Can Ireland’s Celtic Tiger roar again?
By Steven Pearlstein, Published: August 16
DUBLIN — Much of Ireland has been riveted this summer by recordings of phone conversations from 2008 that revealed not only shocking levels of greed and bad breeding among some of the country’s top bankers, but a deliberate effort to snooker the government into bailing out the country’s banks by concealing the extent of their insolvency.
As Dan O’Brien, the business editor of the Irish Times observed, the tapes gave new life to a simple narrative that many Irish desperately want to believe: that Ireland was put on the path to financial ruin on a single night five years ago when a small group of regulators and politicians, pressured by bankers and European leaders, foolishly decided to guarantee all of the outstanding debts of all Irish banks. In this telling, it was that one boneheaded decision that wound up bankrupting the government and plunging the economy into a prolonged recession.
In the world beyond its emerald shores, meanwhile, another simple narrative about Ireland’s economy has found a receptive audience, this one about the Draconian spending cuts and tax increases that have been forced on Ireland by its creditors in order to reduce an annual government budget deficit that had reached 32 percent of the country’s annual economic output. The Irish themselves have long since accepted the urgent necessity of belt-tightening. But to Keynesian critics who believe in the healing power of fiscal stimulus, the country’s recent slide back into recession is offered as proof of the futility of austerity.
Neither of these fables — the one about the bank bailout, the other about austerity — is adequate to explain the rise and fall of the Celtic Tiger. You don’t have to spend much time here before discovering that the real story turns out to be both more complicated and more interesting.