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On Ireland’s double dip depression and other links

Topic of the Day: Ireland

When looking at the horrible news coming out of Ireland, these comment from a June post came to mind:

I have come to see the fiscal prudence angle as inevitable. I came to this conclusion in October. People have tired of all of the bailouts and sucking up to special interests. If the economy is still weak in the US and Europe, people want to know everyone is sharing the burden. Hence, the desire to impose fiscal discipline.

Just to be clear, austerity decreases demand, decreases employment and decreases GDP.  It increases the potential for recession. And with massive debt levels and financial sector interconnectedness, the potential for a serious downturn is great…

For most of the last year and a half since Lehman collapsed, I have been hoping this view was wrong. Specifically, I had hoped that beggar thy neighbour, economic nationalism and protectionism would not re-visit us.  However, my early view is being increasingly validated by events. It’s clear to me that I have the psychology of depression economics right and that makes a relapse into depression probable.

-Re-considering the Great Depression II Meme

Given the talk about trade sanctions in the U.S., austerity in the U.K, and the Sino-Japanese diplomatic row, you can’t view what’s happening in Ireland in isolation. Will the double dip in Ireland put people off harsh austerity? I doubt it: GOP ‘Pledge to America’ to call for U.S. spending freeze

A few CGI links

The Usual Fare

Germany

Just for Fun

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About 

Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty years of business experience. He is also a regular economic and financial commentator on BBC World News, CNBC Television, Business News Network, CBC, Fox Television and RT Television. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College. Edward also writes a premium financial newsletter. Sign up here for a free trial.