Morgan Kelly's now notorious polemic has reignited the debate about Ireland's debt levels, prompting the Taoiseach Enda Kenny last night to warn his solution would deliver a "lethal injection" to the country.
Kelly argues that Ireland should walk away from the IMF/EU bailout, claiming it condemns us to bankruptcy in two years' time.
His "big bang" fix, explored in his Irish Times piece, involved an immediate balancing of the books – instead of eliminating our multi-billion budget deficit over four or five years as the government currently plans, we would do so immediately.
I want to explore what that would mean in detail and ask whether Kelly can fix it?
Essentially, we'd have to get taxes to meet expenditure without any external help. We'd get no external help because we'd have given two fingers to the European Central Bank and handed them our zombie banks. They would stop funding the government, because the government would have broken the bailout memorandum of understanding.
The fiscal problem is pretty clear. There is a big gap between what Ireland spends, and what she makes. Including promissory notes, the Irish government has been taking in roughly €53.3bn and spending close to €72.4bn with the difference of €19.1bn coming from borrowing, first from the international markets, and then from the EU, IMF, the UK, and Sweden.