Wednesday, November 24, 2010

The cuts aren't working? More cuts please

So Ireland is going to raise taxes and cut spending, again, in response to the bond markets' fears. But wait a second, wasn't Ireland everybody's favourite example of how to do the fiscal consolidation thing?

Even the markets have now cottoned on that fiscal retrenchment doesn't get them their money back. Yet Ireland still needs to show its willingness to bear pain, just so we know they're serious. It's like the ritual of some kind of weird cult.

This is starting to look like Argentina circa 2001. But without the exit option.