Kevin O’Rourke on the Irish/Eurozone Mess

Posted on by

This INET interview with Kevin O’Rourke, a professor of economics at Trinity College Dublin, focuses on how Ireland got into its mess as well as the domestic and international political dynamics as to how it is being resolved. There is an interesting tension between the cool talking head style and some of the coded descriptions of the stresses and the stark choices at hand.

Print Friendly, PDF & Email


  1. Foppe

    Having read the opinion article posted by the leader of the True Finns, I feel that it is important to contradict O’Rourkes implicit suggestion that they are against the bailout because of nationalist reasons. Yes, part of it is that they don’t like to have to pay for the bailouts, but this isn’t because of their intense dislike of the Greeks or Irish, but rather because they realize it’s an ‘extend & pretend’ solution, coupled with institutionalized theft through privatization.
    Now, it may be that O’Rourke read this letter in the WSJ, which heavily edited the opinion piece, and removed pretty much everything he wrote that cast blame on the criminal banking system. Let me quote part of this letter here, with the parts that were removed by WSJ editors bolded.

    Why I Won’t Support More Bailouts

    When I had the honor of leading the True Finn Party to electoral victory in April, we made a solemn promise to oppose the so-called bailouts of euro-zone member states. These bailouts are patently bad for Europe, bad for Finland and bad for the countries that have been forced to accept them. Europe is suffering from the economic gangrene of insolvency—both public and private. And unless we amputate that which cannot be saved, we risk poisoning the whole body.

    The official wisdom is that Greece, Ireland and Portugal have been hit by a liquidity crisis, so they needed a momentary infusion of capital, after which everything would return to normal. But this official version is a lie, one that takes the ordinary people of Europe for idiots. They deserve better from politics and their leaders.

    To understand the real nature and purpose of the bailouts, we first have to understand who really benefits from them. Let’s follow the money.

    At the risk of being accused of populism, we’ll begin with the obvious: It is not the little guy that benefits. He is being milked and lied to in order to keep the insolvent system running. He is paid less and taxed more to provide the money needed to keep this Ponzi scheme going. Meanwhile, a kind of deadly symbiosis has developed between politicians and banks: Our political leaders borrow ever more money to pay off the banks, which return the favor by lending ever-more money back to our governments, keeping the scheme afloat.

    In a true market economy, bad choices get penalized. Not here. When the inevitable failure of overindebted euro-zone countries came to light, a secret pact was made. Instead of accepting losses on unsound investments—which would have led to the probable collapse and national bailout of some banks—it was decided to transfer the losses to taxpayers via loans, guarantees and opaque constructs such as the European Financial Stability Fund, Ireland’s NAMA and a lineup of special-purpose vehicles that make Enron look simple. Some politicians understood this; others just panicked and did as they were told.

    The money did not go to help indebted economies. It flowed through the European Central Bank and recipient states to the coffers of big banks and investment funds.

  2. Philip Pilkington

    Not a big fan of Mr. O’ Rourke.

    He says in this interview that multinationals like having the Euro and this means that more of them set up in Ireland. Does he not think that multinationals might prefer having a majorly devalued Punt?

    He says that the problem with being a member has something to do with the banking crisis but doesn’t specify what (because I suspect he doesn’t know). Hint: it wasn’t the Eurozone as such, it was deregulation and the push for government surpluses. Not surprising that he misses this one as I’m pretty sure he’s a bit of a deficit terrorist.

    The big problem with being an EMU member is that we don’t issue our own currency and so have to deal with bond vigilantes to float our government deficits. This is clearly beyond O’ Rourke.

    He calls our population ‘Europhilic’ — so, how does he explain their constant voting against EU treaties? No, we don’t have a Europhilic population; we have a Europhilic political class… there’s a big difference. There are no real major parties in this country that aren’t strongly tied to Europe, so there’s no real electoral choice. The only alternative is Sinn Fein who are fairly small relative to the others, O’ Rourke conveniently forgets to mention their enormous gains in the last election — which was in part due to continued disaffection with Europe.

    He says that defaults aren’t in the interest of the European elites. Well, I’d beg to differ. I think the likes of Merkel and Sarkozy would love a default by Greece and Ireland — at least from the point-of-view of electoral gains.

    O’ Rourke, like most of his colleagues in the economics profession, don’t have a good grasp of what happened in this country. What they’re saying — that we had it right barring the banking crisis — is reflected by most in the opinion-forming classes and in the political class. They’re basically all wrong. And it’s not surprising considering these are the very people that were championing the ‘Irish miracle’ on the way up.

    1. Philip Pilkington

      Sorry, he does actually mention Sinn Fein — I was writing that point-by-point. However, this contradicts what he says previously about having a Europhillic population.

      Watching it to the end O’ Rourke is constantly contradicting himself. He really comes across as someone who is just a bit confused.

      “Eh, sometimes we have a world that is described by Keynesian models and, eh, sometimes it’s described by very different models…”

      He’s completely vague. You’d be as well-off trying to extract a vision out of a vagrant.

      1. Valissa

        That’s why Ed Harrison called them Voodoo People. Obfuscation seems to be a central practice in economics.

      2. disgruntled observer

        Philip, I think you’re being more than a little unfair to Kevin O’Rourke. Have you read or listened to anything else that he’s put out other than this short interview? Granted he comes accross as quite hestitant in it, and his opinions are heavily nuanced, and yes, he’s very Europhilic himself, (his mother is Danish I believe), but, he’s actually quite keynesian in outlook.

        I think a better interview with him is here:

        1. Valissa

          “his mother is Danish I believe”

          And this means something? LOL… I find that very amusing as a justification! My mother is Danish too, so is my dad… and he’s a fan of Rush Limbaugh.

        2. Philip Pilkington

          My impression of O’ Rourke is that he’s a ‘soft Keynesian’. Soft Keynesians — they call themselves New Keynesians — are, in my view, completely inconsistent.

          The US have plenty of these commentating and directing policy — from Mankiw to Rogoff. They’re generally neoclassicals in disguise.

        3. Philip Pilkington

          Listen, for example, to the stress he puts on interest-rates in the interview. I haven’t listened to all of it, but he doesn’t seem to talk about fiscal policy at all.

          Yet, I think that one of the major aspects to the Irish crisis was that the governments ran surpluses which meant that the private sector had to run deficits to fuel the economic growth.

          If he’s a Keynesian, then why doesn’t he mention this? This point should be front and center.

  3. Susan Truxes

    The other day when Trichet accepted his Karl and gave his speech he alluded to the unavoidable: that the EU would someday have to be a political union. What effect will it then have – that the EU itself will have an imperial bank? Then the EU will have a tax base for catastrophe. A fund. And will it also have laws to prevent rogue banking? The benefit from the fund should go to the tax base not the catastrophe.

  4. ambrit

    Paying attention to the ‘cues’ aluded to by the blogmeister, I do indeed think Mr O’Rourke was hinting that Ireland could become a modern Weimar Germany. (Anti immigration and anti Europe ‘Right wing parties’ for starters. The man may be diffident because he knows he can’t just come right out with his true opinion ‘among polite company.’ As for bemused; who wouldn’t be with the Troika holding a gun to your head?

    1. Philip Pilkington

      Ireland is not going to become the next Wiemar Germany — no matter what happens. We don’t have an extreme right-wing in this country and I suspect we never will. By nature we’re just not a fanatical people.

      O’ Rourke thinks he’s scared of the Nazis. He’s not. He’s scared of the backlash against Europe because he’s a Euro-obsessive. The anti-European parties that have sprung up across the region don’t scare O’ Rourke because they’re going to liquidate immigrants — they scare him because they express concern over the European project, which O’ Rourke has committed himself to.

Comments are closed.