IM is representative of a widespread view in Ireland that it is not realistic for Ireland to default on ECB debt without putting our membership of the Euro and EU in doubt - and destroying our banks and attractiveness as a recipient of foreign direct investment into the bargain. In other words the decision to guarantee the banks was fatal and cannot now be undone now that most of the original bondholders have been repaid and that debt replaced with Sovereign debt.

People understand the situation in terms of their own experience and extrapolate that to high finance where different rules apply. The whole subprime scam was based on the realisation that most people want to repay their debts even at the cost of going hungry and the immorality of high finance and "debt restructuring" is outside their moral universe.

Index of Frank's Diaries