Quote of the Day (John Fitz Gerald, on Housing Policy as a Source of Economic Destabilization)

“We have repeatedly warned that the government’s housing policy was extremely dangerous. You will now see unemployment going to 10 percent and we will experience a sharp drop in output.”—John Fitz Gerald, economist at the Economic and Social Research Institute

(I have to admit here a slight case of indirection in the above quote: John Fitz Gerald’s organization is based in Dublin, Ireland, not the U.S., and he’s referring to his own country’s economic policy, not ours. His quote comes from an article in The New York Times yesterday on the fizzling of Ireland’s “economic miracle.” The piece is not only instructive in showing how the same patterns of thought repeated themselves globally in the evolution of the current crisis, but also in detailing the poverty of values that, in Ireland as in the U.S., had arisen in conjunction with the go-go economy of the last two decades.

Case in point: Sean Dunne, a developer, who, while digging into a meal while being interviewed, announced, “Jealousy and begrudgery are still alive and well in Ireland, and whoever eradicates them should be prime minister for life.” This from a man utterly clueless about why anyone could object to his holding his wedding party nearly five years ago on a two-week Caribbean cruise on the yacht Christina O—the same one used for the marriage of Aristotle Onassis and Jacqueline Kennedy.

The article’s implicit foil to Dunne is Brother Shawn O’Connor, a Franciscan working with the poor in Moyross, on the northern edge of Limerick, which missed out on the economic boom enjoyed by Mr. Dunne and others. I was stunned—and pleased—by the first positive mention by the Times of a cleric in Ireland in, oh, about the last decade or so. I can only hope that it’s a reminder to people that the Church for years was about more than the sexual abuse scandal.

Back to Mr. Fitz Gerald's point, about housing. It looks as if part of the roar from "The Celtic Tiger," as in the U.S. and Britain, came from illusions about housing. Low interest rates and a bank lending spree, along with something more uniquely Irish--a wave of inward immigration from the Continent--led to the housing bubble. Just before the house of cards came tumbling down, banks in Ireland had been pushing more than 60 percent of their loans toward property. It's enough to make you shake your head.)