In February, it had been four years since the European Debt Crisis was made known. Greece and four other countries have been in-debt to the European Central Bank. Actually, Ireland had first started to borrow in September of 2008. The ECB manages Monetary Policy for the eighteen nations that share the common currency, the EURO. Additionally, the ECB is part of “The Troika” –along with the European Commission and the International Monetary Fund–which arranges such financing.
Ireland, as the smallest country in trouble has become, in effect, the test case for Europe’s prescribed Austerity Program–which imposes huge public spending cuts, tax increases and the resultant high unemployment. That ushered in five years of an extremely grim economy for the Irish People. Currently, the Irish debt to the ECB, however, is at its lowest since it first started to borrow.
During the first decade of the 21st Century, Ireland was known as the “Celtic Tiger”, somewhat of a take-off on the “Asian Tigers” (Developing Economies). Prior to its collapse, Ireland attracted considerable Global Investment, especially from American Tech Giants, as corporations flocked to Ireland’s low tax rates. Everything looked great!
Real estate developers were leveraging new housing projects throughout Ireland. In fact, the new home supply was way, way over-the-top, especially for a country of only $4.5 Million people. The several major Irish banks threw common sense to the wind as they focused too much of their respective loan portfolios into real estate, rather than diversifying into other purposes.
In the end, the Irish Government finally did step in; but, it definitely erred by completely bailing-out the banks. There was not any pain inflicted on the banks–or their shareholders–for mismanaging their business. Sounds familiar, huh?
That’s when the “Troika” stepped-in to manage the Irish economy and, of course, to impose the “necessary” Pain and Suffering. Germany, however, the largest country and the strongest economy in Europe, is the true banker behind these bail-outs. There had been real concerns that the Eurozone would fall apart, as country-after-country fell into similar dire straits–and left the Zone. And, Germany didn’t want that.
Both the Irish Government and Europe appear to be using Ireland to fabricate the desired success story. Ireland wants to give its People hope, and Europe wants to “prove” that Austerity does, in fact, work. But, it doesn’t!
Fintan O’Toole, a columnist and editor for The Irish Times, and also a guest lecturer at Princeton University, wrote the linked article, from the NY Times. O’Toole describes the Irish Success Story as “European Blarney”, as follows: http://www.nytimes.com/2014/01/11/opinion/irelands-rebound-is-european-blarney.html?hp&rref=opinion/international&_r=0. He points-out that there are two Irish Economies: the facade that the Troika has created and the real one in which most Irishman live and work.
I would like to end this Blog Post by sending the following link of a Bonnie Tyler YouTube video to German Chancellor Angela Merkel and Wolfgang Schäuble, the German Finance Minister. I believe that it demonstrates the European spirit in this matter. So, here goes, Angie and Wolf: “Holding Out for a Hero”: https://www.youtube.com/watch?v=7f_HsjpSVaI.