Had no idea things were THAT bad in Ireland. To have a country's govt collapse...capitalism just lost a lot of credibility. Let's hope that the new govt isn't in some extremist form. Also LOL @ the ousted political party's name, how fitting...."For Mr. Cowen and his Fianna Fail party..." http://www.nytimes.com/2010/11/23/world/europe/23ireland.html
An institution that spent more money than it generated failed? How is that an indictment of capitalism?
euro finances are simply a mess. and to think Ireland was the shining example of what 'could be' if only deregulation and mergers were allowed. Ugh!
Capitalism cant overcome the human factor of unrelenting, stupendous and absolutely mind boggling amount of greed. That creates justification for doing ANYTHING for money in most countries, to the detriment of masses.
Just for clarification, Euros did have regulation, but several big banks exploited a loophole where they bought AIG's AAA rated Credit Default Swaps and AAA rated derivatives that were packaged from our crappy housing markets. The loophole allowed them to counting that trash as cash reserves and it allowed many banks to have a leverage ratio upwards of 50:1 while meeting the Basel Requirements. So it's not all about the lack of regulation or too much deregulation. There's failures at all ends here.
It's an indictment on the failure of regulators to mitigate risk where the consequences of failure were catastrophic and far reaching.
The Loophole would seem to be a lack of regulation. If you regulate that loophole then there it's gone. So it does seem to be a lack of regulation.
Their government didn't actually collpase, it just means the ruling party no longer has a majority in parliament and thus new elections will have to be held to form a new ruling party. In a parliamentary system the government ministers are chosen from and by the party or parties (in the case of a coalition government) with a majority in the legislature. The green party is going to leave the ruling government(which is made up of an alliance between different parties), so they no longer have a majority. The Dutch government "collapsed" a couple months ago because the ruling parties couldn't come to agreement about pulling out of Afghanistan, so one of the parties left the coalition.
No system is perfect but the byproduct of inefficient socialism is by far worse than the product of inefficient capitalism. Ireland previously had only around 60% of debt to GDP versus 120% or so in Greece if I remember correctly. Their problems stemmed from their banks lending and the real estate bubble that had many depositors trying to take money out of Irish banks. This resulted in the government backing up the banking system, much like FDIC which has a vague US backing much like fannie/freddie, which lead to their debt burden being 120% or more to GDP and a limitation on credit lines to the banks and the country. Much of the problems in many of the newer Euro-zone countries is the significant credit lines the banks and nations recieved due primarily to their acceptance. The socializing of risk amongst many nations led to a false belief in their sustainability. The Irish and Greek economies are pretty small but if a place like Spain starts to crumble with its 800+ billion in debt. Watch out....
The irony in this whole matter is that the belief in soverign debt sounded a lot like the belief in real estate. That its higher in credit quality and rarely fails. When looking at long-term real estate prices they will see a lackluster performance over the long-run barely outpacing inflation with significant volatility. Soverign debt follows the same pattern in which most currencies will inflate their way out of debt (unless in Eurobonds which are not demoninated in their own currency) or be like socialist Argentina which has defaulted 6 times in the last 200 years and investors got around .30 cents on the dollar! What a bargain!
The irony is that you are too dumb to know that Ireland's crisis was caused by real estate rather than sovereign debt.
Why don't you read my post before that one you fool. So ready to jump on someone that thinks different than you that you can't even read a post above. You should talk to someone and get some help for your anger management issues.
There you go SamFisher. It was two posts above yours but you were so giddy that you couldn't wait to put someone down. You are a sad little man.
that's like saying that if we all get naked before we board a plane the terrorists can't blow it up. They will always find a way. What we should do is get rid of all the leverage. unpopular, but true. If the economy isn't growing because of actual fundamental growth, it shouldn't look like it is growing on paper.
