Friday, September 03, 2010

All Fall Down



As I hope I’ve made clear, I’m not any kind of expert in economics. It is simply something that caught my attention when I retired so I read a good bit about it. I think it is also clear that I’m a fan of Paul Krugman -- which is where I get most of my information.

Back in late June, Krugman had this to say about Ireland and its economic trouble.

A Terrible Ugliness Is Born

”That’s why the Irish debacle is so important. All that savage austerity was supposed to bring rewards; the conventional wisdom that this would happen is so strong that one often reads news reports claiming that it has, in fact, happened, that Ireland’s resolve has impressed and reassured the financial markets. But the reality is that nothing of the sort has taken place: virtuous, suffering Ireland is gaining nothing.”

There was a entry in the Economix blog on The New York Times that caught my attention. I think some of it is beyond my comprehension level -- but not all of it.

In Ireland, Dangers Still Loom

”Ireland had more prudent choices. It could have cut the budget deficit while also acknowledging insolvency and requiring creditors to share some of the burdens. But a strong lobby of real estate developers, the investors who bought banks’ bonds and politicians with links to the failed developments (and their bankers) prefer that taxpayers, rather than creditors, pay.”

If you don’t have time to read the whole entry, you should at least skip down to the last sentence.

Using my favorite (if crude) analogy, if 1929 = 2008, then we’re only in 1931. Beware.

”The Hoover Moratorium was a public statement issued by U.S. President Herbert Hoover on June 20, 1931 in order to deal with a very serious banking collapse in Central Europe that threatened to cause a worldwide financial melt-down.”

Don Brown
September 3, 2010

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