The Celtic Retreat

noreply@blogger.com (Stephen) — Fri, 20 Jul 2012 06:30:00 +0000

The Celtic Tiger was the longest period of economic growth ever achieved in Ireland. The country went from having one of the highest rates of unemployment in Europe to almost full employment. Net outward emigration was turned into net inward migration, for the first time in its modern history people from other countries came here looking for work. Credit became available to all and people loaded themselves with debt, with the belief it could be paid back.

People where convinced to get on the property ladder and buy their own property. Banks, estate agents, the media and politicians where all complicit in encouraging the population, that now was the time to buy a house. Despite the rapid acceleration of house prices at the turn of the century the demand for housing continued increasing until it hit its peak in 2006.

Public spending also greatly increased during the Celtic Tiger. Both welfare recipients and public servants benefited from wage increases well above the rate of inflation. Spending on Infrastructure also increased with the country benefiting from improvements in roads, telecommunications and public transport.

The Celtic Tiger was built on strong foundations, but by 2007 these foundations were cracking and by September 2008 these foundations would fall apart, leaving behind an exposed and shattered Ireland in its wake.

This blog will attempt to identify those groups, people and institutions most effected by the Celtic Retreat.

Ireland back from the brink - reasons to be positive

noreply@blogger.com (Stephen) — Thu, 19 Jul 2012 22:10:00 +0000

Over the past number of years Ireland’s reputation at home and abroad has taken a battering. Ireland suffered three successive years of negative economic growth during the years 2008 to 2010. Things are now beginning to improve, preliminary results from the Central Statistics Office (CSO) indicate that GDP increased by 0.7% for 2011.

Many multinational companies are now looking to invest in Ireland again. In 2011 new investment into Ireland increased by 30% and 13,000 new jobs were created by foreign direct investment (FDI) companies source (PricewaterhouseCoopers)

Why Ireland is attractive location to invest in

• 12.5% Corporate tax rate

• Ireland has one of the youngest workforces in Europe

• 3rd lowest tax rate in the EU

• 48% of 25-34 years olds have a third level qualification

• The only English speaking Euro-Zone member

• 33% of the population are under the age of 25

Ireland has become a hub for many FDI Companies

• 3 of the worlds top 5 gaming companies are located in Ireland

• 50% of the world’s top banks are operating here

• 9 of the top 10 pharmaceutical companies are in Ireland

Many of the job opportunities over the next few years will be primarily in exporting companies. While the domestic economy in Ireland is struggling the export sector is flourishing, and this is no surprise when you consider that Ireland is the 2nd largest exporter of medical devices and is one of the top 5 exporters of software in the world.

The Youth of Ireland

noreply@blogger.com (Stephen) — Sun, 20 Nov 2011 21:24:00 +0000

The economic crisis has hit the youth of Ireland like a tsunami. During the Celtic Tiger young people had an abundance of options. Third level education was affordable with low registration fees, there were plenty of apprenticeships in many sectors in part due to the booming construction and motor sectors. The retail industry was also performing well providing both full time and part time work for many young people.

Ireland today is like a desert for the youth of Ireland with thousands trying to compete for the mirage of jobs that the Government like to think exist. The affluent days of the Celtic Tiger have being replaced with austerity, with negative consequences for all. Third level registration fees have doubled, the amount of apprenticeships has dramatically declined due to the collapse of the construction sector and many retail jobs have disappeared because of the depressed state of the domestic economy.

The employment prospects for the under 25’s in Ireland is dim to say the least. The youth unemployment rate in Ireland is close to 30%. The under 25’s find it difficult to compete for jobs because of their lack of work experience compared to older workers with a long employment history. A lot of workers approaching retirement are now working longer because their pension pots have being rapidly reduced. This is making it even more difficult for young people to find employment.

The government both past and present has unfairly targeted young people when looking for cuts. The dole has being reduced to €150 a week for under 25’s and a €100 a week for under 20’s. Those who are under 25 also have their dole means tested which results in lower payments for many of those in receipt of unemployment assistance.

Ireland is once again witnessing a flight of young people from the country. This may have worked in the past, but with a growing grey population and an increasing retirement bill, young people are needed to pay the pensions bill of the future.

It is time that people in Ireland realised that young people are the solution to this economic crisis and not part of the problem like many in Ireland believe.

Fianna Fail

noreply@blogger.com (Stephen) — Tue, 15 Nov 2011 23:51:00 +0000

Once Ireland’s largest and most successful political party Fianna Fail were trounced at the last general election. Going into the 2011 general election Fianna Fail had 70 seats out of a total of 166 in Dail Eireann, this was reduced to 20 after the election.

For almost seventy years Fianna Fail was Ireland’s largest political party. Every past Fianna Fail leader became Taoiseach at some stage in their career. The soldiers of destiny had a vast appeal to many in Ireland. They were seen as the true Republican Party and the party of the people.

Fianna Fail in many ways build modern Ireland. Éamon de Valeraestablished Irelands constitution, Sean Lemass industrialised the country and Ray MacSharry pushed through the necessary budget cutbacks which led Ireland to growth in the 1990’s.

The month of September 2008 was the beginning of the end for a once proud party. The bank guarantee was rushed into without any consultation.This led to the state having to pick up the tab for all of the banks debts.

For eleven years Ireland ran a budget surplus and Fianna Fail were able to introduce popular budgets. This all changed in 2008 when the economy imploded and Ireland’s finances spun out of control.

From 2008 to 2011 Fianna Fail had to introduce some of the toughest budget cutbacks in decades. For a population reeling from cutbacks and job losses Fianna Fail was identified as the party who blew the boom.

The ultimate death nail in the coffin of Fianna Fail was the arrival of the IMF in November 2010. Fianna Fail was forced to effectively sign away Ireland economic sovereignty because of the disastrous way they ran the economy.

Fianna Fail has a long history of corruption and cronyism and political opportunism which have being responsible for wrecking Irelands economy many times. In the past Fianna Fail escaped any blame be getting out of Government before having to introduce tough budget measures.But from 2008 to 2011 they had to introduce budget cutbacks due to their own mismanagement and this was meet with anger by the people of Ireland.

The soldiers of destiny have a bleak future many people have rightly identified them as the main culprits in Irelands economic decline. Fianna Fail politicians both past and present still blame everyone else but themselves for Irelands collapse.

Despite having destroyed Ireland for a generation many of the ministers which were in cabinet over the past three years get gold plated pensions and payoffs. While rest of the country is suffering from job losses and austerity, ex Fianna Fail minister are at home counting their money.

Education

noreply@blogger.com (Stephen) — Thu, 10 Nov 2011 23:13:00 +0000

The education system in Ireland was underfunded even during the Celtic Tiger. Ireland had one of the lowest levels of spending on education as a percentage of GDP among the OECD economies. Schools have always being required to raise additional funding, because the amount of money provided by the department of education has not been enough to meet the overall running of a school. School walks, coffee mornings and voluntary contributions from students parents is a feature of every Irish child’s education.

The subsequent demise of the Celtic Tiger which resulted in the largest contraction in the Irish economy in living memory has being devastating for the funding of an already underfunded system. Special needs assistants and English language assistants have been made redundant, a policy which will have devastating consequences in the future.There has being an embargo placed on future recruits until 2014. Class sizes have increased making it even more difficult for under pressure teachers to deliver a quality education to their students

The next budget will witness even more reductions in teaching numbers, with teaching numbers to be reduced by between 1500 and 2000. Many schools have also seen their capital budgets slashed, making it impossible to build new facilities.

In some counties the rental bill of prefabs is some €3 million a year. It would be cheaper when spread over a number of years to actually build new school buildings. But the department of education continues to waste money on renting prefabs. Teaching children in dilapidating prefabs is a sad indictment of our so called world class education system

The third level sector has also being hit hard with an increase in student numbers but with a reduction in funding from the government. One proposal put forward by education chiefs is to cap the number of students entering third level. This is a stupid approach focused entirely on short term gain.

If the so called knowledge economy is to succeed in Ireland, it will require not only an overhaul of how education is delivered but an increase in funding for schools and colleges. A failure to do so could in the not so distant future see a reduction in the amount of foreign direct investment coming into the country.

At a time when many other countries including emerging economies are investing heavily in their education systems it is imperative that Ireland keeps investing in education. Our future prosperity depends on the quality of our education system today.

While many government departments will see a reduction in the amount of capital provided to them by the government over the next few years, it is vitally important that the department of education’s budget is spared.

The Banks

noreply@blogger.com (Stephen) — Fri, 28 Oct 2011 20:10:00 +0000

Once regarded as pillars of the Irish economy, the banks today are considered as the prime suspects in destroying the economy. It has been a dramatic decline from pre 2008, when leading bank officials were being interviewed constantly by the media. Figures such as Sean Fitzpatrick, David Drumm, Michael Fingelton, and Dan McLaughlin were regarded as economic geniuses and their every word taken as gospel.

In September 2008 the Irish Government made the worst economic decision since the foundation of the state. The decision to introduce a blanket guarantee left the people of Ireland on the hook for any losses the banks may occur. Rather than introduce a limited guarantee covering future loans, the government introduced a whole scale guarantee for which Ireland will fell the consequences for decades.

The star child of the Celtic Tiger Anglo Irish Bank is to be wound down and put out of its misery. This institution alone has cost the Irish taxpayer close to €30 billion. From the height of a share price close to €18 in May 2007 Anglo Irish is now worthless. Its uncompleted decaying building in the Dublin docklands is a symbol of its excessive greed and the consequences of where such greed can lead to.

Share Price Chart

Irish Nationwide is also to be wound up having cost up to 7 billion to recapitalise. Their former chief executive Michael Fingelton still refuses to hand back his one million Euro bonus he received in 2009. It has also being revealed in the past year that Fingelton has a pension pot in excess of 20 million Euros. This must be extremely upsetting for the shareholders who lost a small fortune and possibly their own retirement security net, in part thanks to Fingeltons miss management of Irish Nationwide.

Allied Irish Bank has so far cost the nation of Ireland up to €19 billion. Its attempt to follow Anglos strategy of betting on the property market ultimately ended in tears. The bank is to scrap half its workforce due to the downturn and close a significant number of branches.

Bank of Ireland wasn’t as aggressive in its pursuit of the property market as the other major Irish Banks, but it was still left exposed due to its reliance on the Irish property market. The Irish state has so far invested around 7 billion Euros and has a 36% stake in the company.

Between 2008 and 2010 when the banks were struggling to survive, they still managed to pay bonuses of €44.7 million. The Chief Executive Officer at Bank of Ireland admitted to the Dail in January this year that his company provided ‘erroneous information’ in relation to performance relation bonuses. In the past few months of 2008 Anglo Irish Bank employees received €20 million.

It’s ironic that the banks so long the cheer leaders of the free market system are now almost all completely controlled by the state. The Irish people will be left with the bill for their excess; each of Ireland’s citizens will owe €15,000 thanks to the banks reckless pursuits of short term profits.

During the Celtic Tiger the banking sector in Ireland became one of the most competitive in Europe. Ireland witnessed an influx of foreign banks entering the market. The past few years however has seen a number of these banks withdraw from Ireland. In the coming years the banking sector will be dominated by BOI and AIB and this will mean increased prices on a range of services.

The bankers in Ireland are now being held in the same contempt as the landlords of the 19^th Century. While the people of Ireland are exposed to harsh austerity measures in part thanks to the banks, not one single banker has being sent to jail. This is a scenario which outrages everyone in Ireland.

FAS

noreply@blogger.com (Stephen) — Wed, 19 Oct 2011 18:50:00 +0000

The national training agency otherwise known as FAS has been completely discredited over the past few years. During the latter part of the CelticTiger FAS effectively became a junket for senior management and Union officials. FAS which was essentially set up to help young people find apprenticeships and to assist those without a job in providing advice and assistance, was no longer primerly concerned with fulfiling this function.

FAS had a budget of nearly €1 billion a year during a time of record unemployment. There was no scrutiny on how this money was spent by FAS management or the Fianna Fail Government at the time.

As a result of the lack of financial oversight at FAS, a culture of excess developed.There were lavish expense trips by management abroad on business of course. Between 2002 and 2008 FAS spent €4.7 million on foreign travel. Gerry Pyke the former assistant general at FAS and his wife took a three week trip around the world with the business class tickets costing €12,021, of course spouses always travelled abroad with their partners.

Over a seven year period FAS spent €1.7 million on hotels, lunches, limo’s and other such perks. €3.55 million was paid for a website which was shutdown after a year. €600,000 was spent on ads which were never aired.

FAS also spent over €3 million in building their new headquarters in Birr, County Offaly, which has since been cancelled. By the way Birr conveniently happens to be the home of the former head man at FAS, Roddy Molloy and former Taoiseach Brian Cowen.

The wasteful spending from 2002 to 2008 is not what has done the most reputational damage to FAS however. What really has damaged them,in the eyes of most employers in particular is the poor quality of their courses, their lack of any marking procedures and repeated reports of students passing exams no matter what marks they got.

At a time of rapid unemployment the country really needs a training agency fit for purpose and one in which people can trust. FAS will soon get a name change, but it is a change of culture inside the organisation, not a change of name above the organisations door that’s really needed.

In November 2008, Roddy Molloy the director general stepped down, he got a severance package worth around €900,000 and was gifted a car as an added bonus. This was all singed of by Peter Mcloone, former head of ICTU who was on the FAS board at the time.

The Mortgage holders

noreply@blogger.com (Stephen) — Thu, 13 Oct 2011 20:47:00 +0000

Ireland has one of the highest rates of home ownership in the world. This is what makes the mortgage crisis even more frightening. Unlike other European countries Irish people have long shunned renting property in favour of owning their own home.

There are many historical reasons for this which I won’t get into right now. In 2006 at the peak of the property bubble 203,953 mortgages were taken out, this compares to just 45,818 in 2009 for example. Of these mortgages 71% accounted for personal dwellings, with 28% buy to let residential properties and 1% holiday-homes or second- homes.

There are are a total of 782,000 home loans with a 116 billion outstanding on them. At the end of 2010 there were 28,600 mortgages in arrears of more than 91 days. The method for calculating the number of mortgages in arrears is those home owners who have not paid for 90 days or more. At the end of August 2011 there were 49,600 home owners in arrears.

Those home owners who face the prospect of losing their homes have to deal with some of the most draconian bankruptcy laws in the western world. If their home is repossessed by their mortgage provider they still have to repay their mortgage in full.

Many home owners who purchased their house over the past decade are caught in the negative equity trap. There where an estimated 196,000 in negative equity at the end of 2010. By mid-2011 house prices were almost 43% below their peak levels of late 2006. Dublin has seen the biggest fall with house prices falling on average of about 60% from their peak.

Negative equity is a problem facing all of society in Ireland. If a person is stuck with a house in negative equity they become immobile. By immobile I mean that they can not move to certain areas to take up jobs, or sell their house to move to a bigger or smaller home. This will not doubt further depress the sale of second hand housing units in the years to come.

The majority of mortgage holders in Ireland around 54% have tracker mortgages. Those with tracker mortgages can only face interest hikes when the European Central Bank increases its interest rates plus a margin of around one percent. It is estimated 30% of mortgage holders have variable mortgages, this is the group which has suffered the most pain. Those with variable mortgages can see the interest charged on their loan increase at any time. The remaining 15% of the mortgage book is accounted by those with fixed mortgages.

What further complicates the mortgage crisis is the fact that the government has a large stake in most of the Irish banks and any mortgage write off would require those banks needing further capital. With the financial coffers dry the government cannot meet this financial burden.

Nearly 40% of the loan book in Ireland is owned by foreign banks. They would not agree to any mortgage write-offs unless of course the government compensated them for it, which is unlikely to happen.

Unfortunately in the years ahead there is likely to be a raft of house repossessions. Some media commentators recently suggested that 30,000 people could be at risk of repossession. The next couple of years therefore are gone to be turbulent to say the least.

The Labour Market

noreply@blogger.com (Stephen) — Fri, 07 Oct 2011 21:42:00 +0000

The Labour market in Ireland has witnessed a spectacular fall since the country entered recession in March 2008. The following stats give an insight into the rapid decline of the labour market.

Average unemployment

2006	4.4%
2007	4.5%
2008	6.4%
2009	11.8%
2010	13.6%

The present rate of unemployment is as of September 2011 14.2%

Many sectors of the Irish economy have withnessed absolute carnage over the last few years. The construction sector, the hospitality industry, DIY stores, garden centres, café’s, night-clubs and many more industries have suffered closure or declining margins. This has resulted in a surge in the amount of people joining the dole queues.

The 25-34 and 35- 44 age group have been hit particularly hard by the recession. These two age groups account for over half the unemployment rate. Stuck with properties in negative equity, large debts, and with a family to support many in these two groups are unable to emigrate unlike those under the age of 25 who are foot loose and fancy free and more freely able to emigrate. The majority increase in the unemployment rate over the past year has been in the 25-34 age group which was 10,900

Many people who have never experienced unemployment, suddenly found themselves unemployed for the first time in their life. The Long term unemployment rate, that is people who are unemployed for over a year has increased to 7.7%

The unemployment rate among countries within the EU 27 stands at 9.8%. Spain has the highest unemployment rate at 21.3% while the lowest rate of 4.6% was recorded in both Austria and the Netherlands.

The largest decrease in unemployment over the year has been in the under 25 category but this can be put down to people mainly emigrating or returning to education.

Non-nationals have also been hit hard by the recession there are currently 46,800 unemployed in Ireland. Many more non-nationals have also had to leave the country with hundreds of thousands leaving due to the collapse of Ireland’s economy.

The fall in employment levels seems to be stabilising all be it at a very high rate. With the prospect of two more tough budgets in the next few years and of the world on the brink of entering a global recession what hope have any of those unemployed ever have of working again.

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Ireland

noreply@blogger.com (Stephen) — Fri, 30 Sep 2011 18:17:00 +0000

The Biggest Institution to suffer from the crash of the Celtic Tiger is Ireland in general. Our international reputation has being torn to pieces. Once Ireland was considered a prudent example of how to run a successful economy, but that has now changed. Ireland is now perceived to be a feckless and reckless country which lost the run of itself.

Many countries now consider Ireland to be a tax heaven for multinational companies. Many Euro Zone countries are exasperated by the fact that they are bailing out a country with a corporation tax significantly lower than theirs. They see Ireland as unfairly attracting companies here by offering innovative tax measures.

Ireland has also lost its economic independence, by far the most serious and humiliating aspect of the fall of the Celtic Tiger. The Troika of the EU, IMF and ECB now have the power to decide on all of Ireland’s economic policies. These include our taxation system, labour market, level of social spending, which state assets to sell.

This little country on the edge of the Atlantic has now become a battering stick in which European politicians use to rile their electorate. Ireland is now more commonly recognised as the i in the pig rather than the emerald isle.