Several other countries such as Sweden and Britain are outside the euro currency zone but are part of the European Union. It is no coincidence that they are not under nearly as much pressure as Ireland at present.
There is not other possible course, given the massive deflationary budget that the current Irish government has just introduced.
The inability of Ireland to devalue its currency, print its own money and set its own interest rates has cost it enormously in the current crisis.
As a result there is no possibility of a stimulus jobs package side by side with cuts as an example.
Instead, the Irish are caught in an ever increasing spiral of massive debts, now loaded with high interest rate repayments and no growth.
The assumption of the debts of the bankrupt banks has itself ensured a death spiral of more debt, more repayments and lack of growth.
Taxing people and businesses ever higher, as has been done in the Irish budget unveiled on Tuesday, is not a formula for growth.
Quite the opposite. With far less money in the system people will cut back, not spend.
Advising the Irish government to default, The Guardian newspaper in London last week called the Irish deal the equivalent “of the Versailles Treaty.”
That was the one that banjaxed the German economy after World War 1 and led to the rise of the Nazis and the Second World War.
Overloading any economy with debt, and then charging exorbitant interest rates is a recipe for disaster as the Weimar Republic collapse proved.
It is only common sense to strongly question how the Irish government has handled this entire crisis.
The initial move to underwrite 100% all the bondholders of the banks was a disastrous step that will have to be walked back.
When the crippling debt becomes too great and the Irish taxpayer can give no more, it may be too late.
A new government could not walk away from its obligations, but certainly should renegotiate them.
Bankrupt companies reschedule their debts all the time. A percentage of the debt can be agreed upon to be repaid. The Irish government cannot pay 100% of what they guaranteed these bank bondholders.
Sure, Ireland’s pride will be hurt, but the consequence of the initial bad decision cannot be allowed to condemn future generations of Irish to penury.
Ireland is “no mean country,” with a great historical and artistic legacy as well as a footprint around the world with its 70 million diaspora that is the envy of many nations.
Through a combination of overconfidence, corruption, greed and over-reaching, Ireland finds itself at this crossroads now.
The emigrant planes are filling up, the traditional safety valve, but even the departure of hundreds of thousands will not put salve on this particular wound.
The new government needs to think clearly and very smartly about what can be done. Bond Aid or repaying with Irish taxpayer’s money those institutions and individuals who gambled on Ireland’s Wild West economy is not the way forward. An equitable settlement based on what Ireland can afford is.