November 14, 2011
European and American business leaders are praising Ireland's government for setting a courageous course to return the Irish economy to financial prosperity in the years ahead. A balanced mix of increased taxes and reduced spending has both European Union (EU) and International Monetary Fund (IMF) leaders pointing to Ireland as a superb example of fiscal prudence as the country fights to restore its economic health.
As reported in the Irish Times, the president of the European Commission, Jose Manuel Barroso, said, "I was happy to report that Ireland is indeed headed in the right direction, that confidence is returning, and that commentary internationally from business, economics and from a political perspective see a country that imposed discipline on itself and is meeting the conditions by the Government working with the people." Barroso went on to say that "interest rates have come down and growth has returned."
The European Director of the IMF, Antonio Borges, said, "Ireland was performing surprisingly well and that conditions now were much better than they were before. I think the Irish economy has been positive. Ireland's performance is exemplary but the situation remains challenging."
And American businessmen are investing significant capital in Ireland –building plants, hiring new employees, and creating research centers. Ireland is still looked upon as a favorable place to invest for the future.
The only dark cloud here is the possibility that Europe may go back into recession as a result of the inability of countries like Greece to pay the European banks what they owe them. And as our own stock market reflects almost every day, this brings great uncertainty to investing and many businesses are holding on to what cash they have to protect themselves from the economic disasters we experienced in 2007 and 2008.
According to the New York Times the first European large bank to come close to failing is the Belgian-French Bank Dexia, which received tens of billions of "Bailout" euros in late October to keep them solvent and be able to pay two American companies Goldman Sachs and Morgan Stanley what they owe them. From this, it can be seen that this is not simply an Irish problem. Institutions across the world borrow from each other to have the funds necessary to loan at higher interest rates. Unfortunately, both the borrowing and lending decisions are made by imperfect human beings who have occasionally compromised themselves and their companies by making the wrong decisions.
But congratulations to Ireland's leadership. Though sacrifices are being made by most all in Ireland, the country appears to be facing its problems with courage and toughness as salaries have been reduced, taxes have been increased, pensions have been decreased, and many social services have been curtailed.
Ironically, many of these decisions were made by the government leaders who were voted out during the last election. Fianna Fail's finance minister during that time, the late Brian Lenihan, put in place many of the austerity measures that the people reacted negatively against. Today, the moves rate praise in Europe.
Boston's Consul General of Ireland Michael Lonergan, while optimistic, warns, "There is, of course a lot of uncertainty and considerable risks, not least signs of slowing activity in our main trading partners in recent months."
So, while it may not be time to send the marching band down Grafton Street, there are positive things happening in Ireland.