THERE'S no disputing that last Thursday was a grim day for this country. The full extent of the state's exposure for bailing out the banks was laid bare and it confirmed our worst fears.

It's understandable that, after so many different predictions of how much Anglo would cost the taxpayer, people are sceptical that the €29.3bn sum (with an extra worst-case scenario €5bn contingency) really is the end of the matter.

But the quality of the people involved in the process – Central Bank governor Patrick Honohan and financial regulator Matthew Elderfield – does inspire confidence that this is a credible final estimate and it may finally be possible to draw a line in the sand on the banking crisis (notwithstanding the not insignificant matter of paying interest on the huge debt with which the banks have saddled the state).

A leap of faith is required, certainly. But we have little choice but to take it and perhaps that is no bad thing.

Celebrity gardener Diarmuid Gavin has been savaged for his Late Late Show broadside against the Irish nation to stop moaning and wallowing in the blame game but – whisper it – he may have had a point.

Gavin's argument was very clumsily made. And somebody as obviously financially successful as he has been is wide open to the charge of not being able to understand the kind of financial penury that many thousands of people undoubtedly are currently having to endure.

It's easy to say 'we all have to take personal responsibility' and get going. But people who find themselves unemployed and up to their eyeballs in debt and negative equity – through no fault of their own – understandably get very annoyed by such comments.

However, if we are ever to rebuild confidence in our country and our economy, at some point we will have to, as Gavin argues, change our mindset.

A good starting point would be getting our heads around the fact (all historical evidence tells us that it is a fact) that Ireland will actually come through this current crisis, albeit with a lot of pain inflicted in the process.

There is plenty of reason for despair, but there are also genuine grounds for hope as well. As Patrick Honohan pointed out last week, the bill for the bank is horrendous and very painful, but it is manageable. The answer to the question from the New York Times as to whether one bank can bring down a country has to be 'no'. Anglo has done huge, huge damage to Ireland inc, but it will not sink the country.

The annual cost of serving the Anglo debt – around €1.5bn – is utterly galling. Of course that money could be better spent on much more deserving causes. But it is not, as has been suggested, going to damage us for generations to come.

Honohan also pointed out that even factoring in the Anglo money, the country's debt-to-GDP ratio is not unique among countries and that the state has dealt with that level of debt before, in the 1980s, and can do so again.

He also made the point, which cannot be stressed often enough, that by 2014, the cost of the bank bailouts will only account for around a third of the increase in our national debt. The remaining two-thirds will be because of successive annual budget deficits of up to €20bn.

And tackling that deficit is absolutely fundamental to getting the country back on track again. David Begg of Ictu warns that budget cutbacks of the level now being spoken about risk doing serious damage to the ­economy.

But unless the government takes action to get the budget deficit down to 3% by 2014, the cost of borrowing for the state will soar to unsustainable levels and ultimately result in far more severe cutbacks to pay for that. The financial markets are calling the tune and there is no alternative to getting the budget deficit down within the next four years.

Doing that, though, is going to be hugely difficult. The savings in the upcoming budget are now certain to be closer to €4bn than the €3bn figure previously pencilled in.

And there will be tough budgets to follow that in the coming years.

There may well be scope for savings by cutting quangos and introducing 'efficiencies' in the public sector but that isn't going to scratch the surface of what is required. Tax increases are certain and the two big items of public expenditure – the social welfare budget and the public-sector pay bill – will simply have to be cut.

Whoever is in government is going to have to stick to the revised four-year fiscal plan that Brian Lenihan is going to announce in November. It's pretty clear the two main opposition parties accept that is the case. And that's in stark contrast to the last time the country was in an economic crisis in the 1980s when it took the best part of a decade before the political will was there to make the tough decisions.

A day doesn't go by without somebody complaining about a lack of political leadership in the country. But the reality is that there is far more leadership now than four or five years ago when Fianna Fáil was recklessly spending and narrowing the tax base to unsustainable levels and the opposition parties were promising to outdo them if elected. It was politics by focus group.

Now you have Fianna Fáil and the Greens taking genuinely tough decisions – despite fierce opposition and serious political damage. And Fine Gael and Labour – while opposing each individual measure – acknowledge that if they are in government they will have to do the same thing. Labour's Pat Rabbitte was reassuringly candid about this on Tonight with Vincent Browne recently when he said that if and when his party is in government it would have to operate broadly within the same budgetary arithmetic.

Such leadership will be required because getting people to buy into the new economic reality remains a massive challenge. Nowhere is this better illustrated than a property tax – which all the expert advice tells us is both unavoidable and desirable but which the general public will bitterly resist.

One way or another, the tough medicine will be delivered. The question now is who will do so – our sovereign government or the IMF?

It's true that the vast, vast majority of people had no part in causing the economic and banking meltdown. But it's also true that we all have a role to play in getting us out of that mess. It's still in our hands; it's still our responsibility and we should make sure it stays that way.

scoleman@tribune.ie