Wednesday, December 08, 2010

A tale of two I-lands

Ambrose looks at the latest situation and offers this:
Yet the underlying tale of Ireland and Iceland, and the tale of the 1930s, is that a devaluation shock may cause a violent crisis – that looks and feels terrible while it happens – but the slow-burn of policy austerity and debt deflation does more damage in the end.
Did the prime minister of Iceland lose his job, and is Cowen still in power? Just. Does that explain anything?