A family member of mine (one generation down) who
spends about half her time consulting in Ireland
(mainly to local governments) described the
situation to me in much the same terms. The Irish
are only just hanging on to their austerity
programme by the skin of their teeth.
Keith
At 23:49 05/12/2011, Arthur wrote:
December 5, 2011Â NY Times
Despite Praise for Its Austerity, Ireland and Its People Are Being Battered
By
<http://topics.nytimes.com/topics/reference/timestopics/people/a/liz_alderman/index.html?inline=nyt-per>LIZ
ALDERMAN
DUBLIN As European leaders scramble to
overcome the Continentâs
<http://topics.nytimes.com/top/reference/timestopics/subjects/e/european_sovereign_debt_crisis/index.html?inline=nyt-classifier>debt
crisis, many are pointing to
<http://topics.nytimes.com/top/news/international/countriesandterritories/ireland/index.html?inline=nyt-geo>Ireland
as a model for how to get out of the troubles.
Having embraced severe belt-tightening to mend
its tattered finances, Ireland is showing
glimmers of a turnaround. A year after it
received a 67.5 billion bailout, or $90.9
billion at current exchange rates, modest growth
has returned and the budget deficit is shrinking.
But the effects of austerity have pummeled
Irelandâs fragile economy, leaving scars that
are likely to take years to heal. Nearly 40,000
Irish have fled the country this year alone in
search of a brighter future elsewhere; the trend is expected to continue.
âThis is still an insolvent economy,â said
Constantin Gurdgiev, an economist and lecturer
at Trinity College in Dublin. âJust because
weâre playing a good-boy role and not making
noises like the Greeks doesnât mean Ireland is healthy.â
The German chancellor, Angela Merkel, recently
praised the Irish prime minister, Enda Kenny,
for setting an âoutstanding example,â while
the French president, Nicolas Sarkozy, declared
that Ireland was already âalmost out of the crisis.â
Underneath the surface, however, the grinding
reality of Irish life belies those glowing commendations.
Salaries of nurses, professors and other
public-sector workers have been cut around 20
percent. A range of taxes, including on housing
and water, have increased. Investment in public works is virtually moribund.
On Monday and Tuesday, Mr. Kennyâs government
is announcing an additional 3.8 billion in tax
increases and spending cuts for 2012 that will
hit health care, social protections and child benefits.
Retail sales fell 3.8 percent in October from a
year earlier as spending was down even on things
like school textbooks, shoes and other basic goods.
At a Spar convenience store in the center of
Dublin, Samantha OâDonnell, a mother of two,
picked up her shopping basket with some
necessities, then put a few back on the shelf.
âA lot of people are just trying to get by
week to week,â said Mrs. OâDonnell, who said
her salary as a nursing assistant had been cut.
To Sean Kay, a professor of politics at Ohio
Wesleyan University near Columbus, Ohio, and the
author of a recent book examining Irelandâs
crisis, Mrs. OâDonnellâs experience is
typical. âThe Irish are being praised for
doing what they were asked to do, which is
important for bringing investors back to the
country,â he said. âBut for the Irish people, itâs not paying off.â
There are signs of improvement. Compared with
the previous year, exports are up 5.4 percent
for the first nine months of 2011, fueled by
gains from Pfizer, Intel, SAP and other
multinational companies that were drawn to
Ireland in the 1990s and 2000s by its low taxes,
well-educated English-speaking work force and
access to the European market. New information
technology companies like LinkedIn and Facebook
have recently joined the crowd.
Prospects for local technology companies are
improving, too. Brian Farrell founded Tethras
with a partner three years ago to develop mobile
applications for smartphones. He now has 16
employees and hopes to double his work force in the next 18 months.
âEvery time you turn the radio on, companies
in I.T. are hiring,â Mr. Farrell said, referring to information technology.
Gross domestic product grew 1.2 percent in the
second quarter from a year earlier, compared to
a decline of 0.4 percent for all of 2010 and 7 percent in 2009.
The interest rates that Ireland would pay its
international creditors if it were not on a
financial lifeline have also fallen, to 8.7
percent today from 14 percent in August, in part
because investors hope that European policy
makers will resolve the broader debt crisis.
But that is still above the level that led
Ireland to seek a bailout and too high to allow for sustainable finances.
The budget deficit has fallen to around 10
percent of gross domestic product this year from
a staggering 32 percent in 2010. But even under
the best of circumstances, it will not reach the
Europe-wide target of 3 percent until 2015.
Moreover, the recovery looks to be short-lived,
probably putting that goal out of reach. The
Economic and Social Research Institute, based in
Dublin, this month cut its 2012 growth forecasts
in half, to under 1 percent. It cited an
expected recession in the wider euro zone, in
part because the austerity being pressed on much
of Europe by Germany and the European Central
Bank is seen as worsening the prospects for
recovery rather than improving them.
âThe present situation contains elements
reminiscent of policy during
<http://topics.nytimes.com/top/reference/timestopics/subjects/g/great_depression_1930s/index.html?inline=nyt-classifier>the
Great Depression, when a mounting crisis was
confronted by an orthodoxy that resulted in
great poverty that could have been avoided,â
the institute wrote in a report.
Pain is inevitable in any nation overwhelmed by
its debts, which in Ireland continue to climb
rather than fall as a percentage of gross
domestic product. But the Irish example points
to the dangers of simply squeezing ordinary
people to pay off creditors rather than sharing the burden more broadly.
Welfare payments have steadily been reduced even
as the unemployment rate has ticked up to 14.5
percent, and is forecast to remain stuck at high
levels at least through next year.
The Irish are not prone to protest, but now more
are being organized, inspired by the Occupy movement in the United States.
On a recent frosty night in Dublin, David
Johnson, 38, an I.T. consultant, stepped outside
a makeshift camp set up by the Occupy Dame
Street movement in front of the Irish Central Bank.
âThis is all new to Ireland,â he said,
pointing to tarpaulins and protest signs urging
the government to boot out the International
Monetary Fund and require bondholders to share
the losses at Irish banks that have largely been
assumed by taxpayers. âThe feeling is that the
people who can least afford it are the ones
shouldering the burden of this crisis,â he said.
Joblessness would be much higher, economists
say, if not for the rising tide of Irish people
leaving the country for Australia, Britain and
Canada as opportunities at home stagnate.
Thousands of students and construction workers
left this country of 4.5 million people after
the economy slid into recession in 2008, most of
them expecting to be away only temporarily.
But now, accountants, engineers, dentists and
other high-skilled professionals are moving away
with their families. And many are not looking
back, said Edwina Shanahan, a senior manager at
VisaFirst, a company that helps set Irish
citizens up with jobs and visas overseas.
âThe politicians said things would get
better,â she said. âBut things are instead a disaster zone for many.â
Deirdre Cronin, an accountant in Cork, plans to
move in the new year with her husband and two
young children to Australia, which has become a
mecca for tens of thousands of Irish seeking a brighter future.
âWe feel we would never be able to give our
children an opportunityâ in Ireland, she said.
âWeâre going to work hard out there, and earn a decent living.â
The exodus of workers from declining areas to
growing ones is one way economies rebalance. But
it could take years to do so. In the meantime,
many Irish readily admit that they fear that the
hard gains Ireland has eked out could be swept
away if Europeâs leaders fail in their latest
effort to prevent the crisis from fracturing the monetary union.
âThe euro zone is entering a very serious
slump, and it is not certain
<http://topics.nytimes.com/top/reference/timestopics/subjects/c/currency/euro/index.html?inline=nyt-classifier>the
euro will survive in its current form,â said
Simon Johnson, a professor at the Massachusetts
Institute of Technologyâs Sloan School of
Management and a former chief economist at the
I.M.F. âWhy Ireland would want to spend its
time being a model student in the context of the
broader European mishandling of the situation, I donât know.â
<http://www.nytimes.com/2011/12/06/business/global/despite-praise-for-its-austerity-ireland-and-its-people-are-being-battered.html?nl=afternoonupdate&emc=aua22>http://www.nytimes.com/2011/12/06/business/global/despite-praise-for-its-austerity-ireland-and-its-people-are-being-battered.html?nl=afternoonupdate&emc=aua22
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Keith Hudson, Saltford, England http://allisstatus.wordpress.com/2011/11/
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