The Celtic Tiger, No More

We arrived in Ireland in September, when the news was bad about the countries' economy. The unemployment rate has been well into the teens, and the bank most people around here use had been nationalized, due to bad debt. Does this scenario sound familiar? It is worse than in the USA, where by most measurements, the unemployment rate peaked at 10%, and the economy has bottomed out, and is in a slow recovery phase. Here, the economy has gotten worse, each month.

It all started with the Celtic Tiger. This was the name given to the country's roaring economy during the last decade. Ireland had never seen its' economy accelerate and grow like it did then. Houses appreciated astronomically, often to one million euros. The banks loaned money to virtually anyone, without checks and balances. People bought second homes, villas in Spain and elsewhere, There was a speculative frenzy, fueled by the banks and developers. Much of the money loaned out by banks in Ireland came from speculative monies from Germany and France. Do you remember when we all felt safe depositing our money in an institution with the highest regard? Then, the world economy slowed. Jobs were lost, and home values plummeted, often as much as 75%. Many of the patients that I see are of able bodies and minds who haven't worked for 2 years, collecting 200 euros per week, wishing that they had a job.

Then, the Irish government, with the ruling party Fianna Fail, nationalized some big banks, taking their private debt, and making it sovereign debt, to be paid back by the people of Ireland. They felt this was necessary, in order to prevent these banks from closing their doors. This decision is costing the country, many say impoverishing it, for years to come. The speculators, who gave monies to the banks to lend out, are getting paid back by the Irish populace. You might expect those who lent money to the banks to share in the losses. The government felt otherwise, turning this private debt into public debt, handcuffing this economy for years to come.
The Irish have developed an austerity program, in order to get rid of this debt, which is around 36% of their GDP, compared with the US debt which is under 10% of their GDP. This country is cutting expenditures and raising taxes. I am already taxed at 41%.

Ireland is part of the European Union, which, in a way, is like the United states. there is one currency, the Euro, and no border crossings per se. Germany is the economic powerhouse, still healthy with a low unemployment rate. Other EU countries are at vriable states of economic health. Greece got bailed out a while ago. Then, the EU came to Ireland, offering a bailout, which happened very quickly.With all the politics, it was and wasn't a surprise. The monies are loaned to support the ailing banks,as Ireland can't print money, which is how the USA is (fairly successfully, I might add) solving their crisis. The proud Irish cringed when they accepted this bailout, and many wonder if the government, with a 17% approval rating, has been making the right choices. I believe, in the USA and here, there are many bankers who behaved recklessly, and they should be in jail. Millions of people are affected by their mis behaviors, loosing their livelihoods.

In the last month, even with the bailout, the Euro has dropped in value from $1.40, to $1.30 and the US stock market is also dropping. The worries are that multiple other countries here may need financial help, and that the EU cannot bailout them all. If this developes, the world economy will suffer significantly. This state of affairs is changing almost daily, as we saw with the lead up to the Ireland bailout. There are big demonstrations happening in Ireland and Europe, as people are faced with the reality of a worsening recession. Nobody wants to see people suffer, I hope this economic crisis "settles down" as the Irish say.