Many counties have more ghost estates than Leitrim—Cork has ninety of them—but Leitrim emerges as Ireland’s champion when empty houses are compared to the number of the local population. NIRSA’s director Rob Kitchin calculates that 2,945 homes were built in Leitrim between 2006 and 2009 when the growth trend suggested that only 588 would be needed—an oversupply of around 400 percent.
In 2006, at the height of the boom, construction accounted for almost a quarter of Ireland’s GDP and occupied a fifth of the workforce...Bank lending for construction and real estate rose from €5.5 billion in 1999 to €96.2 billion in 2007—an increase of 1,730 percent—while house prices doubled in the six years to 2006.That folks is a bubble. It distorts the economy, and, depending on its size, can do so on a massive scale. Thus after it pops, no amount of money poured into the system is going to reflate it. In a related note, the Case-Shiller index released today, shows US housing prices continuing to fall across the country.
Secondly, the piece does a nice job explaining the culpability and complicity of the Irish political class in creating the bubble. Now, this doesn't in anyway absolve the fraudulent actions of the bankers, but it does show again, despite the protestations of the Greenspans, Bernankes, Summmers, Geithners, Clintons, and Obamas, we know enough about money to prevent bubbles. It takes an active and forceful regulatory environment, limits on size and scope, enforcement against fraud, and limits on leverage.
Finally, the piece concludes with just an excellent paragraph on what wrong with the Irish political economy, but could just as well be applied to the US:
It was a little too good to be true that Ireland could go from the pre-modern to the post-modern without ever fully creating the structures and habits of a modern democracy. Large chunks of classic democracy were missing—the shift from religious authority to public and civic morality; the idea that the state should operate objectively and impersonally rather than as a private network of mutual obligations; the notion of the law as a universal and neutral check on everyone’s behaviour, whatever their status…. Plonking a hyper-charged globalised economy on top of such an underdeveloped system of political governance and public morality was always likely to create an unbearable strain.While, you can argue one way or other about whether the Irish ever developed a rule of law, a de-clanning of politics, and a vibrant public and civic morality, there is no doubt the US at some point had moved in these directions. It also can be said, the plonking a hyper-charged globalised economy on top of the US political economy ripped asunder all these things. It has not just been labor arbitraged by corporate globalization, but government regulation, the rule of law, and maybe most important of all, public and civic morality.
At the end of the 19th century, Oscar Wilde quipped, "America is the only country that went from barbarism to decadence without civilization in between." But being very much a product of contemporary Europe, the vibrant democratic public and civic morality at the bottom of much of American society at that time, would have been lost on him, just as today it is lost on us. If we are to have self-government, we have to renew and revive our public and civic morality. Know one thing, it is not comprised of listening to presidents, or watching 30 second ads, or voting every couple of years, it is the actions we take on daily basis and the motives behind them. You've been given a clear view of the greedy violent rabble who have floated to the top of this decaying republic, each day, they do more to secure their reign. They will only be stopped by a concerted effort of the American people, defining and reviving self-government for the 21st century.
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