Patterico's Pontifications


National Non-Sabotage Brings Ireland to Its Knees

Filed under: General — Aaron Worthing @ 7:56 am

[Guest post by Aaron Worthing; if you have tips, please send them here.]

The other day Steve Benen stupidly asserted that the idea of reducing the debt, lowering taxes, cutting spending and reducing the size of government was all part of a deliberate conspiracy to destroy America!

So one should pay no attention to this story of what happens if you don’t “sabotage” your country:

Irish Debt Crisis Forces Collapse of Government

The Irish government faced imminent collapse on Monday, only a day after it signed off on a $100 billion bailout, setting the stage for a new election early next year and injecting the threat of political instability into a European financial crisis that already has markets on edge.

Confronted with high-level defections from his governing coalition, Prime Minister Brian Cowen said he would dissolve the government after passage of the country’s crucial 2011 budget early in December.

His announcement capped a grim day for Ireland, as protesters tried to storm the Parliament building in Dublin, and Moody’s Investors Service, the ratings agency, lowered the rating on Irish debt by several notches.

In agreeing to new elections, Mr. Cowen seemed sure to become the first political casualty of the debt crisis in the 16-member euro zone.

The developments sent a chill through financial markets and political circles in the euro zone, where the severe austerity measures imposed to keep the currency union from fracturing have yet to be tested in general elections.

The impending collapse of the Irish government after an expensive bailout seemed only to reconfirm fears that the financial crisis was far from contained.

So remember, debt is patriotic.  And dissent is treason, of course.  And racist.

[Posted and authored by Aaron Worthing.]

22 Responses to “National Non-Sabotage Brings Ireland to Its Knees”

  1. Uh. You do know that Ireland is a poster boy for fiscal austerity and low taxes, right?

    AJB (d64738)

  2. When they talk about “collapse of government” they’re talking about the ruling coalition falling apart. Not like, anarchy.

    imdw (25d965)

  3. NYT, 29 June 2010:

    “When our public finance situation blew wide open, the dominant consideration was ensuring that there was international investor confidence in Ireland so we could continue to borrow,” said Alan Barrett, chief economist at the Economic and Social Research Institute of Ireland. “A lot of the argument was, ‘Let’s get this over with quickly.’ ”

    Rather than being rewarded for its actions, though, Ireland is being penalized. Its downturn has certainly been sharper than if the government had spent more to keep people working. Lacking stimulus money, the Irish economy shrank 7.1 percent last year and remains in recession. […]

    Despite its strenuous efforts, Ireland has been thrust into the same ignominious category as Portugal, Italy, Greece and Spain. It now pays a hefty three percentage points more than Germany on its benchmark bonds, in part because investors fear that the austerity program, by retarding growth and so far failing to reduce borrowing, will make it harder for Dublin to pay its bills rather than easier.

    Other European nations, including Britain and Germany, are following Ireland’s lead, arguing that the only way to restore growth is to convince investors and their own people that government borrowing will shrink.

    AJB (d64738)

  4. And Oceania has always been at war with Eastasia.

    Captain Ned (1711ec)

  5. Is there any topic that AJB does not feel compelled to make an ass of itself commenting on it?

    JD (f9d82f)

  6. no european country is a poster boy for low spending. they are all bad.

    Aaron Worthing (e7d72e)

  7. The other factor that is hurting Ireland and complicating the recovery is the Euro. It cannot inflate, unlike the US Treasury which is monetizing the debt to the tune of $600 billion.

    Mike K (568408)

  8. No JD, the clueless are always spouting off on something.

    zeezil (c67c5f)

  9. Good thing California keeps on spending, or what happened in Ireland could happen here! Say, what IS the interest rate on California bonds?

    Oh. 4 1/4% tax-free on a 10-year bond when taxable US 10-year bonds are under 3%. That’s like double at a time when the Fed is printing money. Not as safe as houses, then.

    Kevin M (298030)

  10. “The Irish government faced imminent collapse on Monday”

    Maybe you’re missing that this means that the ruling party is falling, not anarchy. That might be the goal of “sabotage.”

    “no european country is a poster boy for low spending. they are all bad.”

    Are you familiar with terms like “celtic tiger” and “irish miracle” ?

    imdw (0172f3)

  11. this is what they get for joining the ruropean union. you lose your country.

    tommy mc donnell (397858)

  12. Ireland isn’t the land of fiscal austerity, especially for it’s corrupt political leaders. Sure, they offer low taxes for foreign corporations, but they jack up every body else’s taxes to make up for it. Plus Ireland bought in to the EU and allowed France and Spain to steal it’s fishing water rights, at a loss of 7 trillion dollars the domestic fishing industry used to bring in per year. Ireland also bought in to the open borders flood of third world immigrants to displace their citizens, and they are heavily subsidized.

    jenny (090eb0)

  13. I traveled to Ireland last year. They were already facing problems–we came across a protest at the closing of a cancer treatment facility in the south. Due to budget cuts, everyone in the south would have to travel much further north for treatment. I don’t know what happened, but you could see the handwriting on the wall.

    Rochf (ae9c58)

  14. You do realize the crisis in Ireland is the product of a vast accumulation of private debts and the subsequent collapse of the banking system?

    There’s a lesson for sure, but not the one you want it to be.

    Edgonzo (6febc2)

  15. Correct. The lesson is folding your currency and going to the euro is/was stupid. One currency with multiple governments deciding economic policy was designed to fail. The best thing now is to force implosion. But politically that’s impossible so we’ll have a slow motion catastrophe that will eventually claim all of the weak sisters – Greece, Ireland, Portugal and Spain. Spain could be saved, but not the way they are going.

    East Bay Jay (2fd7f7)

  16. To be clear, the banks screwed up and that has nothing to do with the currency. Driving around Ireland last Spring it was astonishing the number of partly built townhomes we saw. Even in small towns without a single stop light. Why anyone thought the demand would be there I can’t say. Collosal mistake.

    But bubbles don’t necessarily collapse one’s economy. Ireland could have devalued it’s currency, it if had one, and that would have dropped the price of ‘Ireland’ (the empty houses, as well as resource costs, including labor) to the rest of the world. So what the banks broke, the government could fix (painfully, but fix nonetheless). Except for that nasty euro.

    East Bay Jay (2fd7f7)

  17. So the lesson is that being in the Euro keeps countries from devaluing the assets of creditors, and instead forces them to impose austerity on their populations and to repay creditors?

    Is that the lesson here?

    imdw (8bb588)

  18. So the lesson is that being in the Euro keeps countries from devaluing the assets of creditors, and instead forces them to impose austerity on their populations and to repay creditors?

    Is that the lesson you want us to reach here?

    imdw (ad842b)

  19. The debt is often expressed as the share each person has. the figure i saw was about 500,000 dollars each. A few years ago the story in ireland was about the many immigrants moving ther for the many high paying jobs. Today people are leaving as fast as they can but the debt stays to be split among fewer, poorer people.As the tax base shrinks with the economy they may not even be able to pay the interest on their obligations.

    dunce (b89258)

  20. The problem is a good debt of the bankers now are dealing with is the subprime garbage that the likes
    of Rubin, packaged from Countrywide and other places

    narciso (82637e)

  21. So the lesson is that by joining the Euro, they are unable to devalue the assets of creditors. Instead, being in the Euro, they are forced to impose austerity and repay their creditors.

    This is the lesson you think this teaches about the Euro?

    imdw (842182)

  22. Nations fail when politicians and bureaucracies ignore the morality and sanctity of marketplace realities. This also doesn’t happen without a little complacency of the general public to fall for the crapola that the politicians are selling them.

    Fred (81454d)

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