RIBA
I join college friend Fergal, and HBS grad and 2:28 marathoner+a successful venture capitalist; we discuss the demise of Ireland which is all over the news. Recall that earlier this year, fears of a sovereign debt crisis sparked a euro crisis from profligates Greece, Italy, Portugal, Spain and our dear Ireland. This led to a confidence crisis as well as the widening of bond yield spreads and risk insurance on credit default swaps between these countries and other EU members, most importantly Germany.Concern about rising government deficits and debt levels across the globe together with a wave of downgrading of European government debt has created alarm in financial markets.
The debt crisis has been mostly centred on Greece and the rising cost of financing the government debt. In May, the Eurozone and the International Monetary Fund agreed to a €110 billion loan for Greece, conditional on the implementation of harsh Greek austerity measures. Also that month, Europe's Finance Ministers approved a comprehensive rescue package worth almost a trillion dollars aimed at ensuring financial stability across Europe by creating the European Financial Stability Facility. It is now being tested.
Ireland's only real economic advantage is their 12.5% corporate tax rate (set up in '86 on the advice of Ira Magaziner who also conceived Brown's "new curriculum" of no grades nor requirements), the lowest in the western world, which attracts foreign companies like Dell to the tiny country (by contrast : US, 39%, Singapore, 17%, UK, 28%). Taking the bail-out, Ireland forced to rethink this advantage. Fergal worried the brightest and the best shall leave. They always do.
We should thank our lucky stars that Gordon Brown kept us out of the Euro. Recall Tony and Peter Mandelson and others fought hard for Britain's inclusion. Super Gee, for all his failures of personality and style, did more for the UK than many appreciate. He should be remembered for this. And Blair - Iraq.
