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The shell of the planned headquarters for the Anglo Irish Bank after it cratered from lavishing loans on profiteering developers

Ireland’s economy in seizure, says New York Times

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The shell of the planned headquarters for the Anglo Irish Bank after it cratered from lavishing loans on profiteering developers

Ireland’s economy is set for more doom and gloom, according to an article in today’s New York Times.
 
The article, which depicts Ireland as a country in the grip of an economic seizure, says that Ireland’s policy of austere economics has not paid off.
 
Alan Barrett, chief economist at the Dublin-based Economic and Social Research Institute (ERSI), a prominent Irish think-tank, explained Ireland’s public spending cuts, a policy which was begun about two years’ ago: “When our public finance situation blew wide open,” said the economist “the dominant consideration was ensuring that there was international investor confidence in Ireland so we could continue to borrow. A lot of the argument was ‘Let’s get over this quickly.’”
 
The policy did not pay off, though. The Irish downturn has thus far been sharper and more prolonged than that of many of its equally strapped European counterparts. The Irish economy contracted by a worrying 7.1 percent last year, and remains in a recession that will seemingly never end.
 
Unfortunately, it seems like the worse is yet to come. Brian Cowen, Ireland’s unpopular Prime Minister, whose popularity with the Irish public continues to plummet, told of how “those who claim there’s an easier way or a soft option - that’s not the real world.”
 
Ireland is now in the same category as Greece, the joke of the European and financial world, and Portugal and Spain, traditionally some of the Eurozone’s poorer countries.
 
Just last weekend the G-20 vowed to make deficit reduction one of their top priorities. Ireland’s public debt –once impressively low– could now stand at an uneasily high level of 77 percent of GDP by the end of the year.
 
Kenneth Rogoff, a former chief economist at the International Monetary Fund, now a Harvard Professor, told the New York Times how “Europe is in a tough bind. If you want to escape default, the Irish path is the only way to go”, but added that “the Ireland experience points to the profound challenges that the current strategy implies.”
 
Patrick Honohan, the governor of Ireland’s Central Bank said that nobody is even in favor of a more stimulatory economic policy: “We don’t have the flexibility to do a spending stimulus now,” said the governor “There’s no one even arguing for it.”
 
On a more optimistic front, though, he does predict that Ireland could return to a tentative growth rate of three percent by the year 2012, a forecast which has been echoed from other quarters in Irish society.
 
The government, says the article, is hoping to pin all its hopes on a pickup in the export market, but pharmaceutical giant Pfizer’s vice president, Paul Duffy, says that that would be a mammoth task: “Exports alone don’t drive a significant number of jobs,” says the executive.
 
Meanwhile some of Ireland’s returned sons and daughters give their reasons for why they regret their decision to come back home, and give an insight into the day-to-day struggle to subsist which has become the reality for many Irish people. Debbie, the owner of a Dublin cafe, tells the newspaper how “It’s destroying” to see her business crippling and her income evaporated and how “we all live day by day and we don’t know when it will ever pick up.”
 
Fifteen minutes away from the city centre in Elm Park, an industrial and residential complex, Allianz Insurance is the sole occupant of a massive complex designed to house many more, a ghostly and stark reminder that the country is still in the thick of a crippling recession.
 
Although anger with the current government has not yet spread onto the streets, a revolt is expected in the 2012 elections, when it’s hoped that incumbents Fianna Fail will be removed from power.
 

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