The way things are going, by the end of next year, the interest payment on our total debts — just the interest payments — might well be 85pc of the 2010 income tax take. Income tax in 2010 was €14.125bn and with all the bank debt we are taking on, the interest payments by the end of 2012 will be €12bn per annum.

Our welfare state will collapse under the pressure of these debt repayments and before that happens there will be massive capital flight out of the country.

Now this should focus your mind over your cornflakes as to what is the big issue in the next 48 hours. It’s not the economy, stupid as Bill Clinton said; it’s survival, stupid.

So two days to go, much of the attention is still focused on which way the election will swing. A Fine Gael government on its own, a coalition with Labour or Fianna Fail, or a Fine Gael government propped up by some genetically compatible Independents?

Whatever happens, it will become clear by Saturday night that the only important initiative will be how to renegotiate our massive debts.

And this won’t be just a nice, pleasant changing of interest rates. To put it at its most simple, the only outcome of the negotiations that will save Ireland from sovereign default will be shaving a few zeros off the end of the bank debt figure, with the ECB and the creditors taking up the slack.

We have a simple choice, either we hive off the remaining bank debt — some €22bn of unguaranteed debt — and force these creditors to take a debt for equity swap in the major banks, or we are toast.

However, that will not be enough to stave off a sovereign default, we will also need to renegotiate the €22bn of secured debt in the banks and the €34bn of the now government guaranteed bank debt. In truth this is no longer an economic issue; it is now a legal problem, because the economic and financial question has been answered — we simply can’t pay it all. Let’s have a look at the numbers. It will make you blanch.

At the end of 2010, the net national debt stood at €93.4bn, which cost us €4.8bn in interest. We then have the EU-IMF loan of €62.6bn at an interest rate of 5.8pc which is €3.625bn per annum. This equals €8.6bn in interest payments alone.

But on top of this we have all the bank debts. We have the promissory note which covers the losses at Anglo and Nationwide which amounts to another €31bn. This is money we have to pay out, even though these banks will be wound down.

There is €10.3bn of this due to be paid by the end of 2013 (adding another €500m to annual interest charges on debt, because we will be borrowing to pay them back). Then there is unguaranteed bank debt of €22bn and government-guaranteed debt of €38.4bn — another €3bn in interest payments.

This means a total in interest payments alone by the end of next year of €12.12bn. This is over 85pc of our total income tax take. We simply can’t afford this. The welfare state will collapse in the face of this type of interest payment. And well before this happens, the middle classes will have taken all their money out of the banks and squirreled it away to banks outside the country, precipitating the implosion of the financial sector. This is the pattern we have seen in other countries.

Therefore, we have to re-negotiate everything — all the bank debt, the guaranteed and unguaranteed stuff and pay very little of it back.

But how do we do it? How do we get the ECB and the creditors to play ball?

Obviously, the first way to do this is to make them aware that if they force us to pay everything, we will default and they will get nothing. So they had better get a little bit of something, than all of nothing.

To make this financial pill easier to swallow, we must take the initiative politically. We can do this via a referendum. If we the Irish people hold a referendum on the bank debts now, we can go to the EU with a mandate from the people which says NO. This will allow our politicians to play hard-ball, because to do otherwise would be an anti-democratic endgame.

Rather than deal with the ECB and its unelected functionaries, we deal with the politicians of Europe who are democrats. A referendum, which can be triggered by Article 27 of our Constitution, would be part of a process of making the banking bailout political.

Interestingly there is another avenue, which could internationalise our plight and the plight of Spanish, Portuguese and Greek citizens who are lumbered with potentially huge bank-related debts.

As a result of the renegotiation of the Lisbon Treaty, a regulation was adopted by the EU which allows for the citizens of Europe to demand by petition a change in EU legislation. The “European citizens’ initiative” enables citizens to ask the Commission to bring forward legislative proposals if the supporters of an initiative number at least one million and come from more than a quarter of member states.

A referendum in Ireland could be the beginning of this process because the only way to get an EU-wide deal, which is what we need, is to mobilise citizens around the EU. Given that together Irish, Greek, Spanish and Portuguese banks owe German and French banks over €920bn, there are plenty of other citizens who will have an interest in getting the banks to pay for what the banks have done.

Some people have criticised the idea of a referendum as being anti-European. This misses the point; in fact a people’s initiative is profoundly pro-European.

Think about it. These huge bank creditor debts — the debts incurred by German and other banks because they gambled in the peripheral states can only be paid by four sets of people or institutions.

They can be paid by (1) the ECB, (2) the bank creditors themselves — the bondholders, (3) the citizens of the peripheral countries where the banks who owe the money are located or (4) the citizens of the core countries where the banks who are owed the money are located. Now that the EU leadership has ruled out options (1) and (2), it means that only options (3) and (4) are runners.

If we force the peripheral citizens to pay the debts of the core banks, they will get angry and direct their anger at the EU. If we force the citizens of the core countries to pay for their own banks they will get angry with the EU too. Both outcomes would be bad for the EU project, so therefore only options (1) and (2) are good for the EU in the eyes of the common man.

Thus, for both economic reasons and broad political reasons, a referendum is the way to go. It is our only way out and though not a panacea, it allows us latitude in the negotiations which we need. And ask yourself, who is threatened by a referendum?

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