Krugman: Ireland’s austerity is financing a private-debt Bankers’ Bailout

Paul Krugman has a nice column today detailing the differences between what’s happening in Ireland (austerity, lots of it, without discernible result) versus Iceland (letting bankers fail, recovery on the horizon). It’s a terrific, and telling, comparison.

But I’d just like to focus on these few paragraphs. The Billionaires’ Coup has gone international, and it doesn’t get clearer than this. “Eating the Irish” (an apt title; my emphasis):

The Irish story began with a genuine economic miracle. But eventually this gave way to a speculative frenzy driven by runaway banks and real estate developers, all in a cozy relationship with leading politicians. The frenzy was financed with huge borrowing on the part of Irish banks, largely from banks in other European nations.

Then the bubble burst, and those banks faced huge losses. You might have expected those who lent money to the banks to share in the losses. After all, they were consenting adults, and if they failed to understand the risks they were taking that was nobody’s fault but their own. But, no, the Irish government stepped in to guarantee the banks’ debt, turning private losses into public obligations.

Before the bank bust, Ireland had little public debt. But with taxpayers suddenly on the hook for gigantic bank losses, even as revenues plunged, the nation’s creditworthiness was put in doubt. So Ireland tried to reassure the markets with a harsh program of spending cuts.

Step back for a minute and think about that. These debts were incurred, not to pay for public programs, but by private wheeler-dealers seeking nothing but their own profit. Yet ordinary Irish citizens are now bearing the burden of those debts.

Eating the Irish indeed. Note the presence of (1) billionaire bankers; (2) corrupt politicians; (3) reimbursing private losses with public money; and (4) an international PR campaign that casts Irish austerity as penance for Irish sins.

What do you call it when the super-rich have control of absolutely everything in the world? Mission accomplished, of course, if we continue to let them have it.

Thank you, Mr. Krugman, for being so painfully clear today.


Gaius Publius is a professional writer living on the West Coast of the United States.

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