Alderman, Liz. (2010, December 11).

Alderman, Liz. (2010, December 11). Ireland strives to rebuild trust in its banks.

The New York Times. Retrieved December 11, 2010 at http://www.nytimes.com/2010/12/11/business/global/11ireland.html?ref=global

One of the most important financial news stories to emerge from Europe in recent months is the collapse of the so-called 'Celtic tiger' of Ireland, whose successful rehabilitation from decades of poverty was once widely considered to be one of the proudest achievements of the European Union (EU). According to Liz Alderman's article from the New York Times, "Ireland strives to rebuild trust in its banks," Ireland is desperately trying to return to solvency through sound financial management and support from other EU nations and the International Monetary Fund (IMF). The Anglo Irish Bank, widely considered the primary culprit in Ireland's lending crisis, will soon be closed as part of an effort to persuade the world of Ireland's commitment to financial reform. Ireland recently applied for an 85 billion euro ($112 billion) international bailout (Alderman 2010: 1).

Regarding the Anglo Irish Bank, said one man: "The [new austerity] budget is going to increase my taxes, reduce my income and cut my standards of living, and these guys [at Anglo Irish] are the culprits…the sooner they're gone, the better" (Alderman 2010:1). However, there is a great deal of blame to be spread around the nation, including to the individuals who took out the risky loans that precipitated the housing crisis. Ireland's default rate is 5 -10%. The Irish economy is continuing to worsen, meaning the rate may increase. Paradoxically, as banks are more leery of extending credit, and the government cuts spending, the ability of the nation to spend its way of recession decreases, causing the Fitch ratings agency to lower Ireland's credit rating three notches last week (Alderman 2010:1).

"The bill to taxpayers for the bailout has swelled to 84 billion euros, 56% of gross domestic product, the result of a government decision to backstop the banks' losses… [despite] the fact that the International Monetary Fund ordered another 10 billion euros pumped into banks immediately, in part to hedge against a possible rise in mortgage defaults. An additional 25 billion euros is on standby if banks' losses are bigger than expected" (Alderman 2010:1). Ireland, once so proud of its independence, is now thinking of doing the unthinkable -- selling its banks to a foreign bidder. An American investor recently made a bid "in a consortium with the Carlyle Group and Cardinal, a Dublin private equity firm" Alderman 2010:1).