Dublin: Ireland is a country in the middle of a major stress test and heading for a possible breakdown.
The term stress test is used very widely here this week, because it refers to what the banks underwent as a result of their spending splurge in good times.
Bad loans cascaded from all quarters and the end result was a banking system that now has to start from scratch, essentially nationalized this week by the government.
The finance minister, Michael Noonan, described the days the bank went broke as the worst since the Irish civil war in 1921 and he is right.
The final number ends up at close to $100 billion that needs to be repaid by the banks after the previous government foolishly assumed all that banking debt on behalf of the Irish taxpayer.
What is beyond irritating however, are the actions of the big European countries that helped land Ireland in this mess.
The $100 billion that Ireland now must repay in order to get its banking system back was in large part loaned by European banks, especially in Germany and France.
Desperate to loan out cash and unable to do in their own countries, they lent billions at ridiculously cheap rates to Irish banks, around .15 per cent. The Irish banks then relent at 2 to 3 per cent to the big property developers.
All was going swimmingly until the housing bubble burst and the developers could now longer repay their loans.
The reasons the Germans, in particular, loaned billions to Ireland was because their own banking systems did not allow such reckless gambling on property as Ireland did.
Ireland became the dumping ground for easy cash, flim flam men and reckless bankers shoveling cash out the door to ludicrous development projects such as the ghost estates that now dot the Irish landscape.
Call the Irish stupid and they certainly were, but Germany, France and Britain to a lesser extent certainly helped feed the alcoholic much more drink with top up loans whenever the opportunity arose.
Now they Germans and French in particular have adopted a hectoring tone and told Ireland to behave and pay back all the bad loans.
All very well, but you are saddling a country with $100 million in debt which everyone knows it simply cannot repay.
The German and French who lent much of it to Irish banks will not hear of any alternative however, but to squeeze one of Europe’s smallest economies to the point where it squeals for mercy.
It s a little like when the bully has raided your piggy bank and taken everything but now insists on smashing it up as well.
The new government came in threatening to hold bondholders such as the German banks equally responsible for the mess.
This week they backed down in a hurry with the bondholders, those who gambled on the Irish property market, emerging untouched and the penniless Irish taxpayer left holding the bag.
There is justifiable anger here in Ireland over that and it appears that the Europeans have kept the hammer on Ireland in order to protect their own banks which hold many of the same dubious loans that Irish banks did before the crash.
If Ireland were too tell them to take a hike it is quite likely the whole European financial system would be dramatically under mined with bank forced to consider what loans are on their books.
The Germans and French would do well to pay close attention to Ireland’s needs at this point and stop their bullying tactics.
The Celtic Tiger may be gone, but it is cornered, not dead. A cornered tiger is a dangerous animal indeed.
26 Comments
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Switch to the desktop site to post a comment.sirpeter | Apr 14, 2011, 08:49 PM EDT
Don't worry about making mistakes..If your post sounds correct.Most have a fear to use Google to correct it,because it exposes their own made up crap.
sirpeter | Apr 14, 2011, 08:43 PM EDT
kinvara7..IC needs you badly so pour your wisdom upon us..It might smother some of the crap here.
sirpeter | Apr 13, 2011, 09:11 AM EDT
kinvara7..Good post..Reality with true fact's from what I can tell. I didn't know Irish companies employ around 82,000 people in the US. You only ever hear what Ireland gets from the EU. You never hear about what we actually give to the EU.
ancavker | Apr 11, 2011, 04:27 PM EDT
sirpeter: I am.
kinvara7 | Apr 11, 2011, 07:40 AM EDT
We have chosen the course we have - putting €70 Billion into the banks (which ammounts to about €15,500 for every man, woman and child) in order to ensure we still have a banking system to service our economy. Ireland had a €45 billion trade surplus last year, and it is expected to be around the same for 2011. There are only two countries in the EU that have a trade surplus with China: Germany and Ireland. We are the worlds largest net exporter of pharmaceutical products, and the second largest exporter of IT and Tech services after India. Ireland attracts many US companies, which employ roughly 100,000 people; this is well known, what is less well known is that Irish companies employ around 82,000 people in the US. There are many Irish co. that are world leaders. When you travel to the US you will have your eyes and fingerprints scanned by Immigration, and the tech they use comes from an Irish co. called Daon. The above are just examples to show that the economic advances that Ireland made in the last 20 years, are more than just bricks and mortar. At the end of the day it's just money, and we will get through this. I believe the British only repaid the money they borrowed from the US during WWII in 2006; of course the Americans gave them a better interest rate than the EU is giving Ireland (something that must change).
sirpeter | Apr 10, 2011, 04:02 PM EDT
ancavker..I think you are been a bit harsh there.When we stop fighting among ourselves. We are quite a force to be reckoned with. I wouldn't worry to much about the French and Germans. Are you Irish ancavker?
ancavker | Apr 06, 2011, 03:42 PM EDT
sir; No the Irish are only good fighting among themselves. And their other fine trait is begrudgery.
ancavker | Apr 06, 2011, 03:41 PM EDT
Hunts: How is rejoining the commonwealth going to help Ireland economically? It is just a social get together group, and has no power; it is simply a throw back to the empire days. This is the typical south of Ireland response now, and something the revisionists love to hear. Rejoin the commonwealth, Ireland never should have become independent. A sad commentary on Irish people. Once given the freedom and opportunity of independence, you wasted it.
huntsman | Apr 06, 2011, 01:51 PM EDT
The EU love in is over. It was always an elite activity. The ordinary people went along with it while the goods were on offer. There was no depth to it. Now the EU has turned nasty people want to have more freedom for the country. Ireland should rejoin the Commonwealth and also get closer to the USA. It is only Anglophobia which is stopping us rejoining a club which has our old traditional friends, Australia, Canada New Zealand.
EireinAmerica | Apr 06, 2011, 10:18 AM EDT
I am sick of all of you weak-willed, British loving, Seoinin bastards that have allowed the erosion of the Irish character. We are not all like that. Some of us are more like the fighting men from across the glen. Shame on the bastards (Brian Cowen) that sold Eire like a common whore!
sirpeter | Apr 05, 2011, 04:56 PM EDT
ancavker..No!! We won't come out fighting..I guess we are not "the fighting Irish" Any stereotypes about the Irish has never been right. Said that a good few times here too.
antoman | Apr 04, 2011, 04:50 PM EDT
@ancavker-Perhaps the perpetrators of the murder of the police officer in N.Ireland are seeking to tap into this silent simmering anger below the surface I mentioned?
antoman | Apr 04, 2011, 02:27 PM EDT
@ancavker-It was admittedly a jest but given the mood and hardship of the people in Ireland it may very well come to civil war.Just today on the news ESB Ireland announced it would be lowering the price of electricity in Ireland.Only those whose accounts are not in arrears will avail of the discount.This excludes the majority of its customers.Who by common sense should be the primary recipients of this discount.People here have had enough.Something has got to give.
ancavker | Apr 04, 2011, 01:47 PM EDT
sirpeter: The Irish are no tigers. They will sit back and take it. They will not be fighting any one.
ancavker | Apr 04, 2011, 01:46 PM EDT
antoman: Civil War??? Who would be the other side in this war?
ancavker | Apr 04, 2011, 01:45 PM EDT
tippman: I have to agree with you on this. Still shaking my head over the shopping trips to NYC done by so many Irish people while things were booming. These were every day middle class people. My sympathies to the Irish people who were prudent and played no role in this mess. But there were many Irish people were horribly obnoxious during the boom times. If nothing else with them not liking the Germans and French now, perhaps they will ease up on hating Americans so much.
antoman | Apr 04, 2011, 12:46 PM EDT
Takes long swig from sirpeters bottle of plonk.Thanks biy.I was sober there briefly like.
sirpeter | Apr 04, 2011, 12:06 PM EDT
antoman..Ha ha..That's real fighting talk. Here la.. Take a lash off my bottle of wine it will mellow you out.You know whiskey gets you all upset. Sur isn't life grand biy.
tippboy | Apr 04, 2011, 12:02 PM EDT
When the Tiger was at it's peak Irish people went around Europe buying up properties with borrowed money and boasting about how were were the "richest" country in the world with the best educated workforce, the best quality of life, blah, blah, blah. We developed our own little celebrity circuit where media and "stars" of screen, stage and property aped Hollywood and tried to outdo each other with ostentatious displays of wealth. Meanwhile people were dying on trolleys in hospital corridors, unable to get an operation or a room. We were like the neighbor who won the lottery and whose level of obnoxiousness increased in direct proportion to their wealth. And we expect the French and Germans who were prudent with their money to give us a sympathetic ear - good luck!
antoman | Apr 04, 2011, 09:21 AM EDT
Start by burning the bondholders like Iceland.Its a game of poker.You win some and you lose some.But in Ireland you can't lose at all.We are a population of four million or so and we have a debt to pay that will take generation to repay.Either we get a realistic sum to repay or we take to the streets.We have become a post WW1 Germany.An impossible debt to repay and a silent simmering anger just below the surface waiting to explode in civil war.
tonyhilley | Apr 04, 2011, 05:44 AM EDT
Not being an economist or a corporate lawyer etc, I only have my common sense. If its true that Ireland cant in reality ever pay back all its dept, then any present solution that is found that does not include the bond holders taking a hit is only a stop-gap solution and in 18 to 24 months we will be back where we were (If the Irish public allow us to get that far?). When the battle is hot, now is the time for Ireland to get together with its other poor European countries in the same boat and other small nations that feel venerable (in terms the German Bull’s focus in the future). Although one can blame a drug addict the drug dealer must take his share of the blame. Ireland should hire a few TOP outside-looking-in American experts to help. Now is the time to take on the bull, if the fight is left to a future date Ireland might be left on its own. Remember strength in numbers. A pack of hungry and desperate small dogs can pull down a prime bull.
Dublinjas | Apr 04, 2011, 12:57 AM EDT
I would like to hear from economic gurus out there, I am guessing but I would imagine that just to service the interest alone on such a debt, would be a mighty annual sum.
Dublinjas | Apr 04, 2011, 12:45 AM EDT
Yes the Banks borrowed the money and it was completely up to them to pay it back, it was all their debt Until late in the night of September 29 2008 without any consultation with the Irish people Brian Cowen and Brian Lenihan encouraged by several lying Bankers assumed on behalf of the Irish Taxpayer the debt we now find ourselves in by guaranteeing all deposits loans investments etc in an to the Irish Banking system, The actual debt is far beyond €100bn Euro it is now to date €208bn Euro according to the Sunday Ind; which when expressed in GDP it is apparently 154% of Ireland's GDP. If every cent that was earned by every person and company and business in Ireland for the next year and a half was handed over it would pay off the banks debt, but then we would have to take care of our own regular national debt, and of course we would have all died of starvation..That gives you an idea of the indebtedness of this country.
BadJjoao | Apr 03, 2011, 09:41 PM EDT
Let me get this straight. The banks borrowed money from German and French lenders and now have to pay it back. What a dasterdly concept. Where is their sense of decency?
sirpeter | Apr 03, 2011, 09:30 PM EDT
"The Celtic Tiger may be gone, but it is cornered, not dead. A cornered tiger is a dangerous animal indeed" I like it Niall..It appeals to my love of analogies. The Irish cornered.Left with no choice but to come out fighting. Oh! how comfortable that feels. We had the party and now we need to bust a few jaws. Doesn't really matter if we get a few broken jaws ourselves.lol
seanomelbourne | Apr 03, 2011, 06:07 PM EDT
Finn Gael doe's not have the mettle to take on the Europeans, after all Kenny and his misfits are part of the system which brought down the "the tiger". I hope I am proven wrong.