Tony Ward's Blog
Monday, 22 November 2010
Tony Ward is chief executive of Home Funding
So what is the true state of affairs with Ireland? A week ago we were being assured that they had no need of European support and here we are now with a near certainty of a €90bn bail-out. So what’s changed?
Well I guess nothing except that a week ago the Irish Government was still trying to avoid European help at a country level and was trying instead to point the bail-out directly towards the banks. That way they would have been angling to avoid European interference with fiscal and political policy. But now this looks to be in jeopardy.
The Irish have fought so hard over the years to gain independence and with the lure of wealth and phenomenal economic growth, Ireland just took what was available from Europe and got behind the roaring success that became known as the ‘Celtic Tiger’.
Who can blame them? So much did this extend to their thinking about the future that even when the Euro was suggested they didn’t hesitate – they were happy to join the band of successful European brothers which left the UK outside and looking a little isolated.
I suppose I’ve always had reservations about the Euro. How can you have monetary union if you don’t at some point also have control over fiscal and political policy on a centralised basis? What about the ‘one-size fits all’ monetary policy that would treat France and Germany the same way as much smaller and more fragile, less developed economies – which it now turns out includes Ireland? Well I guess we’ll just have to wait and see.
So will there be a bail-out of Ireland? I suppose the answer is yes but I fear that until the European review has been completed we just won’t know if €90bn is enough. Are they hiding the true state of their situation and what if they need more?
Once Ireland is sorted Spain and Portugal will likely need support and their economies are on a different scale entirely. Where will it stop?
I fear that we still have a long way to go in this but although the stock market has rallied on the back of Irish news this morning (but has since fallen back) I still feel profoundly uneasy. The future of the Euro is far from assured right now.
In the words of Private Frazer from Dad’s Army it feels like we are all doomed!