Phillip Lane who is now editor of Economics Ireland blog has a good interview in the RTE PrimeTime program. The full interview is here It is a fairly frank laying out of the options Ireland has in terms of the "default" scenarios. Listening to Professor Lane I was struck by the assumptions built into his world view. He assumes I think it is fair to say that Ireland would be better off if default were not contemplated by our Government at least not until it is absolutely determined that the Irish economy has fallen over the cliff and that no one can or will save us from a catastrophic crash. Then it will be OK to default. In any other circumstance ie without any other hard information regarding the state of the banking system it would be better according to the professor to hold fire with the nuclear button and await developments.
Nowhere in the piece is Professor Lane able to conjure up a successful turnaround by Ireland which occurs after a sovereign default. It appears that such a default would have only negative effects on the economy and consequently should be avoided at all costs. This reading of the situation amounts to a straight jacket being applied to the economy from which it will not be able to escape. Such confinement I would argue will cause severe damage to the domestic economy.
