A devastating attack yesterday by Morgan Kelly on Patrick Honohan, properly raises a question for the first time about the role played by the Governor of the Central Bank in the mismanagement of Ireland's crises.

The turning of the spotlight on Honohan, until now regarded as an avuncular figure upon whom we could rely, when all around us political leaders had failed, also serves to raise further questions about the role being played by the ECB in our slow-motion car wreck.

Not before time. If anything, it is a little too late. As Kelly points out, as well as being Ireland's chief economic adviser, Honohan also "plays for the opposing team" as a member of the ECB governing council.

It says a lot about the state we are in that, 13 years after the passage of a referendum on the Treaty of Amsterdam here, which set up it up, the ECB is now effectively seen as the enemy.

Kelly is damning of Honohan's "miscalculation" of the losses in Ireland's banks which, he says, has turned out to be the "costliest mistake ever made by an Irish person".

He is equally critical of the Governor for so deftly cutting at the ankles of the former Minister for Finance, Brian Lenihan, in that Morning Ireland interview which served as a precursor to the arrival of the EU-IMF here.

The argument seems seemless. The opposing team, that is, the ECB, of which Honohan is a member, may indeed have "betrayed" Ireland, as Lenihan has said -- a betrayal admittedly complicated by Honohan's dual role, but also, it must be said, first perpetrated by our homegrown political elite.

As it now turns out, the Amsterdam treaty was, perhaps, the most significant of such treaties to be put before the people, but many did not realise it at the time.

Shortly after the referendum, the intent of a mostly faceless europhile elite was to become manifest: 40 years after it was first mooted, a new currency was born -- the euro, which replaced the generally unlamented punt.

In retrospect, the level of debate that was attached to these seismic events was relatively uninformed, as is evident in that the chickens have come home to roost.

Indeed, it seemed as if most people were happy to welcome the euro only insofar as it avoided a requirement to exchange currency for a holiday on the Med.

Until then, the Central Bank on Dame Street, Dublin, held sway over monetary policy in Ireland.

Back in 1997, when the punt existed, the Central Bank had a staff of 620 and pay was almost €20m. As is mostly the case when one bureaucracy subsumes another, the cost of the Central Bank has since ballooned -- even though it does not have a currency to worry about anymore. In 2009, the last full-year accounts available, there were 1,043 staff and pay was €80m.

Honohan is on a basic salary of €288,000; between them the board were paid almost €1.5m in 2009.

These costs are paid from the Central Bank's profit, which it makes on interest margins. In 2009, it made a net profit of €745m, which was transferred to the Exchequer. Of course, the Exchequer is also liable for any loss the bank may make.

Long before the eurozone came into being, however, there were critics of every political persuasion prepared to point out its many dysfunctions.

The structures were deeply undemocratic, we were warned; they would deprive the elected, at both national and EU level, of any say on macroeconomic policies. Its priorities and objectives were unbalanced, it was said, which would allow the ECB to pursue price stability regardless of the consequences.

The people who warned about this were generally ignored, or otherwise portrayed by those who know better as crackpots best ignored, on our way to the airport in flip flops and shades.

As it turned out, the crackpots were right.

The methods of the ECB have proven to be an exact copy of those developed in different circumstances by the Bundesbank, the Central Bank of Germany.

The order of the new dawn was a dogmatic insistence on the value of monetarism as a guide to policy. In fact, the experience of monetary union has confirmed almost every criticism: yet the entire design remains sacrosanct to the faceless europhile elites.

In the US, the Federal Reserve is just one government agency among others, subordinated to the will of Congress.

In the US, these do not neglect the question of inflation, but are equally concerned about levels of production and employment.

Under the Fed, macroeconomic instruments are used to stimulate activity: these policies may be criticised, but they have resulted in rates of activity and employment superior to those in the EU over more than 20 years.

In 2007, Nicholas Sarkozy won the presidency of France after a campaign in which he attacked the ECB for restraining growth by concentrating on inflation.

But his plan to press the ECB to focus more on bolstering growth was to prove futile in the face of resistance from Germany, whose finance minister at the time stressed the ECB's independence, respect and trustworthiness.

Right now there are many respected figures throughout Europe quite willing to question this, as to whether the ECB has exceeded its mandate, or even whether it has become politicised.

In a recent interview, European Central Bank president Jean-Claude Trichet said, almost as a boast, the ECB was "the only Central Bank which is transforming, by virtue of its own activity, the economy under our jurisdiction".

There is a growing argument, however, that EU economic policy does not acknowledge inherent problems in the eurozone and, therefore, that it is doomed to failure.

In particular, German economic policy continues to enhance its dominant position, with the inevitable result that other economies suffer: this has been made worse by the financial crisis, which has hit the peripheral economies hardest.

In Ireland, the role played by the ECB is only now coming into sharper focus, particularly so when an executive member of the board said people should not complain about having to pay for the consequences of the credit boom when they had elected governments responsible for supervising the banks as the crisis built.

Morenzo Bini Smaghi had a point. But so too did the former Taoiseach, John Bruton, who pointed out that what happened here was not hidden and that the ECB could have paid closer attention.

More recently, Lenihan was even more critical of the ECB in its apparent abandonment of its role as a lender of last resort. As the comments of Bruton seemed to fall on deaf ears, Lenihan's claims have similarly been dismissed by those who seem unable to look beyond an easy target.

Last week, Trichet said the facts showed that the ECB had sided with Ireland in its difficulties and that the bank's support for the State's financial system was without parallel. He did not, however, acknowledge any failure on behalf of the ECB.

For his part, Taoiseach Enda Kenny, has fallen into line, inevitably -- he has said the ECB has been good to Ireland and that Trichet has been a very good friend of Ireland.

Within the ECB, however, opinion would seem to be divided.

The former president of the Bundesbank, Axel Weber, until recently said to be Trichet's successor, is reported to have resigned at least in part because he had disagreed with the pressure put on Ireland to repay all bank debts of bondholders.

Just last January, Trichet said this: "The ECB is expecting governments in the eurozone to make enormous efforts to reduce debt. Debt must be repaid. This is an issue of trust."

But trust in the ECB is in shortening supply throughout Europe. There should be little wonder why: its analyses and decision-making processes remain so secretive; it is nowhere near transparent and therefore, it cannot be held accountable.

Its governing council, of which Honohan is a member, is responsible for setting interest rates, but takes no responsibility for the forecasts produced by the bank's staff.

The deliberations of the council are secret. We do not even know if a vote is taken, let alone how each council member voted. Nobody knows whether different views were discussed, or which arguments were made for and against a decision.

As we saw again recently, Trichet has a habit of pre-announcing an interest rate move a month ahead of the council's decision.

The Italian economics professor, Francesco Giavazzi, has said that Trichet's hints have come to resemble the presages of the Delphic oracle: one has to interpret them looking for a change in the nuance of an adjective.

Few members of the governing council -- Honohan included -- have private-sector experience. They are mostly old "central bank hats", nurtured in a culture that assumes the markets should be kept guessing, and that central bankers know better.

Last week, economist David McWilliams said that European wisdom had been replaced by EU dogma; lateral thinking exchanged for tunnel vision. "The ECB is to blame," he said.

The problem with the European Central Bank is that it seems to believe that there is no economic problem that cannot be answered by austerity.

According to David McWilliams, this dogma will cause successive Irish governments to try to grind down wages and prices in order to be competitive -- something which will take years, and much strife.

These guys, he said, are stuck in an intellectual cul-de-sac. They have only one policy solution for every economic problem. For Ireland, he said, the end of the cul-de-sac is a sovereign default.

Originally published in