Spotlight on David J. Lynch, Author of When the Luck of Irish Ran Out
February 03, 2011
The US-Ireland Alliance plans to provide regular briefings for Capitol Hill staffers on various Irish issues. Yesterday was the first, with author David J. Lynch talking with Senate and House staffers about When The Luck Of The Irish Ran Out, his new book about Ireland's journey over the past quarter century from rags to riches and halfway back again. A good read for Irish experts and non-Irish experts alike.
Lynch made some interesting observations while on the Hill:
- leaving the euro now would do the Irish more harm than good;
- the Irish bailout of the banks, relative to the size of the economy, is the equivalent of roughly 10 TARPs in the US;
- Ireland can and will recover, but it is probably in the 4th year of a ‘lost decade’ -- the danger is that the wrong policies or protracted global weakness could make it a lost two decades;
- the customary route to recovery of devaluing the currency isn't available to Ireland, since eurozone monetary policy is made in Frankfurt;
- the Irish therefore have to crush costs through an internal devaluation; meaning a very visible nominal decline in wages, pensions and other benefits
- it will be extremely difficult for Ireland to avoid some form of debt restructuring;
- a new Irish government may be able to renegotiate slightly better terms of the EU's portion of the 67.5 billion euro bailout, but the immediate benefits will be more symbolic than financial
-Ireland's catastrophic situation is largely the result of its own errors of commission and omission;
-but the entire Celtic Tiger was not a mirage; there are enduring changes in society, the labor market, and notably the situation in the North; the challenge now is to rebuild on a more sustainable footing.