December 2nd, 2010
04:39 PM GMT
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Anyone who’s ever visited the Emerald Isle will confirm that humor always lies just beneath the surface.  Even in these tough times, with the “Celtic Tiger” reduced to the status of a bemused kitten trying hard to look cute beside a begging-bowl, the Irish can fall back on their love of irony and their taste for gallows humour.

So it’s hardly surprising that the following droll story is now hurtling round the email circuit at breakneck speed.  It’s actually quite hard to find the original source, but this particular yarn does seem to have been spinning around for at least a few weeks – before the Irish government was forced into a painful climb-down in the shape of a bailout deal with the EU and IMF.  In fact, I suspect it’s an older story which has been dug out, brushed off and tweaked to make it fit the current circumstances.

Whatever the source, the events of the past few days have sent this tale zooming round cyberspace all the faster, so much so that I received it from two quite separate sources on the same afternoon:

“It is a slow day in a damp little Irish town.  The rain is beating down and the streets are deserted. Times are tough, everybody is in debt, and everybody lives on credit.

“On this particular day a rich German tourist is driving through the town, stops at the local hotel and lays a €100 note on the desk, telling the hotel owner he wants to inspect the rooms upstairs in order to pick one to spend the night.

“The owner gives him some keys and, as soon as the visitor has walked upstairs, the hotelier grabs the €100 note and runs next door to pay his debt to the butcher. The butcher takes the €100 note and runs down the street to repay his debt to the pig farmer.

“The pig farmer takes the €100 note and heads off to pay his bill at the supplier of feed and fuel. The guy at the Farmers' Co-op takes the €100 note and runs to pay his drinks bill at the pub. The publican slips the money along to the local prostitute drinking at the bar, who has also been facing hard times and has had to offer him ‘services’ on credit.

“The hooker then rushes to the hotel and pays off her room bill to the hotel owner with the €100 note. The hotel proprietor then places the €100 note back on the counter so the rich traveller will not suspect anything.

“At that moment the traveller comes down the stairs, picks up the €100 note, states that the rooms are not satisfactory, pockets the money, and leaves town.

“No one produced anything. No one earned anything. However, the whole town is now out of debt and looking to the future with a lot more optimism.

“And that, Ladies and Gentlemen, is how the bailout package works.”

It’s a neat little story, but I have two problems with it.

First, nobody in it is actually in debt – not net debt, anyway. Their net balance sheet is zero. Take the butcher. He owes the pig farmer €100, but is owed the same amount by the hotel owner. And so on for all the Irish characters.

Second, I am not sure how appropriate it is to dwell on the underlying message of the story.  What does the story really tell us? For one thing, it reveals the way a bit of liquidity (the German's ready cash) oils the wheels of the economy.

That is a perfectly sensible thing to point out - normally.  But you don’t have to be a Ph.D. in economics to realise that pumping in too much cash will overheat the economy.  Too much liquidity will jack up demand and ultimately create a bubble.

Sound familiar?  Well, of course that is what happened in Ireland in the boom years: the housing sector floated high on oceans of liquidity, and then when someone pulled the plug the result was a bust, and a bunch of crippled banks.  The rest is Irish history.

So moral of the story, if you will, is actually a dangerous one – and certainly not the one the story-teller had in mind.  Mind you, if the rich German had had the presence of mind to demand an interest rate based on the average of 5.83 percent the Irish will have to pay for their bailout, the conclusions might be different.

But it’s still a good story – so why let dreary old economics spoil it?

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Filed under: BusinessRecession


soundoff (28 Responses)
  1. Jason

    That is ever so funny, and at the same time shows up these bailouts for the snake-oil they are.

    December 3, 2010 at 4:04 am |
  2. Sajith Dath

    Often one other thing happens. Someone in the chain decides to pocket the money and not pay their creditor.

    This story has persons with very high values. Good for them.

    December 3, 2010 at 4:57 am |
  3. Donald Anderson

    If that had been an Englishman they would all have been arrested under the PTA and taxed on the 100 e note and charged interest.

    Or more likely the Engl;ishman would have kept the note in his handbag.

    December 3, 2010 at 5:07 am |
  4. clair

    that story originally had arizona as a setting, same thing , but with american economy...

    December 3, 2010 at 5:41 am |
  5. Shelley

    Dear Charles, didn't anyone ever teach you that once you explain a joke, it's no fun anymore?

    December 3, 2010 at 6:58 am |
  6. Chaotic34

    Tremendous article...:)

    December 3, 2010 at 7:38 am |
  7. A Taylor

    This circular story would be appropriate in Japan, where most of the debt of the country is owned by the Japanese population. But it isn't appropriate in this case because the Irish don't owe money to themselves, they owe it to foreigners.

    More appropriately, the hotel proprietor would take the 100 Euros and repay his loan to Anglo Irish Bank, which would then repay its loan to KFW (a German bank). Then the "circle" would be complete with German taxpayers (the German tourist) bailing out their own banks, yet again.

    December 3, 2010 at 8:39 am |
  8. Frank Finnegan

    I find the repetition of this story from a major news source racist, especially by a WASP writer-economist, Charles Hodson. It is stereotypical palp like this (Irish drinking, prostitution, pig farming, the image of the Irish beggar) that have allowed the English to justify the oppression of the Irish for so long. This joke-story made me cringe and does not belong on the front page; and it also shows how many so-called professionals are bigots. I guess education does not heal racism. If the story is repeated at all in Ireland, it is among the old oppressors for use, the old Protestant ascendancy. It is disgraceful to promote these nasty, antiquated stereotypes.

    December 3, 2010 at 10:08 am |
  9. kahymo

    only thing that is just pure fiction in this story, is that in real world a lot of people never rush to pay their debts especially if they live in USA or UK.

    in the best case they will pay 50Euros of debt and spend the rest, that's how it work for the mass

    December 3, 2010 at 10:55 am |
  10. Aidan Patrick Stewart

    Why do jokes have to descend into the gutter with talk of prostitutes and debauchery? Whay cant they be clean so we can all read them and enjoy them instead of having to stop and get as far away from such evil as possible? I guess it is in the minds of the people and in their hearts to like and desire to hear such filth. Its a bit like taking your child to the movies to watch a Disney film and find nothing but profanity and violence. Who needs it? I for one take a stand against this corruption.

    December 3, 2010 at 10:59 am |
  11. Seamus Guevara

    @Frank Finnegan Absolutely, they should have used a couple of skangers, a barman, bookies (for the gg's) and some heroin addicts.

    December 3, 2010 at 10:59 am |
  12. Kenneth

    I first heard this story when I was growing up in Ireland during the 80’s as a CBS schoolyard explanation of economics. It has crept back into circulation in the past two years again being told by children. No adult would repeat this. At least non that I know!

    December 3, 2010 at 11:05 am |
  13. Paul J. Weighell

    More likely the German would show the note but keep it in his hands until he had seen the room. The Hotelier would however still run around to his creditor and tell him he had a new customer and then demand more credit based on that.

    The ring would proceed around with each asking for more credit based on the hope of being paid off themselves.

    The German would then leave with his money and Eire would be worse off than when they started, but then I guess that's how all indebted nations get to be indebted in the first place...

    December 3, 2010 at 11:20 am |
  14. Con

    This Irish Catholic thinks it's a great story. Frank, while the rest of Ireland sadly prepares to head back to the 1980's you have managed to overshoot and have arrived back in the 1840's!

    December 3, 2010 at 11:22 am |
  15. manik ratna kansakar

    It is a beautiful article for a good joke poking fun at our present day lifestyle on credits. It reminds me of the good old days of Art Buchwald.

    December 3, 2010 at 11:40 am |
  16. jl pujol

    funny, but the story doesn't tell how the income taxes, VAT and "social" expenses are paid for and by whom ?

    December 3, 2010 at 12:44 pm |
  17. Beth

    @ Frank, I have a feeling you have a chip on your shoulder. Fair enough. However, it could just as easily be changed to any other country (Greece, Portugal, etc) that is having an economic crisis. There is nothing particularly racist about it in that sense. Prostitutes, bars and pig farmers are everywhere (including England). And what about the jab at the Germans as being well-off and more than a little uptight? Isn't that also a bigoted generalization?

    Let's all just settle down, have a laugh, and think about the what author is trying to tell us. I'm pretty sure the WASP's and the rest of the people in this world have more important things to worry about than oppressing the Irish.

    December 3, 2010 at 12:55 pm |
  18. Ian Horman

    Hey Frank. Calm down. It's a story. A parable. I lived many years with the Irish. They are great people. Full of fun. All my Irish friends will find this funny. They are all 'educated' Irish. 90% of them catholic. Racism is a two-edged sword as your statement shows. And in case it has escaped you, the Irish are at the top of the league for beer-drinking per capita. Just check internet.

    Please remember. It's better to be talked about in 'stereotypes' than not to be talked about at all.

    December 3, 2010 at 1:01 pm |
  19. pmn

    The original story had an American checking out the inn. If the price was right, the German would take the room, no matter what!

    December 3, 2010 at 1:25 pm |
  20. Brian

    Why isn't the world tapping the bloody Nobel-prize-winning economists for this bloody nightmare?? Has ANYONE yet heard the voice of one of these so-called "economic geniuses" on the issues?? Not a one...so either the prize is bollocks or the so-called geniuses really aren't.

    December 3, 2010 at 2:18 pm |
  21. Chris

    To Frank,

    I completely understand and agree with you about your point on stereotyping a demographic that is generally non-existent in modern European society. Nevertheless, I feel your udder lack of understanding for cultural humor is just sad. As stated by Clair and requested by A. Taylor, the same story has been told from the American perspective and requested to be mimicked for other cultures as well. In this case yes, it is aimed at Ireland but don’t act as if Irish are the only group to have had this well publicized story used for. It is your view in your words "this is a stereotype" of Ireland’s rich history, which I’m sure, just as many others had its drunks, hookers and beggars and many, unfortunately still do today. Not to mention your attacking a writer who RESPONDED TO, not wrote the story you are so desperately upset by. So please understand I can relate with such frustrations, however, in light of this article try and find the humor in these rough economic times, and listen to the words the writer does use to shed some humor and light on a not so joyful subject, and not use it as another platform to criticize the world around you. This world really could use more positive leaders and less bystanders snickering on the street corner from there Blackberries’.

    December 3, 2010 at 2:35 pm |
  22. Oliver

    @Frank Finnegan – As an Irishman I don't see any offense in this article. Maybe you have some self-confidence issues (chip on your shoulder) and need to address these yourself. Considering the author is the same race as the original Irish (caucasian) how can he be "racist"
    The Irish were oppressed because they were disorganised and not united to resist foreign invasion – which happens all over the world.

    December 3, 2010 at 4:17 pm |
  23. John Cash

    Lighten up Frank!

    December 3, 2010 at 7:43 pm |
  24. Malcolm

    1. The economy is not going to overheat if it is still far below potential output, with high unemployment, as it is now. The exact same mistake was made by all those who said that US interest rates would skyrocket last year when the stimulus was introduced.

    2. The money in the story was only circulating for a few minutes. Even at an annual rate of 5.83%, there would be less than 1 cent of interest.

    3. Net debt is always 0, when taken as a whole: Somebody's debt is somebody else's asset. But still, your point is well taken: If everybody individually had a net debt of 0, then you'd have a liquidity crisis, but in this case, when you have individuals with too much net debt, then you have an insolvency crisis. This bailout, like the previous one of the Irish government of the Irish banks, assumes that the underlying problem is liquidity, when in fact it is insolvency, so it won't ultimately prevent the Irish government from defaulting, which is why the markets have not been impressed.

    December 4, 2010 at 11:28 am |
  25. the chris

    learn to laugh, it's the only way to true happiness lol. yeah its got some holes, but what joke doesn't? the whole worlds broke! don't cry over spilt milk..

    December 4, 2010 at 6:48 pm |
  26. Chrimbo

    Yes Frank – but get over it, and move on – it's just a joke – and everyone knows it's just a joke.

    We all know the history, but the world has changed...

    December 6, 2010 at 8:31 pm |
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