washingtonpost.com — LONDON - European officials on Friday scrambled to ease a brewing market panic over financial troubles in Ireland, Portugal and Spain, as speculation mounted that one or more of those nations may be forced to follow in the footsteps of nearly bankrupt Greece and ask for an international bailout.
Nov 13, 2010 View in Crawl 4
freeformjazzNov 14, 2010
A sign of things to come this side of the Atlantic?
arkons24Nov 14, 2010
Not for now. The US is the last on the list of countries that will get hit by an austerity check via bond markets. France, the UK and Japan are three big names you'll see go through serious lending checks before the US gets touched in a meaningful way.
rowlodgeNov 14, 2010
checked this 4 months ago, on the brink ?
jhw539Nov 14, 2010
This is nonsense - Ireland's economy is a model for the world. Just ask the Cato Institute who gushes over their pro-business environment:
"Ireland has the second-highest income per capita and the lowest overall tax burden in the EU. Its economy has grown rapidly as a result of pro-market reforms including tax cuts, which have attracted large capital inflows. The corporate tax rate is just 12.5 percent." -Catching Up to Global Tax Reforms by Chris Edwards, Director of Tax Policy, Cato Institute
They weren't the only fans either.
http://www.taxfoundation.org/blog/show/626.html
Oh wait, that was in 2005. Nevermind.
sanmanNov 14, 2010
It's not their low taxes that are the problem, it's their high spending. That's why they've got all that debt piling up, and are a bad credit risk.
They need to lower their spending right away.
jhw539Nov 14, 2010
"They need to lower their spending right away."
They have. Drastically, about a year ago. The folks who put their money where their mouth is were horrified and fled en masse from any Ireland debt. Countries that embarked on greater deficit spending saw far lower interest rates (a rating of their default risk). Why? Cutting spending in a recession is STUPID, and the markets clearly recognize.
sanmanNov 14, 2010
that's like saying cutting down on meat when you have a high cholesterol problem is stupid.
I would point out that any sudden action is going to precipitate dramatic effects in the economy, as compared to the measured steady approach of staying within budget from day to day.
This is why that measured steady approach should taken to begin with, rather than getting into trouble and trying to fix things in a crash effort.
when times are tough, then jhw539 will say "Cutting spending in a recession is STUPID"
when the economy is growing, then jhw539 will say "oh, times are good now, so we don't need to cut"
It's like the grasshopper talking to the ant.
jhw539Nov 14, 2010
"when times are tough, then jhw539 will say "Cutting spending in a recession is STUPID"
when the economy is growing, then jhw539 will say "oh, times are good now, so we don't need to cut""
Uh, no. When the economy is growing is the time to cut spending - the private market can better allocate resources than the government. But when the private market is letting resources idle the government should put them to use. I know the private projects I'm overseeing are having bids come in millions of dollars under estimates now - this is a great time if you're looking to build anything. And our country could really use a rebuilt infrastructure.
This is macro economics 101. Sorry if you can't understand anything that doesn't fit on a bumpersticker.
sanmanNov 15, 2010
in case you haven't noticed, your beloved Democrats are always the ones arguing for an increase in state welfare programs when times are good. They are all about redistributing the wealth, redistributing the good times, etc to whichever special interest they want to milk for easy votes.
that's why the budget cuts don't happen in good times. Look at how many whine that cutting back on spending will bring the economy back into recession. Never ever do you see the Democrats asking for budget cuts - because they're the part of big govt, and they want to expand the state as much as possible. Their entire political raison d'etre revolves around that.
jhw539Nov 15, 2010
"in case you haven't noticed, your beloved Democrats are always the ones arguing for an increase in state welfare programs when times are good."
Meanwhile, documented reality, shows Republicans are as bad if not worse about growing the deficit. Remember the Bush tax cuts were sold based on the Trillions of dollars of SURPLUS forecast for 2001-2010 (and Republicans had all the levers most of that period).
(BTW my favorite modern president, who I voted for and donated to, was George HW Bush - who put the good of the country over re-election to put the fiscal house in order for the boom of the 90's.)
sanmanNov 15, 2010
I agree with you that Bush Sr was the better president. He swallowed his campaign words and raised taxes when he felt it was in the national interest to do so.
swift2Nov 14, 2010
The bizarre thing is, Ireland after the peace agreements was urged to follow exactly the model of development that blew up in their faces. Then they executed harsh austerity, urged on by the same people who urged them to go up their eyeballs in debt. Now, they will collapse.
I think the fundamental problem is in the conservative "low tax business environment" model. It doesn't work. Neither did the model that got Argentina, for instance to operate on the US $ standard. Boom, collapse.
And now we hear that the "Real IRA" and other groups are becoming active again.
cathal15Nov 14, 2010
The peace agreements was 20 years ago. And as much as the media would like it when Ireland goes into economic decline they don't go back to the days of the IRA.
The main problem is when Ireland was doing fantastically in the past few years the low tax rate attracted huge businesses such as Google, eBay, Facebook, Dell, Intel Coca-Cola to name a few. So because there were so many jobs people from eastern Europe came over from Poland and Latvia etc and took advantage of the jobs.
For the next couple years because more workers were coming over more houses were built and because more people were coming over to Ireland to help build the houses they needed houses.
Then they realized that they were left with almost a million empty houses (for a country with a population of 4 million thats a lot). So because there were no more jobs in construction all the Eastern Europeans went back home leaving more empty houses (which people took loans out of the bank to make.) and then the MNCs realized they can get the same job done by a workforce as good if not better in Eastern Europe.
Leaving Ireland with very little jobs thousands of empty houses and banks that had given out billions that will never get it back.
arkons24Nov 14, 2010
This has been news for several months now but is just now hitting the headlines. Irish bonds never really recovered after Greece and rates have just been climbing ever since. Their bond spreads will need to blow out wider or the dollar will need to climb higher. Any US decline will lead to sharper gains in the dollar which will serious screw Ireland and any ECB backed bailout. Markets will need to stay very stable to keep Ireland and Europe on the level ... almost makes you wonder with how close QE 2.0 was timed to this headline development.
elitematchNov 14, 2010
Looks like it is finally hitting in.
heycomedyNov 18, 2010
how about cut governmetn spending 40% and end all pensions, no money for non workers