Lately, global news has been dominated by the European debt crisis. This news has been predominately negative and I personally have been looking forward to hearing something positive for a change. Ireland has recently been experiencing moderate economic growth and the budget deficit has since been declining. Germany and France have commended Ireland for making economic strides, and believe that this nation is not far from being out of the crisis.
I have been following the currency markets quite heavily in the past few weeks trying to gage the effects of the much discussed QE2 that the U.S. Federal Reserve implemented. Personally, I was expecting that to lead to more inflation in the U.S. dollar and depreciate its value relative to other currencies, including the Euro. Imagine my surprise when I found that I was correct in inflation being expected by the market (due to high treasury yields) but that the Euro was actually the one depreciating versus the dollar! How could this be?
The Irish love to own their own property and home. In the past 20 years, the value of their homes had for the most part increased dramatically, creating a solid investment in something the Irish cherish greatly. In the past year however it’s been a different story, the bubble finally burst. Most of the property values have been cut in half. Many are now owned by banks, and most toxic loans are bundled into a nationalized body called the National Asset Management Agency (NAMA). The government bought out many banks to a tune of 50 billion euro. The bond market in Ireland is in major trouble. Many experts are saying there is a huge need for leadership in not only Ireland’s government, but in Europe as a whole (or the European system may possibly collapse).
The lore of leaving is engrained in the Irish culture. There were 27,700 emigrants this year, an increase of 42%, due in part to unemployment being at 13.7%. In the short run, emigration is just a safety valve. However there is still hope in Ireland. Watch the video to see how George Boyle dealt with her company going bankrupt, and how she stimulated her own micro economy of sorts.