• Greenflag

    Kathleen ,

    Nice summing up by George Lee . The situation in Ireland is only exacerbated by the extent to which the property boom ‘dominated’ the economy in recent years to an extent not seen in other Anglospheric parts apart from NI .

    The one point he makes re Ireland which is still ignored by most economic coommentators in the USA re the USA’s faltering economy is the extent of ‘private debt ‘ build up in that economy .

    Between 1980 and 2008 debt both public and private increased by 400% . Most of the economic policies being pursued now or to be pursued by the new American administration are ‘ignoring ‘ the private debt ‘issue ‘. Same in UK and as Lee puts it in Ireland.

    And the answer to this one . Far be it from me as a practising atheist to suggest a return to Old Testament practice but if memory serves me right was’nt there a period when every seven ? or ten years ? perhaos when all ‘debt’ was written off and a new beginning was made 😉

    I read that Bank of America is pressuring the US Federal Government for just a few billion more to help them digest Merril Lynch . Meanwhile the representatives of the taxpayers are wondering where 350 billion of the 700 billion of Government (the peoples future earnings) has gone . Ostensibly it went to the banks so that they could kick start the US economy by easing on credit . Alas the banks have hoarded the loot and now 8 million foreclosures loom with the prospect of a widening of American unemployment .

    The difference between the USA and Ireland is of course that the ‘desimacados ‘ ( the foreclosed -shirtless ones ) in the USA are armed to the teeth whereas their Irish equivalents are ‘defenceless ‘ against the ‘haves ‘and the ‘bureaucracy ‘ who will of course protect their interest first above all .

    Same in UK, NI etc etc etc .

  • mlm

    George Lee is skirting the real issue here. It’s no surprise that he and his ilk were equally blind to what was coming – they are fundamentally monetarists with a neo-liberal understanding of the economy.

    Credit expansion and even the housing boom were not the cause of the crisis but were simply factors which allowed it to be escaped for so long.

    There is a fundamental correction occuring in the world economy. In shorthand, it might be explained (in net terms): the West consumed without producing, the East produced without consuming. That has to be corrected.

    The Irish experience was slightly more extreme than that elsewhere with massive levels of economic growth created through FDI until a point (2001) where that should have come to an end but it was continued through a massive expansion in personal/business borrowing and the housing credit bubble. Once the point of overextension in the world credit market was reached, deleveraging meant that the imbalance in trade bit immediately. That was followed by a brief period where any remaining economic surplus leached out of the economy and so here we are in Jan 2009.

    What now? My forecast is Dublin to be forced into a massive IMF loan, massive cutbacks across the board and stagnation for a decade. (Look at Japan 1990s or Argentina 2001). There’s no way that they can hope to pay back the level of debt that they’re taking on right now.

    Its dubious whether there’s any way back barring a revolution. Growth will come back at some level but it will remain insufficient to pay off debts for years. Let us remember Dublin no longer has choice to devalue the currency. At a minimum a decade of stagnation and massive cutbacks.

  • Mack

    mlm

    George Lee is skirting the real issue here. It’s no surprise that he and his ilk were equally blind to what was coming – they are fundamentally monetarists with a neo-liberal understanding of the economy.

    You haven’t a clue. He did see it coming – as did many others – been banging on about it for years. Have a watch of his tv show Crash on the RTE website.

    If credit expansion was not the problem then just how do you presume the West was able to consume more than it produced.. sheesh..

    Good luck with your revolution…

  • Greenflag

    ‘the East produced without consuming.’

    Eh ?

    The Chinese have become officially the world’s third largest economy following revised figures of GDP for 2007 )just ahead of Germany and behind the USA and Japan. And if they managed this without consuming I’d like to know how ? Any more bright ideas .

    As for your revolution ? We’re mostly too fat and happy and anyway that would only make matters worse .