The Irish government’s task was to produce an honest and credible assessment of the true cost of bailing out the country’s banks. It did OK. The latest collection of stinky loans within Anglo Irish Bank is being transferred to the national “bad bank” at just 33% of face value. That, in theory, qualifies as a conservative valuation, even against the backdrop of Ireland’s collapsed property market. So, yes, the colossal sum of €29.3bn for bailing out Anglo Irish is credible. Just in case, another €5bn is being provided.It is worrying that the less-troubled Allied Irish Banks is consuming €3bn £2.6bn) and Irish Nationwide Building Society €2.7bn. But Anglo Irish, concentrated on property loans, has been the cash-guzzling monster. If the beast has now been tamed to the point where it can be put to sleep quietly (albeit over a decade or so), the government has a chance to address its next problems.The first is to convince the voters that propping up Anglo Irish – in effect, supporting its senior creditors – makes sense. It is the voters, after all, who will pay the price in the form of higher taxes, high unemployment and poorer public services. The strategy is to warn of Armageddon: a failure of Anglo Irish would “bring down” Ireland, says finance minister Brian Lenihan.The soundbite is powerful, but the government will soon have to spell out the next round of budget cuts and tax rises – the “reprogramming” of the budget. Will the Irish public remain willing to be reprogrammed?So far, austerity has been accepted with astonishingly little resistance. And one assumes the entire European Union financial establishment would invoke its own visions of Irish ruination if necessary. But you never can be sure until voters go to the polls – three crucial byelections are due early next year.The second challenge is to convince international investors that the Irish economy can produce growth from the midst of austerity. GDP fell 1.2% in the three months to June, a deeply disappointing outcome given the scale of the challenge – Ireland is trying to move from a budget deficit of 32% of GDP (or 12% if you ignore bailout costs) to 3% by 2014. November’s budget will also have to find a way to ignite growth and investment.All in all, the government bought itself a little time today. It has sufficient cash to opt out of bond markets until early next year and so avoid paying almost 7% for 10-year money. Staying away from the bond market seems like a smart idea today – but the real test of the credibility of the recovery plan will arrive when bond auctions resume.