For most of last year a common refrain was the line about the difference between Ireland and Iceland being one letter and six months. I was in a minority, a very small minority, in suggesting that although Iceland looked to be in terrible state that they chosen the wiser path of short term pain for long term gain.
The ‘solution’ being tried in Ireland is mainly one of throwing good money after bad in the hope that the global economy recovers before FF/GP have to face the electorate and that, by then, a ‘rising tide’ will have the appearance of being able to lift all boats.
The shine is rapidly coming off that ‘solution’ as the varying stimuli run their courses into the buffers of debt overhang and artificially high prices for everything from stocks to wages and including houses. The only thing that is not overpriced is the oil we are still consuming at an unsustainable rate.
Meanwhile, Iceland is already suffering less pain than the Irish and the have managed to do so by sticking it to the ‘entrepreneurs’ who took most of the profits and are now taking the losses.
“How different from the home lives of our precious bankers”.
For a snapshot of these remarkable events see the estimable PKrugman’s article here.