Sarah Lyall filed from Dublin Thursday on the woeful state of the Irish economy and the big spending cuts submitted by the government to cut debt. She doesn't approve: "Irish Wince as a Budget Proposal Cuts to the Bone [1]."
It sits in boarded-up disgrace next to the River Liffey, an abandoned, half-finished hulk. In better days, it was conceived as the new headquarters of the powerful Anglo Irish Bank, a glorious symbol of Ireland's great economic boom.
But the bank, larded with bad debt and disgraced by allegations of mismanagement, was taken over by the government last winter. The site's developer went bust this fall. And the ghostly construction project, mired in lawsuits, now stands as a monument to a telling kind of failure, the kind measured by the distance between the heights of a country's financial hubris and the depths of its fall.
Lyall did some pretty overt editorializing about those spending cuts contained in the government's "harshest budget in generations."
On Wednesday, the government added to the general misery in this shellshocked city by releasing its harshest budget in generations. The spending plan, 60 billion euros or about $88 billion, cuts 4 billion euros from the country's ballooning deficit by reducing public sector salaries by 5 to 15 percent and by drastically reducing expenditures on health care, education, welfare benefits and other social programs.
Economists applauded the move, saying that Ireland - unlike other crisis-stricken European countries, most notably Greece and Spain - was showing courage in trying to rein in its deficit. European Union rules require countries that use the euro to keep their deficits below 3 percent of gross domestic product. Left unchecked, the government says, Ireland's would increase to 13.5 percent in 2010.
In a populist turn, Lyall seemed to chide economists for ignoring the human factor in favor of silly things like basic macroeconomics:
"This process started in 2008, but today is a big moment for Ireland in its efforts to restore stability to its public finances," Dermot O'Leary, chief economist for Goodbody Stockbrokers in Dublin, said in an interview. "The events of the last two weeks in relation to Dubai and Greece have proved that if you're a small country with a large deficit, the markets will force you into action by driving up the rates at which you can borrow funds."
Markets are one thing; the reality for actual residents of Ireland is another. A number of them converged outside the Parliament building to protest as the government unveiled its budget.
Public sector employees held strikes in November. The national police force has threatened to walk out. It seems impossible to find anyone here who has been left unscathed.
In contrast, the Times was considerably less scathing when it comes to confiscatory tax hikes, like the ones pushed by Britain, as described in a front-page story [2] Thursday by Landon Thomas Jr.: "Yet the tax is not without precedent, even among traditional conservatives."