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Recalling the Celtic Tiger


Edited By Eamon Maher, Eugene O'Brien and Brian Lucey

This book looks at various effects, symptoms and consequences of the period in Irish culture known as the Celtic Tiger. It will trace the critical pathway from boom to bust – and up to the current beginnings of a similar, smaller boom – through events, personalities and products. The short entries offer a sense of the lived experience of this seismic period in contemporary Irish society.

While clearly not all aspects of the period could realistically be covered, the book does contain essential information about the central actors, events, themes, and economic trends, which are discussed in a readable and accessible manner. Each entry is linked to the overall Celtic Tiger phenomenon and its immediate aftermath.

The book also provides a comprehensive account of what happened in this period and will be a factual resource for anyone anxious to discover information on the areas most commonly connected to it. All entries are written by experts in the area. The contributors include broadcasters, economists, cultural theorists, sociologists, literary critics, journalists, politicians and writers, each of whom brings particular insights to some aspect of the Celtic Tiger.

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Liquidity Crisis (Stephen Kinsella)


Stephen Kinsella

Liquidity Crisis

‘How did you go bankrupt?’ ‘Two ways. Gradually, then suddenly’.

— Ernest Hemingway, The Sun Also Rises

A liquidity problem happens when a person, a firm, a bank, or a government cannot meet demands for payments. Most of the time, they just do not have the liquid cash on hand. A liquidity crisis happens when a large number of economic agents have the same problem, and this aggregate shortage of liquidity can render many of them insolvent, meaning the value of their assets are not sufficient to pay their debts. Liquidity crises happen because banks and other financial intermediaries borrow from each other constantly to fund their activities.

The failure of one or two banks can then lead to a cascade of failures, and a possible total meltdown of the system. This process is called financial contagion. Contagion happens because bank failures lead to a contraction in the common pool of liquidity. Banks recall, lend and borrow with each other in the short and medium term. Without lots of liquidity, credit and product markets seized, it is very hard to establish prices for goods and services, and the likelihood of defaults increase. This is a liquidity spiral: lower prices induce liquidations and business failures, which lowers prices further.

The correct policy response in a liquidity crisis is to ease credit conditions by providing what Walter Bagehot advised in the nineteenth century: lend without limit,...

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