No Irish Spring: Emerald Isle as Credit Crunch Microcosm
While the story of the collapse of the Celtic Tiger is not a new story, I did enjoy Theodore Dalrymple’s recent piece in City Journal: How the Irish Bubble Burst.
We are supposed to learn something from this incubator of a pure economic meltdown. I find this amazing:
Some 300,000 new dwellings now stand empty in the Irish Republic, a number whose equivalent in the United States would be approximately 21 million.
And the emigration begins…
Unemployment is now 13 percent in Ireland; it would be higher if 5 percent of the working-age population (principally the young and well-qualified) had not emigrated over the last two years.
A few months ago, I did a podcast interview with a friend of mine from Ireland who described the unsettling change in values during the boom a few years ago while on a family visit.
I observed what I later dubbed the “Irish Carpenter Syndrome” (my label for working and middle class Irish investors who were snapping up condos in Manhattan sight unseen) egged on by the currency imbalance.
The poster child for this phenomenon was The Centria Condo adjacent to Rockefeller Center (faces the famed Christmas Tree directly over the plaza) during the 2007 rush to snap up anything they could. 100% of the buyers in this building were reportedly Irish. The high flying Ireland-based marketing firm that sold these condos to investors, largely sight unseen, imploded along with the investors.
The urgency that permeated this NYT article harkens to another time.
“It’s an Irishman’s dream to be able to go to Manhattan and be able to buy property there,” said Mr. McCann, 36, who added that he hoped to buy more New York apartments.”
Yes, indeed.
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February 24th, 2011 at 9:44 am
Ireland can’t afford to pay for the guarantees they’ve made to the banks, they will reneg on the recent Euro bailout (millstone, really) after their new government enters.
Ireland has 300K vacant homes out of a ballpark 1.5 million residences or 20%.
Spain has 1.5 million vacant in a population of 45 million so thats about 15 million residences or 10% vacancy rate.
Spain is also struggling with a sky high unemployment rate of about 20%. If Spain’s natgas delivery problems from north Africa continue or expand they’ll be on the Euro gurney for a bailout hatchet job like Ireland got. Funny how the nut in Libya could bring down the euro zone.
February 24th, 2011 at 9:53 am
The sad thing is that just like here someone in power probably realized the madness half way up, but knew that if they intervened and stopped it they would be crucified for having “caused” the meltdown. Letting it continue getting much worse and then blow out on its own you can always claim that “nobody could have predicted”.
February 24th, 2011 at 10:37 am
The problem: The Irish Banks lent too much to certain members of Irish society. The international lenders (mainly German and British banks) lent too much to the Irish Banks.
The Solution: All Irish taxpayers and the IMF have now bailed out those German and British banks. Irish borrowers and banks are wiped out.
What should have happened: Punish the specific members of Irish society that borrowed too much. Punish the Irish Banks. Punish the lenders to the Irish banks. This way Irish children, students, pensioners and people who have ever only bought a primary residence would not have gotten shafted.
February 24th, 2011 at 11:23 am
Human nature makes this event or one similar to it inevitably repeatable. Different problem, different people. No lessons learned. While I agree we need to penalize after the fact all we can hope for is for a smaller scope next time.
February 24th, 2011 at 2:53 pm
I see this is a smaller scale version of the ramifications of letting corporations become too big, and too interwoven into every nook of society. Where have all of the anti-trust, anti-monopolization rules gone? I’ll tell you where. Into the back pockets of those who seek to be elected, inserted by the very corporations who wish to control the world as we know it.
And when a speed bump gets hit, 20% of a country’s housing is left vacant.
February 24th, 2011 at 3:30 pm
The credit crunch is destroying any hope in Ireland that they will have an economy to speak of for decades, but many are ignoring the other great shock to that society, the most Catholic of Catholic countries, as they discover that their church, like many churches in the world, harbored thousands of child molesters and abusers. This is an awful one-two punch, and very sad, indeed. The church is heavily intertwined in the culture and affairs of state there, and it will be much more difficult to work out that problem than pay Germany for it’s debts.
February 24th, 2011 at 4:11 pm
Too bad Ireland didn’t cut corporate taxes and deregulate its banks enough to attract more international business. They could’ve made up for the losses on volume.
February 24th, 2011 at 4:54 pm
@wunsacon – maybe its not too late for them to bust union bargaining power. That might help too…
February 24th, 2011 at 5:28 pm
The Irish would do well to reflect on the FACT that Bjork is more courageous and more effective than any of the tuff guys talking out of the south side of their mouths there in Eire. Lots of phookin faeyries and few Fenians, that’s what I say.
Off topic: Run for President in Peru and get a free prostate exam (totally worth i):
http://www.perufail.com/2011/02/21/ppk-amigo-candidato-pedro-pablo-kuczynski-bulto-palpe-aca/
February 24th, 2011 at 7:20 pm
I was in Ireland for a few months at the beginning of the miracle, watching the used car salesmen attitudes I had a feeling this was going to end badly.
Off topic: Washington Post/Kaplan University scumbags
http://www.change.org/petitions/tell-kaplan-the-washington-post-stop-cashing-in-on-low-income-students
February 25th, 2011 at 8:04 am
gordo365, yeah, they’ll be sorry if they leave that stone unturned. g>