Good old reliable Ireland - depressed Irish continue paying massive bank debt with no end in sight


Ireland turned green for St. Patrick’s Day on 
Sunday, but problems still persist.

Here's hoping you all had a great St. Patrick's Day.  In Dublin it was less ecstatic than usual, possibly because of the unseasonably cold weather that has afflicted us for the past two weeks.

I see from the TV pictures that it was the same over there, with what looked like sleet showers falling on the New York parade at some stages.   That did not seem to dampen enthusiasm in the Big Apple.

But then again, the Paddy's Day celebrations have always meant far more to people in the U.S. and other outposts of the Irish around the world than they do to us here at home.

That's understandable.  We're here and we're Irish simply because of that.  We don't have to prove it or demonstrate it.

But for those with Irish ancestry in other parts of the world, the national day is an opportunity to embrace and celebrate their roots, to declare with pride who they are and where they came from.

There is also the reality that these days a lot of people here would much prefer to be somewhere else, somewhere with more opportunity, more optimism and more reward for hard work, unlike here where life is all about cutbacks and new taxes.    

The fact is that, despite some flickers of light at the end of the financial crisis tunnel, life is still pretty bleak here.  Cutbacks continue.  New taxes are about to kick in.   Unemployment stays stubbornly above 14 percent. The national mood is depressed.

People's despair and anger at the failure to lift us out of the mess quickly enough is clearly visible in the latest opinion poll.  There is such disillusionment with the government that Fianna Fail, the party that led the country into the economic collapse and was thrown out of office two years ago as a result, is back from the dead.

Once again they are the most popular party in the country.  It puts Lazarus in the shade.

It's not because of any new found love for Fianna Fail, of course.  It's more an expression of anger that the new government of Fine Gael and Labor, despite all their election promises, are dealing with the financial crisis in the same way as their predecessors did -- by dumping it on the ordinary person.

They have been so successful at this that Ireland is now being held up by the EU/IMF leaders as the "responsible" example for the rest of Europe to follow.  

Unlike in Greece and Spain where there have been violent clashes and huge street protests, the Irish have been taking the harsh medicine without any upheaval and with little complaint.

We have meekly accepted our fate of higher taxes and cuts in state spending on services, even though we know that all the wealthy bondholders who gambled on the Irish property boom have been getting all their money back.

The markets have been very impressed with us.  So last week Ireland was able to raise €5 billion in new "10-year" government debt in the first deal of its kind since the EU/IMF bailout.  

We don't riot. We're sticking with the budget deficit reduction program.  We're reliable.  So the markets have decided to lend to us again.  

Being able to borrow again on such a scale means we have moved dramatically closer to exiting the EU/IMF bailout on schedule at the end of this year.

The interest rate on these new 10-year bonds is 4.15 percent, which is less than Spain or Italy are currently paying on their bonds.  The €5 billion we raised last week is half the €10 billion or so our deficit will be this year.

So we're back on track and should be able to continue borrowing enough to fund deficits until we eliminate them, without having to be in an EU/IMF program.  

Clearly this is good news.   And the government has been letting everyone know it, saying it is evidence of the success of government policy not to renege on bank debts or burn bondholders.

But everyone needs to remember that this "success" has been achieved at an enormous price for the Irish people, and that the "success" has locked us into heavy annual debt repayments for decades to come.