This week I will be updating you on what has been happening in Ireland in the last couple of days. Ireland's momentary situation is extremely complicated since on one hand the country is in serious need of help yet on the other hand not everyone in Ireland wants to accept this help. Discussions about Ireland's future were held on monday between Brian Cowen, which is the current Irish Prime Minister, the European Union and the International Monetary Fund. The three parties agreed to negotiate a bail-out package for the country of €80 - €90 billion.
http://www.dailymail.co.uk/news/article-1331979/IRELAND-BAILOUT-Cameron-Osborne-face-fury-Britains-7bn-loan.html
The bail-out package has been divided in three parts. Britain will give Ireland a £7 billion loan the rest of the package plan will be divided between the European Union (who will give two thirds) and the International Monetary Fund (who will give one third). This bail-out package has caused much controversy in the country since many people including Michael Lowry (one of two independents who currently prop up the country) and Jackie Healy Rae (independent for Kerry South) who said that he would "no longer support this government" (Brown, J. 2010). Eamon Gilore, who is the "leader of the opposition labour party association Dail, the Irish parliament" (Brown, J. 2010) went as far as saying that there should be an immediate general election.
http://www.dailymail.co.uk/news/article-1331979/IRELAND-BAILOUT-Cameron-Osborne-face-fury-Britains-7bn-loan.html
Brian Cowen refuses to resign even though there have been protests all over the country and some protestors even broke in to his office on Monday. He said that he will call a general election in the New Year. Cowen's four year economic plan includes €10 billion public spending cuts and €5 billion tax raise. The people in Ireland are obviously not very happy about this decision and the country is now not only highly indebted but also at war with itself. To add on to the dramatic situation, Moody's credit rating agency has also announced that it would downgrade Ireland saying that “a multi-notch downgrade, leaving the rating of the Republic (of Ireland) still within the investment-grade category, is now the most likely outcome of our review of the sovereign credit” (Brown, J. 2010).
http://www.dailymail.co.uk/news/article-1331979/IRELAND-BAILOUT-Cameron-Osborne-face-fury-Britains-7bn-loan.html
The FTSE also fell by 0.5% today as well as the Euro with constant fears that Portugal and Spain will follow Greece's and now Ireland's footsteps. As I stated last week, the European Union might not be strong enough to carry such a load on their shoulders and bail-out every country that needs help. I believe that first of all Ireland needs to figure out its governmental problems and the problems that they have within the country because even the billion-euro bail-out plan will not help them resolve their internal issues. Second of all I think that the European Union should over-think what they have been doing for the last couple of years, the fact that they have been working more on "expansion" rather than making sure that the member countries were actually performing well. I feel as though the European Union is like a deck of cards and with one card taken away (Greece could be seen as this card), the whole deck is falling apart.
Have a good week,
The Financialista
Financial Times:
Brown, John Murray (2010) "Ireland plunged into political Turmoil" Date Viewed: 22nd November, 2010. Available online at:
http://www.ft.com/cms/s/0/63dd1d9a-f634-11df-a313-00144feab49a.html?ftcamp=rss#axzz1629tk200
FT Reporters (2010) "Euro rally fades as contagion fears grip investors" Date Viewed: 22nd November, 2010. Available online at:
http://www.ft.com/cms/s/0/cedcc27c-f5f2-11df-99d6-00144feab49a.html#axzz162AW0tyo
Images:
Daily Mail (2010) "Irish PM refuses to stand down over financial crisis - but WILL call an election in the New Year" Date Viewed: 22nd November, 2010. Available online at:
http://www.dailymail.co.uk/news/article-1331979/IRELAND-BAILOUT-Cameron-Osborne-face-fury-Britains-7bn-loan.html
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