访谈录 2010-11-26&11-28 爱尔兰救助及欧元前景

What's been happening in Ireland is quite interesting because five, ten years ago, Ireland was seen as the poster child economy of the European Union,  have grown very fast, has attracted a lot of eminent 1 investment, (it was) called the Celtic tiger, experience are very very buoyant, (it was a)very, very optimistic country.

Over the last few years, though, everything has gone belly 2 up. It had an enormous bubble in housing market and the construction sector 3 funded by lending from the banks.

When the bubble burst, the construction sector found it couldn't sell houses, the banks had a lot of bad loans out there to the construction sector, so the entire banking 4 system ran into very, very big problems.

Not until recently, again Ireland was seen as this model way of doing things. So they took very early action to control their budget deficit 5 and they announced quite a few packages of austerity of spending cuts and tax increases.

But in recent months it has been quite clear that the banks are effectively insolvent 6. They are being kept alive on a day-to-day basis with money provided by the European Central Bank. And the pressure was building and building and building and, what are known as bond yields the…the interest rates are in the support and debts are going up and up and up, and it was fast becoming another Greek-style crisis where a country's debts come back to haunt in the financial market.

Well, at the end of last week what happened was that the Irish started to have negotiations 7 with the European Union and with the International Monetary 8 Fund, which always comes in and helps countries out when it's going through these sorts of financial crisis; so, hit squads 9 from both those organizations arrived in Dublin at the end of last week and they got down to work pretty quickly because I think they realized that Ireland in 2010 was quite similar to this, Lehman Brothers Investment Bank in 2008, that if you allowed it to go burst in a very disorderly manner, then there was a real risk of the panic spreading to other parts of the world. So I think that over the weekend talks were very intense and on Sunday night there was an announcement by the Irish government that they would be seeking bailout money from Europe and from the IMF.  George Osborne announced that Britain will provide a bilateral 10 loan to Ireland, which will probably be in the order of 7 billion or 8 billion pounds, probably around 10 billion Euros. And that's for two reasons: one is that the UK is quite heavily exposed as an economy to Ireland. We export more to Ireland than we do to China and India combined from the UK, so obviously we're very big trading partners, so we got some quite strong economic interests, but also RBS and Lloyds have big exposure to the Irish market, particularly their construction sector. And therefore I think the Chancellor 11 here took a very cautious approach, and said it’s, it’s sensible to actually provide this loan to prevent the Irish banks and, by knock-on effect, our own banks from getting into trouble.

Ireland, I think, is gonna have to pay a very heavy price for the loans. There will be another round of spending cuts and tax increases. The position for the Irish people and for the domestic economy is pretty bleak 12 for years to come.

Portugal is the next most vulnerable country and the question is whether Portugal is gonna be next in the follow-on, I think it probably will be. But the bigger question there: does Spain become a target, because Spain is a much bigger economy than either Portugal or Ireland, and if the investment community takes on the Spanish government and starts to push up Spanish bond yield, then there really will be a bigger order of magnitude than what's happened so far.

For the first time since Euro was set up a decade ago, it's conceivable to think of some of the smaller countries flaking 13 away and actually deciding the life inside the Euro zone is so painful, and for so long, they might be better off having a stable life back running their own economies. I think it really depend on how much pain is inflicted 14, whether the medicine works. It hasn’t worked so far in a country like Greece so the potencies 15 are not very good, and whether ultimately there's enough political buy-in from these countries to carry on for the longer term.

And, I mean, another issue is whether Europe has actually got the firepower to continue bailing 16 out countries in its way, or minute set up a 750-billion Euro fund together with the IMF back in May. And already the cost of bailing out Greece and Ireland looks to have taken up something like 200 billion Euros of that, so they've already munched 17 their way through almost a third of the bailout fund. And the question is if other countries find themselves in trouble, whether the Europe has already got the financial firepower to cope with what looks like a pretty structural 18 crisis across the whole of the same currency.