Working late last Thursday, I took a coffee break to get away from the barrage of figures on my computer screen. I had been working on the property business projections, but my mind kept drifting away. Every hour on the hour, the radio stations had been announcing Ireland's bond prices. This is not a normal fascination for a country to have. Our dinner-party conversations used to revolve around property; now this had been usurped by bond yields and CDS rates. This led me to consider our position once again as my coffee turned cold.

The giveaway signs are all around us and many of us are ignoring them. The slide in our bond yields over the last few weeks has made clear to the rest of the world what we in Ireland don't yet know, or don't want to hear about. We are the next Lehman Brothers. Countries default in a modern, dignified kind of way, but the images of the Lehman staff leaving their building clutching their box files should not be forgotten, nor should the look of shock on their faces. They were certain they would be saved, and they thought that the only issue was by whom.

Up to this point in the crisis we have simply been stuck between a rock and a hard place, but the collapse in our bonds has started to push the rock against the hard place, squeezing us in the middle. We are being squeezed by the short sellers and it appears that we do not have a white knight waiting in the wings to step in. There is a saying in the markets about stepping in to a falling market: "Never catch a falling knife." It seems that we are the falling knife, and the market is going to let us slam against the floor. The EU-IMF can then step in and pick up the pieces.

In my own much smaller way, I have been through this kind of scenario in the property business. That business slowly collapsed over 18 months to March 2009. The decline was slow and steady but the end got very steep. Ireland seems to be set on the same course and it looks like we are heading towards a big squeeze around budget time.

Logic dictates that the knife should be caught, and Ireland should be supported, but nobody is stepping in. It's like watching a car crash in slow motion. You can see what's happening but you can't stop it. The only real way to stop this slide is with weight of money. We are well past the point where government talk and token actions can change our course.

The market will not short a stock or a country where there is the risk of somebody very wealthy stepping in to buy up the short position, squeezing them out. We all know that this person is the EU in Ireland's case, and the market is now betting on this to happen. Some Greek bonds now yield almost twice the level that ours trade at despite the support of the EU-IMF fund, so there is plenty of room for our bonds to go the same way, and therefore plenty of money to be made by the short sellers on the way down.

Wring the pension fund now

Batt O'Keefe formally opened the Innovation Fund Ireland last week, looking for expressions of interest from international investors. I can't remember how long ago this move was first announced by the government, but it feels like an age. Snails crawl across my patio at a faster rate. No doubt, this snail will soon have created 10,000 jobs for Batt's local constituency.

This policy, which is a rehash of old money from Enterprise Ireland and some crumbs from the table of the National Pension Reserve, looks doomed from the outset. Its lack of ambition is startling. We need to recreate a new economy for Ireland supporting its local business talent, and all we get from the government is spin. As ever, there have been serious meetings with international investors to look at this proposal. Wake up, Batt. What about meeting with local business people and getting behind them in an innovative and efficient way?

The National Pension Reserve has to be used in an aggressive way to support Irish business and therefore Ireland. We need billions and not millions to be released from this fund to rebuild a new private sector around technology, agriculture, and other sectors where we are skilled. The last thing on our mind should be the reserving of funds for public sector pensions into the future.