Wednesday, September 29, 2010

Next stop Ireland.

Keep calm, all is well

Like Greece, Ireland was lauded for much of the previous decade for its impressive rates of economic growth which far outstripped laggards such as France and Germany. The Celtic Tiger was held up as a model for development which would allow previously poorer countries to expand their economies and bring wealth and prosperity to everyone.

As someone with Irish roots it was satisfying to see throughout the 90's and 00's Ireland's transformation from a sleepy, closed economy on the fringes of Europe into a business power house. No longer would generation after generation be forced with the choice of either staying in poverty in the land of their birth or emmigate to countries such as England where their presence was at best tolerated, at worst met with prejudice and discrimination. "No blacks, no dogs, no Irish" my mother would say, remembering her own experience as a recently arrived immigrant in the 60's looking for lodgings.

The conflict in Northern Ireland which escalted during the 70's and 80's just added to the list of alleged defects of the Irish. No only were they stupid, unreliable drunkards, but now also potential terrorists, beings devoid of either conscience or scruples.

Now it seems that the party is over in Dublin as much as it is in Athens. The former golden boy of the investment community is now implementing the same kind of austerity measures that have been so successful in Greece. Cuts in public spending, tax hikes and yet massive bailouts of the banking system. Likewise the results have been remarkably similar with high unemployment, growing poverty and severe drops in important economic indices such as consumer confidence and private sector investment.

At the same time the money markets, nervous at the possibility of further weakening of the economy are pushing up the cost of lending so raising the possibility of a Greek style bailout package which will further add to the country's woes if implemented, condemning the Irish to an open ended period of stagnation and undevelopment which could last decades if we judge by the experience of Japan whose economy has virtually flatlined ever since its real estate bubble burst in 1991 .

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