Will the US Become the Next Ireland?

http://economix.blogs.nytimes.com/2010/03/18/will-the-u-s-become-the-next-ireland/

Key Terms:

Fiscal-Of or relating to government expenditures, revenues, and debt.

Gross Domestic Product-The total market value of all final goods and services produced in a country.

Liability- An Obligation that legally bind an individual or a company to settle a debt.

Description:
An economist compares the current recession here in the US to the recession in Ireland. The fall in to debt took the same course for both countries. It was the crash in the banking system. This blog informs readers that Ireland should serve as an example to the US as well as Greece- its neighboring country, also in a financial bind. Ireland was forced to make drastic cuts in its public paying system by 20% and a lot of Governmental funds were forced to be injected in restoring all of its major financial matters.

Analysis & Explanation:
Ireland's major banks were distributing cheap credit, they were also allowing any one and everyone to take out loans. Banks thought that it would send the economy soaring because all the money would go back into the economy. However, the fundamental problemof economics is scarcity(unlimited wants,limited resources). There is no doubt that everyone wants as much as they can get, but there is a reason why money flows as it does and why there are higher prices for one item than another. The reason is because there isn't enough resources to produce any one thing for the entire world. Resources are scarce and so is quality. It is actually quite simple, some people are able to afford more than others. That being stated, with a large number of people taking out loans from any and every financial background, there becomes an unbalanced economy and money gone never to return. Ireland's Gross Domestic Product had been the major source of money and made up 2.5 times the money that banks invested with. In 2008 the GDP dropped at large, 7.5%. Money then became extremely scarce and with liability factors being disregarded for loaners and companies, it was no doubt that the lighthearted, financial opportunities given out where by far the greatest bruise attained in this blooming financial problem.

Prediction:
I think that our economy is already taking fairly drastic matters to improve our economy. However, I do not think those small moves will be greatly beneficial because they are so small that no major progress can be seen. If we continue to play with this broken financial bone it could hurt us a great deal and leave us paralyzed.Ireland has learned from their mistake, and although it will take them quite some time to heal, we must consider their situation if and when we make major financial decisions.