Boomerang is a sad book, as well as a funny and enlightening one

Wednesday, 14 December, 2011

“The widely shared analysis in Ireland is that the disaster was caused by an unholy trinity of bankers, politicians, and house-builders, and involved a great deal of systematic corruption on the part of all three (especially over issues such as rezoning land). Lewis is gentler on the banker’s at the heart of the crash than the Irish themselves are: he thinks that the bubble ‘wasn’t as cynical’ as in other countries. The people indulging in the speculation genuinely believed that they were going to get rich. It was a bubble of greed and stupidity and excess, but not one in which the rich systematically stole from the poor. Perhaps the numbers are so bad that no more grimness needs to be troweled on:”

“A single bank, Anglo Irish, which, two years before, the Irish government claimed was suffering from a ‘liquidity problem,’ confessed to losses of 34 billion euros. To get a sense of how ’34 billion euros’ sounds to Irish ears, an American thinking in dollars needs to multiply it by roughly one hundred: $3.4 trillion. And that was for a single bank. As the sum total of loans made by Anglo Irish Bank, most of it to property developers, was only 72 billion euros, the bank had lost nearly half of every dollar it invested.”

“When the Irish banks collapsed, the state stepped in and guaranteed not just the deposits of their customers, but all the banks’ liabilities. Nobody knows quite why they covered the losses of the bondholders who had lent money to these fundamentally broken companies: but they did, and the promise in turn bankrupted Ireland, leading directly to a European Union and International Monetary Fund bailout. The fallout is going to dominate life in Ireland for years.”

From “How We Were All Misled” by John Lanchester in the current issue of the New York Review of Books.

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