Exposing economic literacy as orthodoxy

I suspect that the tenor of the debate around the economy is going to take an ugly turn with the entry of various independents into the electoral race over the next week or two.

Prior to the dissolution of the Dáil, there was the grotesque spectacle of Fine Gael and Labour facilitating the passage of a Finance Bill that they publicly stated they would vote against, but, by their actions clearly condoned. Collectively, their positions on the economy, or specifically, the transfer of private bank debts onto the state pretty much share the same space with the outgoing coalition. Despite some Fine Gael posturing in Brussels with their European People’s Party colleague José Manuel Barroso, his response to Joe Higgins over the IMF-EU deal suggests it was little more than an exercise in electoral optics that will bear no fruit. Where public debate has occurred, acceptance of the collective position of Fianna Fáil, Fine Gael and Labour is being presented as the norm, whereas dissenting voices such as Sinn Féin and ULA candidates are being dismissed as economic illiterates.

Ironically, the severe terms of the ‘bailout’ have been widely critiqued by experts on international finance such as Gerarld Celente, Marc Faber, Max Keiser, Jim Rogers, Peter Schiff and George Soros, and many figures on the political left and right. Many of these voices suggest, in the current arrangement, that the Republic of Ireland will end up defaulting on the debts incurred by private banks with German, French and British lenders. Even the political right understand that banks that fail should be allowed to fail, never mind unnecessarily crucifying the public with their debts. The truth is, being unable to close the gap in income and expenditure due to the interest and repayments on the bailout loans, the Republic will be selling off as many public assets as possible into private hands, but will be unable to sufficiently reduce the debts carried by the taxpayer and a default will occur regardless.

As the likes of Shane Ross and Paul Sommerville enter the political arena, it looks like the current economic ‘literacy’ may well be exposed as mere orthodoxy. Ross and Sommerville are both effective performers and are likely to benefit from sympathetic handling by the media, as did George Lee. The volume at which Ross and others enter the election debates will have a greater impact that in the constituencies in which they stand as they have been consistent in their disregard for the prevailing orthodoxy over economic strategy.

This orthodox opinion, the one presented as economic literacy by Fianna Fáil, Fine Gael, Labour and, to some extent, the Greens, is horribly exposed once you go beyond the confines of the same Irish media that refused to report the truth about the likes of IMF-EU deal. Outside of these four parties and their allies in the EU, like Barroso, no-one gives their economic policies any remote credibility.

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  • Mick Fealty

    I would recommend watching the stand off between Eoin O Broin and Tommy Byrne on #VINB Monday night, I think.

    I’d have called it an uneasy draw, although first round to Byrne in pointing out the Argentinian default was ten years ago and the money is only coming back now.

    And I may have been wrong about Soros’s source. It may not have been an exclusively Irish source after all. See Pete’s piece on the German shift: http://url.ie/91ki

  • John,

    I find it hard to disagree with most of your points.

    Over many years, there has been too much consensus in ROI politics. Consenus is great if the policies are right. It is a disaster towards the opposite extreme when things go wrong. I cant help still thinking about that very graphic commentary on Irish politics by Kevin Myers.

    http://www.independent.ie/opinion/columnists/kevin-myers/kevin-myers-fianna-fail-knows-its-not-fine-gael-but-little-else-2468081.html

    You just hate the opposition for the sake of it and just carry on what they were doing when you get into office.

    You mention the Irish media. Since the banking crisis began, we have had some very good pieces written by Irish economic journalists. If only they had provided more critical economic analysis for the thinking voter in years gone by. But you are still right to criticise the Media (particularly Newspapers). Not enough of them are reporting the whole truth about the measures taken or those soon to be taken within the EU. Right now, Ireland needs the media to be much more incendiary and to debate the unthinkable.

  • Mack

    John, this is lazy stereotyping of your opponents position.

    Let’s start with the basics – if debts can’t be repaid, they won’t be repaid.

    It doesn’t matter how those debts were incurred, from fiscal imprudence or bailing out the banking system.

    If Ireland has to make good all the debts incurred in the course of one of the proportionally largest bubbles in history, in a currency the state can not debase, while at the same time dealing with the fall-out from rebalancing an bubble economy back to a sustainable one then we will have no choice but to default.

    The real question is how does this happen?

    Because of the guarantee, supported by Fianna Fáil, Fine Gael, The Greens, and Sinn Fein very many senior bond holders were able to redeem their bonds at full value to be replaced by new lenders purchasing on condition that their loans were guaranteed by the Irish government.

    This is sovereign state debt.

    According to Michael Lewis, Irish banks have borrowed €86 billion from the ECB to repay their creditors.

    That means burning the bond holders means burning the ECB.

    The Europeans are not going to be pleased either way.

    SF are allowing themselves to be characterised as economic illiterates because their solution is pure ‘blue-sky’ thinking (no possible problems, an easy way out). The argument that Ireland should just default and get it over with is a valid one, the argument that we can do this with no possibilty of pain up front is 100% pure bollocks. To state it with certainty is to invoke the Dunning-Kruger effect, of which most people are subconsciously aware – compare the type of answers you would expect if you ask a question to someone with a huge interest in a topic to someone with just passing knowledge. If there was an easy way out of this mess, don’t you think FF would have taken it?

  • Mack

    There are other historical examples that are relevant. And the Argentine example is relatively benign.

    Zimbabwe lost access to foreign funding in the past decade.

    Germany had a similar debt burden foisted upon them, by the rest of Europe, for the sins of a small powerful coitery at the top.

    Neither worked out well..

  • Mack

    very many senior bond holders were able to redeem their bonds at full value

    As a clarification, in all fairness, the banks were also purchasing their own bonds at deep discounts on the open markets. Those bonds obviously weren’t & won’t be redeemed at full value. No ideas on the amounts though.

  • Greenflag

    Mack ,

    Argentina had a dictator .
    Germany had a dictator .
    Zimbabwe has a dictator .

    Ireland is still a ‘democracy ‘ .

    The Germans opted for ‘dictatorship’ for several reasons 1) unpayable reparations post WWI , 2) The wipe out of German middle class ‘equity/savings /hyper inflation brought about by the failure of the then international financial system 3) the German democrats were ‘floundering ‘ and were seen by voters to be incapable of resolving the economic and social questions of the day .

    The western Allies did not repeat the socially disruptive and economically disastrous provisions of the Versailles Treaty post WWI -which is at least an important reason for Germany today being a united country and a ‘bulwark’ of democracy and not part of a Communist Europe from the Urals to the Bay of Biscay or perhaps even to Cape Clear.

  • Greenflag

    John O’Neill’s excellent piece summarizes how this election will be have to faced by the Irish electorate . In the right hand corner FG/Lab/FF -in the left/opposite corner -everyone else plus SF . A much discredited orthodoxy backed by the very forces that helped create this mess not just in Ireland but worldwide versus a ‘crucified ‘ and distraught electorate now being supported by world wide ‘unorthodox ‘ voices from the right and left and everywhere else .

    We may not listen to SF’s economic pronouncements or give them much weight in international finance, but when world renowned economic commentators like Soros, Keiser etc back opposition to this Irish ‘Versailles’ then our ‘establishment ‘ better start thinking in terms of closing down any media opposition. I read the Sunday Tribune will go unpublished for the duration of the election ? They’re not going to shut down the Internet or blogosphere are they ?

    The ‘orthodox forces’ will not want independent outside economic commentators raising the level of debate in this election for fear that Irish people may upset the cozy partnership of the three main parties .

  • John Ó Néill

    Mack, I think how the debts were incurred is central to this debate. I don’t have any problem burning the ECB – given the interest rate it decided to charge for the state taking responsibility for non-state debts simply to keep financiers off the backs of their local governments in Germany, France and the UK. We were told there would be no-one else that might lend – then the Chinese and Japanese suddenly re-appeared to return to lending in Europe.
    Barroso did a nice photo-op with FG but clearly has no interest in anything else (i.e. his outburst to Joe Higgins).
    No-one can really say there won’t be pain up front. However, the same pain in a few years having had a fire damage sale on any state assets to reduce an unpayable debt would be a criminal act.
    Mick mentioned Vincent Browne’s show on TV3 – it will be a must see during the election campaign.

  • PaulT

    Greenflag, strangely the rest of the Piigs also had dictators, Italy, Spain, Portugal.

  • Mack

    @John

    Mack, I think how the debts were incurred is central to this debate.

    It really depends what you mean, I doubt we’ll disagree on the morality of those debts, but I don’t think it will necessarily make the difference to the markets as some people seem to think it would. Having forced restructuring on one portion of sovereign guaranteed debt, it would be reasonable enough to suspect that the same government or a successor could be tempted to repeat the trick on public debt proper. I suspect that any government debt would then be priced accordingly.

    I don’t have any problem burning the ECB

    Well, it’s not a morality play at this stage. I don’t either. What would the consequences of such an action be? Are you in favour of leaving the euro?

    We were told there would be no-one else that might lend – then the Chinese and Japanese suddenly re-appeared to return to lending in Europe.

    They are lending to an instrument backed by German taxpayers. Germany has never had any problem borrowing.

    Barroso did a nice photo-op with FG but clearly has no interest in anything else (i.e. his outburst to Joe Higgins).

    True.

    No-one can really say there won’t be pain up front. However, the same pain in a few years having had a fire damage sale on any state assets to reduce an unpayable debt would be a criminal act.

    Yes. That was your stand out point to my mind. The signal somewhat lost among the noise. It’s actually possibly one of the pivots where you could have the now or later debate.

    The new government has no choice but to attempt to renegotiate a better deal for Ireland specifically and to work for better supports in and from Europe in general. If they fail, then Ireland will have no choice but to restructure her debts.

  • Mack

    @Greenflag

    Germany and Argentina were democracies at the time.

    You’ve changed your tune somewhat from the days when you opposed my suggestions that capitalism should be allowed run it’s course and the banks fail.

    The ‘orthodox forces’ will not want independent outside economic commentators raising the level of debate in this election for fear that Irish people may upset the cozy partnership of the three main parties

    Jaysus lads, this is all bollocks.

    European nations don’t want to be lumbered with the bill for cleaning up our property bubble. They aren’t the forces that caused this mess and it’s not economic orthodoxy.

    At a basic level it’s us v them, but we’re tied in a project & partnership that has thus far been a benign force for good (economic and otherwise) over the last 30 years or so. Despite the recent awful deal.

    We all know how Europe works, slow, lumbersome, everything takes time. Will they help solve this problem in time? Or are we better off going alone?

  • Greenflag

    @ Paul ,

    ‘Greenflag, strangely the rest of the Pigs also had dictators, Italy, Spain, Portugal.’

    Ireland did’nt need a dictator . We had an oversupply of our own pigs- Anglo Irish , BOI , AIB 🙁 and others in the political and property developer’s world . They’ve done more damage to this country than all your Mussolin’s , Salazars . and Generalissimo’s (Franco) ever did to their countries.

  • Greenflag

    @ Mack,

    Were being the operative word . They were insufficiently ‘democratic ‘ or strong to prevent the growth of non democratic forces engendered largely by the failure of ‘democratic ‘ governments in those states to address the needs of the ‘real ‘ economy i.e the need of the people for economic stability and jobs and security .

    ‘You’ve changed your tune somewhat from the days when you opposed my suggestions that capitalism should be allowed run it’s course and the banks fail.’

    Somewhat but not entirely. I believe in the principle that banks should be allowed to fail – but not when their failure would be so great as to result in literally blood in the streets at empty ATM’s . Which is why although I was against the USA bailing out their banks I believed at that time and still now that more than just the fate of the USA was at stake but the entire world economy would have gone down the tubes -had they not .

    Ireland is very much less important to the fate of the world economy than the USA -but more important than Iceeland which appears to be why the IMF/ECB quickly moved to save international bondholders from an Irish default by forcing the Irish government to sign on the red line . Looking back to events at the time perhaps both Cowen and Lenihan did’nt want to sign up but felt they had no choice being curtailed by common Eurozone membership .

    ‘European nations don’t want to be lumbered with the bill for cleaning up our property bubble.’

    You mean they don’t want to be lumbered with cleaning up their own banks who gambled recklessly in ways in Ireland that would have been illegal in Germany ?

    ‘ They aren’t the forces that caused this mess ‘

    Cheap credit goes back a long time in the EU -that added to lax financial regulation in the USA plus hardly perceptible regulation in Ireland is what opened the ‘treasure chest ‘ of very high return profits for the international bondholders .

    Again why should Irish taxpayers have to pay for the reckless pillaging and looting of the German , French and British banks in Ireland . It’s dare I say the world in a ‘banking ‘ thread ‘ immoral , unethical and ultimately NOT good for democracy or the future of the Eurozone .

    ‘ not economic orthodoxy.’

    The first step back to ‘economic orthodoxy’ has to be the breaking up of the big banks- the Goldman Sachs , Bank of America , Citigroup , etc and their equivalents in the rest of the developed and developing world . As long as they are too big to fail they will always be ‘bailed out ‘ . They know that and elected governments know that they know that -and until there is action taken on this now ‘non issue ‘ -the world economy will not recover bar in fits and starts only to be ‘surprised ‘ by the next ‘unexpected ‘ bubble .

  • Mack

    @Greenflag –

    Again why should Irish taxpayers have to pay for the reckless pillaging and looting of the German , French and British banks in Ireland

    They shouldn’t and can’t. But they will, regardless, at least in part because of the money already sunk into the banks.

    But why should European taxpayers have to pay either?

    You mean they don’t want to be lumbered with cleaning up their own banks who gambled recklessly in ways in Ireland that would have been illegal in Germany ?

    Ummm… Hello?

    Who’s responsibility is the ‘financial wild west’ that Dublin became?

    Making the case for the opposition today are we? 🙂

  • Greenflag

    @ Mack ,

    On a somewhat lighter note in an otherwise non lite issue have you seen the current Economist frontpage -? A masterpiece and so hilarious it’s too funny to be untrue .

    The States are renamed in light no doubt of current economic orthodoxy or would that be another word for reality ?
    I don’t have to hand somebody might want to link it but here’s some examples

    California = Califoreclosure
    Nevada = Nada
    Delaware = Debtaware
    Iowa = I.O.U WA
    Florida = Horrid a
    Texas = Taxes
    Ohio = Ohno
    etc

    I had a quick stab at an Irish and British ‘equivalent but no time to do much more than

    Kilkenny = Kill Kenny
    Leitrim = Leave trim
    Armagh = Arggghmagggh
    Down = Downside
    Kent =Cant
    Somerset = Somergone
    Bedford = Bedforsale

    I digress 😉 There was really no ‘economic debate ‘ bar David McWilliams intervention and journalist George Lee’s much acclaimed at the time prima donna political entry and exit -another reflection perhaps of FG restrained orthodoxy .

  • Greenflag

    ‘Who’s responsibility is the ‘financial wild west’ that Dublin became?’

    Sinn Fein in the literal and not present political sense:) I believe the media were rumbling at the time that Dublin’s Financial Centre would become more than a mini London . German , French and British banks believed them -then .

  • Greenflag

    ‘Making the case for the opposition today are we? ‘

    The ‘real ‘ opposition is the IMF/ECB :(- I’d hazard a guess they’ll be well enough resourced to make their own case .

  • Cynic2

    “I don’t have any problem burning the ECB”

    But you live in a Union where you don’t have economic sovereignty, Ireland has lots of assets abroad outside her own narrow jurisdiction and the ECB may not wish to be burned.

    Ireland’s best bet might be to sell herself to the UK or USA.

  • Mack

    I think Fine Gael candidate Peter Matthews’ performance on VinB tonight should to be rest any nonsense about ‘orthodoxies’, particularly ones that regard the status quo as credible & sustainable..

  • Mack

    Put to rest I mean..

  • John Ó Néill

    I thought Matthews was appalling. It’d be kind to call it electioneering.

  • ItwasSammyMcNally

    Mick,

    your link doesnt seem to go where intended?

    http://url.ie/91ki

  • Mack

    John, whatever you thought of his performance, it should put to rest the misconception you appear to have picked up somewhere of what Fine Gael’s (and Labour’s for that matter) policy on the banks and bailout actually is (unless you were deliberately misrepresenting them in this post?).

    Sommerville, Gurdgiev and Matthews were as one on the need to renegotiate the deal and to negotiate a restructuring of Ireland’s debt burden.

  • Mack

    Actually I’ll rephrase that, I’m not trying to start an argument, just get the debate to move to where it actually should be.

    My understanding of the position of each of the parties is roughly this

    SF : Reject the IMF / EU deal, impose haircuts on senior bond holders, use NTMA and NPRF money to fund the state, take a more gently approach to fiscal consolidation, return to the bond market next year to borrow to fund the deficit.

    FG : Renegotiate the IMF / EU deal, broadly work with Europe to find solutions – debt restructuring, euro-bonds etc, stick to the 2014 deadline, favour cuts to tax rises 2:1, undo some of the changes in the last finance bill (relating to USC, minimum wage)

    Labour : Renegogiate the IMF / EU deal, broadly work with Europe to find solutions – debt restructuring, euro-bonds etc, move deadline to 2016, evenly distribute pain between cuts and tax rises, undo some of the changes in the last finance bill (relating to USC, minimum wage)

    FF : Negotiated the deal, brought in the guarantee, NAMA, socialised private loses, sponsored light touch regulation in government – so largely hoisted on their own petard, while they might hope for something to come up the best they can actually do now is cross their fingers hope for the best.

    The policy difference isn’t between people who support this deal and people who don’t, but between parties that want to solve this problem ourselves first (and then perhaps negotiate) and those who want to work with our European partners to solve the problem

  • Cynic2

    “Sommerville, Gurdgiev and Matthews were as one on the need to renegotiate the deal”

    …. a great electoral position….but so what? The deal is the deal. It has been signed. Ireland has committed. That’s it and anything else is misleading the electorate

  • Greenflag

    Cynic2,

    ‘The deal is the deal. It has been signed. Ireland has committed. That’s it and anything else is misleading the electorate’

    Nonsense and especially so in these times .

    The Treaty of Limerick was signed.
    The Versailles Treaty was signed .
    The Brest Litvosk pact was signed .

    None have stood the test of time or popular appeal .

    Cowen , Lenihan and partners were panicked into signing this deal at the behest of the ECB and international bond markets . The Irish people were not given an opportunity to vote on this deal . There should have been an election before this ‘deal ‘ was signed . During such an election the ‘deal ‘ contents would have been opened up for public debate and soundly rejected by the vast majority .

  • John Ó Néill

    Mack – I take your point, but I think you’re overstating the actual solidity of (e.g.) FGs position – the desired tax:cuts ratio has been 3:1 (Enda at press conference on Wednesday), 2:1 (Bruton, Prime Time yesterday), 2.8:1 (Coveney this morning on Newstalk). They have deferred their ‘launch’ of their economic policies two or three times this week (until next Tuesday apparently). But they do keep saying they will click the heels of their ruby slippers and create 100,000 jobs…

    We’ve been down this route in conversation before. My issue is that (and let’s forget FF when it comes to fiscal policy), at best, FG and Labour are perpetuating a myth that Europe will willingly enter any kind of re-negotiation – down to phoney photo-ops with Barroso (Trichet yesterday laughed at the idea of any form of re-negotiation). How on earth do FG and Labour think they will bring them to the table. It barely even looks like credible election optics (i.e. it simply will not be followed through after the election and that is fairly self-evident). Even down to the FG/Labour positions on the likes of USC – why facilitate the passage of the Finance Bill which they knew contained it. They could have ran with the MoNC knowing they could have then passed their own measures in a revised budget. Again, expect USC to stay, there is no grounds to believe either party’s policies are intended to be implemented.

    Hence, the only actual bargaining position is to size up what defaulting on the bank debt would mean, and making it unambiguously clear that, as the lesser of two evils from the EU’s insistence that failed banks cannot *fail*, those bondholders will be burnt. In that instance, the EU can refuse to look at alternatives but it then would have to say goodbye to the Euro. As it is, it is being rumoured that aspects of the Lisbon treaty will be invoked to facilitate what looks like the French/German drive to enforce a Europe-wide tax, corporate tax regimes, etc Pete is flagging up the French/German story elsewhere).

    My original point was that what Fine Gael, Labour and Fianna Fail are promoting as economic literacy – is nothing of the sort (hence no-one in FG can calculate their tax:cuts ratio). Those three parties are simply mistaking and promoting the orthodox opinion as somehow better informed. If you look outside those parties hardly anyone shares such high opinions of their policies.

    At the same time – I didn’t over-egg, but as far as I can see, SF’s position, challenging the EU with dealing with the reality of an Irish default (and the EU’s role in that), could be effective in forcing the EU (and the bank debt bondholders who are trying to influence EU policy via Frankfurt and Paris) to the table. And to do that now and not once everything has been privatised as it will have to be done anyway (so the state keeps the debts and loses any valuable assets). No serious negotiator is going to talk to Fine Gael or Labour – what have they got to offer on the table? Withdrawing goodwill from the EPP?

  • Greenflag

    ‘Who is going to talk to Fine Gael or Labour – what have they got to offer on the table?’

    So far here are eh two offers 🙁

    Mr Noonan said there is a lot of fat in the banking sector, which could be cut in order to avoid increased charges on customers.

    Gilmore says Labour will ensure Ireland can avail of job creation through green initiatives. The party says 30,000 construction workers could be put back to work retrofitting housing stock that is substandard.

    So Noonan is aware that bankers are fat and Gilmore seems totally oblivious that there are 150, 000 empty houses in the State . He doesn’t of course mention who is going to pay for the retro fitting or where the money will come from ?

    Same old same old .

  • Mack

    It doesn’t really matter whether they succeed in renegotiating the bailout or not, it would be helpful, but won’t on it’s own prevent the inevitable restructuring / default.

    Peter Matthews reckons total debt will be something around €265bn I think this was similar to figures mentioned by Brian Lucey and Paul Sommerville previously.

    This is over 200% of GNP.

    Unless the interest rate is 1% we simply can’t afford this..

  • John Ó Néill

    Mack – maybe the Lord of the Rings had more of a point than I gave him credit for. We are really at the keys-through-the-letterbox-stage, although us O’Neills have been here before.

  • Greenflag

    A century after the Flight of the Earls , Scotland lost it’s Parliament and any prospect of independence or less dependence on London due mainly to the Darien ‘investment ‘ fiasco when Scotland’s ‘bond ‘ traders lost everything as the dreams of Scottish empire died in the mosquito infested swamps of southern Panama .

    While HMG’s Navy were under explicit orders to offer no ‘assistance’ to some 200 dying Scots in Panama -that did’nt stop the London government from offering to ‘bail out’ the Scots -for a price of course. A hundred years later any nascent Irish thoughts of emulating the French or American revolutions were brushed aside in the widespread provocation and slaughter of the 98 rebels and the subsequent Act of Union .

    Is today’s predicament for Ireland any different? . I suppose it is in that today’s’ Earls -‘ our leaders of economic and political orthodoxy – are not fleeing the country but are instead still paying themselves double what British MP’s make 🙁

    @ Mack ,

    ‘Unless the interest rate is 1% we simply can’t afford this.’

    Do you not think the IMF/ECB have figured that out yet ? Perhaps they need one million strong demonstrations outside the Dail or outside the European Commission office in Dublin ? .

  • Mack

    @Greenflag

    Do you not think the IMF/ECB have figured that out yet ?

    They’ve got other worries, they don’t want the Spanish and the Italians looking to suck on the German taxpayers teet.

  • Reader

    Mack: This is over 200% of GNP.
    Unless the interest rate is 1% we simply can’t afford this..

    OK then – what % of GNP can you afford to pay out in interest while you wait for growth to cover the principal? Merkel is not going to be impressed by any claim that you can’t spare more than 2% of GNP!

  • Greenflag

    @mack ,

    The German taxpayer has no teeth left . A combination of having to pay for the East German acquisition plus covering the ‘bare arses’ of their own over leveraged and gambling ‘bank corporate predators , plus the Greek and Irish bail outs has unnerved our ‘friends ‘ in Berlin .

    I don’t know if it’s possible under German law to arrest German ‘bankers’ who are found to have ‘broken ‘ German financial regulations while resident in another EU state ?

    I ‘ll assume that if a German in Ireland was accused by the German authorities of committing murder in Berlin that the Irish authorities would have him /her extradited to face charges?

  • Mack

    @Reader

    It depends, we’re currently paying 3.5% on 110% of GNP (http://ntma.ie/NationalDebt/interestCost.php). So even keeping that rate (significantly lower than the bailout terms, and about 1/3 of the current market rate) we’d double our current annual interest payments. At the current bailout rate we’d nearly quadruple them (that’s another 3 budgets like the last one just to make up the higher interest payments, assuming the economy doesn’t contract at all during the process).

    Last year the government spent 55% of GNP.

    You can see from this table that even the Nordics take in a max of around 46% of GDP in tax (http://www.oecd.org/dataoecd/13/38/46721091.xls). I suspect Irish taxpayers and foreign multinationals essential to our continued ability to function economically would tolerate only a much lower level of taxation (because we won’t have Nordic services) before they leave / riot / revolt.

    What we really need is access to funding while we restructure. The threat of these might be enough to transform the situation. In 2-3 years if Irelands debt-GNP is over 200%, but Eurobonds are available, and restructuring is on the domestic agenda. Ireland could restructure domestic sovereign debt while continuing to access Eurozone wide euro-bond funds. The threat of that alone might cause the market price of Irish bonds to plummet and perhaps the NTMA could then purchase existing government bonds using euro-bond money at a deep discount. Reducing our debt-to-GNP ratio (e.g. if we purchased 50% of our bonds at an average of a 50% discount debt-to-GNP could be reduced to 150%).