[snip] easy credit. If we look at the activities of the three largest banks in the country since 2004, we see that they all nearly doubled their loan books, funnelling money into the country.
To achieve these rates of credit growth, they abandoned all sense of banking decorum and borrowed heavily abroad. As a result, domestic spending went through the roof and Irish inflation rocketed. The prices of everything rose; as did wages. This massive increase in Irish costs was ironically most easily gauged by free-spending Irish tourists complaining to Joe Duffy about the great value they could get in Spain in comparison to home. The difference between a dinner for two in Spain and the same in Athlone, became the staple conversation of the new Irish middle class.
All this disparity was telling you was that Ireland was pricing itself out of the world market. We could only keep the show on the road by borrowing even more of other people's money we didn't have, to buy stuff we didn't need.
Thursday, 11 December 2008
David McWilliams Sez We're Doomed
You know, it's true. Everyone is saying It Went Wrong So Quickly, I had this very conversation with a Taxi driver on Saturday. The problem, as far as Ireland is concerned, stems from...