It seems that Ireland remains in perpetual debt crisis. Usually peaceful Icelanders have stopped short of storming their Parliament, frustrated that the government has done nothing to get the country out of debt. In the U.S., many homeowners have taken their last breaths under their own roofs. That said, one thing is certain: neither Irish, nor Icelanders, nor Americans can ever be kicked out of their countries. There is no such thing as executing a foreclosure on a sovereign nation.

One in five Americans owe more than their homes are worth. This creates an impossible situation in which the economy cannot move forward because its citizens cannot borrow and spend as they used to. There is one thing, however, that homeowners can do and that countries cannot. Homeowners can foreclose and walk away from their properties. Countries cannot. And there is another thing that both citizens and countries can do, which is to stay and take up an important battle with the lenders — one that would reduce the principals owed and lessen everyone's debt burden.

In financial lingo, this is also called "taking a haircut." And, apparently, Irish taxpayers really need to take quite a substantial one to reduce the debts that Ireland has assumed to save its irresponsible banks. While more economists are supporting this "let's shred the debt" view, policymakers are not jumping on this particular bandwagon. Regardless, most developed economies need something drastic done with respect to debt. Otherwise, there will be more cement truck drivers ramming literal and proverbial gates of parliament in desperate attempts to tell their governments that they have had enough.

Perhaps Ireland is an excellent illustration of why governments need to put pressure on private creditors to start sharing in the global recovery pain. After real estate prices plunged as much as 70% in 2009, Anglo Irish Bank, neck-deep in real estate lending, needed a massive, taxpayer-funded bailout, eventually ending up nationalized. As the real estate bubble exploded in Ireland, the country ended up drowning in bad debts and forced the government to implement a strict austerity diet. While the European Union praised Ireland for taking the road many still refuse to travel on, little else has improved. Private lenders were left out of the equation, costs of borrowing have surged, and the country's economy kept on shrinking. For the second quarter, Ireland's GDP shrunk as much as five percent on the annual basis.

Much like Ireland, the U.S. has left its creditors out of the ugly picture marred by bad loans losses. That pattern is traced even further to 2008, when the U.S. government took over AIG — the world's largest insurer at the time — and made sure AIG's debt holders were protected. Since then, many more creditors, regardless of how reckless and stupid they may have been, still enjoy the government's safety net.

Now, creditors argue that forgiving debt would be like flashing a neon sign that it is okay to behave badly. They argue that if people know they ultimately do not have to pay their debts, they will become even more reckless. Undoubtedly, that is a possibility and therefore a valid argument. However, the government has done exactly that with so many foolish lenders deemed too big to fall, so why did no one complain then? Who is indeed guilty of a double standard?

Whichever way we look at it, someone will have to pay all the debt that the world has accumulated over the years. It will likely be the savers and investors of the world, who else? But what matters more is how it will happen. Will it happen in a "rip-the-Band-Aid-off" manner of enduring the worst pain now and taking care of the rest later? Or, will be the "let's-take-it-slow" approach with world governments throwing more good money after bad and creating inflation in the process?

I get it why policymakers don't like the Band-Aid approach. If one person gets a mortgage reduction, why can't another? And who will get to determine the reduction? And based on what criteria? For sure, that is uncharted territory and it scares both the government and creditors out of their wits. But looking at the situation in Ireland, what other choice is there?