Currently there are €107bn of outstanding mortgages in Ireland. Allowing for an average outstanding term of 25 years and an interest rate of 4.5pc, that means that mortgage payments per month in the economy are approximately €600m per month. Or €7.2bn per year. There is a stimulus sitting right there.
Why not freeze all mortgage payments for two years? Nobody makes any payment on their mortgage until November 2012. If we assume a conservative multiplier of only 1.4, Ireland would get €20bn worth of stimulus without upsetting our EU leaders' rules at all.
Probably a function of how we are all thinking at the moment, but I bet your first question is 'What about the banks?' Well first, we own the banks, so they will do what they are told. The financial regulator has been very generous with bending the rules to allow defunct institutions like Anglo to continue in whatever half-life it currently inhabits, so I'm sure he would be willing to allow Irish banks to carry mortgage debt for two years without forcing them to take write-downs on it. After all, a policy like that would be in the interest of the country, rather than just the interest of banks.
Of course, the bondholders would still want to be paid. And they would be, they just might have to join in the two-year waiting game. Which would be better for them? Get a haircut now, or wait a few years and get paid.