Could The US Become Another Ireland?

By Peter Boone and Simon Johnson

As Greece acts in an intransigent manner, refusing to act decisively despite deep fiscal difficulties, the financial markets look on Ireland all the more favorably.  Ireland is seen as the poster child for prudent fiscal adjustment among the weaker eurozone countries. 

The Irish economy is in serious trouble.  Irish GDP declined 7.3% as of third quarter 2009 compared with third quarter 2008.  Exports were down 9% year-on-year in December.  House prices continue to fall.  While stuck in the eurozone, Ireland’s exchange rate cannot move relative to its major trading partners – it thus cannot improve competitiveness without drastic private sector wage cuts.  Yet investors are so pleased with the country that its bond yields imply just a one percent greater annual chance of default than Germany over the next five years.

Ireland’s perceived “success” is partly due to its draconian fiscal cuts.  The government has cut take home pay of public sector workers by roughly 20% since 2008 through lower wages, higher taxes, and increased pension payments.  As the head of the National Treasury Management Agency John Corrigan proudly advised the Greeks (and everyone else):  “You have to talk the talk and walk the walk”.

So is Ireland truly a model for Greece and other potential problems in Europe and elsewhere? Definitely not – but it does provide a cautionary tale regarding what could go wrong for all of us.

Ireland’s difficulties arose because of a massive property boom financed by cheap credit from Irish banks.  Irelands’ three main banks built up 2.5 times the GDP in loans and investments by 2008; these are big banks (relative to the economy) that pushed the frontier in terms of reckless lending.  The banks got the upside and then came the global crash in fall 2008: property prices fell over 50%, construction and development stopped, and people started defaulting on loans.  Today roughly 1/3 of the loans on the balance sheets of banks are non-performing or “under surveillance”; that’s an astonishing 80 percent of GDP, in terms of potentially bad debts.

The government responded to this with what is now regarded – rather disconcertingly – as “standard” policies.  They guaranteed all the liabilities of banks and then began injecting government funds.  The government is now starting a new phase – it is planning to buy the most worthless assets from banks and pay them government bonds in return.  Ministers have also promised to recapitalize banks than need more capital.  The ultimate result of this exercise is obvious:  one way or another, the government will have converted the liabilities of private banks into debts of the sovereign (i.e., Irish taxpayers).

Ireland, until 2009, seemed like a fiscally prudent nation.  Successive governments had paid down the national debt to such an extent that total debt to GDP was only 25% at end 2008 – among industrialized countries, this was one of the lowest. 

But the Irish state was also carrying a large off-balance sheet liability, in the form of three huge banks that were seriously out of control.  When the crash came, the scale and nature of the bank bailouts meant that all this changed.  Even with their now famous public wage cuts, the government budget deficit will be an eye-popping 12.5% of GDP in 2010. 

The government is gambling that GDP growth will recover to over 4% per year starting 2012 — and they still plan further major expenditure cutting and revenue increasing measures each year until 2013, in order to bring the deficit back to 3% of GDP by that date.  The latest round of bank bailouts (swapping bad debts for government bonds) dramatically exacerbates the fiscal problem.  The government will in essence be issuing 1/3 of GDP in government debts for distressed bank assets which may have no intrinsic value.  The government debt/GDP ratio of Ireland will be over 100% by end 2011 once we include this debt.

Ireland had more prudent choices.  They could have avoided taking on private bank debts by forcing the creditors of these banks to share the burden – and this is now what some sensible voices within the main opposition party have called for.  However, a strong lobby of real estate developers, the investors who bought the bank bonds, and politicians with links to the failed developments (and their bankers), have managed to ensure that taxpayers rather than creditors will pay.  The government plan is – with good reason – highly unpopular, but the coalition of interests in its favor it strong enough to ensure that it will proceed.

Investors may wish to remain pleased today with Ireland, but Ireland’s “austerity” – reflecting an unwillingness to make creditors pay for their past mistakes – hardly seems a good lesson for Greece, the eurozone, or anyone else. 

Countries – like the US – with large banks that are prone to reckless risk taking should limit the size of those banks relative to the economy and force them to hold a lot more capital.  If you thought the “too big to fail” issues of 2008-09 were bad in the US, wait until our biggest banks become even bigger – today the big six banks in the US have assets over 60 percent of GDP; there is no reason why they won’t increase towards Irish scale.

When Irish-type banks fail, you have a dramatic and unpleasant choice.  Either takeover the banks’ debts – and create a very real burden on taxpayers and a drag on growth.  Or restructure these debts – forcing creditors to take a hit.  If the banks are bigger, more powerful politically, and better connected in the corridors of power, you will find the creditors’ potential losses more fully shifted onto the shoulders of taxpayers.

 An edited version of this post appeared this morning on the NYT’s Economix; it is used here with permission.  If you would like to reproduce the entire post, please contact the New York Times.

35 thoughts on “Could The US Become Another Ireland?

  1. “Either takeover the banks’ debts – and create a very real burden on taxpayers and a drag on growth. Or restructure these debts – forcing creditors to take a hit. If the banks are bigger, more powerful politically, and better connected in the corridors of power, you will find the creditors’ potential losses more fully shifted onto the shoulders of taxpayers.”

    Agree, and yes…. way too big to be saved (and way early in the morning) but if like Greece, taking half steps forward right now, questions of when and how will be answered promptly and in good faith – I know that to be a fact :-) The “Doop Loop” doesn’t have to be inevitable – the way out of this crisis is happening, even as we speak…..

  2. The US Government can still print Dollars and channel them thru Fannie Mae and Freddie Mac to lend to the private banks. That’s how the newly printed dollars get accounted in the government’s balance sheet. Ireland or any Euro Zone country for that matter, can’t go around printing Euros at will and use any of its own banks to incorporate those in their balance sheets.

  3. Spot on.

    Pragmatic realism. The Irish Citizenry has been sacrificed at the altar of the Irish upper_echelon Kleptocracy (dominant policical party, well connected builders/developers, reckless bankers, ideological free-marketeering influential cliques, supine regulators). The Irish response provides definitive and highly supportive evidence that dominant elites will do all to preserve their power, status and wealth at the expense of the lower orders – and get away with it – any equation you like stat sig *** Being praised internationally for it in fact …….. and in terms of Corporate Governance – there is no real change at the top on all the relevant boards of directors ……. the reckless Insiders who got Ireland in to this mess are still in position in over 95% of cases.

  4. It has been said that Ireland’s banks and Government sell to the same limited subset of the international bond market. Therefore, the logic goes, if Ireland defaulted on senior bank debt it would suffer the same as if it has a de facto sovereign default, and indeed sovereign default would become likely.

    Furthermore, even if Ireland wanted to force losses on senior bondholders, Ireland did not have a bank resolution mechanism to achieve this. Therefore, there was a risk that the entire banking sector would collapse or be nationalised lumbering the state with the debts in any event.

    What do you make of these arguments?

  5. At the end “too big too fail” will be the major reason to cause the sovereign debt crisis in US without doubt. Now “too big too fail” create the over risk taking in too big banks and the manipulation in the market will cause the mispricing and the large price swing will cause the crisis in banking sectors. Surely if “too big too fail” still stay, the government will be responsible the huge debts and the sovereign debt crisis will happen in US and every country having “too big too fail”. I am not sure is there anyone trying to solve this problem?

  6. The Irish case is difficult due to the Govt guarantee of all liabilities and therefore they cannot force any losses on bondholders or be faced with a legal challenge.

    Being realistic the money (upwards of €50Bn) that is being spent setting up NAMA to bail out the Kleptocracy (- defined by David above) would be much better spent setting up a new fresh state run bank that would lend to business, upgrade of infrastructure (read broadband, R&D etc) rather than handing a bail out to the idiots that ran us into the ground. The ordinary tax payer will be paying back this money for generations. Let the Gov Guarantee lapse, wipe out the shareholder of the banks and hand the banks to the creditors, set up a new state bank and invest as above. This is the only way the country will ever get out of the hole we’re in. NAMA will ruin us all!

  7. The choices, more simplified, really seem to be:

    1. Finally reverse the trend of increasing inequality, of a greater and greater concentration of wealth at the top of our social structure, i.e. increase taxes on the wealthy and bail out working-class and middle-class homeowners instead of banks.

    2. Bail out the wealthy and well-connected and allow the rest of us to face decreasing real wages–as a previous poster put it, “sacrifice” workingpeople at the “altar…of the kleptocracy”.

    We’re clearly already on the second path in the US. As Warren Buffet put it, working people need to realize “[t]here’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning.”

  8. Sooner or later a banking crisis will erupt that brooks no discussion but action by the state. Immediate action without Congressional dithering. A Solon solution from the executive.

    Just for counterpoint here is one radical solution. A cut Gordian Knot of massive proportions.

    All of the big bank holding companies and US bank holding company owned National Associations are put into conservatorship at the same time. All non deposit liabilities including Repos and a percentage of deposits outside guarantees are converted to common equity. The former creditors and loss portion deposits owners become shareholders. A simple addition to existing equity. This could be done over a weekend since it amounts to being a journal entry solution. The new shareholders could immediately elect a new board to clean house. Obviously, there would be a systemic partial bank freeze. Like it or not and with no citizen yapper input. It would all center on swiftness. Done in a way that once done it cannot be reversed no matter what Congress or the courts decide. As I said, for counterpoint.

    I speak of a massive crisis even worse than the recent one. Problems like Credit Default Swaps would be deemed to have followed along to the stock received in exchange or to have been extinguished by the swap of stock for debt.The debt was paid off. Similarly, the massive shadow banking trusts would be forced into state consolidation and with similar conversions to equity.

    Whatever solution that emerges would need to be done in a way that renders a future adverse Supreme Court decision moot from a practical perspective.

    Treasuries could be turned into legal tender. That or they are replaced by United States Notes.

    The big wig economists keep talking about a massive next crisis. It would be massive and require a massive immediate response to what would otherwise be a terminal crisis. If not, are these writers of books like Stiglitz just engaging in marketing their product?

    What is the next financial crisis likely to look like? I assume here that without a unilateral state solution anarchy would result.

  9. Force the banks to hold more capital?

    Look at this:

    “9. The authority to pay interest on reserves is likely to be an important component of the future operating framework for monetary policy. For example, one approach is for the Federal Reserve to bracket its target for the federal funds rate with the discount rate above and the interest rate on excess reserves below. Under this so-called corridor system, the ability of banks to borrow at the discount rate would tend to limit upward spikes in the federal funds rate, and the ability of banks to earn interest at the excess reserves rate would tend to contain downward movements. Other approaches are also possible. Given the very high level of reserve balances currently in the banking system, the Federal Reserve has ample time to consider the best long-run framework for policy implementation. The Federal Reserve believes it is possible that, ultimately, its operating framework will allow the elimination of minimum reserve requirements, which impose costs and distortions on the banking system.”

    The Fed sees reserve requirements as “costs and distortions”. There is the definition of the leverage problem – with nothing backing it the leverage is infinite.

  10. Zhou – the fact remains that we do not know WHO these bondhoders are –

    Could I please see a two column table – banks on the left (sic) sovereign on the right (sic) – and then two more columns on amounts held – and sorted by bondholder name (another column) so that we can get some evidence that bank and sovereign sip from the same pot? In other words that the banks and the sovereign are intensely intercorrelated with each other within the Irish upper_echelon Kleptocracy …… as ex-Irish Citizens Joe and Joan Serf would like to know who they are not working for, and in whose interests they and their offspring are being screwed ………

    and I do recognize your point on senior debt ………. (negotiation is not a difficult word)

  11. JerryJ wrote March 18, 2010:

    “Sooner or later a banking crisis will erupt…”

    Canada sees crisis or deflation risk without action

    Mar 18, 2010

    OTTAWA (Reuters) – “Canada has warned the Group of 20 leading nations of the risk of another global crisis or a deflationary spiral if advanced countries do not rein in budget deficits and emerging markets do not allow for greater foreign exchange flexibility.

    The caution was in a discussion document, obtained by Reuters on Thursday, for a G20 meeting Canada is chairing this week ahead of a G20 summit in Toronto in June.

    A return to business as usual without significant policy changes would return to an unsustainable explosion of global imbalances, it said. Fiscal consolidation without more foreign exchange flexibility would be expected to lead to inflation by 2011.”

  12. The economic bigwigs keep warning that catastrophe A- Z will likely happen if agenda items 1-100 are not addressed. They seem mostly procedural. Yet, the financial system is generally concluded to have lent out far more money than it is possible to repay. No bookkeeping ever cures cash flow deficiencies in any economic system. No disclosure improvements will collect loans made that cannot be repaid.

    What must happen is that new domestic retail loans that cannot be repaid must not be made and at the same time domestic retail economic growth must be increased in order to save the present system.

    Bookkeeping never ever saved a dying cash flow business.

    My question then, is what are the facts underlying all these proposals for financial reform that enable recovery to economic status quo ante? Status quo ante is retail loans being amortized while maintaining retail economic growth.

    I have long wondered about the sanity of a political system that thinks state debt must be repaid. State debt functions in the real world as money supply. If it were repaid, there would be a gross shortage of money as was endemic under the gold standard. One of my more interesting sources is Henry C K Liu of Hong Kong. The socialist/ Chinese nationalist viewpoint in many respects.

    Here is a typical Liu piece that exposes the historical probem.

    Regulators must cause collection of bad debts without hurting retail growth. Tough proposition.

  13. There is one crucial lesson the United States of America should take from disaster that is now Ireland. This blog entry by Boone and Johnson refers to only half of the problem that exists, 2.5 times Ireland’s national GDP which 3 no. Irish banks offered in credit for commercial property speculation during the second phase of the Celtic Tiger (build-ing) boom. The point to remember is, while 3 no. Irish banks were offering credit to pay for that fiasco, the same banks were working the other end of the deal – the Irish residential property market. It is over simplistic to discuss one, without discussing the other. They have a deep and murky inter-relationship, that is hard for anyone to decipher. But you may use analogies from history to useful purpose. For instance, the Rothchild bankers got a very nasty surprise when the battle against Napoleon was won very quickly by the British and Prussian combined forces at Waterloo, 1815. The Rothchilds had expected a more protracted affair, as Napoleonic campaigns of the past had been. So good was Rothchild’s communication system, they knew of the surrender of the French national force, many hours before the British crown did. The four year long campaign that was the American civil war saw the Rothchilds stand on the sidelines completely. That had become the most profitable strategy. The most profitable thing to do in Ireland, 2000-08, was to sell ammunition to both sides of the war. The mortgage debt holders on one side and the commercial property debt holders on the other. The Irish banks you could say, were everyones’ friend during the build-ing boom. If you permit this to happen, on a small island like Ireland, mass carnage is the only possible outcome. It cannot end any other way. It is true, the €90 billion commerical property loan book of Irish banks combined, is 2.5 times of Irish national GDP. But the other statistic which Boone and Johnson have not included is as follows. Irish residential properties numbered almost 2.0 million by the end of 2008 (over 80,000 homes completed in year 2008 alone). The total working population of the Irish republic at that time, was roughly 2.0 million. Of which the construction industry, numbered 300,000 men and women in 2008. (200,000 and more of which have been added to the unemployment assistance queues) Try to think of Xerxes landing his Persian army at the pass of Thermopylae in 480 BC. It was much the same thing in Ireland 2000-08, and as I said, the Irish banks were supplying both sides of the conflict that ensued with cheap credit to fund operations. (Many low paid civil servants became landlords owning multiple residential properties) The National Treasury Management Agency, which is an offshoot of the dept. of Finance, is now the Spartan force of ‘300’ led by Leonidas (Mr. Michael Somers and later Mr. Corrigan) who have committed themselves to defend Athens from our invaders. The extended version of my history is available to read at my Designcomment blog for all to read, entitled ‘The sacking of Athens’. BOH.

  14. this is a pr stunt, not his arrest is just in advance of the anglo bank posting losses of 14billion, basicall y a ploy to throw the average taxpayer off the scent of the real issue, whats worse it will work!!

  15. Just for a change of mood, a cheerful quote from happier times:

    “Indeed, in almost any credible BASELINE SCENARIO [my caps, in recognition of this blog] short of a major and prolonged economic contraction, the full benefits of debt reduction are now achieved before the end of this decade…”
    –Alan Greenspan, before the Committee on the Budget, US Senate, January 25, 2001.

    At the same time, Greenspan warned that budget surpluses could become dangerously LARGE. Oh, those were the days my friend, we thought they’d never end…

  16. And while U.S. banks seem to dictate terms of government, they are de facto the government

  17. Re bondholders, I would have thought that its pretty obvious that given there will always be connections between the holders of Irish sovereign and bank debt, but that doesn’t mean that they will be held on the same books. Bondholders goal is always to maximise returns for a given level of risk, so far Ireland has remained supportive to debt holders, any change in this policy would cause a re assessment of the risk of default on sovereign liabilities, which because of the deficit the government is running and rollovers, would make it more costly to borrow, if indeed they would be able to borrow. Any notion of irritating bondholders at a time when every sovereign is vying for funding just illustrates ignorance of the situation we find ourselves in.

  18. Too Big Too Failed is intolerable, true. But it also applies to the financial sector in its entirety, not just to individual banks.

    Finance is just an intermediary, a messenger which now owns the message.

    Indeed the off balance sheet values, namely the parallel universe of derivatives, sucks the real world dry, by derivating most of the money there, in a place that does not exist (according to bank’s balance sheets).

    Most of derivatives ought to be made unlawful, and the rest tightly regulated and, in particular, made completely visible in all its details.


  19. “No ruling class has ever abolished or even reformed itself.” –Gore Vidal, The Last Empire (essays)

  20. Reading these postings is undoubtedly a most helpful exlanation of the financial game for one unversed in such arts. Am I correct in understanding that unlike Ireland or any other country ours (US) with all liabilities in domestic currency can print more bucks as required/desired and consequently can never run out of money? No tipping point is in prospect? No event can ever change this simple fact?

    No one has denied the apparent fact that Mr. Bernanke can helicopter in unlimited loads of greenbacks. Therefore we can sit back and enjoy life? So stop worrying and working yourselves into a lather.

    Thank you for explaining all matters financial, what a good life, and I have mountain views and even a grizzly the other day as well. Foreigners, eat your envious hearts out.

    Local experts may tidy any loose thinking above but no propaganda from aliens thanks.

  21. “””The US Government can still print Dollars and channel them thru Fannie Mae and Freddie Mac to lend to the private banks. That’s how the newly printed dollars get accounted in the government’s balance sheet. Ireland or any Euro Zone country for that matter, can’t go around printing Euros at will and use any of its own banks to incorporate those in their balance sheets.”””

    It’s interesting to contemplate the above statement. The US govt has agreed to an unlimited bailout of Fannie and Freddie over the next several years. Printing money in general is inflationary leading to a weakening of the dollar. Where is this cash going? Fannie and Freddie are about the only mortgage market that is viable as they have this govt guarantee. They are at least starting to improve their lending standards. Fannie and Freddie have essentially guaranteed many many very bad loans made in an often predatory fashion by banks. So they are sending the money back to these banks to try and recapitalize them and repair the holes in their balance sheet. But this money is also leaking out into hefty bonuses for executives who caused this mess and is being paid to bank bondholders as dividend payments. Roubini and others think the bank bondholders should also share the pain by doing a debt for equity swap. This means that their bonds would be converted to stock shares in the bank. Thus we wouldn’t have to cover their dividend payments and their investment would be more tied to the future performance of the bank. This is one measure to reduce debt. Another would be to offer more homeowners principal reductions. This would also lead to less bad loans that would need to be covered by the printing presses.

  22. I’m too ignorant to understand your analogies. How is it that commercial and residential real estate are in conflict as in the American Civil War? In your “300” analogy what is the invasion against which “Leonidas” (Somers) is defending? I understand that the Irish real estate market was swamped with activity, now has gone soggy, but what is the current overwhelming aggressor against which a desperate, heroic few are making a last-ditch stand.

  23. Time to admit that money circuit are too corrupted and overloaded and accept that more and more transactions are going around money circuits into electronic barter , digital and local currencies , Time Banking and the new KWH currency in the WIN WIN Plan for Iceland , Britain and the Nethelands , which will settlew the Icesave liabilities in ELECTRICITY, A NON-INFLATIONARY CURRENCY MUCH BETTER THAN GOLD. ( see story at )

  24. It is more of a case weather the USA can become another Europe. The answer to that
    Is a most definitive yes.

    In a short year and three months we have implemented all the policies that would make Ireland, Greece or Spain jealous – reallocation of 2/3 of the auto industry from private enterprise to government and union control; bailout and semi-control of the financial sector; printed and borrow money in indiscreet quantities; increased the budget deficit at a much higher pace than previously; subsidized the mortgage industry so they could continue to do what they did wrong in the first place; and now, the mother of all national policy indiscretions, the creation of a government controlled Healthcare system, a system that any economist that is not married to ideology would know that it will increase the costs to private industry and to insurance premiums, will add to the deficit, and will shackle
    economic growth – a perfect European model.

    It all points to a definitive “transformation” of America in exactly the direction of the social-
    Democracies of Europe, But what is puzzling is the total disregard of history in doing this.
    We all know that this European path is exactly what brought about the high-cost low-growth vicious cycle in which the European nations are trapped. America will soon join them.

    This thesis can be extensively found at,

  25. @ jonboinAR,

    I will admit, I did have a lot of difficulties coming to terms with the use of my own historical analogies. Sometimes it is worthwhile to stand back for a couple of days, and lets one’s own inner brain complexities work themselves out a bit. I read economist David McWilliams wrote in the Sunday Business Post, FitzPatrick did not act alone. He carried on with the analogies I started, and worked them back down to the essentials. McWilliams did pick out one phrase I used, ‘The banks were everyones’ friends during the boom’. That is they were lending to both sides of the deal. The small speculators who created demand for the completed construction, and also the large speculators who invested in construction where none had previously existed (or was old and readily knocked to create new build-ing land). The fact is, in Ireland right now, in March 2010, the banks are nobody’s friend any more, except their own, at best. Even though the European Central Bank has not raised it base rate of interest, the Irish banks are increasing their charges to their customers to create a margin to sustain themselves. To finally answer your question, about my use of analogies. I think that McWilliams’s working of my analogies in today’s Sunday Business Post newspaper work very well. Where he describes the notorious Irish banking executive, Mr. Sean Fitzpatrick as the leader of the charge. While on the other hand, the phalanx was formed by a close knit group of professional classes in Ireland, who have remained very quite in recent times. Many of them, once cheer leaders of Mr. Fitzpatrick, are now distancing themselves from the same. To quote from todays article by McWilliams: “FitzPatrick sat atop a deeply corrupted system,which was aided and abetted by insiders – politicians, estate agents, lawyers, accountants and much of the media. They extracted fees, votes and profits by making the property scam legitimate with the legal opinions, their quack economics, their glossy brochures and their ‘‘oh so clean’’ sets of accounts. The insiders have made FitzPatrick their moral skip, into which they can throw all the grubby deals that went wrong, all the bad advice they doled out and all the greed that saw them dot the i’s and cross the t’s of yet another syndicated property consortium.” McWilliams is coming to much the same conclusion I came to. What is widely reported in the press in Ireland, is only the ‘cavalry charge’ component of the Irish banking strategy against customers. The important other component, as in the days of Alexander the Great at the battle of Issus, was the strong phalanx of troop. The anvil, against which the cavalry charge could crush its opponents, is not featured in the story of the Celtic Tiger now. Because to do so, would implicate too many members of the Irish professional classes. I recommend the article by McWilliams in the Sunday Business Post. It cleans up the general concept I tried to express, in many more words at my Designcomment blog entry. BOH.

  26. THanks, Mr O, I’ll look at that more. Right now I’m studying our national health care bill that just passed, trying to determine if it benefits me any.

  27. Change you can believe in ;) I don’t know all the details of this and it probably could have been better but I think this is a move in the right direction. If the insurance companies don’t like it then it works for me ;)

    “” Insurers, which opposed the legislation, will have to take all customers, regardless of pre- existing conditions, and face limits on how much revenue can be spent beyond covering medical expenses. “”

    “”The legislation will expand the Medicaid government program for the poor to cover those making up to 133 percent of the federal poverty level, and offer subsidies for millions of other Americans to buy insurance through an online exchange offering policies at more-affordable group rates. “”

  28. As a former paddy I cannot believe the government got away with this “American style bait and switch”.

    In my days we would have burned and rioted with zeal … without this threat of revolt the people are left toothless in the face of arrogant and criminal power.

  29. Do you not think that Brian Lenihan should not have been better prepared so that when the knock or phone call came on the 30th of September ’08 he should have been able to start the proceedings with, “I have been expecting you gentlemen, what kept you?” Stiglitz said “when I worked at the world bank this is what ALWAYS happened”. Lenihan reads does he not? He went on to describe the usual horrible threats made if the ‘offending’ country did not guarantee their banks.

    Lenihan rolled over and he has been rolling over ever since. Tomorrow AIB will be nationalised and later BOI something which Lenihan denied would happen. Economist and commentator Constantin Gurdgiev has said that the approach of the government has been to make us pay 3 times for the privilege of taking over billions worth of debt. Tax payers put on the hook for the lot, with the bond holders pinching themselves in disbelief, at how foolish we have been and are. Sometimes it is better to fight back when you are being bullied but this government has cowered in the corner afraid and defeated strategically and financially most likely ashamed of its own complicity in the bankrupting of the country.

    Bank resolution schemes are all very fine but the horse has well and truly bolted. NAMA has been shoved down our throats. Anglo has been force fed on us too and the government is deflating our economy to death and lying to us that the worst is over. It is only the private sector that could pull the economy out of its present nosedive but that sector has been deliberately let starve as the legal and political elite’s try to save themselves.

    Just wait, until ordinary Joe decides, he and his children are not going to live out the remainder of his life in debt slavery because the plutocracy was kept from imploding by unlimited interconnections between politicians and the monied classes.

    Ireland has reached debt saturation point but even more important a psychological tipping point due to debt fatigue and cronyism. The only people that have the nerve to carry on as before are politicians and those in the public and semi state sectors who want to circle the wagons, but unfortunately there is only so much flogging of a dead horse you can do before he really is dead.

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