According to Bloomberg (citing the RTE website), the Irish Prime Minister said in Toyko today that Ireland may need to call in the IMF if economic conditions continue to deteriorate. According to RTE (Ireland’s public broadcaster), correcting their earlier story, he said no such thing, at least in public.
The broader issue, of course, is that Ireland is not alone in facing economic difficulties – the risk of default, potential debt rollover issues, and credit ratings are likely to move together for a range of weaker countries in Europe’s eurozone. But the presumption has been that the IMF would not get involved in eurozone countries. Any change in this view would throw us back to thinking in terms of the 1970s (when the IMF lent to the UK and to Italy) or the 1930s (when IMF loans could have helped, but of course were not available). Unless you really intend to bring in the IMF for loan discussions, I would suggest it is a bad idea to use those three letters in any conversation, public or private.
Remember that in early October Ireland destabilized the eurozone by suddenly offering blanket bank deposit guarantees. The apparent lack of policy coordination within the eurozone continues to be worrying. These countries really need to start working together more closely.
Relatedly and consistent with my presentation last week, Greece’s sovereign credit rating from S&P was lowered today.
The Baseline Scenario 
“Unless you really intend to bring in the IMF for loan discussions, I would suggest it is a bad idea to use those three letters in any conversation…” particularly if you are talking to Tim Geithner.
Incidentally, didn’t Simon work for the IMF at one time?
Can the eurozone coordinate policy without the return of Napoleon?
Seems to me like they can’t even agree about things they obviously agree about. If coordination is as important as you seem to think, then Europe feels doomed to suffer.
Ireland and Greece have a combined GDP of only 360 Euro, that is less than the GDP of New Jersey, Pennsylvania, Illinois or Ohio. The EU could easily and quickly set up a loan facility to bail out Greece and Ireland should that become necessary. Everyone in the EU knows that.
The Eurozone economy is in much better shape to weather a down turn than the U.S.economy. The larger Eurozone economies have strong automatic stabilizers and social safety nets. The banking systems in the larger Eurozone economies have been far more prudent in their lending than U.S. banks. Finally, the middle classes of the Eurozone are quite solvent unlike their brethren in the U.S..
On the other hand, the U.S. economy has been ravaged by excessive leverage, massive investment in unproductive assets (real estate), underinvestment in productive assets/activities (education, R&D, transportation, manufacturing) and widespread regulatory failure. The sectors of the U.S. economy that been been growing rapidly over the past eight years are the least productive (health care, government services, defense) sectors. The U.S. economy is now highly inefficient and uncompetitive globally. Many Americans are effectively bankrupt. Unlike the EU, the U.S. economy finds itself in very poor position to withstand a down turn.