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Originally Posted by james t kirk
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).
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This is interesting. After a bit of Googling, it appears I was wrong to couple Ireland with the other examples, despite the clever PIIGS thing. Now would appear to be an excellent time for Ireland to regulate their real estate industry to as to prevent this in the future. Undoubtedly, the Irish public are furious about what's going on, assuming they're informed well enough by their media to understand what's going on. With enough public support, even an army of bank lobbyists couldn't stop reform now. I would say that getting financial reform in place should be the priority, even above the question of bailing out vs. failing.
Perhaps it would be smart to nationalize, then cut up the banks and sell them off. The banks would still exist, the money from selling them could contribute to fixing the problem, and future banks will understand that there are consequences for this level of irresponsible behavior.