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Home Publications Blogs Beat the Press Ireland's Economy Is Still Being Managed by People Too Incompetent to See a Massive Housing Bubble

Ireland's Economy Is Still Being Managed by People Too Incompetent to See a Massive Housing Bubble

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Tuesday, 29 June 2010 04:14

It might have been worth pointing this out in an NYT piece telling readers how Ireland's deficit reduction has devastated the country and still left it with large deficits. It also might have been worth talking to an economist who could have pointed out that it is not just markets that are forcing Ireland to go the austerity route, it is the European Central Bank (ECB). 

The ECB, like the Fed in the United States, could adopt a more aggressive policy of supporting member states governments. For example, the ECB could buy up large amounts of member state debt and offer extensive guarantees. This would allow Ireland, which had run budget surpluses and had a low national debt before the collapse of its housing bubble, more time to re-orient its economy. Given the huge amount of unemployment and excess capacity in the European Union, there is little risk of inflation from going this route.

This otherwise good piece does a disservice to readers by implying that markets are forcing this suffering on the Irish population. It is the decisions of the ECB that is leading to this suffering.

Comments (1)Add Comment
...
written by izzatzo, June 29, 2010 7:04
Three Cheers for US Austerity

What Do We Want?
To Be Like Japan!

When Do We Want It?
Now!

How Do We Get It?
Spend Less, Tax More!

How Close Are We?
One Depression Away!

Hail Austerity Now
Fail Fail Fail!

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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