Hat-tip Philip Pilkington for this link to this excellent article. Bill Mitchell must have some Irish blood to go to this considerable trouble to research our predicament.
How’s poor old Ireland, and how does she stand?
Posted on Monday, December 19, 2011 by Bill Mitchell in BillyBlogLast Friday (December 16, 2011), Ireland’s Central Statistics Office published their – National Accounts – for the September quarter 2011 and guess what? Things just became worse. Ireland is now nearly two years in the enforced austerity and all the deficit terrorists have been watching it closely for signs of life. The slightest upturn in GDP growth has brought a salvo of attacks on any one daring to oppose the harsh austerity. Well, I also watch it closely and the pattern that is unfolding is consistent with predictions. Things are getting worse not better. The only growth “engine” has been exports and with austerity spreading that market will not be strong enough to sustain growth when domestic demand is being ravaged by austerity…..
Here are the most telling charts
Bill finishes his well referenced and data-rich article with..
Ireland was the first nation to heel-click to the Euro bullies and in early 2009 imposed a very harsh austerity program on the nation. We were told that it would be tough but growth would come. The Irish people are still waiting while many cannot wait any longer and are leaving the nation behind.
Ireland will struggle while they remain in the Eurozone. The system is geared heavily against them.
This UK Guardian article (December 16, 2011) –
Ireland’s problems are far from over – provides an accurate assessment of what is going on in Ireland at present.The article says:
Listening to Irish finance minister Michael Noonan you would think that exporting lots medical devices and gallons of milk is enough to support a vibrant economy. More than that, a few minutes in his company and you might be forgiven for believing this export fever will also bring down one of the biggest debt-to-GDP ratios of any nation in modern history.
It is the cheery, optimists version of economics he subscribes to, with the cavalry, in the form of the IMF, rescuing everyone in the final reel …
But Noonan’s strategy is not built on firm foundations. As such, it is not so much a confidence boost as a trick. And one that is being perpetrated on the Irish people to keep them thinking they are best served by remaining in the euro currency zone and paying back all their debts.
The article concludes that the recent Irish National Accounts data “are testimony to Noonan’s ridiculous optimism. The economy contracted by 1.9% in the third quarter, far worse than expected”.
The confidence trick is that the Irish government and the IMF and OECD and all the rest of them keep hoping that “the growing export sector will distract the Irish public from the fundamental problems of paying back debts with a smaller and slower-growing economy”.
Conclusion
In this blog from July 2010 – The Celtic Tiger is not a good example – I noted that Ireland’s growth was coming from the modest growth in the US economy. As the Euro depreciated against the US dollar, Ireland’s exports (pharmaceuticals, software, food and services) became increasingly cheaper and more attractive to its two major trading partners Britain and the US.
Exports were driving Ireland’s growth. I noted then that with the UK economy now being deliberately whiteanted by its own government (via the very harsh budget cuts) and the US economy slowing again, the Irish recovery will be stopped in its tracks. The lack of any spending recovery in the domestic components and the rising unemployment will take care of that.
That is what has happened.
Austerity begets austerity and trade is one way that the transmission occurs.
Exactly!
