In Malta we love comparing our situation, be it moral, political or financial, to that of Ireland. There are similarities: the two countries are both ex-colonies of Britain and share the same religious culture. Both peoples have known long centuries of poverty and denial and emigration. Both nations share the same fiery temperament.

In the early 90s, things began to change for Ireland. Encouraged by the strong US-Irish links, American corporations such as Intel, Microsoft and Dell arrived in Ireland to take advantage of the country’s educated, English-speaking workforce and the 12.5 per cent corporate tax rate. They helped start a construction boom. And the Irish bought and bought. Like the Maltese, they believe that if you own land, you’ll never go hungry.

Additionally, the country drew many millions of euros in aid from its early membership of the EU, millions that will never be so easily accessible again to any member state. And so the fairy story started. The Irish economy earned the country the proud title of the Celtic Tiger and the Irish suddenly found that they could afford more than just Guinness. They went on a heady spending spree. Houses that were valued at no more than €1.5 to 2 million went for €3.5 million and more. The new Anglo-Irish bank began to offer loans for property development like nobody’s business. Other banks opted for the same strategy to keep up. One bank even accepted a personal guarantee for a €6.3 million loan without ever bothering to meet the client. Life was good as never, ever before.

Today it is calculated that the average Irish family owes €132,000 to the banks. There have been around 30 suicides, ranging from property barons to construction workers. The boom actually ended in 2001, when productivity growth fell to five per cent – not that anybody either noticed or heeded the early writing on the wall. Nobody wanted to spoil the party. The government, which had led Ireland through boom and bust, failed to spur growth but kept credit flowing easily by pouring it into the markets without regulating the financial services industry.

In truth, money seemed to be no problem. An infamous phrase, if ever there was one, for it is a recipe for disaster. Everybody joined the party. Men went to Antwerp for bachelor parties while honeymoon destinations became more and more exotic. Ordinary people were buying second homes with a pool in Spain. The government was happy to engage in bubble financing. Unfortunately, when the bubbles went away, the whole thing fell apart. There is no worse taste than that of champagne gone flat.

The collapse of Lehman Brothers in 2008 accelerated the slide. The government promptly guaranteed the debts of the banks. The financial regulators, who hadn’t regulated much of anything for at least a decade, didn’t realise the extent of those debts. The Minister responsible went on radio to tell the nation that everything was fine and that they were suffering only the effects of a global crisis. Ray Kinsella, an economist at University College Dublin commented: “As a small, open economy, Ireland was always going to be vulnerable to global swings, but this is a predominantly self-inflicted crisis.”

Irish banks operated in a culture of deference and uniformity and the arrival of a Wall Street culture of performance-based pay meant that bankers went from making thousands a year to millions. The few who dared point out that things were not as rosy as they seemed were ridiculed into silence. Bertie Ahern, Prime Minister from 1997 to 2008, famously dismissed critics by stating that moaning was simply a lost opportunity and he wondered why such people didn’t choose to commit suicide.

Now Ireland has to borrow from England. At stake is a hard-earned sovereignty, where an English class of landlords was replaced by an Irish one, even if it consisted mostly of speculators and bankers who drove a route that joined their brains to their pockets, bypassing all other organs.

Then the bankruptcies and the repossessions started. According to the Independent Mortgage Advisers Federation, there are 700,000 active mortgages in Ireland; experts like Morgan Kelly warn that 100,000 of those mortgages are under water. As one commentator in the Irish Times put it: “If one family defaults on its mortgage they are pariahs: if 20,000 default they are a powerful political constituency.” The present crisis puts Ireland on the cusp of a social conflict not seen since the days of the Land War against the British landowners.

These details were garnered from Bloomberg. But as I said at the very beginning, there are strong similarities between Malta and Ireland, or so we would like to think. Similarities are not copies but even so, I think that what happened to Ireland, just as what happened to Greece and what is happening to other EU states, should be absorbed and meditated upon by each and every right-thinking citizen of Malta and Gozo. A large section of our society also seems to be living life as if it were a dream that will be enjoyed forever. 

Perhaps I’ll let the comedian have the last word or question. It goes like this: How can broke economies lend money to other broke economies who can’t pay back the money the broke economies lent to the other broke economies and shouldn’t have lent it in the first place because the broke economies cannot pay it back?

Happy 2011, friends.