There’s big trouble looming over us at the moment. All the hooha about the royal wedding is doing a marvellous job of distracting people from the problem building steam just over the Irish Sea. The economy there in Ireland has reached it’s tipping point now. Despite their protestations that they’re ok and they don’t need a bail out, they’ll be forced by the other Eurozone countries to take said bailout in the next day or so.
The Irish economic suffering is about to step up a gear because of the path their government chose. And not only the Irish will suffer. Because of the nature of economics and markets in a shared currency, it becomes more and more likely that the Iberian countries will join Ireland and Greece.
The Celtic Tiger wasn’t able to deal with the amount of capital poured down its throat in recent years. It’s just swelled and swelled until, like the bubble it really was, it burst. What should then have happened is that the Dail Eirann should have taken steps to deflate the bubble, as Gordon Brown and Alistair Darling did in the UK. Unfortunately, they took a different path, and now the other nations of Europe, us included, are going to have to bail them out. And then we’ll very likely have to bail out Portugal and Spain as well. That will be four of the 14 Eurozone countries that willl have had catastrophic economic failures. The economic model on which the Euro is based, the freeflow of capital between nations, has serious problems.
Even after all the failures we’ve seen, there is still a massive lack of real regulation of banks and finance and offshore tax havens. Rather, we see the promotion of market-based economic models being promoted. Especially in the UK where George Osborne said of the Eire economy not so long ago
What has caused this Irish miracle and how can we repeat it?
Up until today, Osborne has been happily and enthusiastically imposing on the UK the exact same economic model which has crushed the Republic of Ireland. And just as it crushed them, it will surely crush us. Osborne needs to realise that he has to regulate the banks, and deal with tax loopholes which bankers sail through at the moment. He needs to do more to stimulate economic growth. He needs to remember that the UK won’t have the European Central Bank to help him if our economy suffers in the same way as Ireland’s. George Osborne needs to do all those things to stave off the crippling combination of inflation, no growth and increasing unemployment.
He needs to do it, but he won’t.