Analysis and Commentary on Irish Banking and Eurozone Stability - An Economist's View.
Tuesday, 19 April 2011
Should Ireland Leave The Eurozone -Before We're Pushed ?
The last thing Ireland needed was to be commended by the EU/ECB/IMF ‘Troika’ for ‘making good progress’, following their first Review meeting of the ‘Bailout’: continued economic contraction, 15% unemployment, property prices continuing to fall with tens of thousands in negative equity and in mortgage arrears. The losses of banks in 2010 and prospective impairments tell their own story about the state of the economy. The public finances are carrying an unsustainable debt burden. Our Sovereign Bonds are rated near ‘Junk’. This is ‘good progress? God help us if we ever really get into difficulties.
The changes secured by the Government from the EU/IMF/ECB ‘Troika’ are commendable. Nevertheless, in terms of the impact that the implementation of the Bailout is having right across the economy, they are very much at the edges. The counterproductive Stability and Growth targets to be achieved by 2015 remain the same. Coming down the line are the negative effects of the rise in ECB rates.
The new Government’s focus on job creation is right. The difficulty is that the Government now has little or no autonomy to invest in putting our people, spare capacity, and our natural renewable energy resources, to work. Or to invest further in the ‘knowledge equity’ embedded within our Third Level institutions, the ‘linkages’ with our multi-national companies (MNC’s) and in individual companies.The Ministers we elected now must effectively have their decisions ‘signed off’ by the ‘Troika’—where does Democracy or Liberty come into all of this?Crucially, there has been no reduction in the bailout servicing costs – even though the IMF in their recent Global Stability Report made the case for such an initiative.....Read On
Professor Ray Kinsella is on the Faculty of the Smurfit School of Business UCD. https://sites.google.com/site/professorraykinsella/ (Edit post)