The need for a bailout is the consequence of the government's incompetence. It should pay for its failure
Nov. 21, 2010 (The Observer) -- It never seemed to matter in the boom years, but strictly speaking, there is no such thing as a Celtic Tiger. The image was coined in the mid-90s to compare Ireland with voraciously expanding economies in east Asia.
Now that boom has turned to bust, and Ireland is negotiating a European bailout, the mythical nature of the beast is poignant. There were no big cats in Dublin after all.
But there were fat cats. The Irish boom saw a vast property bubble puffed up by appallingly managed banks with the complicity of idle regulators and political cronies. House prices between 1994 and 2006 rose by around 520%. The relationships between developers, their financiers and the officials who authorised the building spree were usually cosy, often corrupt.
Towards the end of the growth years, the country's financial sector descended into full-blown mania. Banks doled out credit indiscriminately and borrowed on international capital markets on a scale that far exceeded the nation's economic output. When the bubble burst, the government stepped in to rescue the banks, but their debts were ultimately bigger than the state's capacity to raise revenue. Ireland started sliding towards insolvency. Hence, the bailout.
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