The effects of this credit crunch are a catalyst for radical change in Ireland. It is the only way to view this economic storm. The purging from our banking and business system of all bad debts at a national scale is the driver of this. I do not think that this has ever been tried before on this scale. It's one hell of a cleansing, with Anglo and the developers at the top of the pile.

We saw last week from the further decline in the Anglo figures the effect it is having on asset values. I have had my own experience in this area recently and the Anglo numbers do not surprise me. I have spent the past number of weeks preparing and reviewing business plans for Nama. In preparing these plans, we have had to face up to the asset destruction that has taken place and it is truly frightening.

I have to admire the new management of Anglo for pinning their colours to a maximum loss of €25bn. I do not think that it will be possible to contain the losses at this level and I cannot understand how they can have this opinion with the backdrop of rising property yields and falling rents. Deflation means destruction for the banks' balance sheets and it is rampant in the property market at present. We will soon enter the era of negative property values on certain assets as the existing buildings become a liability and their demolition becomes a cost.

Where Anglo goes the other banks are sure to follow. The purging of the toxic loans from the other Irish banks has not happened to the same extent as in Anglo. These institutions still have an element of freedom and a faint hope of independence and this is preventing them from facing their losses. This cannot last. There is an epic battle going on as we speak between Nama and the banks over loans and values.

The banks are now frantically trying to minimise their loan transfers to Nama because these transfers are forcing them to recognise the full loss on the loan immediately. They are looking up the road towards Anglo, living in fear that they are closer cousins than they care to admit. These banks are much happier in the old world, where they could time loan-loss provisions to match their profits, thus creating a false sense of calm. Nama removes this power on the developer portion of their loan books. Are their provisions accurate for the balance of their non-Nama loans? Not by a country mile.

Imagine if AIB and Bank of Ireland were forced to immediately recognise all of the loan-book losses ranging from mortgages to commercials loans. The effect of this would fatal to their balance sheets, and the result would be more Anglos. In truth the whole Irish banking system is basically one big Anglo and the losses are immense.

Have we got the energy as a nation for more of this? We might need it because this is the path we have chosen. The question about whether this should be happening is now immaterial.

I am trying to view this destruction in a positive light. It's really not easy and I am hoping that the medicine does not kill the patient.

That is the risk with all of this honesty. In the world of finance and banking, honesty is a rare thing. Nobody tells the complete truth, and we are certainly bucking this trend. We are putting everything on the line, to the applause of the rest of the world. After the applause, I hope that they are on hand to help pick us up off the floor.

At the end of this process, and when this will happen is far from clear, all bad and marginal debts in Ireland will be gone. The system will be completely purged. This will surely give us the cleanest and most straightforward banking system in the world.

This can be the platform on which we can rebuild our economic growth and repair the damage that this recession or depression will have caused.

We are certainly a long way from Japan's lost decade. They limped through their asset collapse, refusing to recognise the toxic loans after the 1980s. We are admitting to it all.

Like any economic war, there will be casualties and Ireland will be strewn with them. There will probably be so many that an industry will form around dealing with the financial leprosy that many of us will have. The causes of this are clear for us all to see in the form of failed business loans with personal guarantee, and negative equity mortgages. This financial subsector will number in the ten of thousands and we might have to stick together to move forward.