Tuesday, Jun 24, 2008
The Celtic Pussycat is heading for the litterbox.
Irish Independent: We blew the Boom
During a fifteen-year boom in house prices, construction and consumption, the Irish government has squandered its tax revenues (and quite a bit of European Union largesse), and is ill-prepared for the next few years of recession:
"In a devastating economic analysis, the Economic and Social Research Institute (ESRI) forecast the first recession in the Irish economy since 1983. Outlining gloomy prospects for the economy over the next few years, the ESRI said output of goods and services will fall this year -- an Irish definition of recession.
...
The main culprit is still the collapse in house construction, which has plunged from 75,000 units last year to just 30,000 next year. This fall is so serious, it wipes out all the growth in the rest of the economy. "
12 Comments
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1. brian t said...
If interested, see also the linked editorial "How we threw it all away". The "decentralisation" project it refers to is the Irish Government's long-running expensive project to move government offices out of Dublin... to save money. Yes, that's what I thought - and I'm not even Irish.
2. montesquieu said...
'1999: Ireland joins the euro, allowing interest rates to fall from 7pc to 3pc.'
Says it all really ... you don't need to read what happened next ....
3. brian t said...
There are a lot of US companies operating in Ireland, taking advantage of preferential tax rates. There are already rumblings in the USA about bringing those companies home, so if the Irish Government looks in that direction for tax revenues... so long, pardner.
4. mrmickey said...
Ireland has gone from being one of the poorest countries in Europe to one of the wealthiest in a very short time and most of that wealth like the UK's is centred around it's capital city so i can see why they wanted to try to create some employement out in the provinces. I think most Irish knew the new wealth was a bit of a mirage like our own and would eventually dry up but the Irish know how to enjoy themselves and they certainly enjoyed it while it lasted.
5. sold 2 rent 1 said...
Was over there 2 weeks ago.
They are still in denial mode and most haven't got a clue what will happen - 60-70pc crash over 3-4 years
6. mken said...
montesquieu '1999: Ireland joins the euro, allowing interest rates to fall from 7pc to 3pc.'
Says it all really ... you don't need to read what happened next ....
Hardly, as the article says "We blew" it, the banks in Ireland were under no obligation to lend
recklessly but as in the UK no one wanted to stop the party - least of all the respective governments.
The carbon copy crash in the UK is hardly caused by joining the euro.
7. icarus said...
Nothing here about the dangerous over-exposure of Irish banks to the commercial and residential property sectors - another unexploded bomb.
8. cyril said...
mken - montesquieu's comment is not necessarily anti-Euro.
He is just saying look what happens when you halve interest rates? What did they expect?
9. uncle tom said...
The Irish boom was to a large extent bought by getting high on excess debt - now comes the cold turkey...
10. montesquieu said...
Actually I was pro-Euro for a long time ... I thought the consequence of one club interest rates plus mixed speed economies would be dealt with by strict fiscal policy as per the original convergence criteria. coulnd't have been more wrong as it happens ... hands up, I was a Euro enthusiast ... and I still keep an open mind.
So here I wasn't being Europhobic at all ... our interest rates in the UK were artificially low for other reasons than being in the Euro, but the consequences were similar. Party like it's 1999?
11. mken said...
cyril @8
Whatever the interest rate, banks are not obliged to lend to anyone.
They should base their products on some form of analysis.
12. mken said...
The sad thing for me about Ireland is the way the landscape has been ruined by corrupt building in ostensibly protected areas
of great beauty and cultural significance. And generally, not just how the land has been consumed, but the ugliness in what has been built.
See just as an example http://www.greystonesmarina.com/ and on the same subject http://www.gingerpixel.com/ireland/greystones-harbour/