"The greatest supply side success of recent times (other than the Reagan Revolution) is the Irish Economic Miracle. "(pg 191)
from page 1 What's News section of the WSJ with Laffer's op ed piece is promoted on the same page 1
The European Union said it stands ready to step in and help Ireland with its financial situation as investors grew increasingly worried about the challenges facing the region's weaker countries and drove the euro to a one-month low.
btw Here's fellow supply sider Alan Reynolds of the Cato Institute who had strong words of critique against current fed polcy in the WSJ earlier this week. giving his views on proper policy in the US while opining on Ireland on June 10 of this year:
Though Greek deficits and debts have dominated the news lately, Ireland's fiscal crisis was widely considered at least as dangerous to the euro late last year. Ireland is in the worst trouble of all the eurozone countries, the International Monetary Fund then reported. Ireland's budget deficit was as large as that of Greece in 2008, and the Irish economy had shrunk 9 percent in 2009.
But we don't hear much about Ireland today. Why not? Because that country successfully repeated what it had done so boldly in the late 1980s — slash spending on payrolls and benefits, subsidies and transfer payments.....
Unlike Greece, the Irish economy is showing encouraging signs of recovery. Manufacturing increased strongly in March and April, and consumer confidence and retail sales are also up.
"The Irish approach to tackling the recent recession," investment adviser Michael Johnston said, "was vastly different than the strategies implemented by the U.S. and much of the rest of the developed world. Most governments cranked the printing presses into high gear and began injecting round after round of capital into the global economy. Ireland went the opposite direction, imposing draconian budget cuts and reeling in government spending."
The Irish approach worked in 1987-89 — and it's working now.
This is a lesson that Washington should learn sooner rather than later.
FT today from the always insightful Gillian Tett
More remarkable still, it has also imposed a painful austerity plan, in a bid to reduce debt. This has hitherto been largely accepted by long-suffering voters; social cohesion still appears surprisingly high.Yet, instead of being rewarded by the markets, Ireland is now in the crosshairs. Ten-year government bond yields have just surged above 8 per cent. Hedge funds in places such as New York are forecasting a default. And, on a visit to Dublin this week, I bumped into several distressed debt experts, some of whom joked that “Ireland is now even worse than Greece”. And not just because of the weather.
btw another darling of these guys was Latvia whose economy is recovering a bit now after the longest economic decline in the EU with a quarterly GDP contration of 18% in 2008, unemployment that hit 19.4% and a $10 billion bailout from the IMF World Bank and EU
I don't envy Bernanke. But I certainly think this piece by Floyd Norris gives a more balanced view of his situation and the contast of the "can't get no respect" attitude of critics so many of whom were eerily absent from criticizing "the wizard" Greenspan over his 20 year reign. With fscal policy changes off the table (just as advocated by Alan Reynolds above) the only levers left to get the economy moving again are monetary. Good luck Prof Bernanke we need it.
Fed Efforts to Revive Economy Find Critics
By FLOYD NORRISCan you remember when the Federal Reserve was above criticism? When politicians vied for Alan Greenspan’s favor and fell all over themselves praising his wisdom?
Now poor Ben S. Bernanke, who succeeded Mr. Greenspan as Fed chairman, is being blasted from all sides. It is bad enough that his latest effort to revive the American economy has taken on a name previously used for a 40-year-old cruise ship that no longer sails — QE2.
He is attacked by Americans for printing money and by overseas officials for trying to help American trade by undermining the dollar. Some Republicans claim to believe the country would be better off without a central bank at all.
If the stock market were falling, you can be sure the Fed would get the blame. But it has been rising of late, and in some critiques that is proof of the Fed’s perfidy. The Fed is creating inflation, its critics say.
Overseas, there is a widespread belief that the purpose of QE2, for the second round of quantitative easing, must be to depress the dollar and thus give the United States an unfair trade advantage. “It’s inconsistent,” thundered the German finance minister, Wolfgang Schäuble, in an interview with Der Spiegel, “for the Americans to accuse the Chinese of manipulating exchange rates and then to artificially depress the dollar exchange rate by printing money.”