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Remember "The Irish Economic Miracle"?

Roman Berry's picture
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Here's how austerity works...

NY Times: In Ireland, a Picture of the High Cost of Austerity

As Europe’s major economies focus on belt-tightening, they are following the path of Ireland. But the once thriving nation is struggling, with no sign of a rapid turnaround in sight.

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“When our public finance situation blew wide open, the dominant consideration was ensuring that there was international investor confidence in Ireland so we could continue to borrow.  . . .  A lot of the argument was, ‘Let’s get this over with quickly.’ ”

Rather than being rewarded for its actions, though, Ireland is being penalized. . . . Joblessness in this country of 4.5 million is above 13 percent, and the ranks of the long-term unemployed — those out of work for a year or more — have more than doubled, to 5.3 percent.

Now, the Irish are being warned of more pain to come.

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Politicians here have raised taxes and cut salaries for nurses, professors and other public workers by up to 20 percent. About 30 billion euros ($37 billion) is being poured into zombie banks like Anglo Irish, which was nationalized after lavishing loans on developers.

The budget went from surpluses in 2006 and 2007 to a staggering deficit of 14.3 percent of gross domestic product last year — worse than Greece. It continues to deteriorate.  . . .  “Everybody’s feeling quite sick at what happened because things were going so well for Ireland,” said Patrick Honohan, the Irish central bank governor. “But we don’t have the flexibility to do a spending stimulus now. There’s no one who is even arguing for it.”

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Prior to the collapse of the bubble, Ireland was one of those nations that was being put forth as an example to others. The media meme was "the Ireland economic miracle."

In the end, though Ireland did everything right by the free market, this is their reward. The rich remain rich and have an opportunity to buy up the assets of the failed lives around at a fraction of former value. And the working people? Many aren't working any more. And those who are make much less.

Sean Paul Kelly said, "austerity is socialism for the rich."

Lambert posted two sentences from Michael Hudson yesterday, excerpted from a much longer blog post, which sum it all up short and sweet:

The problem is that there is not enough economic surpluses available to pay the financial sector on its bad loans while also paying pensions and social security. Something has to give.

Get ready, 'cause unless you're a bankster or a major bond holder or just independently wealthy, the something that has to give is you.

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