Here we are facing the biggest challenge ever to the Irish economy, and through that the Irish State, and what does the government do? 

Last week, as an example to us all that cutbacks are needed at every level, the number of junior ministers was reduced from 20 to 15. The total saving to the state, including office costs and drivers, is around €2 million ... at a time when state spending needs to be chopped by a few billion. Talk about moving around the deckchairs on the Titanic!

Okay, I know it was just a gesture (to show that the cuts really do start at the top) and that such symbolic moves are important if public acceptance of the drastic cutbacks that lie ahead is to be won. But even on that level it was hopeless.

For a start, most people think that our junior ministers are a waste of space and that they should all be scrapped. All they do is go to events that their senior ministers can't be bothered attending. Their number expanded over the past few decades mainly as a way of placating backbenchers who had not become ministers. 

If the government was serious about making a gesture proportional to the crisis we face, it would have scrapped all the junior ministers plus the Senate (the upper house of the Irish parliament) which is a Land of Nod luxury we can no longer afford.  

While they were at it, they could also have announced that at the next election the number of members of the Dail, the main house in the Irish Parliament, was being reduced to the same level of representatives per head of population as in Britain, which would cut the size of the Dail in half. 

And if we were really serious about getting our state spending under control, we would also be asking ourselves if a little country with about the same population as the city of Houston needs, say, a full size army or a diplomatic service with fancy embassies in major capitals around the world. 

Now I know those Texas boys think big, but the last I heard Houston did not have its own army, or its own ambassadors overseas, or any of the other costly trappings that Ireland feels it must have because it is a country, not a city.

Of course, I'm not being entirely serious about this. The fact is that Ireland is a country, not a city. 

But it is also a fact that our population (which is similar to that of the Houston metropolitan area) has to carry the cost of all the stuff that goes with being an independent state, from the president to the Irish Navy and everything in between, including government departments with thousands of civil servants and all the rest of it.

So if the Irish government was really serious about making cuts to get state spending back in line with our collapsed tax revenues, there are many, many areas they could go into. Instead, we have the farce of the firing of five junior ministers.

And even that did not have the desired effect because it was buried by the news at the end of last week that former ministers who are still members of the Dail are to keep the ministerial pensions which they get on top of their Dail salaries. The government had promised to stop this nonsense (the former ministers get the generous pensions straight away, not when they are 65!) but now says there are legal complications.

Overall, the government's response to the crisis here is still to keep the head down and try to pretend that everything is under control. 

But cracks are now starting to appear. One or two of the sacked junior ministers have broken ranks to reveal how unhappy they all are with the government's performance, accusing Taoiseach (Prime Minister) Brian Cowen and senior ministers of not being up to the challenge.

Most of the fire has been directed at the Tanaiste (Deputy Prime Minister) and Minister for Enterprise Mary Coughlan. Picked by Cowen as his number two, Coughlan looks the part, but there are growing concerns about her competence and experience for a role that is so vital to Irish business at such a critical time. Mind you, when you look at her ministerial colleagues, it's not clear who would be any better.

Part of the government's "business as usual" posture is to expect everyone else to paper over the cracks as well, especially the media. Analysts and commentators who tell the unvarnished truth about how grim the situation facing us here is -- and if you want to know how grim, Google what the IMF had to say about us last week -- are accused of being "unhelpful," to use Coughlan's word.

The government says that all the negative comment about Ireland is damaging us overseas. So you can imagine the consternation there was here when they read that “Erin Go Broke” piece in The New York Times last week by the Nobel Prize winning economist Paul Krugman (famous because he warned that a global crash was coming). 

To be fair to Krugman, he did not write the headline and it was not justified by the article. We're not going broke yet, but we are in dire trouble and he did not pull any punches in spelling out the problem.

Krugman, who must have been reading this column, pointed out that Ireland was in such a bind that it "is being forced to raise taxes and slash government spending in the face of an economic slump -- policies that will further deepen the slump."

Which is exactly the dilemma we were talking about on this page a few weeks ago. As I said then, we're doing it not because we're stupid, but because we have no other option. The cutbacks are being dictated by the international lenders who are becoming less willing to give us billions and billions to blow on current spending. 

Which is why it is so important for us to cut day to day state spending here and get it back to a level that starts to match our tax revenues. It's okay for us to borrow to spend on capital projects that create employment and improve the country's infrastructure, which is the core of the Obama plan in the U.S., although Krugman is not too happy with him either. But our problem is that almost all our borrowing is going into the day to day stuff. 

Critics of the cutbacks that are necessary here say that this would mean slashing spending on hospitals and schools, for example, hitting the sick and the young. But that ignores the huge savings that can be made in the enormous pay bill for state workers, and all the savings that can be made by cutting back on the number of the extended and additional state and semi-state agencies and programs that mushroomed into life during the boom and which we cannot pay for now.

And then there's the Houston comparison and all the savings that could bring. As they used to say, Houston, we've got a problem.