irish bailout plan fly? Cobbled together by European ministers over the weekend, the €85 billion financial rescue package is sure to rile the citizenry. For one thing, the first €17.5 billion is not external aid at all, but a transfer from other government accounts, most particularly Ireland's national pension reserve fund. That money amounts to half the €35 billion set aside for the country's struggling banks. The other €5o billion will go toward sustaining government expenditures.

The €67.5 billion in external loans (almost 90 billion in U.S. dollars) will carry an interest rate of 5.8%, less than the 9% currently demanded by private markets, but punishing nonetheless. This new debt comes to almost $20,000 per Irishman, woman, and child. Service on the debt could reach 20% of the Irish government's annual tax revenues by 2014.

There is still no demand that bank bondholders share in the pain. They will be fully protected until at least 2013, or so the powers-that-be proclaim. Ordinary folks have other ideas. The Irish electorate may have an opportunity as early as next year to vote out its present government, which now enjoys a 13% approval rating, according to recent polls. Prime Minister Brian Cowen, who insisted just weeks ago that Ireland did not need a bailout, now calls the new loan facility "the best deal available." But will it work? Read his lips (below).