Most of the material discussed in Ireland After Nama focuses on Ireland and doesn’t look beyond our shores. That’s fair enough, I suppose: the Irish crisis is severe; this blog is mostly written by Irish-based academics; our remit is Ireland after Nama; etc. But it’s hard not to look out and see that the storm clouds are still developing. The US is far from surging back to growth, as some in Ireland had hoped. Demand from China’s not exactly causing unemployment to fall. The Greek crisis rolls on and the Euro-zone economies look far from being in the clear. There’s lot to chew on here. But there are lots of other stories from elsewhere worth pondering. Here are three.

One is the story of the Nicholsons, a US family whose American dream has turned sour. Unlike Gandpa and Pop, young Scott Nicholson has poor job prospects, despite a good degree. He’s had no luck finding work since graduating in 2008. Things are so bad, he’s thinking of emigrating. Imagine that.

Krugman despairs. He’s appalled at the austerity ideologues – the coalition of the heartless, the clueless and the confused – who think saving capitalism means slashing spending (including on unemployment benefits) and just letting the unemployed get on with suffering. He also singles out Ireland here. Contra those in the financial media who applaud Cowen and Lenihan, Krugman says they’re doing more harm than good:

Ireland has been a good soldier in this crisis, grimly implementing savage spending cuts. Its reward has been a Depression-level slump — and financial markets continue to treat it as a serious default risk.

Elsewhere, Krugman makes a similar point:

All that savage austerity was supposed to bring rewards; the conventional wisdom that this would happen is so strong that one often reads news reports claiming that it has, in fact, happened, that Ireland’s resolve has impressed and reassured the financial markets. But the reality is that nothing of the sort has taken place: virtuous, suffering Ireland is gaining nothing.

Of course, I know what will happen next: we’ll hear that the Irish just aren’t doing enough, and must do more. If we’ve been bleeding the patient, and he has nonetheless gotten sicker, well, we clearly need to bleed him some more.

How much more blood is there?


A second story – one which doesn’t mention Ireland but which resembles the dilemmas facing the Irish state – starts in South Africa but looks globally. At issue here is valuing the South African currency, the Rand. There’s an age-old debate there about whether it’s too high or low against the Dollar. Some call for defending it. Others say that’s lunacy. One factor in the calculation is SA’s peers. But SA has two economies: one is ‘first world’ and the other is ‘third’; one looks like it’s ‘developed’ and from the West, while the other looks like it’s developing and far more Eastern. Tim Cohen in SA’s Business Day contributes to the debate by flagging some work by an influential economist in SA, Michael Power. Power discusses the new global labour surplus. The idea is that there’s simply not enough work for all the people across the world who’ve been proletarianized and have come into the labour force in recent years. Peasants have left the countryside. Cities have swelled. There are 3 billion would-be workers now [who’ve done a lot to help depress wages for those workers who preceded them, which is central to understanding the current crisis, as David Harvey notes here in a cool adaptation of one of recent lectures]. But there aren’t the jobs for all the 3 billion. Capitalists haven’t a need for so many workers. What will the would-be workers do? And so what should states such as SA’s do? How to find the right level for wages? What is the best valuation for its currency? Is it to look West or East to find its peers?


A final story: ING economists think the unthinkable and ask what would happen if the Euro dies in 2011? Their answer:

The euro could slump from around $1.20 in 2010 to $0.85, close to its previous low in 2001 […] while if the euro were to break up altogether the ING analysts expect “huge volatility” in the currencies that are created to replace the euro. For instance, the Spanish peseta, Portuguese escudo and Irish punt could devalue 50% against the new Deutsche mark.

Gulp. Maybe this would solve the Irish government’s public sector pay crisis. But it’d probably complicate other things just a little. Certainly, it’d require a few more lawyers and accountants to scurry to Nama’s door to offer their advice. Would the (new?) Irish government manage to re-finance all the Nama bonds from Euros to Punts?  What price would be offered from potential buyers of the so-called assets in the Nama portfolio? How would the new Punt affect the expectations of profits that Nama hopes to make?


Lots of questions.  Alas, no answers from me.  The joy of blogging.

Alistair Fraser.