Great Depression Online Archive Issue:

Luck o' the Irish

Great Depression Online
Long Beach, CA
November 16, 2010

Inside This Issue You Will Discover…

*** Irish Potato Blight
*** Irish Debt Blight
*** Luck o’ the Irish
*** And More

“I showed my appreciation of my native land in the usual Irish way: by getting out of it as soon as I possibly could.” – George Bernard Shaw

Irish Potato Blight

Sometime in September 1845 something mysterious began happening across the countryside of Ireland.  Suddenly, for no apparent reason, the leaves on potato plants turned black, curled up, and rotted.

Of all things, fungal spores, first transported on ships from North America, were settling on the leaves of healthy potato plants and rotting them.  Over and over the fungus rapidly multiplied and spread to other surrounding plants.  Pretty soon those plants were infected, and were also emitting fungal spores to other surrounding plants.  Before long all the potato fields were infected and, as the fields rotted, a nauseating stench overcame the land.

When the potatoes were dug out of the ground they first looked edible.  But, alas, they were also infected by the same fungus and shriveled up and rotted within days.  After the potatoes rotted…the people starved.

~~~~~~Food Crisis Survival~~~~~~

How to Survive the Coming Food Crisis

What would happen if a natural, civil or economic disaster prevented us from growing, transporting and importing food?

Food prices would rise and supermarket shelves would go empty.  Within three days there’d be no food left in most people’s homes.  Chaos and anarchy would break out.  Thousands (if not millions) would starve.

Are you prepared for such a situation? 

~~~~~~~~~~~~~~~~~~~~~~~~~

While the fungus impacted other parts of Europe, only in Ireland, where subsistence was completely dependent on the potato, did it result in mass famine.  During the ensuing five year potato blight the population of Ireland fell by 25 percent as one million people starved to death and one million others left the island.  Ireland’s demographic, political and cultural landscape was changed forever.

While less grim than the potato blight, Ireland’s now suffering from a new sort of blight…

Irish Debt Blight

Over the last several weeks Irish debt markets have gone haywire…yields on 10-year Irish bonds have run up from 6 percent to 9 percent.  What this means is that, in just three weeks, the cost to borrow money has increased by 50-percent.

Such a rapid increase in the price of credit is sure to crash the Irish economy.  Nonetheless, it’s the flailing Irish economy, followed by years of over borrowing, that’s pushing up bond yields. 

Way back in the good old days – the pre-2008 financial crisis era – when a nation’s deficit exceeded 7-percent of gross domestic product they were considered a credit risk and lenders would dump their bonds.  This year Ireland’s budget deficit will total 32 percent of gross domestic product.  In other words, they’re blighted by debt and beyond bankrupt.

In the pre-2008 financial crisis era Ireland would’ve defaulted on their debt, stiffed their creditors, and suffered the consequences of having to operate their economy under a cash-based, credit less financial system.  But this may no longer be the case.

We’re in the bailout era, remember.  All that’s needed is a phone call to your central banker, in this case the European Central Bank or, perhaps, the International Monetary Fund, and they’ll supply the money to keep you afloat.  In return, you’ll be paying them back to the end of time.

Luck o’ the Irish

Last Friday, IMF Managing Director Dominique Strauss-Kahn told reporters the IMF is ready to lend support to the Irish, if needed.  Will the Irish take the bait?

Here at the GDO we’re not sure what’s worse: A default or a bailout?

Sure a bailout keeps the charade alive, but at what cost?  And is it worth saving anyway?

After all, the bailout won’t really change anything.  The Irish debt won’t have gone away.  In fact, they’ll actually have more debt.  However, the debt will be extended out into the future so that the next generation will be paying for the misadventure of the early 21st century Irish debt binge.

The Luck o’ the Irish is a recognized, yet ironic phrase.  For the Irish have been a remarkably unlucky people.  Famine, oppression, emigration, civil war, religious conflict…you name it.  The Irish have lived it.

Yet history never ends.  It keeps grinding away into the future…changing course where the luck runs out and pot of gold at the end of the rainbow comes up empty.  Today it’s Ireland falling into default.  Tomorrow it’ll be Spain or Portugal.  After that, all of Europe will go bust.

Sincerely,

M.N. Gordon
Great Depression Online

P.S.  The thought that the globe’s leading nations (like the United States and Canada) could suffer even a temporary food shortage (no less a prolonged food crisis) seems unthinkable to most people.  Do you realize how close our technology-driven agricultural industry is to experiencing such a crisis?  In fact, it is because our food system is so sophisticated, integrated and advanced that it is so vulnerable.

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