Ireland out of bailout, back into eurozone la la land
"Those whom the gods wish to destroy they first make mad." Or they just make them join the euro. The end of the Irish bailout has only provided an opportunity for the country's leader to show he's learnt nothing from the folly of joining the single currency
"Those whom the gods wish to destroy they first make mad." Or they just make them join the euro. It is hard not to recall those famous words as you read the deluded expostulations of Ireland's Prime Minister (or Taoiseach) Enda Kenny saying Ireland's "good name and our credibility" had now been restored following the formal end today of its European bailout programme, both symptom and cause of one of the most disastrous economic errors in the country's modern economic history.
Here's the killer line: "Ireland will again stand as a full member of the eurozone, with the same rules, obligations, supports and opportunities as all other member states."
Oh, Lord. Where to start? Perhaps with those "obligations, supports and opportunities".
Doesn't it even occur to the Irish political classes (the people don't get a look in; every time they vote no to the EU in a referendum they're forced to vote again) that the euro has been one of the key reasons for a vast depression that has pushed unemployment well into double figures, dropped property prices by 50 percent since their peak, and seen the economy contract (according to some estimates) by a whopping 15 percent in recent years?
Obviously not. But the fact is that the Irish catastrophe is directly related to joining a single currency completely inappropriate to the country's needs. As with all eurozone countries, Ireland got an interest rate and a currency appropriate to German, and to a lesser extent, French, economic conditions.
But with Irish growth soaring in the run up to euro entry, eurozone interest rates were pushed far too low to contain (indeed, they poured petrol on) the raging fires of a credit explosion which in turn led to a housing boom, which in turn led to a massive crash. This had disastrous implications for the banks who saw their property portfolios collapse in value, and widespread problems for consumers in paying back debts on credit that was artificially cheap.
The entirely predictable result was an almighty crash. The fact is that the euro is a failure. But the almost religious fervour of its adherents prevents them from seeing reason.
Like the proverbial dead cat that bounces when dropped from a height, Ireland will inevitably see a temporary rebound in the next few months, even years.
But deep seated problems remain. And as long as the folly of remaining in a single currency that can only keep people poor continues, it's only a matter of time before disaster strikes again.
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