Ireland on the Brink

[marmar]

By Simon Kennedy, MarketWatch


DUBLIN (MarketWatch) — After promising a 15 billion euro ($20.7 billion) austerity package of spending cuts and tax hikes, Ireland’s government may be facing its last chance to avoid a bailout by persuading markets that the country can repay its debts.

Yields on government bonds have soared in recent days as investors increasingly fear that the only long-term option for Ireland will be a bailout from Europe. But sympathy for Brian Cowen’s Fianna Fail-led coalition is almost non-existent among Dubliners, who see the government as the biggest villain in the collapse of the Irish economy.

In a country where the prime minister, or taoiseach, is reportedly the highest paid politician in Europe and where each member of the lower house represents just 26,000 constituents — compared to over 94,000 in the U.K. — there is palpable anger that those seen as most responsible also appear to be hurting the least.

“People are really angry. People on social welfare, pensioners and lower income earners feel that they’re going to be hit in December’s budget, and when that happens there’s going to be outrage, because those at the top of the food chain aren’t being touched,” said Laura Waters, a former employee of retailer Laura Ashley, who lost her job when the company closed its flagship Dublin store. .............(more)

The complete piece is at: http://www.marketwatch.com/story/ireland-on-the-brink-as-budget-crunch-looms-2010-11-10

[sadbear]

1. Sounds familiar.

The Irish are a little further down the road than we are, though.

[DCKit]

2. Thank Dog. We can learn from their example. n/t

[marmar]

3. I think it's more of a preview than a cautionary tale.

nt

[dawg]

4. This is actually very significant.

Ireland is the European poster-child for right wing economics. Anyone remember when it was the *Celtic Tiger* and it's low-tax business friendly government was the darling of U.S. business. Meanwhile, Socialist Spain was doomed for collapse according to the right-wingers. And at first, as the housing collapse set it, they seemed to be on to something. Housing in Spain was very overvalued and the return to reality was brutal. Probably less to do with the government than the warm climate and beautiful views, but there it is.

Ireland reacted to the crisis with austerity - cut gov't spending, show the business world how *responsible* we are, etc. Spain said, "nuts to that - our people need stimulus". The right wing predicted a collapse in Spanish bond values and a surge in interest rates. Instead, Spain has weathered the recession better than many and certainly better than Ireland.

Paul Krugman has written lots about this. I may have done a poor job describing the issues he talks about, but I recommend anyone interested in such things to read his columns and blog.

[chelsea0011]

9. This is so very true. I think it was 60 Minutes that some years back

did a story about Dublin, the hottest boom city in Europe. Irish who had left were rushing back home along with Americans heading for the new opportunities that Dublin was offering.

[fasttense]

5. So why don't they renegotiate the debt????

I mean the banks made a bad loan. In the free market you suffer for your bad decisions. So, Ireland can't pay back the bad loans. Those loans are pretty worthless now. Why doesn't Ireland simply renegotiate to pay 50 cents on the dollar or some such deal? Something is better than nothing.

I know, I've heard all the doom and gloom over bad ratings and other such crap if Ireland renegotiates. But how do we know it will be any worse than these austerity measures? Let it happen and find out. And they should institute sever and immediate regulations on all banks, insurance firms, stock markets, and bonds, hedge funds etc...

Seems the country is giving up it's sovereignty when it institutes austerity instead of renegotiating and regulating.

[dkf]

8. Because no one will want to loan them anything in the future.

The reason sovereign debt used to be seen as safer is because governments have the ability to tax. Once they blow the deal who wants to loan them any other funds?

[n2doc]

6. Frankly civil unrest is their only option

Make the rich bastards fear for their safety. Because they won't relinquish their stranglehold any other way.

[dkf]

10. That is probably a good way to get killed too.

[n2doc]

11. Freedom isn't free

And you can die slowly, in poverty, or quickly, so that your children don't. Anyway, we shall see if they have the will.

You do realize, that civil unrest can take many forms. See last week's student demonstrations in the UK. Didn't see any deaths there, but they made a strong point that the Tories won't be able to just ram through crap without a response.

[dkf]

13. Pah...freedom comes from lack of debt.

Which makes this country an albatross around my neck. I wish they would get their act together.

[Selatius]

7. Spending cuts are foolish when demand for products and services are down.

If we cut welfare checks, for instance, that means fewer people in stores to buy food and clothes and other necessities because they now no longer have that income to spend. That would only hurt producers, and they will, in turn, lay off even more employees and shut down more operations.

Best thing to do would be to levy taxes aimed at the top 5% of income earners coupled with selling of government bonds, even if they have to be at high yield rates, to support a jobs program, which would pump money directly into the pockets of people who will spend the money. Pay off the debt during good economic times. It beats taking out a bail-out package from the EU with strings attached, or worse a loan from the IMF with even more strings attached.

[sabrina 1]

12. Ireland never should have joined the EU. They resisted

doing so in the beginning, but then gave in. I hope the EU is disbanded when Europeans toss out their current governments. All it has done to undermine the sovereignty of European Democracies and while there is anger at individual governments, there is also anger at the EU which appears to think it is a central government now, and each country the equivalent of a state.