Prof. David McWilliams writes an excellent piece arguing for the relaunch of the punt. He amkes a number of superb points.
1- The "need" to stay in the euro is similar other failed totem poles like "property only goes up", "soft-landing" and "banks well capitalised".
2- We cannot deflate our way out of this mess.
3- Anyone who questions a totem pole is first ridiculed and then viciously attacked before it accepted they were right all along.
4- It would require brave decisions like reneging on the state gaurentee of interbank lending and big investors would get an almighty kick in the cojones.
5- There would be a rapid devaluation of the new punt but that would immediatly make us competitive again.
6- We could use quantitative easing to lift the liquidity trap. Inflation would have to be carefully managed.
7- Many countries have used devaluations successfully before.
8- Even Iceland has now restabilised.
9- The banks would fold, but why not let them and gaurentee personal deposits up to a certain level and start new banks.
10- The price of land would collapse but it would find its level again before too long.
11- Unemployment would fall dramatically as it did in scandanavia and asia.
12- Ther would be a flight of capital but it would return once the economy settled.
13- Middle aged savers would be hit very hard but young people with debts would win bigtime.
14- Before the 1993 devaluation there was all sorts of threats of economic disaster which never materialised.
15- On our current trajectory we are facing slow strangulation.

Well he is a professor of economics so knows what he is talking about. Point 15 is the most telling. By staying in the euro we have a large degree of certainty and stability but that just means a slower death. Its time for some radical solutions.

Ditching the euro could boost our failing economy - Analysis, Opinion - Independent.ie

A number of problems with this one.

1. Are debt is denominanted in euro. We would thus massively increase our debt a la the Argentinian peso crisis a few years ago. The country would default and never get access to international capital markets again.

2. All our structural problems such as a corrupt political leadership and oveerly powerful "social partners" would be still in place.

Having said that, our only other options imo are default within the euro and a period of enforced wage and price deflation, or a very outside possibility we can actually institute far reaching cuts in time to avert bankruptcy

I wouldnt say just because he studies economics he must be right. Remember the saying ask two economists a question and youll get three opinions.

McWilliams is basically saying let the economy fall even further and sure it might just get better.

Also if Iceland is doing so well can you tell me why they are applying to join the EU.

Mary Poppins economics- Harsh medicine will no sugar to help it go down.

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'A defeatist attitude now would surely lead to defeat, it primarly a question of whether we have confidence in ourselves and the dilligence and determination of our people,We can't opt out of the future.' Sean Lemass (1965)

What is the collective noun for fool's, herd,gaggle,heap,flock,school???

Neither can we devalue our way out of this mess.

I find his argument persuasive but I do not fully agree with him. On the one hand, outside of the euro, we would probably react to this crisis by devaluing the Punt to boost exports, especially given that deflation makes it relatively safe to do so without the risk of rampant import-inflation. On the other hand, the longer-term picture would be one in instability for Irish and multinational exporters/importers to/from the State. What we do need though is a revisitation of the single-interest rate. For 10 years, we have had a monetary-policy determined by the interests of France and Germany rather than Ireland, and it cannot be credibly denied that this has been a catastrophe for our property-market, being a key factor in our recession being worse than most other EU states (though it was even worse in Spain - which voted yes to the EU Constitution/Lisbon - where unemployment is now 17% - 4 million people). However, this questioning attitude to European integration increases my hopes that he can yet be brought over to the no campaign in Lisbon II.

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A thunder of gobsh1tes I think.

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We are "they"

brilliant plan! don't know why this wasn't mentioned before!

I'll have to tell my cousins in Mississippi and Tennessee to do the same! Leave the dollar! Why be a repressed country in a giant monetary zone!

sheer genius, we can start a new funny-money called the 'whatever' and it will be.... literally... the magic pill that solves years of credit abuse and bubble formation overnight!

All this time I had been hoping for a magic panacea and there was none, thank god for this! If only we just left the euro things would be fixed in the morning.....

incidentally, i remember the first time i hit the crack pipe and then wrote something too.... ffs....

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If he is right and we can't deflate our way out of trouble then that is also true for the rest of the eurozone. So at some stage the ECB will have to follow Obama and start printing money so we can all inflate our way out together.

If not then his idea might become necessary.

The problem with quantative easing is it is very easy to start printing money but extremely hard to stop and then you get a spike in Inflation followed by rising interest rates.

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'A defeatist attitude now would surely lead to defeat, it primarly a question of whether we have confidence in ourselves and the dilligence and determination of our people,We can't opt out of the future.' Sean Lemass (1965)