A former chief economist at the International Monetary Fund (IMF) has warned that by 2015 every Irish family will be in debt to the tune of €200,000 and that the children born in Ireland this year "will be paying off debts for decades to come".
He has also warned that Ireland was effectively insolvent, with little chance of servicing its debts under current government policies, and that "financial markets are beginning to see Ireland as Europe's next Greece".
Writing for the New York Times on Thursday, Simon Johnson, former chief economist at the IMF, and Peter Boone, of the London School of Economics, said that, until recently, Ireland was considered Europe's poster child of prudent reforms.
"However, it is now apparent that Ireland has not done enough to stem its march toward further crisis. The ultimate result of Ireland's bank bailout exercise is obvious: one way or another, the Government will have converted the liabilities of private banks into debts of the sovereign (that is, Irish taxpayers), yet the nation probably cannot afford these debts."
Johnson and Boone argue that the Government had the option of "more prudent policies" in dealing with the banking crisis and should have required bond holders to share some of the burden, rather than placing the entire responsibility on the taxpayers.
The economists argue that if the Government continues its current policies "the calamity of the Irish banking system will lead to a much deeper recession and the consequences will be felt for decades".