So, I do not have many special insights into the recent news that Ireland is facing a financial crisis of immense proportions. Sure, when Greece got really bad last spring, Ireland was mentioned, along with Spain.
What is the perspective of the average Irish person about this economic crisis:
- spitting with rage (In Ireland, The Death Of 'The Celtic Tiger' Leads To Anger, Populist Uproarby Philip Reeves)
- "Ireland needs a new credit rating agency: Moody & Poor!" - Colm O'Regan, a former IT consultant, now comedian (Comedians Feast On Ireland's Whopping Debt Crisis
by The Associated Press)
- "Indeed, nobody asked why is it worse to allow banks to collapse than to allow societies to collapse or why it is worse to allow banks to be broken than to allow lives to be broken. "(Vincent Browne, The Irish Times - Wednesday, December 1, 2010)
- "The decision of Fianna Fáil/NRA to desecrate Tara’s immediate landscape, the Gabhra Valley, in July 2007 was a bad judgment. The M3 opened this year. We have lost our sovereignty. What did we unleash?" (Dr Muireann Ní Bhrolcháin, Irish Examiner Saturday, December 04, 2010)
Now keep in mind, this discussion is about the Republic of Ireland. The North is facing it's own issues, which are tied into the belt tightening of the United Kingdom.
I know in 2005, houses in Dublin, which, of course, is in the Republic, were millions of euro each. Mortgages were 50 years or more to make the payments somewhat affordable. But the streets were jammed with vehicles, the stores were packed with people, and the skyline was filled with cranes. Basics were high cost and the exchange rate made me feel like the US was a struggling nation. Lots of eastern European immigrants or foreign workers were working in Dublin.
If the Irish have to bail out the banks, the estimate for that alone is: €50 billion.
There are 4.5 million people in the Republic.
That's 11,111 euro per man, woman, and child, just to keep the banks from tanking. Or in USA dollars: $15,331 per man, woman, and child.
That's a lot of doing without to scrape up enough to pay back that amount of debt, eh?
What about the basic fairness of supporting the Irish banks?
With the government having made a commitment to the banks, all the taxpayers are keeping the bank's investors afloat, while those investors are not being asked to "take a haircut" as the phrase goes for incurring a loss on a bad investment. And the banks don't have to close down, or fire anyone as far as I've been able to determine.
This “take a haircut” concept was contemplated in a way as you can read about here.
Why would any investor do this? Reduced risk, I suppose. Getting out of a situation now rather than face disaster later, or a long period of uncertainty and stagnation. The article notes that Standard and Poors has downgraded the four big Irish banks' long term credit ratings.
But the 85 billion euro bailout package for Ireland which was approved by Europe’s finance ministers has been described as not requiring banks or bondholders to “take haircuts”.
Are the european leaders unwilling to spread the hit to any investors? Are they afraid investors would bring down the economies of Portugal and Spain in a flash?
Randall Parker (But Who Caused Irish Financial Crisis? 2010 November 24 Wednesday) has tracked who the bondholders are in Irelands banks:
- British banks provided
- German banks provided
- US banks
- $25bn and
- French banks
- Total lending of
to Irish banks is approximately
Why don't they tell the truth? They are hoping to stave off a greater collapse
Here's a link to more about the money side of Ireland's problems:
I know last spring (May 2010) as many of the eastern European workers had left as could afford to leave - there were no new jobs in Ireland.
Apparently now, the Irish themselves are leaving to find work, reminiscent of hundreds of years of colonial rule and the majority of the period of the Free State and the Republic.
Here's a link to a story about the Irish looking elsewhere for work:
I wonder if they will send money to their former home? The Irish government better hope so!