Paul Krugman talks about the Ireland financial problems  in the oped piece Eating the Irish.

I was going assign to you, dear reader, the task of reconciling Krugman with my posts about Blustein, Roubini, and Taleb. However, I realized that he did his own reconciling.

He asked the question about Ireland’s bailout “Does it really have to be this way?”. I quote his answer comparing Iceland’s economic recovery to Ireland’s lack thereof as follows:

Part of the answer is that Iceland let foreign lenders to its runaway banks pay the price of their poor judgment, rather than putting its own taxpayers on the line to guarantee bad private debts. As the International Monetary Fund notes — approvingly! — “private sector bankruptcies have led to a marked decline in external debt.” Meanwhile, Iceland helped avoid a financial panic in part by imposing temporary capital controls — that is, by limiting the ability of residents to pull funds out of the country.

And Iceland has also benefited from the fact that, unlike Ireland, it still has its own currency; devaluation of the krona, which has made Iceland’s exports more competitive, has been an important factor in limiting the depth of Iceland’s slump.