All debt is not equal. The assumption of the bad debts of the Irish banks by the Irish Government was, arguably, an abuse of the discretion by the ruling party, Fianna Fail. They had no legal obligation to do so, and certainly no obligation to do this by themselves. When a bank makes a loan to a borrower, the bank is or should be in a much better position to assess the creditworthyness of the borrower. If they take risks, they need to make risk provisions. It is the duty of the regulators of that bank to see that they do. Just because German banks took a big risky dump in Ireland does not absolve the ECB or the German Central Bank from responsibility.

Unfortunately, most economics currently taught in universities in the US and Europe makes many utopian assumptions about the behavior of individuals and institutions in the economy and in markets. These assumptions have been challenged by events, but the adherents refuse to change their assumptions. There are many on ET, myself included, who believe that many of those economists, and especially the interests that influence their selection for high posts, prefer the existing theory for its effectiveness as a smoke screen and as a public religion with which to loot the public despite its obvious debilities in explaining how finance and the economy work.

"It is not necessary to have hope in order to persevere."