Banks: The Irish tragedy
1 October 2010
With unemployment, emigration and bond yields soaring, Ireland learned on September 30 that the bill for the bailout of its toxic banks is set to reach €50 billion – an incredible 32% of national income. Is the former Celtic Tiger on the brink of meltdown? worries the Guardian.
From Greece to Japan to the US, countries across the world have been devastated by the banking crisis. But no economy has been wrecked quite so brutally as Ireland's. The erstwhile Celtic Tiger has seen its national income shrink 17% over the past three years – the deepest and swiftest contraction of any western country since the Great Depression. At the height of the long boom from 1990 to 2007, property in Dublin was worth more than in London. Since then, prices have dropped by around 40% – and are still sinking. At this rate, the country will soon hold the dubious honour of hosting the biggest property bubble and bust in modern history. When financiers joked in 2008 that the only difference between bankrupt Iceland and hard-up Ireland was one letter and a few days, they got it wrong – the mess the Emerald Isle is now in is so much worse.
And all the way down, Dublin ministers have promised voters that things are about to get better. Those emergency loans to the banks – that would sort it. These savage spending cuts – that would do the job. That decision to pretty much guarantee the entire banking system (with practically no questions asked) – this time for sure. Wrong, wrong, wrong. Like a body flung off the roof of a skyscraper, the Irish economy has just kept on falling.
They were at it again yesterday. The Irish finance minister, Brian Lenihan, promised voters that the national "nightmare" they have had to live with for the past couple of years would soon be over: "We are now bringing closure to that." He did not convince financiers, who have heard a similar form of words from Mr Lenihan every time he has brought forth another ill-advised plan. Even measured against the minister's previous gambles, though, this one is huge. Yesterday's bailout will include Anglo Irish, the property developer's favourite bank, as well as Allied Irish and Irish Nationwide – and it is set to raise the budget deficit from around 12% of national income to an astounding 32%. Read full article in the Guardian...