The Irish Economy

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Ireland in Transition

I was watching an interesting programme presented by Ian Kehoe (from The Sunday Business Post) showing how the recent resurgence in the Irish economy owes a great deal to a considerable amount of overseas capital investment, especially with respect to sales of distressed property. As is well known the Irish property boom came to a shuddering halt in 2008 leading to massive falls in value with respect to both residential and commercial property. Many of the largest loans on these properties were sold to NAMA (an Irish state organisation that has arguably now become the largest property company in the world). Likewise, many other assets however still exist on the banks' balance sheets, which they are anxious to sell to the highest bidder. And as Irish developers no longer possess the financial means, these assets are being quickly sold principally to the US (on both coasts) the UK and other international investors. Some of these assets have been bought up also by successful Ir

Apple's iTax

The US Senate hearings on the tax avoidance activities of Apple last week places uncomfortable attention on Ireland’s relationship with this key multinational company. This followed a Public Accounts Committee into the affairs of Google who again are effectively using Ireland as a means of legally paying virtually no tax in the UK. And they are by means alone in this regard. For example an article in the Wall Street Journal back in 2005, highlighted the manner in which Microsoft used two subsidiary companies operating within a law firm in Dublin to again substantially reduce their overall tax liability. Then when questioning the extremely high cost of prescribed drugs In Ireland, one can also point to a growing concentration of the pharmaceutical sector. 9 of the top 10 multinationals are now in operation here with - I strongly suspect - tax avoidance on their global operations a major consideration. One of the key consequences of all of that due to a growing unhealthy level of dep

Health Matters

The earliest days of the New Year sadly only act to confirm my w orst fears regarding the state of the public sector in Ireland (and in particular health facilities). Like an ever repeating broken record, we hear accounts at the beginning of January regarding the gross over-crowding of our public hospitals. Though we are told that lessons have been learnt with new plans in place to ensure that the same problems do not arise the following year, unfortunately it is always the same old story (with however matters even worse than before). Of course the HSE will immediately point to the cuts in the health budget as a ready excuse. However the problem is really much worse than this with the truth being that we have an health service now in Ireland that in many ways has become increasingly dysfunctional. There are many reasons for this sorry state of affairs pointing to key weaknesses in the Irish personality in dealing with administrative failure. Firstly there is a huge lack o

Crisis Deepens

Since I last wrote several significant developments have taken place making it clear that the present crisis both in Ireland and in Europe is much deeper that initially realised. Indeed there is an even growing risk now that the whole financial system - not just in Ireland - but in the Eurozone generally could spiral out of control with disastrous consequences for its citizens. And unfortunately this risk is aggravated through a lack of effective action at the EU level (where intervention is most necessary). To be honest I was deeply shocked at the manner in which the EU reacted to the growing Irish problems last week. Though I have been a persistent critic of the terrible mismanagement of our economy (especially since 2000) at least I could not fault the Government for its determination to play by European rules. So for example, despite considerable domestic criticism, Brian Lenihan consistently maintained the Government's intention to fully redeem all senior bondholders in o

Looming Crisis

Things are not looking good at present in Ireland with an enforced economic bailout from the EU/IMF Stability Facility in the new year looking ever more likely. Unfortunately the damage already done to the economy during the totally reckless latter phases of the Celtic Tiger has been so great that in truth it is hard to see how any credible response can now be made to deal with the financial implications. As I had always feared, losses from the banking system have been much greater than recognised. Indeed I suspected that the government was engaging in an unconvincing game of bluff in hiding the extent of such losses. From an initial position that the banks "would cost us nothing" it is now admitted that the losses will be in the order of €50 bl. (which unfortunately is likely to be a severe underestimate). The projections with respect to property prices on which these figures were made were far too optimistic. Furthermore there is a considerable amount of - yet - unreco

A 30 Year Cycle

It struck me recently that the prolonged recessions (lasting up to a decade a length) have been a consistent feature of the Irish economy since independence. Furthermore these recessions have occurred on a fairly regular 30 year cycle. When we obtained our Independence in 1922, the country became ravaged by a very damaging Civil War. Manufacturing industry was practically non-existent with the country almost totally dependent on agricultural production. Though little progress was made during this first decade of freedom, surprisingly, in a qualified fashion, the economy started to revive during the era of the Great Depression. The high tariff barriers now in place enabled the replacement of - formerly - imported commodities by new domestic firms. Also the Government, recognising the lack of private capital took the initiative in setting up several large state-owned enterprises. Then we escaped the worst ravages of the 2nd World War through our neutral stance. However during the ne