Quote:
Originally Posted by Willravel
what do you think is happening here?
Put simply, the so called PIIGS (Portugal, Ireland, Italy, Greece, Spain) have all been quite irresponsible with public debt, which has lead to a shit storm in Greece and looming shit storms in Ireland, Portugal and Spain. Greece basically had to cook their own books due to massive mismanagement and the global financial crisis that started here in the US was the straw (1100 lb. straw) that broke the camel's back. They're getting loans and cutting spending like crazy, but it's lead investors to realize that bonds from other governments could be shit.
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Actually, from what I have read about Ireland, they are "different" than the rest of your examples.
The "Irish Crisis" was brought about by the Irish Banks foolish behaviour, not that of the Government spending money they did not have. In fact, the Irish Gov't had been behaving quite prudently. (Unlike Greece say where they had (and continue to have) various overly generous social programs that they cannot afford.)
No, the Irish banks were investing very heavily in land speculation and writing huge mortgages for properties that were not worth what they thought they were worth. When the credit crisis in the states hit - it hugely impacted Ireland and Britain also. Real estate values plummeted and investors and land owners simply "walked away" leaving the bank holding the back and essentially bankrupting the bank.
The Gov't of Ireland was literally between a Rock and Hard place. Either let the Irish banks go broke (and completely decimate your economy) or bail out the banks with money you don't have to a point where you can not make even the interest payments on the loans because the loans are so fucking huge. In short, you can't run the day to day goverment things (education, health care, public works, etc. AND pay the interest on the debt your incurred bailing out the banks).