8 ms·

When Irish Eyes Are Crying

91 points by dsplittgerber 16y ago

Jun8 16y ago
"Which way entire nations jumped when the money was made freely available to them obviously told you a lot about them: their desires, their constraints, their secret sense of themselves. How they reacted when the money was taken away was equally revealing." So true, for countries and people.
VB6_Forever 16y ago
Banking seems a lot like a gambling except that it's heads you win and tails they lose. Lend big into a property bubble and you'll be rewarded with colossal bonuses. The bubble bursts, loans go bad and the share price collapses. However the main banks banks are considered too big to fail and the taxpayer has to bail them out. Bonuses (smaller ones) for exceptional performance continue to be the norm, rolling heads the exception. Why don't the shareholders get rid of their employees, the bankers who have overseen the collapse of their asset? The shareholders are Pension funds who, while they ostensibly have the little peoples'interests to preserve, are actually run by people from the same gene pool as the bankers themselves. These people sit on one anothers remuneration committees. Dog does not eat dog.
- RyanMcGreal 16y ago
  "Too big to fail" is a classic perverse incentive, and a mockery of the idea that the financial industry can somehow self-regulate. Unfortunately, if you remove deposit insurance (or any of its variants), people's savings once again become subject to the self-fulfilling whims of insolvency or the unfounded rumour of insolvency.
  - anamax 16y ago
    > Unfortunately, if you remove deposit insurance (or any of its variants), I've heard that Canada didn't get deposit insurance until the 50s or 60s, well after the US.
- yummyfajitas 16y ago
  Why don't the shareholders get rid of their employees,... Financial institutions fired 800,000 people nationwide between Jan 1 2008 and Jan 1 2011. That's about 10% of their total workforce. http://research.stlouisfed.org/fred2/series/USFIRE?cid=11 http://research.stlouisfed.org/fred2/series/USFIRE?cid=11
billjings 16y ago
Here's the previous article in what seems to be a series: http://www.vanityfair.com/business/features/2010/10/greeks-bearing-bonds-201010 http://www.vanityfair.com/business/features/2010/10/greeks-b...
greenmachine 16y ago
As someone currently living in Ireland, I found the subtitle of this article particularly appropriate: "Where's the rage?". The Irish government bankrupted the country many times over by putting the debts of the banks on the backs of the people. But, unlike France, for example, where people have taken to the streets and brought the country to a halt to be heard, in Ireland there is nothing like the level of activism that one would expect given the depth of the economic quagmire. I find it quite sad to see how a country that was once such a hotbed of political unrest has become so passified by the recent wealth that it experienced. My guess is it has to do with people having the feeling that they are stakeholders in the system now, with mortgages and fungible assets, and so they are less willing to want to subvert the system itself rather than muddle along even with unsatisfactory political solutions.
- pjriot 16y ago
  You're advocating unrest? The government has disbanded and elections have been called. They're in for a kicking, which although short of full-on political reform, is something several hundred people had to die for in Egypt. Would it satisfy you if we burned a few cars? Where do you live? I'll meet up with you later and we can tear your street to shreds if you like.
  - greenmachine 16y ago
    Not much of a comparison between Ireland and Egypt obviously. That's why the comparison to France is more appropriate: where the people were actually unwilling to take it lying down - as they are doing in Ireland. It doesn't matter that a general election has been called. With the poverty of leadership in Irish politics at the moment, Ireland is in for more of the same incompetence that led to the current disaster from whatever regime takes over. With activist unrest earlier on, it might have been possible to make it clear that the decision to bailout the banks was unacceptable and needed to be reversed. So, yes, sometimes you have to burn a few cars if you want to be heard. Instead the passivity of the Irish people has doomed the economy for generations.
    - deleted 16y ago
staticshock 16y ago
some previous discussion on this: http://news.ycombinator.com/item?id=2171381 http://news.ycombinator.com/item?id=2171381
bhavin 16y ago
Pardon if I deviate a bit from the main topic. I live in Ireland, and it was quite disheartening when the last budget cuts appeared. Taxes were increased across the board. If you were earning 25,000 Euros a year, you would pay an extra 1000 Euros in tax (and surprisingly enough, this low earner class was the worst beaten income group by hike in tax in percentage terms - 4+% more tax!). Since its general consensus that banks, govt. etc are at fault (to which I agree), I want to say something which generally is ignored, just a theory. The Celtic Tiger years, due to low Corporation Tax rates, have had the similar impact on the economy as Resource Curse (http://en.wikipedia.org/wiki/Resource_curse http://en.wikipedia.org/wiki/Resource_curse). Ireland got rich so fast with all the incoming money that lots of careless spending by government as well as people was ignored. The property prices went up crazy, things became awful expensive etc etc. When nobody cared about how much govt spent or how much banks are landing real estate developers, this was bound to happen IMHO. If Ireland had gotten rich slowly and on its own (by increasing exports, productivity etc), such rackless spending bubble economy would probably never have manifested itself.
- deleted 16y ago
  [deleted]
- deleted 16y ago
  [deleted]
- fdghjkh 16y ago
  The UK spent the last 10years in a period of genuine economic growth - but still managed to increase it's national debt. There is no limit to how much government's can spend, however they get the money!
  - benohear 16y ago
    Until 2002 it was actually going down. Then the increase was moderate and it finally exploded in the 2007 recession.
abrenzel 16y ago
Anger is certainly an appropriate reaction in circumstances like this, but I find articles like this really gloss over the nature of the shared responsibility for what happened. Yes, banks and governments (including the US! - we just haven't felt the full brunt of it yet) engaged in many unsustainable and downright fraudulent practices. Asset bubbles are breeding grounds for such things. On the other hand, no one forced homebuyers to take on loans they knew they could not afford, or spend borrowed money at unpayable rates. Now, everyone wants a bailout. Neither banks nor consumers should get them. Iceland actually did the right thing by taking its banks into receivership and breaking them up. The banks screamed bloody murder and threatened national chaos, and the Icelandic economy did grind to a halt for almost a year. Now, they seem to be on a road to sustainable recovery. This is not true in either the rest of Europe or the US, where the bailouts came fast and generous. Look at today's job report. Is that the sign of economic growth? While the decisions were justifiable at the time, TARP, TALF, and the like need to be admitted as mistakes and corrected. If this means recognizing all of our largest institutions as insolvent, so be it! The nation requires a banking system, but not any individual bank. It will hurt badly, just as it hurt in Iceland, but the alternative is Ireland and Greece.
- ebiester 16y ago
  On the other hand... for the equivalent square feet in Tucson, my rent went up 50% over a decade for the same square footage. When you see your rent go up so drastically, while everyone is getting low interest rate mortgages, you start to question your "fiscal responsibility." If I had bought in 2006, I couldn't have sold my property today. However, we didn't know where the "new normal" would even out. People took on these home loans, in most cases, because of the fear of rent increasing past their ability to pay. If you buy, you may not be able to afford it now, but eventually inflation will bring the numbers into line, especially not knowing where the "new normal" would be.
  - yummyfajitas 16y ago
    People took on these home loans, in most cases, because of the fear of rent increasing past their ability to pay. This is one of the most retarded ideas I've ever heard. Renting: a small, liquid, short duration, unleveraged short position. Owning: a large, illiquid, long duration, highly leveraged long position. So basically, to follow a short term trend, people decided to tie up a large chunk of their life savings in dangerous, long term leveraged bets. Financial literacy FAIL.
arethuza 16y ago
One of the few positive things to have come out of the financial crisis of 2008 is that it has probably killed any prospect of Scotland becoming independent - we used to be promised that we could share in the same kinds of success as Ireland and Iceland if only we had the courage to go it alone! I doubt if many people have the appetite for being stuck in a small country with a financial monster like RBS or HBOS. [NB I am a reformed Scottish Nationalist]
- seanalltogether 16y ago
  Whenever I hear about people wanting to break away like that I'm always reminded "There's strength in numbers". As the world economy starts to flatten out, we're all learning that it comes down to a population game. I wonder if we'll see a point where two countries vote to merge together to create a stronger economy.
  - falsestprophet 16y ago
    Both the future independent Scotland and the United Kingdom of England and Wales would presumably be constituent nations of the European Union.
    - arethuza 16y ago
      "Independence in Europe" has been a policy of the SNP for a long time. Interestingly enough the relevant page on their site still has: "The SNP believes that Independence in Europe is the logical next step for Scotland to take on its road to becoming a normal, democratic, European nation, just like Denmark, Ireland or Luxembourg." http://www.snp.org/node/242 http://www.snp.org/node/242 Note that I'm not anti-EU at all - quite the opposite.
  - sp332 16y ago
    See: the European Union. Shared currency, very little restriction to travel and trade, made it possible to compete economically with the UK.
6ren 16y ago
Australia also has had a long, rolling property boom, with bank lending behind it all. It didn't pop when expected because our economy was propped up by mineral/metal prices, due to China's demand and surprisingly little supply from other countries. Both may change.
- j2d2j2d2 16y ago
  It still has a bubble which hasn't popped. Australia is def a nation to watch.
  - bhoung 16y ago
    Crossed my mind to ask if anyone saw any parallels with Australia. Glad to see someone mention it. My rough interpretation of the article is that cheap labour from Poland distorted the Irish economy, and the banking contagion resulted in loans to the Polish who couldn't afford the loans, and subsequently disappeared, especially once the whole economy went sour. An important difference to Ireland's story is that the people who make up Australia's cheap imported labour face greater restrictions in entering the country as they are, with the exception of New Zealanders who are have the same living standards as Australians, international students (and possibly people on working holiday visas) who, to my understanding, are required to demonstrate sufficient funds to get by. Staying on after graduation of whatever course is not guaranteed and has become more difficult post a recent policy change. Australia runs a points system in issuing residency visas and has just cut the number occupations/courses which receive points. My feeling is that the same expectations fueled bubble has arisen here (I'm in Melb) but has been sustained by the resilient resources dependent economy as well as the capital inflows from those who see Australia as an attractive place to invest and/or also live/have a holiday home. "real-estate bubbles never end with soft landings. A bubble is inflated by nothing firmer than expectations." Although the factors driving the housing bubble in Australia are different from those in Ireland, if we concede there is a bubble in Australia, and we listen to economics professor Morgan Kelly, we're due for a crash. A couple counterpoints to the above: China's demand for resources will probably span another two or three decades, and also Australia's financial lending practices are not and haven't been as lax as those of Ireland or the US.
- 16y ago
dpapathanasiou 16y ago
It's interesting to compare Greece and Ireland. Greece was profligate, openly cooking the books since at least 2002 (http://en.wikipedia.org/wiki/Greek_Financial_Audit,_2004 http://en.wikipedia.org/wiki/Greek_Financial_Audit,_2004) whereas Ireland was doing the noble thing by imposing austere measures on itself. Yet both needed bailouts by the EU recently, and both will probably wind up defaulting.
- rst 16y ago
  Also Ireland vs. Iceland. Both got massively screwed over not by the government, but by mismanaged banks. Ireland's stuck its own taxpayers with the debts of its profligate banks, and done the "austerity" thing to pay for it. Iceland let the banks go broke, and let the banks' overseas debtors take the hit. And even though the Icelandic banks screwed up worse than anybody's, Iceland's doing as well as Ireland in total output (better than the Baltics), and a lot better in unemployment, which is kinda relevant if you're an Icelander. Everyone's favorite economic lightning rod posts graphs here: http://krugman.blogs.nytimes.com/2011/02/01/comparative-peripheral-suffering/ http://krugman.blogs.nytimes.com/2011/02/01/comparative-peri...
- watchandwait 16y ago
  Ireland and Greece are COMPLETELY different. Greece's government budget is wildly fraudulent. Ireland's government was responsible, but decided to encumber taxpayers with private banking losses. Irish voters, like those in Iceland, may yet reject this deal. I know I would. The international banking cabal has captured the "democratic" processes across most of the West and is using those governments to plunder their people.
  - patrickk 16y ago
    "Ireland's government was responsible...." absolutely untrue. "As a small, open economy, Ireland was always going to be vulnerable to global swings," says Ray Kinsella, an economist at University College Dublin. "But this is predominantly a self-inflicted crisis." http://www.businessweek.com/magazine/content/10_48/b4205082055642_page_4.htm http://www.businessweek.com/magazine/content/10_48/b42050820... There was an expensive, taxpayer-funded study done (can't seem to find it atm, but if you Google around you may find it) which basically concurs with the above statement - our crisis was largely our own making. The international credit crisis may have accelerated it slightly, but it would have happened eventually anyway. I attended a great presentation by a guy called Ed Walshe, who is the former president of one of Ireland's biggest colleges (http://en.wikipedia.org/wiki/Edward_M_Walsh http://en.wikipedia.org/wiki/Edward_M_Walsh) where he laid out in black and white all the idiotic stuff the government got up too when times were good. Things like massively increasing the numbers of civil servants - not in front line services like doctors, nurses and teachers; but useless bureaucrats in offices in Dublin, massively increased civil servant pay - way ahead of inflation (this effectively bought them popularity for the next election), cutting income taxes across the board, 'throwing gasoline on the fire' by giving extra tax breaks to property developers (section 23 and section 50 tax breaks) when things were extremely overheated and the brakes should have been applied etc. etc. I can dig up a copy of the presentation on my hard drive if you are especially interested. Also adding to the problem was non-existent regulation of the banks and construction industry in general. The head of the construction federation was a guy who was former Fianna Fail (the main party in government). The head of the banking lobby was a former member of a party that was in power with Fianna Fail. Basically at the highest levels in Ireland the whole scene operated like a gigantic old boys' network that would put things to shame in most other parts of the world.
Padraig 16y ago
One fundamental problem we have in Ireland is the way in which we elect our Dáil (parliament). There's a 4 minute section in this video (43m45s onwards ) http://www.rte.ie/player/#v=1090239 http://www.rte.ie/player/#v=1090239 which explains better than I can, but here goes: In short: 1. There are multiple seats (often with a few candidates running from the same party) per constituency. 2. It doesn't take many votes to get elected (Any more than 8,000 votes got you elected in my constituency of 86,000 people). Politicians don't compete on the differences between their parties because they're also competing against another locally running party member. Instead, they wage very local personality based campaigns. Since they only need a few thousand votes, they can and do call door-to-door to chat with everyone they can. Pothole need filling? Let your local candidates know and by god it'll be fixed immediately. This means that the people who end up making important decisions on whether or not to take on 100s of billions of euros worth of debt are the people who came across best on a few thousand house calls.
- fdghjkh 16y ago
  There's a great book written by a civil servant in Ireland's foreign ministry in the 80s. He said he had two maps on his wall, one of the eastern bloc enemy and a bigger one of his minister's constituency - a crisis (eg a pothole) in the constituency was the priority.
  - Padraig 16y ago
    Ha! That doesn't surprise me at all. What's the book called? There is an appetite to reform this stuff now, but it's hard to imagine the winners of the game when played by those rules deciding to change it dramatically.
    - fdghjkh 16y ago
      Don't remember - got stuck at Dublin airport once and it was the only book not about whiskey, your Irish ancestors or pictures of green fields
    - vdm 16y ago
deleted 16y ago
[deleted]
deleted 16y ago
[deleted]
duke_sam 16y ago
The bank bailouts made very little sense, the biggest toxic bank, Anglo Irish Bank, was not a retail bank. They specialised in property financing. Letting them go under would not have resulted in the Irish Government having to cover huge amounts of deposits. The current majority party (Fianna Fail) has a history of connections to property developers and this connection is what a lot of people though spurred the saving of Anglo. Now more information is bubbling up about the exposure of European banks to Anglo and the other Irish banks. Europe (especially Germany) wants this mess cleaned up because if the Irish Government drops the guarantee then their own banks will have a huge hole in their finances. These were essentially risky investments made by foreign banks that the Irish taxpayer is now being forced to pay back. Bank of Ireland and Allied Irish Bank were profitable (extremely so in the context of the Irish economy) and if kept in government hands would eventually make back their losses. Anglo made it's profits on the back of the property bubble, not something that will be repeated any time soon. This is the perspective of an Irish economist on the debacle: http://www.ronanlyons.com/2011/01/18/the-irish-bank-sandwich-time-for-the-eu-to-face-up-to-reality/ http://www.ronanlyons.com/2011/01/18/the-irish-bank-sandwich...
- yequalsx 16y ago
  I'm in Berlin now and it appears the Germans feel these so called bailouts are rescuing countries that don't have their affairs in order. I think these bailouts are mostly to prop up German and French banks. Banks in Europe and the U.S. have finally figured a way to socialize their losses and privatize their gains. Big bonuses are still the norm at American banks even though it was their bad bets that led the U.S. to its current economic mess.
  - muhfuhkuh 16y ago
    "Big bonuses are still the norm at American banks even though it was their bad bets that led the U.S. to its current economic mess." I agree wholeheartedly, but there are _so_ many people who readily (and hastily) blame "dumb and poor" people who shouldn't have gotten mortgages, Fannie and Freddie (US loan guarantors) who backed those mortgages, and one rogue liberal US representative (Barney Frank) who somehow bullied the entire 500-member legislative branch and then President Bush into allowing more mortgages to be handed out to poor people, thus causing the worldwide financial crisis. Seriously, that's what people actually believe. What can be done to convince them that it's way, WAY more complicated than that?
albemuth 16y ago
Completely off topic, but the ?printable=true in the url is a very nice touch
deleted 16y ago
[deleted]
patrickk 16y ago
Wow, great to see Michael Lewis, one of my favorite authors, coming to little ol' Ireland and do such an in-depth piece on us. I had no idea that the insane decision to bail out Anglo Irish was so directly linked to Merrill Lynch's 'advice'. Interesting fact: I was sitting less than 50m away from the heroic egg-thrower when he went for the kill. Wasn't in the same room unfortunately. We were warned to hide our bank ID badges that day going in and out of work :-)

91 points by dsplittgerber 16y ago

Jun8 16y ago

"Which way entire nations jumped when the money was made freely available to them obviously told you a lot about them: their desires, their constraints, their secret sense of themselves. How they reacted when the money was taken away was equally revealing." So true, for countries and people.

VB6_Forever 16y ago

Banking seems a lot like a gambling except that it's heads you win and tails they lose. Lend big into a property bubble and you'll be rewarded with colossal bonuses. The bubble bursts, loans go bad and the share price collapses. However the main banks banks are considered too big to fail and the taxpayer has to bail them out. Bonuses (smaller ones) for exceptional performance continue to be the norm, rolling heads the exception. Why don't the shareholders get rid of their employees, the bankers who have overseen the collapse of their asset? The shareholders are Pension funds who, while they ostensibly have the little peoples'interests to preserve, are actually run by people from the same gene pool as the bankers themselves. These people sit on one anothers remuneration committees. Dog does not eat dog.

RyanMcGreal 16y ago
"Too big to fail" is a classic perverse incentive, and a mockery of the idea that the financial industry can somehow self-regulate. Unfortunately, if you remove deposit insurance (or any of its variants), people's savings once again become subject to the self-fulfilling whims of insolvency or the unfounded rumour of insolvency.
- anamax 16y ago
  > Unfortunately, if you remove deposit insurance (or any of its variants), I've heard that Canada didn't get deposit insurance until the 50s or 60s, well after the US.
yummyfajitas 16y ago
Why don't the shareholders get rid of their employees,... Financial institutions fired 800,000 people nationwide between Jan 1 2008 and Jan 1 2011. That's about 10% of their total workforce. http://research.stlouisfed.org/fred2/series/USFIRE?cid=11 http://research.stlouisfed.org/fred2/series/USFIRE?cid=11

billjings 16y ago

Here's the previous article in what seems to be a series: http://www.vanityfair.com/business/features/2010/10/greeks-bearing-bonds-201010 http://www.vanityfair.com/business/features/2010/10/greeks-b...

greenmachine 16y ago

As someone currently living in Ireland, I found the subtitle of this article particularly appropriate: "Where's the rage?". The Irish government bankrupted the country many times over by putting the debts of the banks on the backs of the people. But, unlike France, for example, where people have taken to the streets and brought the country to a halt to be heard, in Ireland there is nothing like the level of activism that one would expect given the depth of the economic quagmire. I find it quite sad to see how a country that was once such a hotbed of political unrest has become so passified by the recent wealth that it experienced. My guess is it has to do with people having the feeling that they are stakeholders in the system now, with mortgages and fungible assets, and so they are less willing to want to subvert the system itself rather than muddle along even with unsatisfactory political solutions.

pjriot 16y ago
You're advocating unrest? The government has disbanded and elections have been called. They're in for a kicking, which although short of full-on political reform, is something several hundred people had to die for in Egypt. Would it satisfy you if we burned a few cars? Where do you live? I'll meet up with you later and we can tear your street to shreds if you like.
- greenmachine 16y ago
  Not much of a comparison between Ireland and Egypt obviously. That's why the comparison to France is more appropriate: where the people were actually unwilling to take it lying down - as they are doing in Ireland. It doesn't matter that a general election has been called. With the poverty of leadership in Irish politics at the moment, Ireland is in for more of the same incompetence that led to the current disaster from whatever regime takes over. With activist unrest earlier on, it might have been possible to make it clear that the decision to bailout the banks was unacceptable and needed to be reversed. So, yes, sometimes you have to burn a few cars if you want to be heard. Instead the passivity of the Irish people has doomed the economy for generations.
  - deleted 16y ago

staticshock 16y ago

some previous discussion on this: http://news.ycombinator.com/item?id=2171381 http://news.ycombinator.com/item?id=2171381

bhavin 16y ago

Pardon if I deviate a bit from the main topic. I live in Ireland, and it was quite disheartening when the last budget cuts appeared. Taxes were increased across the board. If you were earning 25,000 Euros a year, you would pay an extra 1000 Euros in tax (and surprisingly enough, this low earner class was the worst beaten income group by hike in tax in percentage terms - 4+% more tax!). Since its general consensus that banks, govt. etc are at fault (to which I agree), I want to say something which generally is ignored, just a theory. The Celtic Tiger years, due to low Corporation Tax rates, have had the similar impact on the economy as Resource Curse (http://en.wikipedia.org/wiki/Resource_curse http://en.wikipedia.org/wiki/Resource_curse). Ireland got rich so fast with all the incoming money that lots of careless spending by government as well as people was ignored. The property prices went up crazy, things became awful expensive etc etc. When nobody cared about how much govt spent or how much banks are landing real estate developers, this was bound to happen IMHO. If Ireland had gotten rich slowly and on its own (by increasing exports, productivity etc), such rackless spending bubble economy would probably never have manifested itself.

deleted 16y ago
[deleted]
deleted 16y ago
[deleted]
fdghjkh 16y ago
The UK spent the last 10years in a period of genuine economic growth - but still managed to increase it's national debt. There is no limit to how much government's can spend, however they get the money!
- benohear 16y ago
  Until 2002 it was actually going down. Then the increase was moderate and it finally exploded in the 2007 recession.

abrenzel 16y ago

Anger is certainly an appropriate reaction in circumstances like this, but I find articles like this really gloss over the nature of the shared responsibility for what happened. Yes, banks and governments (including the US! - we just haven't felt the full brunt of it yet) engaged in many unsustainable and downright fraudulent practices. Asset bubbles are breeding grounds for such things. On the other hand, no one forced homebuyers to take on loans they knew they could not afford, or spend borrowed money at unpayable rates. Now, everyone wants a bailout. Neither banks nor consumers should get them. Iceland actually did the right thing by taking its banks into receivership and breaking them up. The banks screamed bloody murder and threatened national chaos, and the Icelandic economy did grind to a halt for almost a year. Now, they seem to be on a road to sustainable recovery. This is not true in either the rest of Europe or the US, where the bailouts came fast and generous. Look at today's job report. Is that the sign of economic growth? While the decisions were justifiable at the time, TARP, TALF, and the like need to be admitted as mistakes and corrected. If this means recognizing all of our largest institutions as insolvent, so be it! The nation requires a banking system, but not any individual bank. It will hurt badly, just as it hurt in Iceland, but the alternative is Ireland and Greece.

ebiester 16y ago
On the other hand... for the equivalent square feet in Tucson, my rent went up 50% over a decade for the same square footage. When you see your rent go up so drastically, while everyone is getting low interest rate mortgages, you start to question your "fiscal responsibility." If I had bought in 2006, I couldn't have sold my property today. However, we didn't know where the "new normal" would even out. People took on these home loans, in most cases, because of the fear of rent increasing past their ability to pay. If you buy, you may not be able to afford it now, but eventually inflation will bring the numbers into line, especially not knowing where the "new normal" would be.
- yummyfajitas 16y ago
  People took on these home loans, in most cases, because of the fear of rent increasing past their ability to pay. This is one of the most retarded ideas I've ever heard. Renting: a small, liquid, short duration, unleveraged short position. Owning: a large, illiquid, long duration, highly leveraged long position. So basically, to follow a short term trend, people decided to tie up a large chunk of their life savings in dangerous, long term leveraged bets. Financial literacy FAIL.

arethuza 16y ago

One of the few positive things to have come out of the financial crisis of 2008 is that it has probably killed any prospect of Scotland becoming independent - we used to be promised that we could share in the same kinds of success as Ireland and Iceland if only we had the courage to go it alone! I doubt if many people have the appetite for being stuck in a small country with a financial monster like RBS or HBOS. [NB I am a reformed Scottish Nationalist]

seanalltogether 16y ago
Whenever I hear about people wanting to break away like that I'm always reminded "There's strength in numbers". As the world economy starts to flatten out, we're all learning that it comes down to a population game. I wonder if we'll see a point where two countries vote to merge together to create a stronger economy.
- falsestprophet 16y ago
  Both the future independent Scotland and the United Kingdom of England and Wales would presumably be constituent nations of the European Union.
  - arethuza 16y ago
    "Independence in Europe" has been a policy of the SNP for a long time. Interestingly enough the relevant page on their site still has: "The SNP believes that Independence in Europe is the logical next step for Scotland to take on its road to becoming a normal, democratic, European nation, just like Denmark, Ireland or Luxembourg." http://www.snp.org/node/242 http://www.snp.org/node/242 Note that I'm not anti-EU at all - quite the opposite.
- sp332 16y ago
  See: the European Union. Shared currency, very little restriction to travel and trade, made it possible to compete economically with the UK.

6ren 16y ago

Australia also has had a long, rolling property boom, with bank lending behind it all. It didn't pop when expected because our economy was propped up by mineral/metal prices, due to China's demand and surprisingly little supply from other countries. Both may change.

j2d2j2d2 16y ago
It still has a bubble which hasn't popped. Australia is def a nation to watch.
- bhoung 16y ago
  Crossed my mind to ask if anyone saw any parallels with Australia. Glad to see someone mention it. My rough interpretation of the article is that cheap labour from Poland distorted the Irish economy, and the banking contagion resulted in loans to the Polish who couldn't afford the loans, and subsequently disappeared, especially once the whole economy went sour. An important difference to Ireland's story is that the people who make up Australia's cheap imported labour face greater restrictions in entering the country as they are, with the exception of New Zealanders who are have the same living standards as Australians, international students (and possibly people on working holiday visas) who, to my understanding, are required to demonstrate sufficient funds to get by. Staying on after graduation of whatever course is not guaranteed and has become more difficult post a recent policy change. Australia runs a points system in issuing residency visas and has just cut the number occupations/courses which receive points. My feeling is that the same expectations fueled bubble has arisen here (I'm in Melb) but has been sustained by the resilient resources dependent economy as well as the capital inflows from those who see Australia as an attractive place to invest and/or also live/have a holiday home. "real-estate bubbles never end with soft landings. A bubble is inflated by nothing firmer than expectations." Although the factors driving the housing bubble in Australia are different from those in Ireland, if we concede there is a bubble in Australia, and we listen to economics professor Morgan Kelly, we're due for a crash. A couple counterpoints to the above: China's demand for resources will probably span another two or three decades, and also Australia's financial lending practices are not and haven't been as lax as those of Ireland or the US.
16y ago

dpapathanasiou 16y ago

It's interesting to compare Greece and Ireland. Greece was profligate, openly cooking the books since at least 2002 (http://en.wikipedia.org/wiki/Greek_Financial_Audit,_2004 http://en.wikipedia.org/wiki/Greek_Financial_Audit,_2004) whereas Ireland was doing the noble thing by imposing austere measures on itself. Yet both needed bailouts by the EU recently, and both will probably wind up defaulting.

rst 16y ago
Also Ireland vs. Iceland. Both got massively screwed over not by the government, but by mismanaged banks. Ireland's stuck its own taxpayers with the debts of its profligate banks, and done the "austerity" thing to pay for it. Iceland let the banks go broke, and let the banks' overseas debtors take the hit. And even though the Icelandic banks screwed up worse than anybody's, Iceland's doing as well as Ireland in total output (better than the Baltics), and a lot better in unemployment, which is kinda relevant if you're an Icelander. Everyone's favorite economic lightning rod posts graphs here: http://krugman.blogs.nytimes.com/2011/02/01/comparative-peripheral-suffering/ http://krugman.blogs.nytimes.com/2011/02/01/comparative-peri...
watchandwait 16y ago
Ireland and Greece are COMPLETELY different. Greece's government budget is wildly fraudulent. Ireland's government was responsible, but decided to encumber taxpayers with private banking losses. Irish voters, like those in Iceland, may yet reject this deal. I know I would. The international banking cabal has captured the "democratic" processes across most of the West and is using those governments to plunder their people.
- patrickk 16y ago
  "Ireland's government was responsible...." absolutely untrue. "As a small, open economy, Ireland was always going to be vulnerable to global swings," says Ray Kinsella, an economist at University College Dublin. "But this is predominantly a self-inflicted crisis." http://www.businessweek.com/magazine/content/10_48/b4205082055642_page_4.htm http://www.businessweek.com/magazine/content/10_48/b42050820... There was an expensive, taxpayer-funded study done (can't seem to find it atm, but if you Google around you may find it) which basically concurs with the above statement - our crisis was largely our own making. The international credit crisis may have accelerated it slightly, but it would have happened eventually anyway. I attended a great presentation by a guy called Ed Walshe, who is the former president of one of Ireland's biggest colleges (http://en.wikipedia.org/wiki/Edward_M_Walsh http://en.wikipedia.org/wiki/Edward_M_Walsh) where he laid out in black and white all the idiotic stuff the government got up too when times were good. Things like massively increasing the numbers of civil servants - not in front line services like doctors, nurses and teachers; but useless bureaucrats in offices in Dublin, massively increased civil servant pay - way ahead of inflation (this effectively bought them popularity for the next election), cutting income taxes across the board, 'throwing gasoline on the fire' by giving extra tax breaks to property developers (section 23 and section 50 tax breaks) when things were extremely overheated and the brakes should have been applied etc. etc. I can dig up a copy of the presentation on my hard drive if you are especially interested. Also adding to the problem was non-existent regulation of the banks and construction industry in general. The head of the construction federation was a guy who was former Fianna Fail (the main party in government). The head of the banking lobby was a former member of a party that was in power with Fianna Fail. Basically at the highest levels in Ireland the whole scene operated like a gigantic old boys' network that would put things to shame in most other parts of the world.

Padraig 16y ago

One fundamental problem we have in Ireland is the way in which we elect our Dáil (parliament). There's a 4 minute section in this video (43m45s onwards ) http://www.rte.ie/player/#v=1090239 http://www.rte.ie/player/#v=1090239 which explains better than I can, but here goes: In short: 1. There are multiple seats (often with a few candidates running from the same party) per constituency. 2. It doesn't take many votes to get elected (Any more than 8,000 votes got you elected in my constituency of 86,000 people). Politicians don't compete on the differences between their parties because they're also competing against another locally running party member. Instead, they wage very local personality based campaigns. Since they only need a few thousand votes, they can and do call door-to-door to chat with everyone they can. Pothole need filling? Let your local candidates know and by god it'll be fixed immediately. This means that the people who end up making important decisions on whether or not to take on 100s of billions of euros worth of debt are the people who came across best on a few thousand house calls.

fdghjkh 16y ago
There's a great book written by a civil servant in Ireland's foreign ministry in the 80s. He said he had two maps on his wall, one of the eastern bloc enemy and a bigger one of his minister's constituency - a crisis (eg a pothole) in the constituency was the priority.
- Padraig 16y ago
  Ha! That doesn't surprise me at all. What's the book called? There is an appetite to reform this stuff now, but it's hard to imagine the winners of the game when played by those rules deciding to change it dramatically.
  - fdghjkh 16y ago
    Don't remember - got stuck at Dublin airport once and it was the only book not about whiskey, your Irish ancestors or pictures of green fields
  - vdm 16y ago

deleted 16y ago

[deleted]

deleted 16y ago

[deleted]

duke_sam 16y ago

The bank bailouts made very little sense, the biggest toxic bank, Anglo Irish Bank, was not a retail bank. They specialised in property financing. Letting them go under would not have resulted in the Irish Government having to cover huge amounts of deposits. The current majority party (Fianna Fail) has a history of connections to property developers and this connection is what a lot of people though spurred the saving of Anglo. Now more information is bubbling up about the exposure of European banks to Anglo and the other Irish banks. Europe (especially Germany) wants this mess cleaned up because if the Irish Government drops the guarantee then their own banks will have a huge hole in their finances. These were essentially risky investments made by foreign banks that the Irish taxpayer is now being forced to pay back. Bank of Ireland and Allied Irish Bank were profitable (extremely so in the context of the Irish economy) and if kept in government hands would eventually make back their losses. Anglo made it's profits on the back of the property bubble, not something that will be repeated any time soon. This is the perspective of an Irish economist on the debacle: http://www.ronanlyons.com/2011/01/18/the-irish-bank-sandwich-time-for-the-eu-to-face-up-to-reality/ http://www.ronanlyons.com/2011/01/18/the-irish-bank-sandwich...

yequalsx 16y ago
I'm in Berlin now and it appears the Germans feel these so called bailouts are rescuing countries that don't have their affairs in order. I think these bailouts are mostly to prop up German and French banks. Banks in Europe and the U.S. have finally figured a way to socialize their losses and privatize their gains. Big bonuses are still the norm at American banks even though it was their bad bets that led the U.S. to its current economic mess.
- muhfuhkuh 16y ago
  "Big bonuses are still the norm at American banks even though it was their bad bets that led the U.S. to its current economic mess." I agree wholeheartedly, but there are _so_ many people who readily (and hastily) blame "dumb and poor" people who shouldn't have gotten mortgages, Fannie and Freddie (US loan guarantors) who backed those mortgages, and one rogue liberal US representative (Barney Frank) who somehow bullied the entire 500-member legislative branch and then President Bush into allowing more mortgages to be handed out to poor people, thus causing the worldwide financial crisis. Seriously, that's what people actually believe. What can be done to convince them that it's way, WAY more complicated than that?

albemuth 16y ago

Completely off topic, but the ?printable=true in the url is a very nice touch

deleted 16y ago

[deleted]

patrickk 16y ago

Wow, great to see Michael Lewis, one of my favorite authors, coming to little ol' Ireland and do such an in-depth piece on us. I had no idea that the insane decision to bail out Anglo Irish was so directly linked to Merrill Lynch's 'advice'. Interesting fact: I was sitting less than 50m away from the heroic egg-thrower when he went for the kill. Wasn't in the same room unfortunately. We were warned to hide our bank ID badges that day going in and out of work :-)