Ireland is a mess

The fate of nations hinges on the last minute decisions of single individuals.  Some time ago, when the financial collapse of 2007 was still just beginning, the prime minister of Ireland at the time ended up agreeing to back the three big Irish banks.  They were in dire straits with their stock prices having dropped 15-30% just the previous day and they convinced the prime minister that if he would guarantee all of the banks obligations that suddenly they would be in good shape again and no collapse would take place.  Ireland could have simply guaranteed the deposits of Irish citizens, which would have been costly but not disastrous, or it could have done nothing, in which case the banks fold and their obligations (mostly to foreigners) go largely unpaid but Ireland itself is not desperately troubled.  Instead he believed the bankers instead of the markets, common sense, or the warnings of many people around him and signed away the country.  3 years ago Ireland was running a surplus and was one of the wealthiest nations in the world.  Right now Ireland's deficit is at 32% of GDP, where 3% is considered riskily high and clearly unsustainable.  It looks like in the near future the IMF will have to move into Ireland and take over their finances per EU rules as the country will be unable to pay its bills at all and will be entirely bankrupt.

This is obviously a pretty incredible transformation.  There are plenty of remarkable things about the whole situation but the one that strikes me the most is how this displays for all to see just how utterly impossible it is to predict the stock market.  There are so many people out there with funds of various kinds that claim to be able to beat the market, to predict changes and trends and figure that they should find lots of folks and convince them of the ability of their fund to grow faster than anyone else's.  Of course if you look at Ireland and the mess there it becomes entirely clear that nobody can predict the market.  It is by far the most obscene and extreme situation I have seen where a single individual's decision warps world finances in ways no one could predict.  How could you know whether or not those banks would collapse and be worthless or whether a country would take the fall for them?  Moreover, how in the world could you predict the vagaries of such a complex system significantly better than all the other 'experts' out there who are trying to do the exact same thing?  There are plenty of people and plenty of funds that beat the market, the trouble is in finding ones that can beat the market in a consistent, statistically meaningful way year after year, particularly since they don't exist.

There are plenty of other examples of course, particularly in the mess that occurred over the last few years.  There are innumerable bank presidents, CEOs and fund managers who made decisions that destroyed companies, lost billions, or made fortunes.  Not everyone lost money in the collapse as there were some people betting on it happening and they ended up richer than anything.  (See the book The Big Short if you are interested, it is a fascinating look at how the collapse occurred and how a few people made a killing off of it.)  No matter how big companies become, no matter how complex the system is, there are always opportunities for single people to make big decisions and shape the world, economically and otherwise.  Because of that our ability to predict the sweep of future history is weak indeed.