Economics Editor, Newstalk

"In economics, fear is driven, as is always the case with fear, by emotion and uncertainty. The immediate challenge is to replace emotion and uncertainty with logic and fact. That is the first step: to get a clear view of where we are.

"The economy has grown by 90% in the last decade. Ten percentage points of that was froth. We need a managed contraction. Credit, employment levels, tax levels and house prices will go back to 2005 levels. The government needs to manage that.

"Unemployment is rocketing. This is partly because we did something unprecedented in taking in 400,000 immigrants in recent years. Therefore it is unsurprising to me to see the live register rising. This is natural and logical and if we see it as such, it won't engender the panic we've been having. We should consider labour market policies on immigration.

"We need to bring down the cost of living by aggressively promoting competition and achieving cost savings from public sector reform. The savings should be handed back to the taxpayer in the form of cuts in VAT and local authority business rates and, eventually, the reversal of the income levies.

"We need to learn the lessons of the 1980s that, if you push tax rates up too far, it will reduce revenue. Stamp duty revenue is now lower than in 2004. This is a clear wake-up call that it needs to be reduced or abolished. The prime reason that the public finances are in the state they are in is that this is a stupid and dysfunctional tax.

"A reform of stamp duty will improve volumes [in sales of houses] but it won't bring prices up; you need a return of market confidence and economic growth for that.

"No, we should not reflate the economy. We need a VAT cut to restore competitiveness, reform of stamp duty and cuts in income tax to restore wage competition. But an economy that needs artificial stimulus is not healthy. Let the economy settle at the levels consistent with our competitiveness. A correction is needed.

"We shouldn't, however, be too concerned with budgetary balance in the short term. We can begin consolidating in 2010 when growth starts coming back into the economy.

"Unemployment will be somewhere north of 210,000 by the middle of next year but we'll still have two million people working and that's a half a million more than a decade ago.

"How do I rate the performance of Brian Cowen and Brian Lenihan? Better than most commentators. The mistakes they've been criticised for, for example on medical cards, were political. I would rather see them grab the bull by the horns on the economy and take the political flak than go for a politically safe budget and leave the economy unanswered for."