Mary Harney raised the issue of Irish economic philosophy by saying we were closer to Boston than Berlin. With the government's ability to get funding threatened by sharply rising,punitive interest rates at close to 7% on its 10 year bonds,dithering government deficit budgeting could bring us closer to Athens than Berlin.
If-a very big if-Irish government interest rates were restored to levels prevailing before bond desks began worrying about the PIIGS countries, Ireland could borrow at a small premium above Germany's rates and then the interest burden would be tolerable at around 3.5% (3.5% of debt at 130% of GNP = interest payments of about 4.5% of GNP).
So what urgent measures should the government undertake to restore bond market confidence in its bonds? Has it left it too late,to the point that a double dip depression is underway?