Bond markets have given up the ghost on Ireland
The key role of the Government in recent times has been to try to convince bond markets that Ireland is a safe sovereign risk. To date it has unfortunately failed abysmally to achieve this objective.
Irish bond yields continue to climb and the 10-year differential over Germany, which topped 6pc yesterday, makes a complete joke of the fact that Ireland is part of a monetary and currency union with Germany.
If it makes us feel any better, the same thing can obviously be said for Portugal, Greece and to some extent Spain.
Ireland is clearly in the middle of a serious economic, fiscal and funding crisis, but the eurozone itself is in the middle of a sovereign debt crisis that it is struggling to cope with.
The real Achilles heel of the whole single currency project is now being cruelly exposed, not least the total lack of political unity across the diverse economic and political zone.
The comments from German Chancellor Angela Merkel last week to the effect that bond investors would have to bear some of the pain in future eurozone sovereign debt crises, was about as useful to Ireland, Greece and Portugal, as John McGuinness's recent comments about government are to Taoiseach Brian Cowen.
Merkel of course is answerable to a German electorate that is not over the moon at the manner in which it is being asked to pay the price for the reckless and wayward behaviour of a number of European countries, particularly Greece and Ireland.
There was of course nothing whatsoever wrong with what Merkel said, but the timing could have been a whole lot better.
Only a very naïve individual could suggest that the German taxpayer should bear the brunt of the total misbehaviour of any member country of the eurozone.
By God, how the Irish have misbehaved over the past decade. We have created a totally unsustainable public finance situation, we have allowed our banking sector to run amok, and we have continuously re-elected incompetent and economically illiterate governments to run our country. And we expect the German taxpayer to bail us out?
The real problem for Ireland now is that despite the commitment to take €6bn out of the economy on December 7 and the imminent publication of the four-year budgetary plan, the markets are not just unimpressed, but they are becoming less believing by the day.
In recent discussions with serious economic players in the US I was a little bit taken aback at how much they take it for granted that Ireland will eventually have to be bailed out by the IMF/EU.
One would like to think that when the budgetary plan is eventually published and when the details of the 2011 Budget are announced on December 7, the markets will become more relaxed.
However, that appears like a forlorn hope at the moment and there is a very high probability that the markets will still be exacting a very high price for Irish borrowing when bond sales have to re-commence in the first quarter of next year.
If bond rates are still anywhere close to current levels at that stage, it would be financial madness to try to borrow at that cost.
At that stage the EU/IMF bailout fund would have to be accessed or the monies invested in the National Pension Reserve commandeered to help pay the excessive costs of running the country, thereby keeping us out of bond markets for most of next year.
The facts in relation to Ireland's public finances should be quite clear to even the most economically illiterate amongst us.
In the first 10 months of 2010, the Government spent almost €1.2bn more on the day-to-day running of the country than it took in.
The fact is that tax revenues are too low and the cost of running the country is too high.
Balance will have to be achieved through an increase in tax revenues and/or a reduction in expenditure. It is as simple as that.
Those who argue that the process should be spread out over a number of years are generally vested interest groups who are trying to protect their own patch rather than acting in the national good.
In my view, the national good should involve an acceptance that the tax base will have to be broadened through the introduction of water charges and a property tax and through the introduction of thousands more to the tax net.
On the expenditure side, the correct approach is to focus on the quantity of spending, the efficiency of spending and the manner in which public services are delivered.
Having to access the EU/IMF bailout fund would not be the end of the world as it would force us to do what needs to be done. There is an upside to every downside.