I'm Irish by birth, and my mother's family played a significant part in Irish political history; so the rise and fall of the Celtic Tiger has been of more than academic interest to me. On frequent visits to Cork and occasional ones to Dublin, I remained slightly sceptical about the fabulous expansion of that pneumatic phantasm, and felt sad when it imploded, shrivelling to a distorted caricature of itself.
But far worse has been the aftermath, as voluntary austerity moved to compulsory impoverishment. The latest turn of the screw, announced on Thursday, was the result of the new 'stress tests' on the Irish banks, which factored in the collapse of house prices, and the losses due to the speculative construction bubble. This implies a new round of bank nationalisation, of taxpayer liability for financial sector debts, and expensive borrowing from the European Central Bank, the IMF, Germany and the UK, who will charge 6 per cent for funds they themselves can borrow at 3 per cent.
This condemns Irish citizens to many years of falling incomes, rising taxes and reduced public services, all because of the grandiose delusions of bankers, politicians and speculative builders, tightly bonded in the close circle of cronies who ran the country. And it raises huge questions about which path Ireland should try to take in future.
The accepted wisdom that prevailed among the Irish elite was that the road to prosperity lay in capturing some of the fruits of global trade - in money and in manufactures. The government encouraged inward investment, especially from the USA, and offered low business taxes to attract the headquarters of international companies to Dublin. The success of these strategies in the 1990s emboldened a new generation of chancers,who then joined the global banking casino to finance the building bubble.
Now Ireland is one of several small European countries that must think about a radically different alternative, looking to its indigenous resources, physical, cultural and human. The clues to how this might be achieved may be found in other regions which sank into poverty after sudden economic catastrophes, but
enjoyed gradual recoveries, pulling themselves up by their bootstraps to achieve sustainable growth.
One example is the Basque country in Spain. As reported in Wednesday's Guardian, that region was devastated by the 1930s civil war (remember Picasso's Guernica), and then suffered the collapse of its traditional industries, shipbuilding and steelmaking, twenty years ago. But - despite a troubled political history with Irish resonances - it is now resurgent, thanks mainly to co-operatives and social enterprises with strong local roots, not to global capital.
The regional government gave tax breaks to these co-ops, not to international companies, but required them to invest 10 per cent of their profits in community cultural resources in return. This sector has thrived, and its success helps to explain the youth unemployment rate half that of Spain as a whole. But the Basque region is not isolated from global markets. Its biggest co-operative, Mondragon, has a turnover of 14 billion euros and 85,000 employees wordwide, with more than 250 constituent companies.
The organisation is a flat pyramid, with top managers earning no more than 5 times the salaries of workers, and around half the profits invested in the healthcare plans and pensions of staff. Its enterprises include manufacturing companies, a supermarket chain and a university.
In other words, the Basque strategy is to scale up indigenous co-operatives and social enterprises, building on local and regional success, rather than trying to attract foreign investment. After all, this was how Ireland's economic expansion started - with firms like Kerrygold, and with the spread across Europe of Irish pubs.
And it is not only the small peripheral countries of Europe that might take a leaf out of the Basque book. That region might provide a model for Scotland, Wales and the North of England, as austerity creeps across thes islands like a new ice age.