PROFESSOR Morgan Kelly has intensified the debate on the financial crisis with his attack on the handling of the EU-IMF bailout, his dramatic proposals for the future and his criticism of the Governor of the Central Bank, Professor Patrick Honohan.
Anything Morgan Kelly says must be taken seriously. He is Ireland's leading prophet of doom, who warned in advance of the coming economic meltdown when the political and banking establishment mocked the idea. It is well remembered that the then Taoiseach, Bertie Ahern, said he wondered why such critics did not commit suicide.
And there is no denying the sensational nature of his present analysis and proposed solutions. He hits at the heart of the establishment on the issue of the EU-IMF bailout, and he makes a twofold demand: that we should dump our debts on the doorstep of the European Central Bank and eliminate our budget deficit in order to pay our own way.
But there are useful debates and less useful debates. The two professors accuse each other of miscalculating figures. This is dismaying for the average person, who simply cannot grasp the concept of a national debt of €250bn or, as Prof Kelly colourfully calls it, "a quarter of a trillion".
He deploys an even more colourful phrase when he accuses the Governor of cutting off the former finance minister, Brian Lenihan, "at the ankles" at the time of the bailout last November.
Most people will continue to believe that Prof Honohan rendered the nation a service by disclosing the fact of the bailout negotiations while the Cowen government tried to deny that any such prospect was in view. But this is no time for blame-laying or self-exculpation. The crisis is no longer an Irish (or Greek, or Portuguese) crisis. It bids to shake Spain, the world's ninth-biggest economy. It affects the entire common currency zone. It threatens the stability of the European Union. To a very real extent, it is a world crisis comparable to, if not exceeding, that of the 1930s.
Nobody imagines that any easy solution can exist. Our people find it hard to picture the inevitability of a degree of pain much worse than the present. Still less can they readily picture the consequences of eliminating the deficit in one fell swoop, to consider only one leg of Prof Kelly's proposals.
The cuts in public spending that this would require -- and which would probably bear with particular force on jobs and social welfare -- could plunge our faltering economy into a deep recession, because of their effect on spending power. And repudiation of debt would pose a risk to our international reputation as a safe country in which to do business.
Of course there are risks in any course of action, and they are increased by our present poor standing in Europe and the unconcealed tendency of the major powers to dictate to the "periphery". On Friday night a "secret" meeting was convened in Luxembourg to discuss the disastrous condition of Greece. Ireland was not present. The Greek prime minister defended himself to the best of his ability, but it is doubtful that his country can avoid more drastic austerity measures in the short term.
Can Ireland avoid more turns of the screw before a promised new regime comes into operation in 2013? Not in the sense of preventing more suffering on the taxation front (property tax and water charges) or in the form of cuts in public services.
The Government, however, can fight on the margins and on issues which it would not be correct to call marginal.
It has evidently had an excess of confidence -- prompted, it seems, by the relatively favourable treatment received by Portugal -- that we will get a lower interest interest rate on the bailout. But in financial terms that is not a major issue. More important is the retention of our 12.5pc corporation tax rate. Even at our weakest, we cannot countenance a move which would threaten the jewel in the crown, exports.
In the medium term, we must regain our voice in Europe. Here is the awesome test for the new Government, and specifically for Finance Minister Michael Noonan. He must lead our efforts within the European Union, and at the same time promote a debate at home based on objective facts and solid information. And he must take us all into his confidence.