An Irishman Walks Into A Financial Crisis . . .
This post is primarily to tout Michael Lewis’ brilliant (and long) piece in Vanity Fair examining the origins of the recent financial meltdown in Ireland. A sample:
An Irish economist named Morgan Kelly, whose estimates of Irish bank losses have been the most prescient, made a back-of-the-envelope calculation that puts the losses of all Irish banks at roughly 106 billion euros. (Think $10 trillion.) At the rate money currently flows into the Irish treasury, Irish bank losses alone would absorb every penny of Irish taxes for at least the next three years. In recognition of the spectacular losses, the entire Irish economy has almost dutifully collapsed.
But I also want to make a broader point. While anything as huge as the financial crisis has many origins and many culprits. At its heart it was a failure of the governments to police the markets. Even a pro-market economist will acknowledge that a functioning capitalist economy depends on a central body to enforce property rights and minimize negative externalities. While pro-market economists remember this basic precept, pro-market politicians do not always do so. As you hear about calls to roll back regulation, particularly of the financial sector, try to remember this. It shouldn’t be hard; we are still paying the price from the last rollback.Click here for reuse options!
Copyright 2011 Liberaland