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Irish Economy 2010 - The New Reality

By Edited Jun 19, 2015 0 0

  

Since joining the EU Ireland's economy has grown and been completely modernised.

 

In 1967 milk was still being delivered in churns by donkey cart to local cottages, where children were sent out with a pail. The pail of milk would sit in the corner and the children would dip cups into it and drink the still warm from the cow, unpasteurised milk.

 

All the working donkeys are now gone, along with the leprechauns, though the price of a jenny (a female breeding donkey) has increased recently, so maybe they will be making a comeback, until the government slaps a tax on donkey harnesses, or imports thousands from Eastern Europe.

 

From 1995 the irish-economy exploded, so much that the next 13 years, until 2008 are referred to as the years of the Celtic Tiger. The Tiger is dead and waiting to be buried. The irish-economy has been grossly mismanaged by a succession of politicians.

 

Politicians usually have some basic grasp of economics, even a paper qualification or two in this esoteric area. The Irish people would love to know where their leaders obtained their economics qualifications. Wherever it was is keeping very quiet, lest their own reputation should suffer by association with such a bunch of incompetents.

 

These politicians did not grasp the first law of economics, 'What goes up goes down'. They thought that the irish-economy was going to fly in the face of all economic theory and keep going up for ever.

 

Irish politicians have even shorter memories than other politicians. It was only in the 1980s that there was no work to be had in Ireland and Irish people had to go to England to find jobs. A whole generation of workers left Ireland and brought their families up in a foreign country because the irish-economy was in such a mess.

 

Yet in 2007, after 12 years of growth the Finance Minister, the man in charge of the irish-economy still seemed to behave as though the economy's growth would carry on forever.

 

On 15th September 2008 the Lehman Brothers bank filed for bankruptcy and started the financial reassessment in all banks that led to the financial collapses throughout the world. The irish-economy's growth ended on that day

 

 

The US banking sector was in a mess because of poor mortgage lending practices. The irish-economy's growth was founded in property. Banks were found to have misled the Financial Regulator, who has since stepped down and taken early retirement because of the bank scandals that came to light.

 

One bank, Anglo Irish Bank, had lent money to its directors to invest in property speculation, then the market crashed the directors were unable to pay back the loans, one is currently filing for bankruptcy. The same bank had scores of other 'irregularities', substitute frauds if you wish, that had been covered up by the bank.

 

The irish-economy is now totally wiped out, because of the stupidity of politicians and senior bankers. Irish banks funded the expansion of the economy by funding investment in property: Property speculation to the rest of the population.

 

Even in 2008 the Irish government's 'management' of the economy included tax relief on the purchase of investment property. Everything the politicians did was designed to fuel the boom in the irish-economy that was solely based on property.

 

Over the years of the Celtic Tiger property prices nearly tripled. The irish-economy grew, but it did not triple over this time scale. The growth in house prices happened because wage inflation was very high, especially in the state sector.

 

The irish-economy also benefited from the immigration of hundreds of thousands of people from Eastern Europe during the Celtic Tiger. All of these people looking for property to rent fuelled the growth in the prices of investment property, as everyone and their dog were looking for houses to rent to immigrant workers.

 

The government encouraged this mass migration to bring wage costs in the irish-economy down. Unfortunately the irish-economy did not benefit very much from these immigrants because most of them were living in shared rooms, spending the minimum possible in the irish-economy and sending most of their wages back to Eastern Europe. Most of these migrants have now left Ireland and returned whence they came.

 

Even in today's irish-economy people working directly or indirectly for the state in Ireland have a wonderful deal. They get a job for life AND a pay rate that is above that of the private sector AND guaranteed pay rises and increments every year AND an inflation linked low cost final salary pension scheme. This all happened during the good times, but of course these people have kept all their fabulous conditions, even now when the bad times have come around.

 

It is partly because of the growth in the wages of state employees that the irish-economy is in such a mess. There are fewer people, paying less tax so the wages in the state sector should go down as they would in a private company with a falling order book. There is currently a wage freeze in the state sector, and that almost caused a National Strike, even though they still receive annual non-performance related increments each year.

 

There are no jobs in the private sector as companies fail due to the fall in consumer spending that has followed mass unemployment. There are no jobs in the public sector either, because of a recruitment freeze.

 

The only vacancies in the irish-economy are temporary ones or voluntary ones where you work in order to gain 'experience'. What experience does someone who has been working for 30 years need? This system of voluntary jobs means that vacancies can be filled with volunteers rather than paid employees, another crazy system that is unique to the irish-economy.

 

Between 2002 and 2006 there was net immigration to Ireland for the first time ever. Net emigration is back again, with many young Irish families moving to Australia and Canada, just as in the bad old days.

 

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