The thing is we just can't know how this will play out or really – while we are in the middle of it – how 'serious' it is. We have our gut instincts – some of us think it is nothing more than a normal recession that is over (not many on here of course) while others feel something is deeply amiss.

But it could well be that we bump along like this for another year or two then pull out of it and have a sustained period of real growth in the economy. I hope that does happen, I really don't want to live through some sort of major depressionary cycle – there are no jobs already where I live if it gets much worse it will be dire for some parts of the country.

But I don't think it can – or at least not in any sustainable way – while the banking sector is still in such a state. One of the things that seem to be happening – as Golem predicted back over a year ago – is that we now have a two tier economy. All the elite in Davos are apparently full of confidence – over 80% of normal US citizens don't believe the recession is over.

@hoolighan – 'Unfortunately ever since man/woman got behind the wheel of a car history sped up inexorably'

Rubbish! I know what you're getting at, (like that planes / world trade centre incident) and technology has definitely changed things but it's much more complex than that. To take one example, look at how the boom – burst cycle in the west since ww2 happened at seven year intervals but the last boom lasted far longer, (which is why Gordon Brown, admittedly naively, thought he'd managed to end boom and burst) so things can slow down as well as speed up…

The obvious thing then is to follow Iceland. Forgive those who trespass against us and repudiate the debts we continue to take on. We have, with the apparently poor strategy adopted by the GFF, taken on more debt. Good. This should continue, making the default even bigger when it comes?

OK, it is less moral than going the Iceland route now, but we know that no one has in terms equity lawyers love "clean hands".

What we must do then as the wise who lead the masses, is prepare for this day? Will we leave the EU? Will other countries also go this route? Free trade has been helpful to Ireland allowing the economy to grow but on borrowed money. If the EU is taking away our CT rate we will not grow as fast as we did and in fact as we shed the malinvestments made during the boom we will shrink, particularly as we knuckle under to our masters in Europe.

If we leave the EU, we still have that CT rate but we lose all those lovely banks or do we? In the meantime we enjoy all those capital transfers from those in the EU fearful that we default now. We defer default and help them drive down the euro. They must expect to pay for this co-operation! We are only 1% of the EU economy or even less. The realities will eventually make default more acceptable even to those who still hog the gravy train as their electorates realize what needs to be done and as Iceland prospers.

This is after all the likely outcome as the masses awaken they will send some message via voting, but as in the USA, they can vote only for those on the ballot! (In the USA they will accept write ins not in Ireland!) The massage goes both ways and dep[ends on earlier messages but tax increases will eventually cause a rethink as will service curtailments, suicides and emigration.

This takes time. We enjoy the funds from the ECB and the extra housing. We rectify the economy by taxing land and reducing the price. Eventually, we become more competitive. But as the tax base dwindles, so the budget deficit will eventually balance but only if we default on interest and repayments are out of the question!

The international turmoil will smother this little hiccup as other countries also default. The idea that Ireland must contribute to their reconstruction is merely a rentier's fantasy, not a moral position!

In the meantime we languish and some suffer disproportionately, cause: Bad regulation by those who were ignorant or in the pay of others!

Maybe a trade war, a currency war, some kind of non-shooting war, could occur. Nobody wants to be left holding the bag. Right now they're all desperately trying to hold the bag together. Who's going to let go first?

Michael Hudson has also talked about how over the past 100 years or so the tax burden has been gradually shifted from FIRE (i.e., unproductive income) to the middler & lower classes via income taxes. They justify it to themselves by saying the people who use the services should pay for it.

Of course, not taxing FIRE leads to what we have today, a combination oligarchy/aristocracy. But empires don't topple in a day. It'll have to be baby steps. Perhaps starting with Ireland.

What they're doing in Ireland now, though, is similar to what was tried (it failed) in the US, when the lame duck congress tried to pass social security "reform." Voting after the election, but before the newly elected members had taken office, the aim was to avoid having anyone held responsible for the vote.

Those who'd lost reelection wouldn't pay, and everyone else figured in 2 years time (next election) no one would remember. So in Ireland the period between governments is a perfect time to pass unpopular legislation. The gall, the nerve, they have to do this is almost to be admired for its sheer brazenness.

Fair point about history however you could look at it another way. During the Great Depression there were years of growth – just not enough growth to really kick start employment – it wasn't that things weren't happening or that the economy wasn't collapsed – its just that unless it was happening to you or someone you knew many didn't really think about it. And many politicians even denied it was happening. I would argue that at least now due to blogs like this one – we are aware of what is happening and have other points of reference than the mainstream media and lying politico's.

The other point I would make is that we often don't recognise history as it is happening – unless it is really momentous like world war two. I read an article that was linked to here – in The Atlantic about the new super rich – and the writer of that made a really interesting point – that what happened with Reagonomics and Thatcherism – will be shown in the future to be as seismic as the industrial revolution. Interesting point of view.

Golem – have you seen this in The Guardian about the banks and the coalition purposefully trying to subvert EU policy to toughen up on them? It was linked to on the UT (apols if it has been linked to here before). http://www.guardian.co.uk/commentisfree/2011/jan/24/curb-the-banks-government-propped-them-up

Do you think you might ever get to Sheffield for a talk? I know there would be a fair few interested people.

Glad you did. We need all the brain power, courage and collective dissent we can muster.

Unfortunately ever since man/woman got behind the wheel of a car history sped up inexorably – however with limited understanding of all the dangers and barriers on a highway we travel our journey preventing, if possible, any personal crash. It is only if a sudden revelation of real facts make us slowdown and think about our direction that we begin to realise that we are all on the same road and can benefit from knowledge and the guides of those among us who like Golem clarify matters. Thanks