November 26, 2010
Comparison: The Irish and Greek financial meltdowns
The Christian Science Monitor article by Stefan Karlsson on the the differences between the two situations. The points are interesting, but at the same time involve defining the term "mismanagement" in ways that hardly seem to cover the actions involved. Isn't the promulgation of the "property bubble" a rather dramatic form of mismanagement? If so, the blame lays heavily upon countless banks throughout the world. The Greek faking of data hardly requires any effort to declare as 'mismanagement,' (probably 'criminal' is more appropriate), but it seems to pale in significance to the rush of many banks (like the Irish banks) to force math to yield impossible results.
" Both involve euro area countries with large deficits who initially saw interest rates rise because of the large deficits, but then the increase in yields got a life of its own and became self-reinforcing. The increase in interest rates was itself seen as a reason to drive yields up further (as the perceived risk of default increased), something which in turn drove up yields yet further and so on.
Yet there are some differences:
One is that while the Greek crisis involves long time fiscal mismanagement with systematically too large deficits even during the boom, the Irish crisis is instead a case of a burst property bubble that has created big problems in the banking system."
Related:
2011 – Creating the European Financial Stability Facility (EFSF) & the "PIIGS"
2017 – Another Greek Economic Crisis?
The Drachma almost returned to Greece 2013–2017
Greek economic Survival in the 1990s
Greece's Golden Visa program
