Of Bond Ratings, Bailouts and the Diaspora
Ireland and its struggling economy have taken center stage over the past week providing journalists with filler for major publications throughout the Globe.
Here's a quick sample from a Google news search: "Bailout Friday?", "Markets recover on Irish bailouts talk", "EU bail-out for Ireland", "EU urges early Irish bailout", "Ireland Crosses Fingers To Avoid Bailout", "Ireland Denies Bailout Rumors."
Ireland's Fate Tied to Doomed Banks
- a Nov 10th article provided a particularly sobering view by Charles Forelle and David Enrich of The Wall Street Journal
.
Despite WSJ's assertion that "the unpopular government (Ireland's) is bracing for collapse" and that the Government has (allegedly) as recently as yesterday engaged in bailout talks with the EU, the Irish government contends that the situation is over exaggerated and that they have not and have no plans to formally engage in availing themselves of a "bailout" from the EU. A good thing? Depends on your perspective. To their credit, Ireland tried to preempt such action by enacting major spending cuts and raising taxes - unlike the situation in Greece - but it may have been all for naught as the total amount of toxic debt is arguably not yet realized. It appears that - not surprisingly given the reprehensible behavior of Irish bank executives - the actual figure of bad debt Ireland now holds is an illusive figure. Translated - the country is still suffering from a debilitating hangover from which the fog is continuing to lift. Whether loans were granted based upon inaccurate/unverified collateral or future would be returns, the amount is staggering and a final number is a matter of dispute.
In addition to the ever growing injection of public money into the country's banks to cover losses - the latest estimates around €46 Billion - bond ratings are accordingly suffering which has led to the current "he said she said" accusations of formal bail out talks. According to reports by the Irish Times and RTE News, both Finance Minister Brian Lenihan and International Monetary Fund [IMF] chief Dominique Strauss-Kahn have denied talks of a bailout. Strauss - Khan said yesterday that Ireland can manage its fiscal affairs well, and the fund has had no request for aid. Lenihan went further saying, "It doesn't seem to me to make any sense ... It would send a signal to the markets that we are not in a position to manage our affairs ourselves." There are other reports that talks have taken place but are only "technical" in nature.
Whether talks are happening and the government is keeping mum or whether, as Minister Dermot Ahern has contended, the talks are "fiction" will invariably come to light in time - probably sooner rather than later. The insatiable appetite of today's media only makes the problem much worse. Chicken Little scenarios have become their bread and butter. The bigger issue here is what happens to the country. High unemployment and massive emigration was supposed to be a thing of the past - not to recur. But taxes are up, services are down and the public is justifiably outraged. The Irish people are both pragmatic and reasonable but the lack of accountability and the lack of justice that has been served unto the perpetrators of this fiasco is maddening for them. In chatting with family and friends it appears that many folks have lost all faith in their elected representatives in Dublin due to an apparent inability to represent the average citizen. Notwithstanding the above, I take issue with economist Morgan Kelly's position that civil unrest is inevitable in the country -
If you thought the bank bailout was bad wait until the mortgage defaults hit home
In particular his prediction that "Within five years, both Civil War parties are likely to have been brushed aside by a hard right, anti-Europe, anti-Traveller party that, inconceivable as it now seems, will leave us nostalgic for the, usually, harmless buffoonery of Biffo, Inda, and their chums" is self destructive, self serving, incendiary and on a positive note - far fetched at best. Worthy of a read that paints a different picture is Donal O'Mahony's retort -
Now is the time to pause the national self-destruct button
On a separate note and from a political perspective, I certainly do not envy the position Brian Lenihan finds himself in. Notwithstanding the numerous personal attacks he has sustained, I think history will prove that Lenihan performed as well as could be expected as Finance Minister. Despite his intelligence, the challenges he faces are virtually insurmountable and the blame finger has invariably been pointed at him. Add to that the fact that he is currently suffering from pancreatic cancer, I have to admire his decision to continue on in this role.
What Now?
The government's initiatives that began with meetings at Farmleigh in 2009 makes good sense and will hopefully equate to a boost for the country's economy. There is a sobering realization that Ireland cannot appear to be asking for a handout from the United States [we have our own problems] or anywhere else for that matter. But a harnessing of the Irish Diaspora, a by product of the Farmleigh talks, is an integral piece of the recovery initiative.
Meanwhile back in America ...
In the midst of all this, a third meeting of
took place for the first time on American soil in New York city last week with Minster for Tourism Mary Hanafin - in my opinion another star in Cowen's cabinet - representing the Irish Government. According to Lara Marlowe of the Irish Times the mood of the meeting was somber with one participant "privately suggesting that there was nothing left to do but send food parcels."
Postmortem for Celtic Tiger predicts Ireland can Rise Again
During the gathering, Minister Hanafin urged attendees not to be swayed by the propensity of the media to portray an apocalyptic Ireland but rather stressed the government's mission "to promote Ireland's economic, cultural and tourism messages in key markets. No government has a monopoly on good ideas. Maybe rather than just having talks about the difficulties we're facing we could also take a minute and look at the strengths that we have."
Skilled Irish diaspora focus on recovery
Such is a view and attitude that, although challenging, must be embraced and shared by the Irish in Ireland and abroad. One way to highlight such strengths is a coordinated effort to harness the Irish diaspora.
In addition to the Global Irish Network, another initiative that was born out of the Farmleigh talks was the establishment of a a network of Irish and Irish Americans in the United States and throughout the Globe.
is the national organization encompassing member organizations in key cities throughout the United States. The networks charge is to "provide an inclusive environment that facilitates effective coordination and collaboration, on a global stage, of Irish and Irish Americans from all vocations, with the goal of strengthening the economic, social and cultural ties between the U.S. and Ireland." The end game here is to harness the creativity and experiences of Irish born and Irish Americans in a way that will not only re-ignite America's connection to Ireland but to also establish mutually beneficial links bearing both economic and cultural rewards for both countries. The response to date has been phenomenal. INs have been popping up throughout the US - Boston, New York, Philadelphia, Chicago, California's Bay Area, San Diego, Washington DC, and Seattle.
As a board member of the
Irish Network Boston (IN Boston)
, I have been impressed with the rate at which the various city networks have gotten off the ground and the number of people here in the States that are anxious to get involved. Does it change the situation in Dublin - no - but it provides a forum for opportunities. Some cynics fed by ignorance may rhetorically inquire "what can a bunch of 'plastic paddys' do for us?" Such attitudes however only perpetuate a doom and gloom outlook that in the end is self- destructive. Rather, these initiatives should be viewed as a means by which American interest in and love for Ireland can be used to achieve a win win endeavor for all - whether it manifests itself in business dealings or cultural initiatives. Our launch on 3 November saw the support of local businesses, the Irish and United States Governments - Ambassador Michael Collins and Congressman Bill Delahunt - and was attended by 300 people all of whom want to see prosperity return to Ireland. I look forward to our continued efforts to increase fruitful links between the two countries.
The financial crisis is still affecting us all and unfortunately there is no going back. There is plenty of blame to go around for the collapse of the markets we have collectively been suffering from. As far as Ireland's future, key elements will most certainly be a renewed commitment to creative economic policies and a renewed partnership with Irish America and the entire Irish diaspora.
