The long summer holiday season is nearly over and the new year – as dictated by our children returning to school – starts next week. It also heralds the third anniversary of the banking and fiscal crisis that began at the end of 2007 when an unknown (outside these islands) British mortgage bank, Northern Rock, collapsed, sparking the first run in a UK bank in 150 years.
Politicians and central bankers (CBs) are correct in saying that their intervention back in 2008/09 prevented the immediate melt-down of the world banking system. But where they are dead wrong, is in their view that they reversed the recession and an economic recovery is now underway. In reality, they only stuck their collective fingers into the cracking dyke, all the while pouring the equivalent of an estimated 13 trillion dollars of NEW debt and borrowings to bail out insolvent banks and industries and add to the already explosive volume of hundreds of trillions worth of global debt. The day of reckoning has only been postponed; all the while more capital, more companies and jobs disappear.
Here in Ireland, as the foreign debt piles up, unemployment keeps rising and asset prices (like property) keep falling. We are in the eye of the storm. Our debts are simply too big to repay and the Great Recession continues, but the pace of is quickening again as the efforts to stop the recession in the USA and Europe are also being seen not to have been particularly successful. The US bond market is terribly overheated and the danger of a sovereign debt default in Greece in particular has grown as the Greek economy (like our own, and Spain’s) continue to weaken under a growing burden of unemployment, higher taxation and lower spending.
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