This past week there has been a lot of talk about Ireland's financial woes and the Euro. Did you see how fast they solved the crisis and smoothed it over? They didn't want to repeat the Greek drama that had just kind of settled down. Let me see if I can put it in a nutshell.
On January 1, 2002 several European nations started using the Euro as a currency. When they did this they gave up their right to print their own money. (BTW I'm sure the Brits are saying, "I told you so") As you know, there is a lot of national pride and it was very hard for Ireland to ask for a 100 billion dollar loan, I'm sure. In a way they gave up their national sovereignty in order to be part of the Euro currency. They traded their ability to print their own money for the hope of economic prosperity and stability. Now they have to be fiscally responsible. If they could still print their own money they would just pay their own bills, their money would be devalued by the market and life would go on and hopefully balance out. Their goods would become cheaper to the rest of the world and that would bring more business, yada yada yada. It's great how a free market works. But now they will have huge debt and no real way to pay it back except fewer services for higher taxes. Sound familiar? Problem solved....
They have painted the elephant the same color as the walls and backed it into a corner hoping nobody will see it. That elephant in the room is Spain. Now let's just forget about it and go on with life. Happy trading!
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