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What if the Irish defaulted?

I understand that if the Irish try to make good on their government's debts, government services must shrink and taxes must rise in order to service those debts.

But what if the Irish government simply said: we're not paying back our debts. They would be relieved of the burden of the debt, services would not be cut, taxes would not increase (assuming services and taxes are in balance). Anyone holding Irish government bonds would be out of luck, everyone from grandma to international bankers.

Question: what would happen next?

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