I have to start this week by coming right out and thanking Anglo for being there in the early days of the Celtic tiger, when no other bank would support business in Ireland. As we now line the bank and its previous management up for the firing squad, let's remember its full life and not just the last few years.

A lot happened last week and I am still trying to make sense of the various strands. Iceland has literally blown up in a spectacular way. Where they go we seem to follow along slowly behind. Are we next for an eruption? Is there a secret volcano sitting under Leinster House waiting to deliver its verdict on Ireland? What lies in the mountains of Greece or the plains of Spain?

The plume of dust from the financial eruption in Iceland continues to dampen the economic skies over Europe. We have all tried to convince ourselves that Iceland's problems are unique. In Ireland we have equally tried to convince ourselves that our problems are not unique. Only time will tell. Greece certainly provides us with a more vivid picture of our potential future. Apparently it was bailed out last week, but on closer inspection this is not really the case. We always need to look at the detail, rather than listen to the political rhetoric.

We have been led to believe that Greece's problem is liquidity and interest spreads whereas in reality it is solvency. Is Greece solvent? When Greece draws on its €45bn IMF facility it will solve its problems for one year. What happens in 2011 and beyond? The only solution to the fiscal and solvency problems for both Greece and Ireland is the rapid correction of government spending, and a rebalancing of the tax system. We set this in place in Ireland with the McCarthy report, which seems to be vanishing into history as another report going nowhere. The functions of the state are huge, and inefficient, and growing fatter by the day, it seems. The fumbling of state involvement in Quinn and Anglo made this all too clear for me last week. Politicians now want to control banks to win votes.

Are we capable of implementing the radical reform that the markets will demand once they are finished with Greece? We will see. Like the volcanic ash over Europe, the white smoke that we saw last year in the McCarthy report and the firm handling of the public sector wage bill is beginning to dissipate. We need to hold the line on these brave decisions and implement the radical reform that is required before Greece defaults, which now looks more likely.

The government is moving to put into law our commitment for €450m for Greece. If we are serious about an unnecessary bailout for Greece, the cost will be a lot more than this. It is always expensive and difficult to try to hold back the tide and it is rarely worth it.

The high gods of finance

On the subject of defaults, Goldman Sachs reported last week on the performance of its $1.8bn property fund. The fund's value has been written down to $30m, showing a loss of 98% of its value. Goldman pointed out in its investor letter that it had successfully restructured some of the debts on various properties and that it had handed back the keys on others. Hold on, aren't these the people whom Brian Lenihan says we cannot default on in Anglo Irish Bank? Aren't Goldman Sachs the high gods of finance who dictate terms to little countries like Ireland? These gods will default and gain maximum advantage whenever they can in a situation, and we should treat them with the same respect as they show others.

If they can't do a deal on a bank restructure, they hand back the keys. If they can't pay a debt and they don't have to, they default, knowing they will always be able to borrow again the next day.

Goldman and all of Wall Street are actively defaulting on their property fund debts because they have no obligation to pay these debts. This is how it should have been in Ireland. We are not obliged to pay the debts of companies like the banks and we should never have got into that position.

The state guarantee was a catastrophic error, and the blame for this must lie at the feet of the two Brians in government.

It was a short-term solution to a problem with long-term consequences.

As for the bankers who went begging for this solution, let's take their pensions off them, like we see happening to private entrepreneurs in the courts. Surely we can claim back all the golden handshakes and fat pensions of these bank executives and put them in the same place as the developers. Surely their assets should be pulled into Nama to help pay for the losses.

A safe and fair market?

I was looking at the official website for the financial regulator and I came across an interesting role that he has. Part of his job is "to help consumers to make informed decisions on their financial affairs in a safe and fair market".

Does anybody think that the banks are operating in a "safe and fair market"? I am not sure what is safe about the wholesale increasing of interest rates on all customers to repair the banks' broken business models, and insolvent balance sheets. Breaking loan agreements, and changing interest rates is neither safe nor fair but it seems to be the approved policy.