As soon as Ireland's finance minister Brian Lenihan admitted that the "unavoidable" bailout of Anglo Irish bank could cost taxpayers up to €34bn (£29.1bn), Irish opposition leaders were quick to declare today Ireland's "Black Thursday". The bailout, which will take government debt to more than 100% of GDP, comes on the back of grim data revealing a double dip recession, the downgrading of Irish debt and the rapid deterioration of the public finances. "Any Anglo failure would bring down the sovereign," warned the finance minister. "No country could contemplate the failure of such an institution."
Lenihan may indeed be right on this point – but on many others he and his colleagues have thus far proved dangerously wide of the mark. As Michael Burke argued on Cif last week, Ireland's experience offers an important – and thus far wholly ignored – warning to our own coalition government, which is still committed to slashing public spending. Before the double dip became evident, the "tough" measures the Irish government took to deal with their economic crisis had been widely praised. Now things have gone south once again, commentators on the left have been quick to point out the flaws in this type of thinking. Over-retrenchment, critics are only too keen to point out, often make things worse.
So far, so predictable. More puzzling, though, is why the Irish, a people famed for their long history of impassioned civil protest, stood by so meekly and let the cuts happen in the first place. There were marches and protests, of course, but nothing on the scale such a wholesale raid on public finances should have provoked. Someone was angry enough to drive a cement mixer into the gates of the country's parliament yesterday, but there was much more commotion earlier this month when Tony Blair – an ex-prime minister of a foreign country – came to town. Why?
An easy (and often overplayed) explanation is that the Irish, for so long a devoutly Catholic people, feel guilty for their overindulgence during the good years, when the Celtic tiger was roaring and they all borrowed and spent too much. Thanks to a spectacular property-fuelled boom, average incomes between 1997 and 2007 grew by a staggering 131%. During these years, many people developed a penchant for lavish first communions, expensive cars and second homes (the last of these fuelling the unsightly, pastel-coloured "bungalow blight" that plagues Ireland's beautiful countryside). Now perhaps these same people have accepted the austerity measures largely because they see them as a form of penance; this is even the language that their politicians have couched their policies in to sell them.
http://www.guardian.co.uk/commentisfree/2010/sep/30/ireland-apathy-economic-crisis