The Celtic Tiger is wounded and bleeding but is still desperately trying to stay ahead of the European Union that it fears has castration on its mind.
Ireland is broke, it is insolvent, it cannot meet its debts. The country breezed through its own supposed economic miracle days, refusing the see the bubble until it burst with a collapsing housing market and a devastating bank crisis. The Irish government moved to salvage the country's financial institutions, underwriting their weakness by guaranteeing bondholder claims without having the financial strength to make good on those promises as the bailout swelled to almost half of Ireland's GDP.
The European Central Bank is trying to pressure Ireland into allowing itself to be bailed out, fearing the repercussions of a total Irish collapse on the greater EU economy. If the Irish bleeding isn't staunched some believe it could have a domino effect, sending the Spanish and even the Italian economies into the same freefall.
So what's stopping Ireland? Why won't it take the EU's helping hand? Because it stands to lose sovereign control over its own economy. The European Financial Stability Facility operates like an in-house IMF. It comes through with funding to get an economy afloat again but expects the borrower to swallow some bitter fiscal medicine. Part of that would require tax increases. Part of Ireland's economic miracle rested on luring companies to the republic with a 12.5% corporate tax rate. Bring corporate tax rates in line with the rest of Europe and Ireland could see some big departures. On the other hand, an Irish collapse could see even more companies returning to Britain.
Ireland lept into the arms of the E.U. to free itself of British domination. Then it went on a fiscal binge of casino capitalism. Like the great Irish famines of the 19th century, Ireland's 21st century collapse is being marked by the flight of Irish youth abroad in search of a better life. Many of them realize that Ireland's once vaunted prosperity was all an illusion carried out through a collusion of government and banks.