Opinion

The Great Debate

Ireland could use a little audacity of hope

By Marian Harkin

The opinions expressed are her own.

Barack Obama’s infectious hope will help replenish the spirits of the beleaguered Irish people as we strive to emerge from recession, but more significantly his invoking our small nation’s educational and entrepreneurial talents help to show us the way forward.

A once-in-a-generation economic crisis might seem like an odd time for Ireland to issue back-to-back invitations to Queen Elizabeth II and U.S. President Obama, but as the sun shone through the rain cloud, illuminating the President as he visited his ancestral home in Moneygall Co. Offaly, it seemed a masterstroke, for it is precisely an injection of Obama-esque audacious hope and “yes we can” positivity that Ireland needs to kickstart our long road to recovery.

One week ago as her Majesty Queen Elizabeth II bowed her head before a Memorial to Ireland’s Republican dead, the message rang out to the high heavens – we work as equals and we can live in peace, and that peace can be the foundation upon which growth and prosperity is restored to this small island north and south.

So the feel-good factor was already firmly in place by the time Air Force One touched down in Dublin Airport.  Obama harnessed that upbeat mood by linking together the potential of youth, education and peace along with the power of dreams. As he himself is the embodiment of that dream, he makes it easy to believe, he makes it easy to hope and it is somehow easier to reaffirm his call “Is féidir linn” – Irish for “yes we can.”

Obama did not propose solutions to our economic problems on this visit, but for a little while he lifted our morale.  For the past two years Irish citizens have watched as enormous swathes of bank debt accumulated by the casino-like operation of Irish and European banks have been transformed before their disbelieving eyes into sovereign or citizen debt.  The sheer scale of the burden and the sense that the only light at the end of the tunnel is that of an approaching train has traumatized an entire country.  Our self belief is being sorely tested as we try to make sense of the madness that rewards the speculators and punishes the citizens.  The loss of our economic sovereignty is a huge body blow.  Yet somehow the events of the last week each in very different ways have helped to restore some national dignity.  As friends and equals with our nearest neighbors and bound by history, friendships and shared values with the US we can dig deep and find the resilience and the resolve we need to ensure that, as Obama said, “Ireland’s best days are ahead.”

from James Saft:

Icelandic mulishness wins the day

Iceland's remarkable return to growth shows once again that in this crisis the best policy is often the one that will make international partners most angry.

Having been reviled and chastised when it refused to make good the outsize debts of its banks, Iceland this week capped a striking turnaround when it announced that its economy expanded by 1.2 percent in real terms in the most recent quarter, its first such rise in two years.

This is in stark contrast to Ireland, whose pliability and inability as a member of the euro zone to act unilaterally leaves it with a still crashing economy which must service ever more debt by making ever deeper cuts to public spending.

from James Saft:

Pension savers get the boot

From Dublin to Paris to Budapest to inside those brown UPS trucks delivering holiday packages, it has been a tough few weeks for savers and retirees.

Moves by the Irish, French and Hungarian governments, and by the famous delivery company, showed that in the post-crisis world retirees, present and future, will be paying much of the price and taking on more of the risk.

This goes beyond merely cutting back on pension benefits, rising to actual appropriation of supposedly long-term retirement assets to help fund short term emergencies.

from MacroScope:

Europe’s over-achievers and their fall from grace

Ireland's fall from grace has been rapid and far worse than that of its counterparts, even Greece. But life in the euro zone has still been one of profound growth, as it has for most of the other peripheral economies.

Take a look first at the progress of  PIGS (Portugal, Ireland, Greece and Spain) GDP since 2007 when the global financial crisis took hold. In straight comparisons (ie, rebased to the  same point) Ireland is far and away the biggest loser. Portugal is basically where it was.

Scary

But now take the rebasing back to roughly the time that the euro zone came together.  First, it shows that Ireland's fall is from a very high place. The decade has still been one of profound improvement in cumulative GDP even with the last few years' misery. But it is front loaded.

It’s time for a wider European policy debate

AUSTRALIA/By Mohamed El-Erian
The opinions expressed are the author’s own.

It is safe to say that there is broad agreement on what is most desirable for solving the Irish crisis — namely a mix of domestic policies and external financing finely calibrated to enable the country to grow strongly, create jobs, stabilize the banks, and overcome large and mounting indebtedness.

Unfortunately, what is most desirable is not feasible given the path Europe is embarked on; and, to make things even more complicated, what appears feasible to Europe is not necessarily desirable. As a result, Ireland finds itself stuck in an unstable muddled-middle. It can’t get ahead of the crisis; it is far from a first best solution; and it confronts choices that are painful to implement and uncertain in outcome.

What is evolving in Ireland today resembles what was done in Greece six months ago. Expect the Irish government to commit to even greater budgetary austerity, its European neighbors and the IMF to provide massive funding, and the banks to receive liquidity, capital injections and other unconventional forms of support.

Irish plight about more than austerity

Ireland and its economic unraveling is not simply a test case of the stimulus versus austerity dispute, it is an illustration of the limits and pitfalls of the very popular strategy of keeping the banks ticking over, hiding under a desk and hoping for a strong recovery.

Previously praised for taking a tough fiscal stance which fans hoped would put it on a solid footing, Ireland now seems more vulnerable than ever. Concerns that the costs of the banking bailout will exceed the government’s ability to pay, even with European Union support, have battered Irish debt in financial markets.

The price of insuring Irish government debt against default hit a record on Wednesday, with markets extracting a premium of just over 4 percent of the amount being insured. Similarly the yield investors demand to hold 10-year Irish government bonds has increased greatly, hovering just around 6 percent, or 380 basis points more than German benchmark bonds.

from MacroScope:

Political economy and the euro

The reality of  'political economy'  is something that irritates many economists -- the "purists", if you like. The political element is impossible to model;  it often flies in the face of  textbook economics;  and democratic decision-making and backroom horse trading can be notoriously difficult to predict and painfully slow.  And political economy is all pervasive in 2010 -- Barack Obama's proposals to rein in the banks is rooted in public outrage; reading China's monetary and currency policies is like Kremlinology; capital curbs being introduced in Brazil and elsewhere aim to prevent market overshoot; and British budgetary policies are becoming the political football ahead of this spring's UK election. The list is long, the outcomes uncertain, the market risk high.

But nowhere is this more apparent than in well-worn arguments over the validity and future of Europe's single currency -- the new milennium's posterchild for political economy.

For many, the euro simply should never have happened --  it thumbed a nose at the belief that all things good come from free financial markets; it removed monetary safety valves for member countries out of sync with their bigger neighbours and put the cart before the horse with monetary union ahead of fiscal policy integration. But the sheer political determination to finish the European's single market project, stop beggar-thy-neighbour currency devaluations and face down erratic currency trading meant the  currency was born and has thrived for 11 years.

from The Great Debate UK:

Thomson Reuters Newsmaker: Ireland and the Lisbon Treaty

Political leaders gathered in Dublin to debate both sides of the controversial Lisbon Treaty and the implications it could have on the future of Europe.

The panel consisted of Micheál Martin, Ireland's Minister of Foreign Affairs, Nigel Farage MEP, leader of UKIP, Mary-Lou McDonald, Deputy President of Sinn Fein and David Begg, General Secretary of the Irish Congress of Trade Unions.

Watch the debate on the player below.

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