Nobel Economics Prize winner Paul Krugman, the New York Times columnist is the latest U.S. commentator to say Ireland has made a major mistake in agreeing to underwrite bank losses
According to Krugman, the Irish story began with what he describes as “a genuine economic miracle”.
He says the speculative frenzy that followed was “driven by runaway banks and real estate developers, all in a cozy relationship with leading politicians”.
When the property bubble burst the Irish banks were faced with huge losses resulting from the reckless loaning.
He describes the Irish Governments bank guarantee in plain terms: “The Irish government stepped in to guarantee the banks’ debt, turning private losses into public obligations”
Before Ireland's banks went bust he notes, Ireland had little public debt.
“But with taxpayers suddenly on the hook for gigantic bank losses, even as revenues plunged, the nation’s creditworthiness was put in doubt. So Ireland tried to reassure the markets with a harsh program of spending cuts”
The columnist insists that Irish citizens are now bearing the burden of debts incurred “by private wheeler-dealers”
“Or to be more accurate, they’re bearing a burden much larger than the debt — because those spending cuts have caused a severe recession so that in addition to taking on the banks’ debts, the Irish are suffering from plunging incomes and high unemployment”.......
[
link to www.irishcentral.com]
Canada
United States
