Two reports on the causes of the banking crisis in Ireland were published at the same time yesterday as reported by the Irish Times in particular (Irish Times, 10/06/10).  One was produced by a team led by Patrick Honohan, Governor of the Central Bank, while the other one is informed by the findings of an inquiry conducted by German economist Klaus Regling and Max Watson, formerly of the International Monetary Funds and now working for the Chatham House think-tank in the UK. In a nutshell, the two reports broadly come to a very similar overall conclusion: Ireland’s banking crisis is not simply the outcome of  a global financial and economic crisis, it was fostered at home through, among other things, an unreasonable support of the construction industry, a lack of financial regulation, and a unsustainable tax-base. So the successive Budgets during the Celtic Tiger boom period have largely contributed to make the country highly vulnerable to events such as the global financial crisis that has been unfolding since 2008 now. As Regling and Watson put it: ‘Ireland’s banking crisis bears the clear imprint of global influences, yet it was in a crucial ways “homemade”‘. In other words, Ireland’s banking crisis is a ‘glocal’ crisis, which negative impact was deepened by the fact that instead of starting to manage public finances more carefully when hints of an imminent crisis and subsequent recession emerged, the Government continued to spend money as it came without even giving some serious thoughts on how to provide Ireland with a more stable tax-base. Beside the fact that this is a major political blow for current Taoiseach Brian Cowen who was then Minister of Finance, what is interesting here is that the conclusions of the reports may help people think about the continuous importance of local and national political economies, or the political economic choices that we make (through our elected representatives) in an era of so-called globalization.

Delphine Ancien

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