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There must be other factors involved apart from public debt as a percentage of GDP. We would have to ask a bond trader what those factors are.

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Moreover, it’s an opportunity for high-tax European states to level the playing field. Throughout the go-go late ’90s, the Celtic Tiger grew by 6 percent or more each year as low taxes — including a 12.5 percent corporate tax rate, which is among the lowest in Europe — attracted over 1,000 multinational companies, including Intel, Pfizer, Microsoft, and Google. (Wasteful EU subsidies to Ireland, meanwhile, mostly went into the shrinking agriculture sector, though some also went to building infrastructure in the rural west.)

For decades, these successful low-tax policies infuriated continental Europe, where politicians attacked Ireland’s “unfair competition.” Now, under the conditions of the bailout, middle-class Irish families will lose their tax credits and low-paid workers will be taxed. Also, as a French official has ominously remarked, the corporate tax “leaves room for progress.” France’s president, Nicolas Sarkozy was more direct: “Our Irish friends . . . have more room for maneuver than others, their taxes being lower than all the others.”

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Originally posted by BradNelson:
In a very real sense, the Irish bailout is about the creeping (and creepy) attempt to keep socialism ascendant in Europe.

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The worst case scenario looks at a trillion euros of Europe’s money allocated towards financing sovereign debt, sovereign debt defaults or even the end of the common currency as we know it. In assessing the combination of short-term pressures from increasing minimum debt payments and interest charges with the longer-term burden of structural deficits, Zangana has six eurozone countries on his list of “troubled sovereigns.” To the usual suspects, Greece, Ireland and Portugal, he has added Spain, Italy and Belgium. The government debt due for refinancing between 2011 and 2018 of these six countries amounts to EUR 2.9 trillion – a bite on which the EFSF might easily choke, in Zangana’s view.

There has been much speculation that, faced with such a reality, one of the prime contributors to the EFSF, Germany, could be tempted to abandon its financial responsibilities and the eurozone altogether. Another possibility is that fiscal austerity measures and monetary tightening convince Southern European states to leave the euro. The third possibility Zangana outlined is that in the process of ensuring fiscal stability, the eurozone becomes more integrated, but individual member states shed more of their sovereignty.