It’s no Irish joke!

Until around 2006, Ireland was considered as an economy to be emulated, given the knowledge-based businesses it built and its ability to attract leading multinationals away from other European capitals.Fast forward 2010, Ireland’s external debt is in excess of 10 times its GDP and it is desperately seeking a bailout. It all seems the usual story.

When the going is good, assets (real estate and stocks markets in particular) are over-valued purely based on confidence; then banks start lending on these ‘fancy’ valuations, consumers and businesses start spending and living way beyond their means and the party goes on for a while! However, when the realisation comes that ‘imaginary money’ can only take you this far, the panic button is hit! Is there anything Sri Lanka can learn from the Irish crisis?