Go to your toilet. Flush it. Watch the whirlpool gather force and momentum as it heads for the drain.
That's the Irish economy as we head through 2010.
So, when you hear someone say Ireland's economy is in the toilet, you know you're talking to an optimist who believes we're still in the bowl.
The Celtic Tiger
Irish economy was the fastest growing economy on the planet for many a 1990's
year, at points growing at a clip over 12%. An economy is considered exceptionally
healthy when it passes 3% annual growth. This
huge swell of prosperity led observors to compare Ireland with the 90's Tiger
economies of Singapore and Taiwan. Ireland was "The Celtic Tiger."
The 90's were a time of real economic growth spurred by low wages, membership in the European Union and tremendous productivity gains as computers and updated business methods spread.
Following 9/11 there was a pause, but then began Tiger Two when the Celtic
pussycat again started rustling about in the economic garden.
And 'twas Tiger Two that sunk us.
A Sea of Debt
When Ireland joined the Eurozone, it gave away the most powerful weapon for restraining inflation - the ability to set its own interest rates.
The benefits for Ireland of being a Euro country should have offset this disadvantage. It didn't, because the governing party was notoriously dependent on builders and developers for its financial support.
The one remaining tool in the government's arsenal - requiring high capital requirements of the banks - was jettisoned. Construction and housing became the driving force of the economy.
Speculation was rife. The banks lent hundreds of billions of Euro to land speculators. The madness was encapsulated in the tale of an acre and a bit of land in Dublin with a nice house on it that was purchased for 53 million euro. The house was to be torn down, plans for an apartment complex and three smaller homes were sent to the planning department. The planners looked at these totally unsuitable developments for a quiet residential area and nixed the idea.
Someone lent these speculators the money for this stupidity. Who did that?
Well, to my surprise, I loaned these fools the money.
You see, the banks got in so deep with such tomfoolery that when push came to shove, they folded. So, I and all my neighbours are now on the hook to bail out the banks, to recapitalise them and keep the developers from ever having their loans called in.
Ireland's total debt in 2004 was under 500 million Euro. In four years it soared to nearly 2.5 trillion - a fivefold growth. This was the fastest debt growth of any society, any time, anywhere. A planetary, historic first!
It wasn't only the banks' favoured speculators who were showered with largesse. Credit cards rained from the sky, consumer debt soared and young couples stood in lines to hock their futures to builders.
Even worse, government budgets rose 50pc in the same period. From 40 billion, the government's annual obligations rose to 60 billion.
How did the brilliant overseers of government spending propose to pay for their spendthrift ways? They based everything on the premise that the good times would roll on forever. A tax on buying houses came to underpin the national budget.
In 2006, more than 90,000 housing units were finished. Compare this to the 13,000 a year not much more than a decade earlier and you understand the flush of money that coursed through the economy in the noughties.
Enter the credit crunch. Exit Lehman Brothers.
Bye bye Celtic Tiger!
Fear Stalks the Land
As we head through 2010, fear abounds. The only people not afraid are the overpaid higher-ups in the public service - the guys and gals actually running the show.
Every action the government proposes to deal with the crisis takes direct aim at the poorest and most vulnerable. They are always careful to spare the big boys, the banks, the highly paid. Everything they do gets us in deeper.
The most monumentally incompetent government in Irish history is in charge as I write. When bank fraud is unearthed, the government does nothing. As hundreds of thousands of jobs are shed, the government ministers mumble about task forces. Key and critical reports aren't even read by the Finance Minister.
We Shall Overcome
Just because mismanagement has left the Irish temporarily down doesn’t mean the country won’t bounce back. Let me quote from my newsletter.
Core strengths remain:
A worldwide diaspora of 70 million people identify themselves as Irish.
Ireland has the finest grass on the planet and the beef and lamb that go with it. Farm exports earn more than computers and pharmaceuticals combined.
The island boasts a potent image as a ‘green’ country.
Irish democracy is stable – perhaps too stable!
Crucially, we are members of the European Union.
The work force is young, well-educated and English speaking.
An entrepreneurial culture makes it easy to set up a new business.
Culturally, the Irish are renowned for their music, literature, history – and pubs.
Remaining reasonably strong industries include pharmaceuticals, medical devices, optical devices and programming/IT. Exports of food and beverages – beef and alcohol – are solid.
All the new roads, port facilities, expanded airports, electric grid upgrades, better insulated homes and brightly painted towns are lasting legacies of the Celtic Tiger.
Ireland has the most constant strong winds and the best wave and tidal power in Europe. Green energy galore.
The Irish are friendly, welcoming and fun.
The place is truly lovely.
The Vacation of a Lifetime
One reason for Ireland's
predicted economic rebound is its productivity. A United Nations report states
that the Republic boasts the third most productive workers in the world. Partly that's
because the Irish work longer hours each year than most of their European
counterparts - some 1,668 hours. This is exceeded only by the US,
Finland and Portugal.
Unlike the serfs of the
US economy, however, all Irish workers enjoy by law 4 weeks of paid vacation
per year. I compare this to the wage slavery of many of my American friends.
They earn more per hour than their Irish counterparts, but get only one or
two weeks of vacation per year to enjoy it.
In this section I've tried
to answer questions concerning money, taxes and prices in Ireland. I am not
a trained accountant, economist or self-made millionaire. My economic advice
should be handled with care. So, I'll mostly try just to survey those questions
of greatest concern to Irish immigrants. Expert advice should be sought when
it comes to your key financial affairs.
Ireland takes a census
every five years. Some of the questions in it are nosy and snoopy and none
of the government's damned business! But, what interesting results! Here seems
as good a place as any to link you to the Central
Statistics Office where you can get population and economic statistics
enough to make a math professor swoon.
Check out the Salary page.
For information about
opening a bank account, transferring money to Ireland and an overview of all
the key banks, click here.
Do you qualify for an
Irish pension? What taxes will you owe on pensions transferred from abroad? Click here.
Social Security Payments
You can arrange to have your Social Security/Social Welfare/Pension checks delivered to you almost anywhere, even direct-deposited on your behalf into many banks around the world. Check with your country's appropriate agency for the arrangements that are available. The key point to understand is that, almost surely, you do not need to maintain an address overseas to receive Social Security and similar payments.
Images in This Section
A money section, I'm thinking, should focus the mind on the desirable goodies that moolah buys. So, this section is filled with photos of the Irish countryside. Those of you preferring to stare at €1,000 notes should send me a few for scanning and I'll be happy to oblige.