Antique Thermostat Chronotherm

Ireland Ireland

I will not write too, because here it will not read anyone. But hey, what Ireland is not really a surprise. In fact, it was almost expected. Worth review where the problem began.

1. Ireland enters the euro, greatly lowering the transaction costs of doing business with the rest of the EU.
2. Being a small and very open economy (at least to the EU), the Irish authorities decide will grow by using a very simple strategy: Luxembourg, speaking English. A kind of fiscal semiparaíso in the eurozone, but with a bit more space.
3. To be competitive with Luxembourg, the Irish decided that regulate the financial system is weak and feeble-minded, and let the banks do what they want. While
4. Meanwhile, in Frankfurt, the ECB monetary policy expansionary cheerfully clumsy thinking of French and German economies, scattering of money the system.
5. German banks (and French), given that they come kicking but forex your country has trade surplus having an obsession, they decide to pay all the money they ask their Irish colleagues. And hey, ask for much, but believe what the Celtic Tiger.

spend a few years. In mid 2008, the mechanism begins to break:

1. The freeze Lehman hit financial markets, when the entire planet simultaneously realizes God is all up to their eyeballs in debt.
2. Irish banks, which rely more money than anyone from outside the country, stay with your ass in the air: nonsense of money had asked everyone, but can not renew their loans and that no one pays money to anyone.
3. The Irish government is the problem, and concludes that the panic is making its ultra-efficient wonderful and deregulated banks can not get liquidity, so give them a nudge with public money.
4. Banks still unable to obtain liquidity, and that still can not get to renew their loans. The government provides a little more money.
5. And a little more.
6. and more.
7. and more.
8. Both, in fact, you just screwed for nationalizing banks, only to discover with horror that it costs a paste and has to cut spending elsewhere in a recession. Grit your teeth, and pulls palante .
9. Meanwhile, banks still need more money, without seeming to be endless. It was not liquidity - rather huge quantities of garbage and artifacts subprime accounting unpresentable. According to government accounts deteriorate the condition that makes you start having the same problems: no one trusts the country, so nobody wants to lend them money.
10. In early November 2010, it is clear that the hole in the banks is larger than the entire economy, and that the Irish state will never be able to save . The rescuer needs to be rescued from bankruptcy.

what parts have failed? Ireland, unlike Greece, not a victim of a political class with accounting practices unsustainable. The euro became the model for growth of the country most likely crazy, but it was the main engine. The Irish, in fact, Iceland - a banking system totally out of control that takes a country ahead.

The "contribution" of the euro to the Irish stage, however, is no less cruel than in Greece, Iceland could devalue its currency, declare bankruptcy and have everyone eat the brown. The Irish ... Well, Angela Merkel will not let them. They can not get out of its currency can not leave the sinking problem and making its currency lose value debts. Nor can they stop paying, because that would be charged half German and French banking sector, and thus political career Sarkozy and Merkel confidence in the eurozone.

Basically, we are in Citoyen commenting the other day, the euro assumed that removing monetary policy from the hands of the states, local politicians would behave well. The Irish case is a sign that trust in the intelligence and responsibility is asking too much, and always someone will have brilliant ideas, like trolls based financial system deregulation.