Kelly Ireland. OPINION:Ireland is heading for bankruptcy, which would be catastrophic for a country that trades on its reputation as a safe place to do business, writes MORGAN KELLY WITH THE Irish Government on track to owe a quarter of a trillion euro by 2014, a prolonged and chaotic national bankruptcy is becoming inevitable.
By the time the dust settles, Ireland’s last remaining asset, its reputation as a safe place from which to conduct business, will have been destroyed. Ireland is facing economic ruin. While most people would trace our ruin to to the bank guarantee of September 2008, the real error was in sticking with the guarantee long after it had become clear that the bank losses were insupportable. Brian Lenihan’s original decision to guarantee most of the bonds of Irish banks was a mistake, but a mistake so obvious and so ridiculous that it could easily have been reversed.
Honohan’s miscalculation of the bank losses has turned out to be the costliest mistake ever made by an Irish person. De Grauwe Governance-fragile-eurozone.pdf. When Irish Eyes Are Crying. A single decision sank Ireland, but when I ask Lenihan about it he becomes impatient, as if it isn’t a fit topic for conversation.
It wasn’t much of a decision, he says, as he had no choice. The Irish financial markets are governed by rules rooted in English law, and under English law bondholders enjoy the same status as ordinary depositors. That is, it was against the law to protect the little people with deposits in the bank without also saving the big investors who owned Irish bank bonds. This rings a bell. When U.S. On September 30, 2008, in the heat of the moment, Lenihan gave the same reason for guaranteeing the banks’ debts that Merrill Lynch had given him: to prevent “contagion.” Across Europe just now men who thought their title was “minister of finance” have woken up to the idea that their job is actually government bond salesman.
But there was once a time when the wishes of the E.C.B. didn’t matter to Ireland. Bring Me a Little Ire. Beware of Greeks Bearing Bonds. After about two hours I work up the nerve to ask him.
To my surprise he takes me seriously. He points to a sign he has tacked up on one of his cabinets, and translates it from the Greek: the smart person accepts. the idiot insists. He got it, he says, on one of his business trips to the Ministry of Tourism. “This is the secret of success for anywhere in the world, not just the monastery,” he says, and then goes on to describe pretty much word for word the first rule of improvisational comedy, or for that matter any successful collaborative enterprise. Take whatever is thrown at you and build upon it. I notice now that his windows open upon a balcony overlooking the Aegean Sea. “The whole government says they are angry at us,” he says, “but we have nothing. At that moment, out of nowhere, Father Ephraim walks in. “Don’t you believe in miracles?” “I’m beginning to,” said the Greek M.P. When we are introduced, Ephraim clasps my hand and holds it for a very long time. Notes on a Scandal.