From the Christian Science Monitor – Election no quick cure for Ireland’s ills; more debt, fewer jobs:
Ireland became known as the Celtic Tiger. Everyone felt rich. House prices rocketed…
if you could borrow money and then sell at a 100 percent profit, who cared?
Compounding Ireland’s woes was the decision to swap its own currency, the punt, for the euro, whose interest rates were falling just when Ireland needed rates to rise.
Then the bubble burst, Ireland’s free-wheeling banks were suddenly insolvent…
By 2010, over a game of golf with a (now disgraced) banker, the prime minister was forced to agree to bail out the banks, even though he – and the regulators – had no idea of the depth of their problems. So great were those liabilities that the Irish government cannot now meet its own debts.
Just to repay its own short-term borrowings, the Irish state has borrowed money from the European Union at usurious rates and agreed to massive cuts in state spending and salaries – which only intensifies the financial problems facing many Irishmen.
Across the country whole villages of new houses lie deserted. Unemployment is zooming. The banks are effectively bust and cannot lend. And once again bright young Irish men and women have to go abroad to get jobs – 1,000 people a week are now leaving for good.
Everything in Ireland (except interest rates and unemployment) is a one-way bet down. It is becoming poorer than when I was a boy. It must either accept decades of decline in living standards or simply default on its state debts. That passes the problem on to British and German banks that have huge exposure and will be in serious trouble.
• Tom Winnifrith is the United Kingdom’s top performing fund manager over three years, working at t1ps.com.