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Fierce row in Ireland after Morgan Kelly called for debt restructuring

An comment by the Irish economist Morgan Kelly in the Irish Times calling for Ireland to walk away from the bailout agreement provoked a huge row in Ireland and some fierce reaction from the central bank and the government.  Kelly argued that the Irish government should walk away from the banking debt, leaving it to the ECB, so that the country would be left with a "survivable" €110bn debt.  Central bank governor Patrick Honohan felt compelled to defend himself, after Kelly accused him of making the "costliest mistake ever made by an Irish person" by miscalculating the scale of the bank losses. Honohan defended his role in the run-up to the original bailout deal and his decision to retain the bank guarantee. The finance ministry also responded by issuing a stark warning in response to Kelly's article, saying that child benefit and the wages of 300,000 public sector workers would be slashed by 33% if the government were to abandon the EU-IMF bailout deal.

(Google link)

Economics is politics by other means
by Carrie (migeru at eurotrib dot com) on Mon May 9th, 2011 at 05:39:38 AM EST

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