I really don't get this undercurrent of national pride, mild xenophobia and/or defensiveness concerning this decision by the government. It sounds like if a Brit or other European criticised the decision of an Irish man to drink bleech, you'd weigh in supporting the paddy.
There is also the ludicrous notion that all this is some sort of zero-sum game; what's good for an Irish banks is bad for "foreign" banks and visa-versa and that we could survive this even if the UK system collapsed. Given that we have one of the most globalised economies in the world, the naivity is almost touching. We are a tiny country being buffetted around in a global maelstom. The same sort of idiotic childish egotism was apparent six months ago in the complaints of "us talking ourselves into a recession" as if the huge changes in the global economic system could be affected by the sentiments expressed to Joe Duffy to by the "ordinary man" in Ireland.
This is an appalling and deeply flawed response by the government to the problems faced by the banks and our neighbours have a right to express concern and dismay given that the government has not only potentially f*cked our country by blindly acquiesing to the bank execs' demands but the policy has negative effects on our neighbours' banks also.
As SPC100 points out, it would take very little to transform this guarantee into a massive bill. Property index futures in the UK are currently pricing in a 35% drop in residential property over the next 3 years - we could well be facing worse. If 60% of the 400bn of assets held by banks is in property, then the sums are simply terrifying. To put these figures into perspective, this money could easily be more than all the money spent on roads, rail and other transport infrastructure in the country over the last 15 years.