For those of us who are real stakeholders in Ireland this article is tough medicine. This, or something like it, is what our kids are going to read about what we did to our country. And it’s nothing to be proud of. Think 20 years from now with many of our kids by then permanently living overseas, with no real expectation of returning home, bringing up their families overseas and coming home intermittently so that the grandparents can see the grandkids, etc.
I’ve read other similar pieces by Michael Lewis in the past – they are written in a particular style. The piece includes plenty of fact and sufficient colour to help you remember the juicy bits.
We are currently in the middle of an election – one in which many of the current government have declined to participate. Having been in power for 13 years, led the country into this disastrous financial mess, many of them, including the Taoiseach, have decided to step out of public office. Perhaps they are only avoiding a running certainty in the forthcoming election?
Lewis seems to be firmly of the opinion that the government should have limited its guarantees to deposit holders and let the bondholders sink. This position has been consistently argued for by a a number of established economists and commentators; this position has also been consistently dismissed by the Minister for Finance (Brian Lenihan) and his Government. And, for now, we would appear to be stuck with a level of debt which we will not be able to service.
This background to the election has the competing parties waffling to no end about what they may or may not do in terms of renegotiating the terms of ‘the bailout’ – or to use the vernacular, ‘de bailout’. And the various powers in Europe remind us that a deal is a deal, while hinting that there may be some scope for change (perhaps in exchange for harmonisation of tax rules across the EU).
As a country I think the sooner we face up to balancing our books on an annual basis the sooner we can sit down and negotiate with those from whom we have borrowed. Moving in that direction in the last 18 months has seen huge cuts and serious drop in net take home packages for workers. There is an argument that we need to tackle unemployment levels of c. 450K rather than continue to cut. Unfortunately it looks like the resolution of the unemployment issue will have more to do with mass emigration than anything else for the forseeable future.
- “Michael Lewis on Ireland” and related posts (econolog.net)