... Ireland will default, and that Anglo Irish Bank, the recently nationalized bank that has become a reviled symbol of rampant lending and corruption, has not only underestimated its loan losses, but has a swelling book of derivatives contracts gone bad.

The result ... could be bank losses at Anglo Irish and other banks that supersede the Irish government’s promise to guarantee all liabilities in the banking sector. What would follow would be a run on the banks, an inability of the government to finance its 12 percent budget deficit and ultimately, a bailout by the European Union.

“That is the optimistic scenario."

—Irish economist Morgan Kelly as paraphrased by Landon Thomas, Jr., in "Ireland? Iceland? Doubts on Doomsday Scenario in Eire"

I know my readers dislike rosy scenarios, so here's what Mr. Kelly really thinks—

... his worst fear is a collective economic failure of several countries in eastern Europe, along with Ireland and those on the southern periphery of the euro zone — Greece, Spain, Italy and Portugal — that would be beyond the capacity of any government or group of governments to stem.

“It’s not about the property developers and the banks anymore — it is about the survival of Ireland,” he said.

Mr. Kelly holds a minority view among Irish economists. One amongst them considers Kelly to be "one-sided and irresponsible," corrupting the Irish by inhibiting their natural desire to consume.

With St. Paddy's Day just around the corner, I intend to do my part by drinking more.

Recommended listening: LiveIreland.com, Irish internet radio

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Tags: news and politics Ireland Europe recession economic depression finance banking banks