THEY are not going to be too pleased in the Central Bank or the Department of Finance about yesterday's IMF analysis on debt writedowns for distressed mortgages.
On the face of it, the International Monetary Fund economists seem to be saying that generous debt relief for distressed households is a very good idea. Money spent on such relief typically comes back in the form of higher national output, with a bit extra.
It certainly would be very welcome. The strongest evidence in the report, and the most alarming, is the severity of recessions which are preceded by a large increase in household debt.
Curiously, in this instance Ireland is certainly not like Greece. It is distinctly Nordic. The largest increases in household debt during the boom years, apart from ourselves, were in Denmark, Iceland and Norway.
In all four countries, household debt exceeded 200pc of annual national output. It may be some small consolation as we beat our breasts, that two of the best-governed countries on the planet, Denmark and Norway, also failed to curb this huge rise in personal debt.
But it is a very small consolation. The research shows that debt-laden recessions are typically four times worse than a plain vanilla recession and last "at least" five years. We have not yet hit that anniversary. Forecasts that 2012 would be the year of recovery had history against them, and do not look like being correct.
Ireland has the highest household debt of any advanced economy, but consumption has not fallen as fast as in some other countries in eastern Europe. It is, however, still falling.
In these circumstances, people are bound to seize on the finding that debt relief is an aid to recovery. The IMF analysts are particularly impressed by the Icelandic experience, where mortgage costs were reduced by 15-40pc, depending on the type of loan.
This has assisted the recovery which is under way in Iceland, although it took street protests involving thousands of normally unflappable Icelanders to bring it about. However the report is a useful antidote to the idea that Iceland somehow found a way to escape the dire effects of their banking bust.
The fall in their living standards was much greater than that of Irish people, with the purchasing power of the currency falling by three-quarters. That fall may now be over for them, whereas there is more to come for us.
How much more, no-one knows, although the fuss about household charges and public sector allowances suggests a lot of people do not even know it is coming. Relief for those with unsupportable debt would be given in the context of reduced incomes for everyone.
The IMF study is quite clear about this. There are winners and losers in any relief programme, and the losers include those who did not get deeply into debt. It was already clear from the publication of the personal insolvency legislation that this is not a popular idea.
Everyone might be a winner in the end, if recovery comes sooner, but that is a difficult message to sell. The concerns already expressed by Central Bank governor Patrick Honohan and Finance minister Michael Noonan are on another difficulty -- free riders who can pay but try not to.
"All policies that respond to the consequences of excessive household debt need to be carefully designed to minimise the potential for moral hazard and excessive risk taking by both borrowers and lenders in the future," is how the report puts it. Many people think the legislation is not carefully enough designed.
In the USA, two thirds of the reduction in household debt has been due to mortgage defaults. That may well have helped the economic recovery now under way but it has created other problems such as continued house price falls as banks are left with seized houses they have to sell at any price.
The big question for Ireland is, unfortunately, one that the report does not address -- can we afford any large-scale mortgage debt relief? The analysis does not cover Ireland, but it makes some general points which give cause for concern.
The first is that the banks must be strong enough to carry the losses. The collapse of the Icelandic banks allowed the newly-created ones take over existing loans at good prices, which meant they could finance far-reaching household debt restructuring. In two other cases, Colombia in the 1990s and in Hungary now the banks could not absorb the losses when forced to do household debt restructuring and cut off credit to the rest of the economy.
They sound more like Ireland than Iceland does. There is more than one letter separating us now. Irish banks have received enough public capital to cover their losses on development loans after the Nama purchases and significant losses on mortgages.
That is losses -- where mortgages fall into arrears -- not a large-scale relief programme and there are fears that even the losses will exhaust the fresh capital. It is also patently the case that the Irish Government does not have the "fiscal room" to finance such a scheme through the Exchequer.
A comprehensive household debt relief programme may not be feasible for Ireland, but that raises the most troubling question of all -- what exactly is feasible?