What would God do in this economic crisis? It is a serious question, and one we will come back to later, because it has significant resonance in relation to what is going on in Europe this weekend. Before we come back to God, let’s examine the crisis and its implications for us.

Put simply, the question is, if Greece is Europe’s Anglo, could Ireland be its Nationwide? Like Anglo and Nationwide, are Greece and Ireland so umbilically tied through the euro that what happens in one has severe ramifications for the other?

Financial markets behave like a herd so, if Greece goes, it will affect us.

This shouldn’t come as a surprise to anyone because, in terms of overall debt, our position is actually much worse than Greece’s. For example, if we calculate total private and public debt together, we can assess the debt prospects of a child born in Dublin vis-a-vis a child born in Athens.

If we divide the total debt of the Irish people by the birthrate, we see that the child born in Dublin today will owe €46,641.This is before the baby takes its first breath. Contrast this with the situation in Greece. The newborn Greek baby will owe about half as much as the newborn Irish baby. The figure is still huge at €26,300, but it is €20,300 less than the Irish child.

The financial markets know this. And the way the government is throwing past banking mistakes into the big skip called the Irish government debt market, the outside financiers won’t remain sanguine for long.

Have a look at Chart 1 to see how this pans out. Now that the government has ’fessed up about the fact that the Anglo ‘investment’ is not an investment at all but current expenditure, we need to calculate the government deficit with the bank bailouts as current expenditure.

This drives the Irish deficit – if we put €20-odd billion for Anglo in the 2010 figures – above €40 billion, or 32 per cent of GNP. Need I say more?

Even if this can be explained a way as a ‘technicality’, we still need to borrow the cash, and it will therefore end up in the national debt, so the national debt (Chart 2) will explode.

As discussed two weeks ago in this column, history argues that the bailout will be unsuccessful, Greece will implode anyway and the bailout money will be wasted. The reason for this is that the financial markets need to believe that Greece has changed fundamentally.

This means that it is not good enough to stump up sufficient to stem this crisis; the EU has to stump up enough money so that Greece never flirts with bankruptcy again – or at least in the foreseeable future.

Recapitalising a country is a bit like recapitalising a bank. You need to make sure that you inject enough money into the bank – not so much to ensure that it doesn’t go bust now, but that it never goes bust again.

Another issue spooking the markets is that the International Monetary Fund (IMF) will go into Greece and tell them to cut right, left and centre – which is the normal IMF medicine.

However, there has never been an IMF austerity programme which has not relied on a huge currency devaluation to get the export sector going.

So the Greeks will be asked to bear all the brunt of austerity without the cushioning effects of a cheaper exchange rate; this is a first in economic history and militates against a successful adjustment.

As a result, Greece is likely to embark on a series of unsuccessful efforts to stabilise. The limping-along scenario will beget more instability, which will prompt capital flight and beget more financial crises, until one day the whole thing blows completely.

In the process, the Greek/EU strategy will destabilise all the weak countries – including Ireland – leading to a prolonged credit crunch rather than a short sharp shock. So the creditors destabilise the debtors so much and everyone loses. The EU strategy is to lend more money to Greece in order that the Greeks can repay even more debt in the future.

At its root, the EU is trying to solve a problem of debt with more debt, and the omens are not good.

Interestingly, this outcome is not new. In fact, the Bible predicted all this and, as it is Sunday, let’s get religious. In the Book of Deuteronomy, chapter 14,God calls for mass debt forgiveness.

Addressing creditors, God says: ‘‘At the end of every seven years, thou shalt make a release and this is the manner of that release: every creditor that lendeth aught unto his neighbour shall release it; he shall not exact it of his neighbour; or of his brother; because it is called the Lord’s release.”

It couldn’t be clearer. The Old Testament lads knew what happens to a community where one member keeps another member in debt slavery. It leads to resentment, chaos and the breakdown of the community.

Ironically, the main argument that the Greeks, Germans and French have put up against the Turks joining the EU is that the EU is essentially Christian and we share common Christian values. If this is the case, why are we not adhering to essential Christian teachings on debt?

In biblical times, enforcing debts that couldn’t be paid led to all sorts of strife.

What would God – an advocate of debt forgiveness – think of a Christian club where the solution to too much debt was forcing the poor debtor to take on more debt to pay even more interest to the creditors in the future? This is what the Bible was warning against.

Byde faulting now, the Greeks can simply say they are going back to the morality of the Bible and save themselves and everyone else the hassle of the next few years.

If Germany and France want to keep the euro together, they could do worse than taking on board the wisdom of the Bible.

Who says the Good Book is no longer relevant?

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