Follow the Money

[Howth and Ireland's Eye. County Dublin, Irela...

[Howth and Ireland’s Eye. County Dublin, Ireland] (LOC) (Photo credit: The Library of Congress)

Follow the Money, The Tale of the Merchant of Ennis, by David McWilliams is the story of how the Great Recession came to Ireland. The Irish were affected like the rest of the world by the Great Recession originating on Wall Street, but they made it worse in their own way. When Ireland adopted the Euro as their currency, it enabled their banks and their property developers to go on a building spree. Prices on homes and commercial property skyrocketed as some got rich and many others tried to. 100% mortgages were widely available.

When the crash came and people lost jobs and could not meet their obligations, the Irish government in cahoots with the banks and the old-boy network of Ireland’s 1%, bailed out the banks and the wealthy at the expense of everyone else. The author argues against austerity and in favor of a currency devaluation. That is not possible if Ireland retains the Euro. His solution is to leave the Euro, devalue Ireland’s currency, and then rejoin the Euro later. His point is why should the nation suffer to save a few wealthy individuals and a few banks?

This book is an interesting read with logical arguments, in my opinion, against too-big-to-fail. What happened in Ireland resembles what is happening here in the US as well as the experience of other European nations now, particularly Greece. The people of Greece are suffering so that banks, especially in Germany, do not experience any losses on their loans.

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Greece

English: (Green) Greece. (Light-green) The Eur...

English: (Green) Greece. (Light-green) The European Union (EU). (Grey) Europe. (Light-grey) The surrounding region. See also: Category:SVG locator maps of countries of Europe (Photo credit: Wikipedia)

Greece will be voting again on Sunday June 17, 2012. Depending upon the outcome, it is possible that Greece will abandon the Euro and enforced austerity. It may be bad for the rest of Europe and the US, but it may be good for the people of Greece. Iceland let its banks go bust and now Iceland is recovering nicely. Greece got into trouble by borrowing more than it could repay from big, Wall Street banks. Greeks also have a history of tax avoidance which is not unique to Greece, but probably more endemic there. I will await Sunday’s results with bated breath. I wish the Greek people well.

Please see Excellent article | Paul Krugman