A good man, and a fox hole
"If we stabilise Ireland, it may be possible to hold the eurozone as well." Interviewing the Irish finance minister yesterday, that was the line that jumped out at me. I had asked him whether he thought Ireland would be the last eurozone country to apply for emergency support.
Say this for Brian Lenihan - he doesn't go in for the kind of exaggerated statements of confidence that most finance ministers resort to when their backs are against the wall. I suspect his fellow European finance ministers would have preferred something less tentative. But that has never been his style.
I first interviewed him back in April, at the start of Britain's election campaign. If anything, he was more relaxed the second time around, though compared to today, April must now seem to him like the lull between the storms. Rightly or wrongly, at that time the markets were giving Ireland the benefit of the doubt.
Come to think of it, back then the markets were feeling pretty optimistic about the entire world. The IMF started talking about unwinding the many G20 stimulus programmes, and it looked as though the eurozone might not be in as much trouble as some had feared.
Not any more. Now, some of the worst fears that senior policy-makers have had about the eurozone and its crisis management capacity have been realised - or at least now look much more real than they did before.
On the vexed issue of Ireland's banks and their debt, Mr Lenihan confirmed to me that there would be sizeable haircuts for many, if not all, the junior creditors of Ireland's most troubled banks. He was pleased that Anglo Irish had reached an exchange agreement for its subordinated debt maturing in 2017, which values it at merely 20% of the face value. Expect more such deals.
But he was adamant, as ever, on the question of senior debt. I pressed him hard: he kept returning to the same, undeniable truth - that Ireland is not so different on this issue than anyone else.
Ireland has guaranteed the debt explicitly. But implicitly, the other European governments have been just as keen to reassure senior bondholders in their banks (with the possible, and unsurprising exception of Germany.) He said "there has been no question" of failing to service this debt in Ireland - but there hadn't been any question of it happening in Britain either.
We tend to think that the desire to reassure bondholders is driven by blind fear: no-one wants a repeat of Lehmans. But, after the interview, Mr Lenihan mentioned an intriguing, practical, objection to imposing haircuts on senior bondholders. Because, in European law, the senior bondholders in a bank have an equal legal standing to its depositors, he claims that it would be legally challenging, to say the least, to punish bondholders without punishing depositors as well.
I'd be interested to hear whether the legal experts agree. If true, most of Europe's politicians would consider it yet another reason why they don't want to go down this road.
But, as we saw this week, investors do not believe that governments will be able to hold the line. if senior bank debt isn't restructured, they expect that there will be some form of sovereign restructuring instead. The price for taxpayers is just too high - and their economies too weak.
Against this backdrop, Mr Lenihan's lukewarm vote of confidence sounds about right. "[I]f we stabilise Ireland, it may be possible to hold the eurozone" is a fair reflection of where we are.