Dean Baker: Ireland Should 'Do an Argentina'

[marmar]

from the Guardian UK:




When a firefighter or medical team make a rescue, the person is usually better-off as a result. This is less clear when the rescuer is the European Central Bank (ECB) or the IMF.

Ireland is currently experiencing a 14.1% unemployment rate. As a result of bailout conditions that will require more cuts in government spending and tax increases, the unemployment rate is almost certain to go higher. The Irish people are likely to wonder what their economy would look like if they had not been rescued.

The pain being inflicted on Ireland by the ECB/IMF is completely unnecessary. If the ECB committed itself to make loans available to Ireland at low interest rates, a mechanism entirely within its power, then Ireland would have no serious budget problem. Its huge projected deficits stem primarily from the combination of high interest costs on its debt, and the result of operating at levels of economic output that are well below full employment – both outcomes that can be pinned largely on the ECB.

It is worth remembering that Ireland's government was a model of fiscal probity prior to the economic meltdown. It had run large budget surpluses for the 5 years prior to the onset of the crisis. Ireland's problem was certainly not out of control government spending; it was a reckless banking system that fueled an enormous housing bubble. The economic wizards at the ECB and the IMF either couldn't see the bubble or didn't think it was worth mentioning. .............(more)

The complete piece is at: http://www.guardian.co.uk/commentisfree/cifamerica/2010/nov/22/ecb-ireland-bailout-argentina

[Hannah Bell]

1. kr.

[abelenkpe]

2. K&R please read

I think this article is spot on.

[xchrom]

3. Strong recommend. If only the US had

A similar attitude about it's muti-nationals.

[abelenkpe]

4. good summation....

What the people of Ireland and every country must realise is that if they agree to play by the bankers' rules, they will lose.

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It's more than that. What countries need to realise is that agreeing to play by the bankers rule is agreeing to give up their countries sovereignty. They basically abdicate power of their government to the will of the bank.

[Demeter]

5. I'm stealing your post for SMW

Excellent summation.