Tuesday, November 23, 2010


Ireland Poses Difficult Questions forOsborne

As someone whose daughter lives in Donegal, I'm interested in the fate of its economy for family reasons. Eurosceptics complain we are helping to bail out a euro country when we are not in the sodding eurozone so why bother? The fact that the Irish economy has a powerful connection to the UK economy is a valid reason of course. Ian Traynor in the Guardian explains that it's in our interests to nurse the Irish banks back into health as they have borrowed so much moola from us.

Despite Europhobic complaints that Britain is paying to rescue the despised euro single currency, Britain, in fact, will be helping Ireland in order to help itself. British banks' lending to Ireland, at €149bn, is the highest in the EU. An Irish collapse would hammer British banks. The two neighbouring economies are utterly intertwined, not least because of Northern Ireland, and British trade with and exports to Ireland are huge.

But there is another reason why Ireland is interesting: it is a good example of how the current government's cut the deficit policies have worked in practice. as Simon Hoggart points out:

For years Ireland was the poster boy for British right-wingers, having used low taxes to boost the economy and then, when things went bad, deploying massive cuts. And things went wrong anyway! The leeches sucked out the blood, but they didn't cure the patient.

Hoggart goes on to quote Alan Johnson's comments in response to Osborne:

Alan Johnson, who is making a surprisingly good fist of the economic brief, pointed out that Ireland had followed the Tory policies without any success at all. "The private sector did not take up the slack," he said. He reminded Mr Osborne of what he had said back in 2006: "We should look and learn from across the Irish Sea." He had asked rhetorically what had brought about the Irish miracle, and how could we mere British copy it?

"Alan Johnson, who is making a surprisingly good fist of the economic brief"

But not so good when remembering the Korrect Nomenclature of his Dear Leader....................

Hint for AJ - it's Ed, not Red
Reduction of basic wage means elimination of the minimum wage. I thought that was one of the basic agreements among Mish readers. I guess they love eliminating the minimum wage when it affect American workers. I say it should work globally, even in the beloved homeland (to some) of old Erin.
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