Erin Go Broke? Krugman's NT Times piece - and some reaction

Paul Krugman has an opinion piece in today's New York Times, arguing - among other points made - that "As far as responding to the recession goes, Ireland appears to be really, truly without options, other than to hope for an export-led recovery if and when the rest of the world bounces back".

Paul Sweeney comments in response that

"While I agree with much of Krugman’s analysis, he appears to contradict his own statement that “As far as responding to the recession goes, Ireland appears to be really, truly without options,” when he is also critical of the way the bank bailout is being handled by the Government. He seems to favour the bank nationalisation route, which the government is studiously avoiding at all costs. If nationalisation is the alternative route to NAMA, then Ireland does have options. The nationalisation path, which I and others have favoured for some months now and still think may come to pass, by necessity, is preferable (than the NAMA route) as it gives far greater control to the government, the paymaster. It is a clearer path and also allows property valuations to be determined later as the market begins to operate and is not dependent on the guesses of estate agents. The idea that government civil servants would run the banks as articulated by some opponents of full state control, is of course, a distraction. Boards would be set up - as independent as possible and far preferable to the current bunches of cosy capitalists which gambled, not just with the banks’ assets, but with those all citizens of this Irish Republic. It is interesting that Krugman is keeping an eye on us, if for all the wrong reasons."

Any other views?

Posted in: Banking and finance • Economics • Fiscal policy • Fiscal policy

Tagged with: banking • nationalisation • krugman • NAMA