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Monday 18 December 2017

We will reach rock bottom and the only way out is to default


The D words are taboo. Remember devaluation in the Nineties? It was unpatriotic to utter the word. Today, when we can no longer devalue, 'devaluation' is replaced by 'default'.

'Default' is as taboo today as 'devaluation' was in 1993. In both decades, we have wallowed in denial.

Sometimes we refuse to recognise racing certainties. In 1993, as the inevitable loomed, we dubbed it "realignment". Today, we are being trained to dub default as "restructuring".

The denials from Enda Kenny and Michael Noonan are hardly convincing. Default will not be their decision. Nor will it be dictated by Angela Merkel or Nicolas Sarkozy.

The markets, mightier than Merkel or Sarkozy, are spelling out a clear message: Ireland cannot repay its debts. Ireland's bond yields signal that it will be impossible for us to borrow in the markets for years to come.

Ireland has hit the buffers.

Ireland, suddenly exposed as a politically weak nation -- admittedly the worst offender in the league of the reckless -- is an easy target. We are being bullied to satisfy the domestic political imperatives of Sarkozy and Merkel. We are a pawn in Sarkozy's presidential re-election campaign and the regional political spats in Germany.

On good days we are mercifully sidelined. Even the smallest concession, a cut in the interest rate we pay on November's loan package, has been postponed. It is a red herring because, either way, we are on the road to default, but not before we are humiliated. Europe wants to keep us on the drip until they can create a bigger basket for themselves in 2013.

Ireland cannot wait. On Friday, Michael Noonan claimed that he had used his visit to Budapest for "building relationships" on the margins of the meeting. That is where we are.

It is too late for that. Relationships are at rock bottom. We could sort the economy by accelerating the inevitable. Call it 'restructuring' if you must, but do it quickly.

The first step should be a referendum on the deal. Armed with that, negotiate an agreed default. If our colleagues refuse to engage, there are already dark mutterings about the need to tap Barack Obama on the shoulder when he arrives in May.

Sunday Independent

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