"As this week’s general election approaches, Irish voters look set to unceremoniously eject the incumbent Fianna Fáil government. But more than a simple change of party, Ireland needs a restructuring of its debt, and profound reckoning with its failed institutions. Only a second Irish Republic can achieve both tasks.
In the bond markets, Ireland’s error has been to take bank liabilities on to its national balance sheet. By then connecting this with entry into Europe’s bail-out fund, the country has set out on a road to serfdom, in which the scale of indebtedness is now likely to smother growth and curb policy flexibility. This week’s election ought to be about how to turn off this road, not how long it should be. Yet Ireland’s national debate still focuses on how to fund debt, rather than how to end insolvency."
You can read Michael O'Sullivan's full opinion piece in today's Financial Times here.