The Non-Luck of the Irish

Irish gold

Paul Krugman shows everyone why it’s rough to be Irish these days (despite their recent success in rugby and soccer):

The combination of deficits and exposure to bank losses raised doubts about Ireland’s long-run solvency, reflected in a rising risk premium on Irish debt and warnings about possible downgrades from ratings agencies.

Hence the harsh new policies. Earlier this month the Irish government simultaneously announced a plan to purchase many of the banks’ bad assets — putting taxpayers even further on the hook — while raising taxes and cutting spending, to reassure lenders.

Ouch. And Dr. Krugman doesn’t even mention that Ireland’s best bet for recovery, export led growth, is hampered by its inclusion in the Eurozone. Ireland would normally devalue its currency making its goods less expensive on the international market. That’s a no go when you share a currency with Germany and France. PLUS the pound has almost equal to the euro now so Irish goods will be about the same price as nearby British goods.

At least they don’t have snakes . . .