First off, I'm from the US and lean to the right and so far am buying the Tea Party's message that too much government causes more problems than it solves. So, I'm a bit surprised to read about Ireland's woes. After all, they have not had too much government intervention (as far I can decipher). What was/is Ireland's issue?
Ireland has one if the highest personal debt loads in the developed world. A small hiccup in growth and failures cascade.
Additionally, Ireland had a very large housing bubble, worse than the US in some respects, and we all know how bubbles end badly.
Governments provide the necessary infrastructure for the private sector to operate. They do this by providing jobs in the military, in law, in regulation, in education, health care and other vital sectors of the economy. Government intervention can sometimes be harmful to economic growth, but some level of intervention is a requirement for growth. The Irish had an economic model that was very successful for a time: they attracted foreign business through attractive tax rates and they grew domestic investments and spending through financial services and real estate. As a result of the financial crisis they found out that more government intervention would probably have been a real asset to their economy though. Their economic model produced an oversupply in real estate and in the financial debt that was used to finance it. A well managed government could have steered their economic development into a more rational and sustainable direction. Right now other European countries are trying to force them to increase taxes. They want Ireland to close their budget gap. I donât think this is a very good idea as it will hurt their economy really bad. If GDP drops further this means that the ratio of (private) debt to GDP increases further. Unlike the Tea Party I like deficit spending. Like the Tea Party I like tax cuts though. Ireland would do best to eliminate corporate taxes but maintaining spending. The financing for this should be provided by marking up some numbers in Irelandâs account at the European Central Bank. This will prevent a deflationary depression in Ireland.
this should fill you in on the state of things - debt of $800 Billion, house prices down 50%, unemployment 13% and rising etc etc etc "Will Ireland's Austerity Program Work? Analysts say Ireland's bailout may not be enough and that Portugal and Spain could be next in line for a rescue from the EU and IMF. Will Ireland's tough austerity measures succeed, or will the contagion spread? BNN speaks with Alex Jurshevski, Managing Partner, Recovery Partners; Richard Jenkins, Chairman and Managing Director at Black Creek Investment Management Inc; and Michael Taylor, senior economist, Lombard Street Research." Will Irelands Austerity Program Work? - Part One [11-26-10 12:30 PM] Will Irelands Austerity Program Work? - Part One [11-26-10 12:40 PM] Will Irelands Austerity Program Work? - Part One [11-26-10 12:50 PM] http://www.bnn.ca/Shows/Headline.aspx
First, people on this site are retarded, which is why I like this site as it's a comedy goldmine. 2nd, Ireland's problems were not government debt. Eating the Irish Before the bank bust, Ireland had little public debt. But with taxpayers suddenly on the hook for gigantic bank losses, even as revenues plunged, the nationâs creditworthiness was put in doubt. So Ireland tried to reassure the markets with a harsh program of spending cuts. Step back for a minute and think about that. These debts were incurred, not to pay for public programs, but by private wheeler-dealers seeking nothing but their own profit. Yet ordinary Irish citizens are now bearing the burden of those debts. Or to be more accurate, theyâre bearing a burden much larger than the debt â because those spending cuts have caused a severe recession so that in addition to taking on the banksâ debts, the Irish are suffering from plunging incomes and high unemployment. But there is no alternative, say the serious people: all of this is necessary to restore confidence. Strange to say, however, confidence is not improving. On the contrary: investors have noticed that all those austerity measures are depressing the Irish economy â and are fleeing Irish debt because of that economic weakness. Now what? Last weekend Ireland and its neighbors put together what has been widely described as a âbailout.â But what really happened was that the Irish government promised to impose even more pain, in return for a credit line â a credit line that would presumably give Ireland more time to, um, restore confidence. Markets, understandably, were not impressed: interest rates on Irish bonds have risen even further. Ireland is now in its third year of austerity, and confidence just keeps draining away. And you have to wonder what it will take for serious people to realize that punishing the populace for the bankersâ sins is worse than a crime; itâs a mistake. ------------ If FOXNews blames Ireland on govt programs then it must be true... FOXNews the early years: <object width="480" height="385"><param name="movie" value="http://www.youtube.com/v/fACJ22ixzhg?fs=1&hl=en_US"></param><param name="allowFullScreen" value="true"></param><param name="allowscriptaccess" value="always"></param><embed src="http://www.youtube.com/v/fACJ22ixzhg?fs=1&hl=en_US" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" width="480" height="385"></embed></object> Can't believe people fell for that. lol
Ireland socialized corporate welfare with the hope that the companies would add to the GDP. When the tax revenue never materialized they were shit-out-o-luck.
Put aside the public debt issue for a moment - the Irish had taken on astronomical levels of private debt well before the debacle hit. The were doomed to fail, it was only a question of "when".
Just so you know....here are some of irelands social programs. Deserted wifes allowance Prisoners wifes allowance Health & safety benefit for pregnant women and/or breast feeding women(lets them stay home from work) And my favorite...PRE-retirement allowance. Its about 800 euros per month that you get to start collecting at age 55. Some more are... one parent family allowance Job seekers allowance (this is about $250 per week, but if you have a wife and 2 kids you get about $500 per week) There are a ton of others and most pay the same (about 200 euros per week) I dont know how credible this next one is, but my cousin who lives in Northern Ireland says that if you are diagnosed as an alcoholic, the government gives you £30 per week to buy alcohol. But thats northern ireland and they are controled by the british, so it doesnt count towards irelands woes.
In case you are interested in the facts: https://www.cia.gov/library/publications/the-world-factbook/geos/ei.html (CIA factbook, search for: "Economy - overview") The most important part: To make it short: - Banks attracted by low corporate taxes (=low government interference with business activities) - Many banks moving to Ireland - Few regulation of banks activities (=low government interference) - Banks taking too many risks - Banks come into trouble - Government bails out banks in order to prevent complete collapse of the country Even shorter: 1. Government trying to interfere as few as possible with the markets 2. Companies do what they think maximizes their profit 3. Some big companies loose eventually 4. Government has to take losses in order to prevent collapse of whole national economy