March 03, 2012
A Washington Post article on the weak state of Ireland’s economy began by telling readers:
“Of all Europe’s crisis countries, Ireland has been perhaps the most adamant about pushing ahead with the budgetary, banking and other steps urged by its international lenders.
“Yet more than a year into its bailout, economic growth is lagging, high unemployment seems entrenched, and households and banks remain weighed down by the debts accumulated during a heady real estate boom.”
The second sentence would have been more accurate if it said:
“As a result, more than a year into its bailout, economic growth is lagging, high unemployment seems entrenched, and households and banks remain weighed down by the debts accumulated during a heady real estate boom.”
The poor performance of Ireland’s economy is not a surprise to people who know economics. Sharp cutbacks in government spending in the middle of an economic downturn are expected to lead to weaker growth. Ireland’s economy is doing badly precisely because it has been following the ECB-IMF program so closely.
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