Interesting read note the important part...
In late 2009, after heated debate, the government, the financial sector, and the business federation agreed on a comprehensive debt-relief programme for firms and families. The main components were: firstly, for the household sector debt in excess of 110 per cent of the fair value of each property was written off. Specific relief measures (administered by a bank or a new debtorsí ombudsman) were put in place for those that could not service a reduced loan.
Secondly, low-income, asset-poor households with high-interest mortgage payments got a temporary subsidy from the government.
Thirdly, small- to medium-sized firms could apply for debt relief if they could credibly document positive cash-flow from future activities. The firm had to be willing to re-engineer its operation so as to make best use of its assets.
Ireland took the wrong path by putting the debt on it's citizens and not offering help to those who need it. Hence the pathetic state of the economy right now. FF sold us out, now FG carry on selling us out to the banks and ignoring the problems and not offering help.
Iceland took bold action, it worked and now they have bounced back. Meanwhile Ireland (who's problems started before Iceland) is crapping along at the bottom with a dead domestic economy, huge debt burden, vast numbers of people in negative equity, big tax hikes and the poorest people have even less than they did. With little prospect for any substantial recovery (and a ropey outlook for most of the EU) there was a way to deal with this problem. Debt write downs across the board, help for those who needed it.
Result an economy that is put back into shape fairly quickly. But don't expect FG to actually admit they are on the wrong path or their austerity drive isn't working (it's def not working we all know that) More of the same kill the patient medicine that isn't and has not worked.
Even the IMF know they screwed up big time. Bank debt is not people debt, we're not a charity and we've been made to suffer to save the banks.