Ireland's economy... What economy?
Prestigious mag says nation's economy is shot
The Economist magazine has pronounced Ireland dead. The official diagnosis cites injuries sustained as the result of a collision with a runaway construction boom. But the results are still the same; the magazine reckons the country is dead.
The Irish Government is planning an emergency intervention on April 7, but most believe the surgery is too little and way too late.
The 10-year party’s over. The Irish economy is kaput. The only thing left to do is pick up the pieces.
The Economist points to the empty office buildings in Dublin as proof and claims that the only cranes moving are the ones over the new football stadium at Lansdowne Road.
In fact, Ireland is so quiet that the St Patrick’s Day festivities were low-key as the country adjusted to a recession which The Economist says is the worst in Europe.
The magazine highlights two key indicators; The economy shrank by 2.5 percent in 2008 and is expected to shrink another 6.5 percent this year.
Unemployment has jumped from 5 percent to 10.4 percent raising fears of the specter of the early 1980s when unemployment soared as high as 17 percent.
Meanwhile, the banks have been walloped by the collapse of the property market. They might have avoided the toxic securities which crashed the U.S. banking system but the overpriced construction loans could do them in.
The crisis is so bad that the Government is carrying out emergency surgery on April 7 with a rush Budget.
This rapid implosion in the Irish economy has focused attention on the insane housing boom. And let’s be honest, it looked psychotic from this side of the Atlantic.
But, the magazine claims that the housing collapse hides the fact that real gains were made in Ireland.
They divide the boom into two parts; one phase built the foundations; the other phase put so much stress on the system that it was doomed to fail.
A youthful, English-speaking, cheap labor force ($14 an hour against $28 an hour in Germany in 1998) was a powerful magnet for direct foreign investment (DFI - think Dell and Xerox). The mostly U.S. companies poured in money and know-how and the Government gave the foreign companies, grants, a low tax rate and access to the EU market.
Mortgage interest rates plummeted from double-digits to less than 5 percent. This cheap credit kicked off a massive boom in building and retailing. Rumors that Irish streets were paved with gold attracted migrants from new EU member states. This all helped to maintain the illusion of a boom. But as one Irish economist notes, the Celtic Tiger had already left on the tide.
When the tide went out, it revealed a sodden mess of unsold houses and bad debt. But more importantly, the high costs of housing had driven wages and spending so high that the whole economy rested on a flimsy house of cards.
As the recessionary winds started to blow across the Atlantic, the entire structure collapsed.
- Nelson Mandela was against IRA decommissioning.
- Irish students told “No Irish Need Apply”...
- Racist incidents in Ireland up by 85 percent...
- Bill O’Reilly slams Nelson Mandela as an...
- Unionists regret US envoy Haass’ call for...
- Top ten negative terms used to describe Irish...
- Hollywood star Gabriel Byrne brands new Pope...
- Are the Celts one of the ten lost tribes...
- Married priests could well be Pope Francis'...
- Dubliner found guilty of vicious Temple Bar...
Since most T.D.s are largely indifferent to an Ghaeilge and some are openly opposed to it, and since there is increasing OPPOSITION to the R.C. ChurchHollywood star Gabriel Byrne brands new Pope as little more than a ‘figurehead’
It's a serious illness, this fanaticism about abortion that creeps into OFF TOPIC comments on so many IC articles and that rehearses so many misogynisGay teacher fired from Catholic school after applying for same-sex marriage license
Father James McCloskey is in a better position to judge his fellow men than the Pope, I see.Nelson Mandela once considered a terrorist by many Irish political leaders
The hypocrisy is stunning. The same government leaders who are hailing Nelson Mandela's militancy today are the very people who would blow him up wit