When all the people you read every week for information are talking about the same report, you know that you should read it. From Paul Krugman on the left to John Mauldin on the right, some of my favourite reads of the week are citing a McKinsey Consulting report on global debt.

Reading through it, one chart jumped out at me. Have a look at the chart. Yes, the one accompanying this article. It is taken from data of the Bank of International Settlements. It shows just how much debt the Irish economy is carrying. What it tells you is that Ireland is the most indebted country in the world. When compared with Greece, Ireland is carrying more than two-and-a-half times more debt. We are twice as indebted as Portugal.

This deterioration happened when we were members of the euro. When we borrowed hand over fist from German and British banks in particular.

The implication of this figure is that the Irish economy has to grow six times faster than the interest rate charged on this debt in order for the overall debt burden to remain stable. Assuming that the rate of interest — even with all the negotiations — is 4pc. This means that the Irish economy would have to grow by 24pc next year, just to ensure that the debt/GDP ratio stays stable.

Much is made of the government debt –which remains enormous — but the real problem seems to be the debt held by the banks or the financial institutions and the debts built up by Ireland Inc, as well as the debts which we, the people, incurred in the boom.

The implication of this for the next few years — if we try to pay this money back — is that the huge outflow from the economy every year will amount to just over €30bn — that’s at an interest rate of 4pc. Quite how we can cope with this is anyone’s guess.

So it is time to get real. There is little or no hope of this money being paid back in total. In fact, the least of our worries is the government debt when you consider the size of the private sector, corporate and banking debts.

In terms of default, conventional wisdom suggests that Ireland should not default on its sovereign debt. This is a persuasive argument and we — the Irish citizens — should probably go along with it.

But when it comes to the private debts, whether it’s the debt you might be carrying on the house you bought in the boom, or a company’s debts or even the debts of the financial system, the iron rule of capitalism needs to be applied.

This rule says that in order to get out of the debt mess, the lenders and the borrowers must pay. Given what the data is telling us, it is amazing that the line has been held for so long, without massive default. Indeed, what is more amazing still is that the national narrative has been dictated for so long by the lenders who, having lent the various players in the country over 600pc of income, are clearly the villains in this story. If anyone wants evidence of reckless lending, there it is straight in front of your eyes.

At the moment, the Irish Government is reading from the creditors’ script, trying to wrangle a few euro out of them and being apologetic in the process while resorting to sound bites like “who would lend to us?”

The problem with these type of debt numbers is that the people who are lending to us are only facilitating the payments of other creditors. So the money they are lending now is being stuffed recklessly down into a hole of debt and all it is doing is creating yet another pyramid scheme and yet more dependency.

For example, this includes the Anglo €1.25bn, which is being paid (pathetically) today. This is just adding to the mountain of debt, which is already built up, because we are just adding more and more debt to the huge financial burden to pay for this existing liability.

Can you see how this is yet another pyramid scheme? It is the inverse of the credit pyramid scheme in the boom — which couldn’t last. It is a debt pyramid scheme where the likelihood of getting out at the top, is based on how much more debt we stuff into the bottom of the pyramid.

We are not the only country facing this dilemma, but our situation is by far the most precarious. The whole of the West is dealing with the consequences of the credit boom. Most countries are condemned to years of debt repayment, rebuilding their balance sheets and increasing savings. This is termed deleveraging.

In Ireland, given the magnitude of the debt, it is very clear to me that only a fraction of this household and corporate debt will be actually paid off. The figures scream default.

Take a typical Irish case where a business — like a local convenience store — borrowed €4m to build a few retail units and a few apartments in the boom on a turnover of €700,000. The bank lent the money and everyone clapped the “entrepreneur” on the back.

Today, turnover is €450,000 but the development can’t sell for more than €1m. Even if they could find a buyer, at €1m, where will they get the money to pay the rest of the €3m outstanding?

They won’t. So the hit will be taken by the bank that lent the cash. Then the bank has a default problem. This is what is happening all over the country. This presages massive defaults on an ongoing basis.

There are two ways you can get out of debt. One is that you can work your way out over years and years. This is the “right” thing to do. But sometimes, when the weight of debt is just too heavy, it is impossible. I fear that this is the case for Ireland, irrespective of how certain parts of the economy — for example the export sector — are moving. It is just not possible, without inflation, to pay this debt in full.

We have been told this week that a “bomb” would go off if the Anglo debt were to be defaulted on today. That is nonsense. The bomb has already gone off. It went off when all this lending was incurred and every time someone got more into debt, a further little device detonated, creating the economic wasteland we walk in.

Before you finish, take a look at the chart again. Examine the numbers for Ireland and you tell me if there is possibly another way out of this?