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You're also overlooking the point that hardly anyone believes that the current repayment regime is in any way practical or realistic. The ECB/IMF suicide agreement is based on dogma and rhetoric, not practical economic reality.
It's not Ireland that needs to deal with reality - it's the ECB and the IMF.
Given that default is a predictable outcome of the current agreement - after the real economy crashes into a depression - the choice is between defaulting now, extracting the banking parasite, and rebuilding a working real economy, or defaulting later when all that's left of the real economy is a glassy smoking crater, and the best talent has moved abroad.
To be honest, I don't get this: "it can't be paid argument anyway." Belgium had a public debt higher then 100% of gdp too. Even if we ignore Japan, there is also Italy.
wWy do you assume that Ireland will always be in recession, never grow again and never be able to balance it's budget? And never gain to able to get lower interest rates?
Do you really think a hedge fund - or any private lender woulds give a credit to the irish banks at 1.75%?
The current negotiated rate for the bailout loan is 5.8%, which looks pretty damn punitive to me - and certainly if you want a country to get out of a depression, loan sharking isn't the most effective way to do it.
Unless you're arguing the case for the loan sharks, of course.
I suppose someone has to.
Burn the ECB! 1.75% is usury!
Friends come and go. Enemies accumulate.
Belgium had a debt of 115.5% to gdp in 1996 and 73,3% in 2007. So there is real example not that far away.
So why should be impossible to balance the budget in five years or so?
"Austerity Now" is the Brussels Consensus, though it might well be a remake of a famous Coppola movie from the 70s, starring Marlon Brando.
Keynesianism is intellectually hard, as evidenced by the inability of many trained economists to get it - Paul Krugman
If the ECB and IMF were not demanding Austerity Now!, then we wouldn't be having this discussion, because Ireland would be perfectly able to repay the debt in due time. But Austerity Now! is what is being demanded, and what will cause Ireland to default. Well, better to default now, and let the people who are demanding Austerity Now! eat the losses, than first crash the Irish economy and then default, leaving the Irish public in a smoking crater and the people who are demanding Austerity Now! still eating very nearly the same losses.
Defaulting is a zero-sum game. Not defaulting is a negative-sum game.
Even if we ignore Japan
A common consequence of prolonged cheap money regimes is the creation of asset bubbles. In the US Greenspan's prolonged cheap money policy combined with "see no evil" regulatory forbearance helped fuel the bubble that broke in 2008. That bubble which began in 1999 served to facilitate the extraction of wealth from the US middle class by the US banking elites through home equity loans that made possible the continued purchase of cheap Chinese goods that also profited those same elites -- at the expense of the US worker whose real income has declined.
The end result of such cycles is economic devastation for the many and, absent governmental intervention as with FDR, consolidation of the wealth and power of the financial elites. As a collective institution that financial elite is incapable of concern for the health of the body politic or the average citizen and, in a failed attempt to continue to extract expected returns, imposes massive gratuitous damage on the society as a whole. This is what is looming for Ireland.
As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
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