"Private wheeler-dealers" caused Ireland's mess, but the Irish government has been punishing its citizenry for three years now with austerity programs to repay the debt incurred, writes Paul Krugman. This pain is necessary to restore confidence, say all the "wise heads," even though the deep spending cuts are actually turning the nation's recession from bad to worse, writes Krugman in the New York Times.
The latest pain comes via the so-called "bailout," which isn't really a bailout. "What really happened was that the Irish government promised to impose even more pain, in return for a credit line—a credit line that would presumably give Ireland more time to, um, restore confidence." The markets, alas, seem unimpressed with the draconian measures. "You have to wonder what it will take for serious people to realize that punishing the populace for the bankers’ sins is worse than a crime," writes Krugman. "It’s a mistake."