For all my powers of foresight, I overlooked this thread when it was originally posted.
I also neglected to use whatever meagre capital I had spare in 2005 to take positions that would have earned me a chapter in Michael Lewis’s last book.
Like just about everyone, uber-bears included, I’ve been shocked by the sheer scale of the destruction. I could see a property crash coming, and read through from that to the predictable effects on an out-of-control banking sector. But I didn’t foresee the insolvency of the Irish state itself, and the reduction of living standards towards Eastern European levels (yes, that’s where we’re going).
Looking back, we really can blame the international credit crunch for something. Lehman Brothers and all that gave the banks and government the cover to pretend it was all a liquidity squeeze. And so the guarantee was granted, and we are where we are.
For me, the lesson in all of this is mixing banking and democracy (especially the Irish variant of both). When a credit boom kicks off, vote-hungry politicians tend towards letting it rip. In a bust, they shy away from any form of bank resolution (especially if they were the pols in place during the boom), and do so by having the state take on just about any future liability, no matter how potentially ruinous in the long term.