There is no doubt the current Govt. has done it's utmost to close down all the options for its successor and that Ireland is in a much weaker position defaulting on Sovereign as opposed to private debt.

Nevertheless the issue of sustainability remains:  If the Irish economy goes into a death spiral in consequence of 4 austerity budgets in a row then default becomes unavoidable no matter how undesirable it may be.

No matter how you "package" it, we need a "stimulus" plan to complement the austerity measures and whilst I have no difficulty in cutting bloated salaries of senior politicians/civil servants and some appallingly inefficient administrative overheads the solution cannot be public expenditure cuts alone.

A rebalancing of the EU intervention - away from the ECB as the sole intervening institution - towards more active engagement by the Commission/Council supporting investment in infrastructural or green energy projects - in line with the Lisbon competitiveness agenda - and which could be funded by interest payments or regional/cohesion funds - would go along way to reducing the noxious effects of austerity and risks of default.

We have got to move away from the ECB being almost the sole EU institution involved in economic development - and return it to its proper, and much more limited role as a monetory authority and regulator - and tell it to do its own business better - i.e. regulate banks and hedge funds much more effectively.

It is the absence of an EU political vision and action programme that is the most striking since Merkel's rise.  It is almost as if the British eurosceptics have been replaced by Germans, and the other 20 odd members have gone AWOL.

Index of Frank's Diaries