At Tralee, on Da tour of golf courses in southwest Ireland, a caddy named Danny explained that he had a mortgage of -250,000, or $375,000, on his house. He can't possibly pay it on a caddy's earnings and tips, and the golf season in Ireland ends in mid-October.
He got the mortgage five years ago when he was a foreman in the housing industry, a boom that went bust.
Danny's story is all you need to know about the origins of the Irish financial and economic crisis. Nearly 20 per cent of Ireland's housing stock is empty, and hundreds of thousands of Irish families are holding mortgages now worth twice as much as their homes. As The Irish Times wrote in an editorial last week: "Their assets have plummeted in value but their liabilities have not."
Of 780,000 mortgage-holders, the Irish Independent reported last weekend, 50,000 are three months or more in arrears on their payments. There is much talk of debt forgiveness, or restructuring, for those hardest hit.
But as Danny asks: "Who decides whose debts are forgiven, and how?"
At one time, 20 per cent of the Irish workforce was in the construction industry, building homes and office towers, many of which are now unoccupied. Gleaming new office buildings on the outskirts of Dublin stand empty - "see-throughs," as they are called in the real estate industry, with no curtains, no furniture, no offices and no people.
In the long term, Irish investments in education and infrastructure, as well as low business taxes to encourage investment, will pay off. In the near term, Ireland's challenges are daunting.
When the bubble burst in the United States three years ago, Washington rescued Wall St. by lending it $700 billion U.S., all of which has been paid back. In Ireland, instead of lending money to the banks when the housing bubble burst, the government guaranteed or bought -80 billion ($120 billion) of debt. Since then the European Central Bank has come through with a further -85 billion in loans, and the International Monetary Fund has also stepped in with a bailout. Where it formerly ran a surplus, Ireland's deficit is now one-third of gross domestic product, and its debt is 130 per cent of GDP. Where unemployment was only four per cent before the housing bubble burst, it's now 14 per cent.
And people are leaving Ireland. Again. Not because of famine, but because of the folly of their banks and government.
At the Waterville golf links, a caddy named Robert is finishing up his degree in civil engineering, and is thinking of emigrating to either Canada or Australia. At Tralee, Danny's colleague, David, is a plumber who wants to move to Alberta, where there's a shortage of skilled tradespeople. At Old Head, the caddy master, Paddy, has a son, a mechanical engineer, who has just found a job in Vancouver.
Everywhere our group went, people asked about Canada, which they had heard was booming, and how they could get there.
They have a lot to offer. Ireland's workforce is the one of the most literate and among the most highly skilled in the world. They speak English. There's community support for resettlement in cities such as Toronto with large Irish populations.
He got the mortgage five years ago when he was a foreman in the housing industry, a boom that went bust.
Danny's story is all you need to know about the origins of the Irish financial and economic crisis. Nearly 20 per cent of Ireland's housing stock is empty, and hundreds of thousands of Irish families are holding mortgages now worth twice as much as their homes. As The Irish Times wrote in an editorial last week: "Their assets have plummeted in value but their liabilities have not."
Of 780,000 mortgage-holders, the Irish Independent reported last weekend, 50,000 are three months or more in arrears on their payments. There is much talk of debt forgiveness, or restructuring, for those hardest hit.
But as Danny asks: "Who decides whose debts are forgiven, and how?"
At one time, 20 per cent of the Irish workforce was in the construction industry, building homes and office towers, many of which are now unoccupied. Gleaming new office buildings on the outskirts of Dublin stand empty - "see-throughs," as they are called in the real estate industry, with no curtains, no furniture, no offices and no people.
In the long term, Irish investments in education and infrastructure, as well as low business taxes to encourage investment, will pay off. In the near term, Ireland's challenges are daunting.
When the bubble burst in the United States three years ago, Washington rescued Wall St. by lending it $700 billion U.S., all of which has been paid back. In Ireland, instead of lending money to the banks when the housing bubble burst, the government guaranteed or bought -80 billion ($120 billion) of debt. Since then the European Central Bank has come through with a further -85 billion in loans, and the International Monetary Fund has also stepped in with a bailout. Where it formerly ran a surplus, Ireland's deficit is now one-third of gross domestic product, and its debt is 130 per cent of GDP. Where unemployment was only four per cent before the housing bubble burst, it's now 14 per cent.
And people are leaving Ireland. Again. Not because of famine, but because of the folly of their banks and government.
At the Waterville golf links, a caddy named Robert is finishing up his degree in civil engineering, and is thinking of emigrating to either Canada or Australia. At Tralee, Danny's colleague, David, is a plumber who wants to move to Alberta, where there's a shortage of skilled tradespeople. At Old Head, the caddy master, Paddy, has a son, a mechanical engineer, who has just found a job in Vancouver.
Everywhere our group went, people asked about Canada, which they had heard was booming, and how they could get there.
They have a lot to offer. Ireland's workforce is the one of the most literate and among the most highly skilled in the world. They speak English. There's community support for resettlement in cities such as Toronto with large Irish populations.
The question is, what is Ottawa doing to encourage them to choose Canada over Australia or the United States?
Quite a bit, as it turns out, according to Loyola Hearn, Canada's ambassador to Ireland. A former Conservative MP, Hearn is Newfoundland Irish, which makes him as Irish as anyone.
"We've doubled the number of student and youth visas to 5,000 from Ireland," he was saying the other night. They've all been snapped up. Student visas are being extended from one to two years, to encourage young Irish people to stay on in Canada.
Immigration files are being fast-tracked, though for reasons passing strange, the paperwork is done from the Canadian High Commission in London - which means it takes weeks, even months, when the embassy in Dublin could handle it in days. Given the history between the Irish and the British, the symbolism alone is unfortunate.
There is also the minor inconvenience that Canada isn't easy to get to for those coming from Ireland. There are no nonstop commercial flights except in summer, and then only to and from Toronto on Air Canada.
But that's a pretty minor obstacle given the opportunity to start over again in a welcoming new country. By the time the Irish have worked through all their fiscal issues, the best and brightest of a new generation will have left for distant shores.
"But," as Hearn says, "the Irish are like Newfoundlanders. They may work somewhere else, but they always come home."
imacdonald@irpp.org
Quite a bit, as it turns out, according to Loyola Hearn, Canada's ambassador to Ireland. A former Conservative MP, Hearn is Newfoundland Irish, which makes him as Irish as anyone.
"We've doubled the number of student and youth visas to 5,000 from Ireland," he was saying the other night. They've all been snapped up. Student visas are being extended from one to two years, to encourage young Irish people to stay on in Canada.
Immigration files are being fast-tracked, though for reasons passing strange, the paperwork is done from the Canadian High Commission in London - which means it takes weeks, even months, when the embassy in Dublin could handle it in days. Given the history between the Irish and the British, the symbolism alone is unfortunate.
There is also the minor inconvenience that Canada isn't easy to get to for those coming from Ireland. There are no nonstop commercial flights except in summer, and then only to and from Toronto on Air Canada.
But that's a pretty minor obstacle given the opportunity to start over again in a welcoming new country. By the time the Irish have worked through all their fiscal issues, the best and brightest of a new generation will have left for distant shores.
"But," as Hearn says, "the Irish are like Newfoundlanders. They may work somewhere else, but they always come home."
imacdonald@irpp.org
© Copyright (c) The Montreal Gazette
Read more: http://www.montrealgazette.com/business/Irish+economy+staggers+youth+eyes+Canada/5331346/story.html#ixzz1WbldXGE5
Published August 24, 2011