There has been no rescue of the Euro debt crisis, just the beginning of one. Today we explain why and what it means to you.

What did the emergency summit change?

Contrary to expectations which were lowered before the summit, both Germany and France in a separate bi-lateral meeting u-turned on their failed hard line policies and agreed to increase the firepower and independence of the EFSF, simultaneously changing the front loaded nature of its rigid lending model which was strangling programme countries like Ireland and causing further market anxiety.

So does that mean we’re out of the woods?

Nope far from it but it does mean that, with a tailwind from reasonable economic growth, we’ve now got a real fighting chance of manoeuvring out. It also means that if we hit a brick wall as Greece did, further relief will be possible including bond buy backs, the voluntary selling back of Irish debt by bondholders to Government thereby relieving much of the excessive load.

So what did we get last week?

Firstly, we no longer face an impossible loan repayment schedule; it will now be stretched over 15 years. That means default is no longer a given. Secondly we are no longer being ludicrously fined with a punitive average interest rate in excess of 6% for money. It’s dropping to 3.5% relieving us of extra interest payments that are estimated to be between €800m and €1.2bn.

Does that mean lighter austerity?

You gotta be kidding. The gap between Government spending and our intake from tax revenues from a fragile, weak and shrunken economy is unchanged so the austerity period continues unabated despite lobbying from vested interest groups.

Can I safely bring my money home?

In my view – yes. The risk of a catastrophic move like a unilateral leaving of the Euro or appropriation of cash deposits by the Government has significantly abated. Furthermore, that private investors have piled into Bank of Ireland shares is a sign that the banking market, buffered with massive recapitalisation and having passed the latest EBA stress test, is making a comeback.

Will the economy grow this year?

There are no official economic indicators that yet give clear evidence of growth in the domestic economy but I think growth is returning slowly and probably started in March this year once consumers adjusted to the effects of the budget and rid themselves of the depressing sight of a beaten, demoralised and uninspiring Government.

What about all those hammered with debt?

It’s taken three horrendous years but the penny is dropping. Banks, boosted with fresh capital, part of it aimed at matching debt write offs, are finally getting around to forgiving debt where there is no other way out. The Government should now accelerate the implementation of the Law Reform Commission report to install a network of legally authorised insolvency trustees tasked with the job of mediating workouts between the over-indebted and creditors in a dignified system that affords honest people a fresh start in the near future.

So what’s next?

The last summit was the breakthrough where the Euro group got ahead of the problem but the problem of excessive debt in parts of the Eurozone hasn’t gone away. It’s going to take years to address the underlying causes, most particularly chronic uncompetitiveness and poor tax compliance. In the meantime I don’t think markets are finished testing the Eurozone’s defences.

It’s highly likely that we’ll see a series of these summits over the years ahead and witness some members peeling off the Euro but, at least now in an organised manner. Ireland’s more likely to stick with a reformed Eurozone, becoming its prodigal son.

All eyes now turn on the US political deadlock between the Republicans and Democrats split along the hoary old divide to raise taxes or shrink Government as the worlds largest economy strives to cut its yawning deficit.