“Even in an era when capitalists went out of their way to destroy capitalism, the Irish bankers set some kind of record for destruction.”
Michael Lewis, one of my fave financial writers extant, has been traveling and tracing the roots of the global credit crisis. He went to Greece last year and determined in a Vanity Fair story that no one in Greece actually pays taxes.
His latest must-read missive is about how the Irish banks, many of them older than Ireland itself, came to bankrupt their own country’s citizens. Shockingly, no one there seems to care.
One of the most interesting questions asked and answered in the story is that of how Ireland even got themselves into such a boom/bust cycle to begin with. Prior to the millennium, the nation was always an embarrassment economically-speaking …
Ireland’s regress is especially unsettling because of the questions it raises about Ireland’s former progress: even now no one is quite sure why the Irish suddenly did so well for themselves in the first place. Between 1845 and 1852, during the Great Potato Famine, the country experienced the greatest loss of population in world history—in a nation of eight million, a million and a half people left. Another million starved to death or died from the effects of hunger. Inside of a decade the nation went from being among the most densely populated in Europe to the least. The founding of the Irish state, in 1922, might have offered some economic hope—they could now have their own central bank, their own economic policies—but right up until the end of the 1980s the Irish failed to do what economists expected them to: catch up with their neighbors’ standard of living. As recently as the 1980s one million Irish people—a third of the population—lived below the poverty line.
What has occurred in Ireland since then is without precedent in economic history. By the start of the new millennium, the Irish poverty rate was under 6 percent and by 2006 Ireland was one of the richest countries in the world. How did that happen? A bright young Irishman who got himself hired by Bear Stearns in the late 1990s and went off to New York or London for five years returned feeling poor. For the better part of a decade there has been quicker money to be made in Irish real estate than in investment banking. How did that happen?
Michael Lewis nails this story. Your weekend reading should begin here.