IRELAND : ECONOMY DOMINATED BY DEBT.

 
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Ireland's Finance Minister Michael Noonan says he can sum up the country's economic problems in one word: DEBT.

The word merits block capital letters because of the scale of the problem that has rapidly overwhelmed Irish life since autumn 2008. The days of Ireland being top of the class in keeping to the Maastricht criteria, or the effective euro membership rules on deficit and debt, are now a dim memory.

But hopes of an improvement and upswing spring eternal and the issues are being faced to a large extent. In December 2012, Noonan insisted the 3% deficit target would be achieved by 2015, coming down by stages from the 2012 rate of 8.2%, and all in line with agreed staged targets of the 2010 bailout agreement reached with the European Commission, European Central Bank and the International Monetary Fund.

Since November, this EC-ECB-IMF troika has been shaping Irish economic policy. The government hopes this can end in December 2013, though it will still need some continuing outside support thereafter.

Meeting such stringent targets has caused some pain to ordinary citizens with a raft of new taxes phased in and reduced spending on services. Unemployment is about 14% and only helped by a renewed wave of emigration, especially among young people. A crazy spending spree on property at home and abroad, which fed a property price bubble, added to the fallout from the international economic crash of 2008.

Perhaps the quickest way to explain how Ireland's economy spun out of control is to evoke the story of the Anglo Irish Bank. As late as 2006, Anglo' was a money markets darling rated among the fastest growing financial institutions in the entire world. By 2008, it was bust and its debt burden had fallen on the hapless Irish taxpayer. The estimated cost of an orderly wind-down had been put at 34 billion - more recently that estimate was wound down to 25 billion. Irish people only take notice of billions' in media reports these days - millions are petty cash'.

The Irish bank sector has been in a shambles since late 2008. Most banks are now state owned - with the exception of the Bank of Ireland, which is partially owned by the state. They have an insatiable capacity to swallow funding and latest estimates are that the main banks urgently require 30 billion, which Ireland hopes can ultimately come from the European Stability Mechanism (ESM).

How the bank crisis was handled by the previous government - driven from office in the February 2011 ground-breaking...

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