Ireland’s financial crisis

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Anchor Lisa Mullins speaks with Laura Noonan, financial reporter for the Irish Independent newspaper, about the continuing financial crisis in Ireland. Download MP3

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Lisa Mullins: As we just heard in that story, those in need don’t always want handouts. Well, you could put Ireland in that category now too. The Irish government may be in line for an international bailout to save its banking system from collapse. The European Union and next-door neighbor Britain say they want to help, but Ireland today replied it doesn’t need a bailout, thank you. Well, given the flagging state of the Irish economy and the looming debt crisis there, the Irish may have to take the handout just the same. Laura Noonan is a financial reporter for the Irish Independent newspaper. You are in the eye of the storm in Dublin right now. What are the signs that the banking system in Ireland is on the brink, and what are you seeing and hearing in terms of the spin out for people there?

Laura Noonan: Well, I guess in terms of the banking system being on the brink, the main thing that we’re seeing is that Irish banks now owe about 124 billion Euros to both the European Central Bank and the Irish Center Bank, and they owe that cash because they can’t borrow money from other banks. Other banks don’t believe that the Irish banks will be able to pay back the money, and that’s the real stress. In terms of how this is being felt on the streets in Ireland now, I mean, people are concerned about their own savings, because people would obviously have savings in banks. Now there isn’t any immediate reason to be concerned about that. But it’s just that people hear all of this bad news. They think about their own life savings sitting in banks and they get concerned.

Mullins: Well, what has put Ireland in the position of being such a risk right now? I mean, one of the things that brought this on we know was the big real estate bubble that burst there, as it did here. But what’s causing this latest trouble?

Noonan: The latest trouble, I guess, is just things going to a head from a number of fronts. The Irish banks owed a lot of cash to other international banks, which had to be paid in September. They then weren’t able to actually borrow that cash again from other banks, because banks won’t lend to Irish banks anymore. So they have to go to borrow from the European Central Bank. European Central Bank now appears to be saying that they don’t want to have that amount of their money tied up within the Irish banking system, which has then brought this crisis on again. But I mean, the Irish crisis is part of a bigger European picture. There’s a number of other European countries like Portugal, Greece, Italy, who are also finding it hard to get the better off European countries to lend money to them and to their banks.

Mullins: Well, when we talk about providing help for Ireland as we mentioned, there is a bailout very likely in the offing, but it seems as if, while the EU is pushing for the bailout, the government of Ireland is pushing against it. Why is it saying, at least for now, no?

Noonan: A lot of it depends on the form that the bailout actually takes. In terms of what the European Commission would like to do, they would like to see Ireland, the overall country, accept money, rather than the Irish banks. Now that could have a very big implication on the way Ireland can actually run its own affairs, and the way Ireland can make its own choices. People over here are very concerned that if we were to take money from any of these big international bailout funds, then we could be forced to do things which we do not want to do. We could be forced to cut the number of people working in the public service, to have big pay cuts across the public service. So people are very concerned about those kinds of choices being effectively forced on us. And you also have to remember in all of this that Ireland is a country which has fought a very long struggle for its independence, to be in control of its own destiny. So if we were to go down the bailout route, and actually hand over some of that control, that would be a very big issue for some people to deal with.

Mullins: How is the Irish public then taking the news that the government doesn’t want a bailout?

Noonan: There’s a lot of the people in the Irish public who think that we should just take the cash because the country is in such dire need of cash. People look at this, and I guess it can be very hard to understand why we have to cut health services, we have to cut schools, we have to cut all these things that ordinary people need. And at the same time you have the bailout fund dangling a big wad of cash, saying, ‘Take it,’ and we’re saying, ‘No.’ From that point of view, a lot of ordinary people who aren’t able to pay their own bills think we should take the cash, and they can’t understand why we actually won’t.

Mullins: All right. Thank you very much for speaking with us. Laura Noonan, financial reporter for the Irish Independent newspaper, talking to us from Dublin. Thank you.

Noonan: Thanks, Lisa.

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