Tim Geithner helped sink Ireland

"France has no friends, only interests," said General Charles de Gaulle in response to a question from Winston Churchill. It's a telling reminder that in international relations it's one thing to talk about our "friends" in Europe or America or wherever, but quite another to believe such talk.

Saturday's Irish Times carried a column by economics professor Morgan Kelly in which he laid out the events that have led to our "economic ruin." If you've been following this story you already know that the Irish government and banks led us into an economic disaster and that the government then (& quite possibly now) didn't know what it was doing and made mistake after mistake.

Kelly not only points the finger of blame at Honohan for his "miscalculation," but also hints that Honohan undercut the Minister for Finance last November when he sided with his fellow Central Bankers on the European Central Bank Council rather than support the Minister who was refusing a bailout on onerous terms because he rightly understood that the goal of the ECB was to force us to take a bailout that they hoped would stop the panic spreading to other euro member countries.

Damning stuff. Arranged against Ireland were most of the power-brokers in the EU and ECB and, interestingly, US Treasury Secretary Tim Geithner {photo}. Kelly says that Geithner torpedoed efforts by the IMF to help the Irish government rid itself of the massive bank debts. In fact, Kelly says that "only one to speak up for the Irish was UK chancellor George Osborne," which goes a long way to proving de Gaulle right.

Ireland's only friend in its hour of need last November was Britain, although not because they love us but because a collapse here was more damaging to Britain than was the collapse of the euro.

I'm not in a position to argue with Kelly's analysis, but I'd like more than he gives me on Geithner's rationale for forcing ruin on us. Kelly implies that it's simply ideological: taxpayers should bail out failed banks. I'd love to imagine someone asking President Obama about this when he comes to be cheered on O'Connell Street and in Moneygall.

Why did his Treasury Secretary veto a deal that could have prevented ruin here? My guess is that European subsidiaries of American banks were afraid of the losses their European off-shoots would incur if euro members were allowed to restructure their debts.

Regardless, Kelly says that it is only a matter of two years or so before Ireland is bankrupt, at which point our reputation will be shot. We cannot recover. Eventually, we will be EU protectorate, "Europe’s answer to Puerto Rico."

We did this to ourselves, but we had help. Our European 'partners' and the European Central Bank were a big part of what went wrong here. And, as it turns out, the Obama administration played a role in twisting the knife when it was firmly planted in our backs. Et tu, Brute?


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