Businesses closing, families losing their homes, broken marriages and an increasing number of Irish citizens that wish to leave the country is what is seen in the so-called Irish “tiger”, that this week had to accept help from its European neighbors to save its banks and prevent a further financial collapse.
What happened to the Irish economic miracle, which recorded a GDP of 11 percent in 1999, even as they began to show signs of turmoil in Europe in 2004, figures showed more than 5 percent?
The analysts suggest that the regulation of the financial system did not exist or was lax, growth figures were somewhat faked, because it was not well supported by loans and investment, and the country was not fiscally prepared to be part of the euro area joining the single currency.
Professor Luis Garicano, London School of Economics, told TIME that Ireland has taken many difficult decisions when trying to rescue the financial system. Some have been good, as trying to introduce transparency, recognizing losses and trying to put everything back on track.
The origin of the crisis
The greatest sin was the assurance given by the Irish Government on September 2008, at the height of the crisis, that all bank creditors would recover their investment.
This warranty transferred the risk of default from bank creditors (debt holders and depositors) to taxpayers. Dublin was betting with almost no information, that the financial market problems were only based on lack of cash,” said Garicano.
British MEP Charles Tannok backed his government’s stand of being the first to announce financial support for Ireland, despite not being part of the eurozone, and stressed the responsibility of the Irish banks that were dedicated to very large loans in the construction sector.
Garicano also supports the thesis that the process for the implementation of the unified currency was poorly designed.
While solutions are implemented, Irish citizens see how ‘the tiger’ is farther and father away. Local media reports how young Irish students seek to work in Australia, Korea and Canada once they finish their studies, as the 4.5 million citizens are plagued with the second highest unemployment rate, at 13%, after Spain.