...better choice? ------------------------------------------------- Contents 1. Introduction to the financial crisis 2 2. Conditions leading up to the Irish and Icelandic economic crisis 3 2.1 The business cycle 3 2.2 The era of the Irish ‘Celtic Tiger’ 4 2.3 The ‘Financial Vikings’ of Iceland 5 3. Financial crisis response 6 3.1 Government response to the financial crisis 6 3.2 The default decision 10 4. Economic outlook and long-term repercussions 14 5. Conclusion 18 1. Introduction to the financial crisis The Great Recession began in 2007 as the United States housing market fell into a sharp decline. Many economists consider the resulting financial crisis to be the worst financial crisis since the Great Depression. While the crisis can be traced back to a variety of economic origins, the volatility that existed in the world economy from the 1990’s undoubtedly played a large role (Roubini, 2010). The Asian Crisis that arose after the fall of car manufacturer Kia in 1997 and the burst of the Dotcom Bubble in the early 2000’s resulted in many wealthy countries decreasing interest rates to all-time lows to encourage growth in their economies (Roubini, 2010). These low interest rates led consumers, particularly those in the US, to borrow more money than they could afford to repay (Roubini, 2010). During the financial crisis, credit defaults brought the solvency of a number of major international banks into question, and several governments...
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...of western countries while the national output are not very big. Comparing the financial history of the events leading up to the financial crisis of both Iceland and Ireland Ireland Financial Bubble Burst Among the countries currently experiencing sovereign debt crises, Ireland’s case is perhaps the most dramatic. Over the past decade, Ireland has made remarkable economic achievements which created a record of continuous growth miracle. From 1996 to 2007, average annual economic growth rate of Ireland was 7.2%, which won the "Celtic Tiger" reputation. After several years of development, according to per capita GDP, Ireland became the second wealthiest country in a comparison of European Union countries, after Luxembourg. One of major factors to drive rapid growth economy of Ireland is high-tech development. Since the mid-20th century, the Irish government put great emphasis on high-tech development, implementation of the strategy of reinvigorating the Ireland with science and technology, which laid the foundation of the Irish pharmaceutical and chemical companies as well as communication and information competitiveness. Whether the export or to attract foreign investment, the Irish are also eye-catching performance, which contributed to economic growth. But there are some bad. Real estate bubble is the initiator of the debt crisis in Ireland. With the real estate bubble burst, coupled with the impact of the...
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...1. Executive Summary This report, targeted at senior Government officials considers the current issue of the EU treaty and the impact the outcome will have on Ireland. A referendum will be held to decide this outcome but it is noted that the political parties will have a strong influence on the public’s decision. As with all the EU countries, Ireland’s economy retracted sharply with the global financial crisis in 2008. They have recovered better than most of the EU but the major economic issue still facing Ireland is the unemployment rate which currently sits at over 14 per cent. Signing this EU treaty will impose tighter fiscal discipline on members by entrenching tougher tax regulations and limiting government spending (Halpin 2012). The overall aim of the treaty is based on the Keynesian theory of using monetary policy to create budget surplus. EU countries will reduce their budget deficits by the strict spending regulations outlined in the treaty. The downside to signing the treaty is the lack of control Ireland will have over the country. The primary avenue for government spending will be limited to tax increases. Ireland has been criticised for having one of the lowest personal and company tax rates in the EU. The benefit of the low corporate tax rate is the large foreign multinational corporations that create employment in Ireland. Increasing taxes could have a negative effect on the economy. If Ireland do not sign the treaty, although they will still be a member...
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...provides a critical assessment of the labour market of a particular country. You will be allocated the country in the seminar in week 1. If you have not attended this seminar, then you need to consult the module leader to obtain the country you will cover. Part 1 of the report (worth 40% of the marks) requires you to provide a statistical profile of your allocated country’s labour market and present an overview of the most important trends and developments in this country’s labour market over the past decade. Part 2 of the report (worth 60% of the marks) requires you to provide a critical review of the particular situation in your country of NEETs – young people not in employment, education or training. Specifically, using appropriate economic concepts, you should analyse the causes and consequences of being NEET. Your analysis should also critically comment on existing policy solutions and make relevant proposals to improve future policy directions. Part 1: ‘A labour market can be understood as the mechanism through which human labour is bought and sold as a commodity and the means by which labour demand (the number...
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...UCD CENTRE FOR ECONOMIC RESEARCH WORKING PAPER SERIES 2011 Ireland’s Sovereign Debt Crisis Karl Whelan, University College Dublin WP11/09 May 2011 UCD SCHOOL OF ECONOMICS UNIVERSITY COLLEGE DUBLIN BELFIELD DUBLIN 4 Ireland’s Sovereign Debt Crisis Karl Whelan University College Dublin 1 May 2011 1 This paper was presented at a workshop on "Life in the Eurozone With or Without Sovereign Default?" that took place at the European University Institute in Florence on April 14, 2011. 1 1. Introduction Among the countries currently experiencing sovereign debt crises, Ireland’s case is perhaps the most dramatic. As recently as 2007, Ireland was seen by many as top of the European class in its economic achievements. Ireland had combined a long period of high economic growth and low unemployment with budget surpluses. The country appeared to be well placed to cope with any economic slowdown as it had a gross debtGDP ratio in 2007 of 25% and a sovereign wealth fund worth about €5000 a head. Fast forward four years and Ireland is shut out of sovereign debt markets and in an EUIMF adjustment programme. Its debt-GDP ratio has soared over 100% and the sovereign wealth fund is effectively gone. In this short paper, I provide a brief review of how this rapid change came about and discuss potential future developments in relation to Ireland’s sovereign debt situation. 2. The Rise and Fall of the Celtic Tiger It is now well known that Ireland’s famed “Celtic Tiger” ended...
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...Financial Crisis in the European Union: The Cases of Greece and Ireland Sara F. Taylor Thesis submitted to the faculty of the Virginia Polytechnic Institute and State University in partial fulfillment of the requirements for the degree of Master of Arts in Political Science Scott G. Nelson, Chair Karen M. Hult Deborah J. Milly September 7, 2011 Blacksburg, Virginia Keywords: EUROPEAN UNION, EUROZONE, GREECE FINANCIAL CRISIS, IRELAND BANKING CRISIS, EUROPEAN CENTRAL BANK Copyright 2011 Sara F. Taylor Financial Crisis in the European Union: The Cases of Greece and Ireland Sara Frances Taylor ABSTRACT The 2008 eurozone financial crisis has only worsened as of summer 2011 raising questions about the economic future of the eurozone and sending shock waves through economies around the world. Greece was the first state to receive a bailout from the European Union and the International Monetary Fund, surprisingly followed only six months later by Ireland. The goal of this thesis is to analyze the challenges posed to smaller, weaker economies within the eurozone, specifically Greece and Ireland, since the recent eurozone financial crisis. This study is based on the experiences of both Greece and Ireland as very different members of the single currency. How and why did these states meet the criteria for euro convergence? To what extent was there support for the euro in both countries in the past? To what extent is there support today after the near collapse...
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...The 2008 financial crisis was a massive economic and financial downturn that later became a full on recession. This crisis lead to a near halt in trading and plummeted the GDP of almost all European countries. But how did the booming European economy suffer such terrible loss? While the crisis began in the United States a nationwide recession, especially one in a country thought to be economically sound, can quickly cause panic across the globe, leading to a distrust of banks. This can be absolutely detrimental as the system of banking relies wholeheartedly on trust as money is truly just a piece of paper with a trusted value. Panic can cause the public to rapidly pull their funds from banks and this panic and draining of funds can quickly...
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...Local Economy http://lec.sagepub.com/ The euro crisis Andrew Jones Local Economy 2011 26: 594 DOI: 10.1177/0269094211421748 The online version of this article can be found at: http://lec.sagepub.com/content/26/6-7/594 Published by: http://www.sagepublications.com On behalf of: London South Bank University Local Economy Policy Unit Partner Organisation: Centre for Local Economic Strategies Additional services and information for Local Economy can be found at: Email Alerts: http://lec.sagepub.com/cgi/alerts Subscriptions: http://lec.sagepub.com/subscriptions Reprints: http://www.sagepub.com/journalsReprints.nav Permissions: http://www.sagepub.com/journalsPermissions.nav Citations: http://lec.sagepub.com/content/26/6-7/594.refs.html >> Version of Record - Nov 17, 2011 What is This? Downloaded from lec.sagepub.com at UNIV OF GUELPH on November 17, 2013 Review article The euro crisis Andrew Jones Local Economy Policy Unit, London South Bank University, UK Local Economy 26(6–7) 594–618 ! The Author(s) 2011 Reprints and permissions: sagepub.co.uk/journalsPermissions.nav DOI: 10.1177/0269094211421748 lec.sagepub.com ´ ˜ Marco Buti, Servaas Deroose, Vıtor Gaspar and Joao Nogueira Martins (eds), The Euro: The First Decade, Cambridge University Press: Cambridge, 2010; 1048pp: ISBN 978-9279098420, £95 (hbk); Roy H. Ginsberg, Demystifying The European Union: The Enduring Logic of Regional Integration (2nd edn), Rowman & Littlefield: Lanham, MD, 2010;...
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...everyone who left had a third-level education in the 12 months to April this year. The I.T graduates are also leaving the country due to better opportunities in their fields in other countries, such as the UK, the US and Australia. (Irish Examiner , 2014) * Skills Shortages In its ‘ICT Skills Audit’, Fastrack to IT (FIT), estimates that there are 4,500 vacancies in Ireland’s ICT sector. These are not being filled, because of “the severely limited supply of suitably skilled applicants”. The study, shows that many of the vacancies are at the intermediate-skills level, and could be filled after training programmes of six to 24 months. FIT runs courses enabling people to re-skill. The sectors with most job vacancies include digital/creative media, contact centre support, games development, cloud computing, PC maintenance and mobile technologies. (Percival, 2013) * The Economy ICT is not only one of the fastest growing industries, directly creating millions of jobs, but it is also an important creater of innovation and development. ICT is a large contributor to the recovery of the economy after the economic crisis. It helps the economy by direct job creation, contribution to GDP growth, emergence of new services and industries, workforce transformation and business innovation. (Kvochko,...
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...Domestic Product) of two countries which were Ireland and Malaysia. During the year 2006, the GDP of Ireland recorded 5.3% because Ireland’s economic prospects remain good and growth looks set to strengthen further during 2006 with consumer spending is expected to be the main engine of economic growth. Economic growth remains firm in year 2007, employment has grown significantly, full employment, the public finances are in excellent shape and inflation remains relatively low, so the GDP growth rate increase to 5.6%. In September 2008, Ireland became the first euro zone country to officially enter recession. The recession was confirmed by figures from the Central Statistics Office showing the bursting of the property bubble and a collapse in consumer spending that terminated the boom that was the Celtic Tiger. The figures -3.0% shown the GDP growth rate fell. Next was followed by GDP -7.0% in year 2009, Ireland’s government debt had become the riskiest in the euro zone, surpassing Greece’s sovereign bonds, according to credit-default swap prices. The loss of output in the economy in 2009 and 2010 is likely to result in a broadly similar loss of employment and a sharp rise in the rate of unemployment which is forecast to average 113⁄4 per cent of the labour force this year rising to an average of about 141⁄2 per cent in 2010. After 2009, it is sustained recovery in 2010 where is -0.4%. The Ireland economy returned to growth in 2011 after three years of contraction. GDP increased...
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...European Sovereign-debt Crisis Throughout history, debt has been an issue and a concern for many countries around the world. Nations borrowing money, unnecessarily spending, corruption, inability to pay back loans and a variety of other factors have contributed to the devastating and lasting effects of monetary absolution. In recent years, some of the most significant and devastating economic occurrences that have taken place were released to the general public. One that has received a great deal of attention is known as the European Sovereign- debt Crisis or the Euro zone crisis. The European Sovereign Debt crisis is an ongoing financial crisis that has made it impossible for some countries in the Europe to repay or refinance their government debt without the assistance of third parties (Wikimedia). Countries across the European Continent are struggling to find ways to cope with the crisis and the impact that it has taken on debt stricken nations. Europe’s politicians, regulators, and market players are trying different approaches to deal with the problems at hand (Bloomberg LLP). Due to the number of countries that are involved this financial crisis is not only affecting these countries but the entire world. The Euro zone crisis had a variety of origins that grew their roots over a course of many years, but the situation was not released to the general public until back in late 2009 when the concerns intensified. Fears of a Sovereign Debt Crisis arose among investors as...
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...Sharma Guohan.Wang The Debt Crisis of Greece Early October 2009, the Greek government suddenly announced that in 2009 the government budget deficits and public debt as a percentage of GDP was expected to reach 12.7% and 113% respectively, far more than the EU's <stability and growth pact> rules of the upper limit of 3% and 60%. Given the Greek government finances deteriorated significantly, the three major credit rating agencies fitch, standard & poor's and moody's have cut Greece's sovereign credit rating, the debt crisis in Greece officially kicked off. However, when joining the EU, Greece saw himself was far away from the two standards related. This was not a good thing of Greece and the Euro zone. Especially when the euro first came out and then began to depreciate. Greece would then turn to the U.S. investment bank Goldman Sachs for assist. Goldman Sachs then design a set of currency swaps for Greece in order to cover up a sum of up to 1 billion Euros public debt, which made the Greek conform to the standard of Euro members. In addition, Goldman Sachs designed for Greece a variety of ways to accumulate capital and at the same time they did not lead to rising debt. Such as the national lottery and aviation tax income in the future as a mortgage, in exchange for cash. This kind of mortgage now became a sale in statistics instead of debt. In other words, it became the securitization of bank creditor's rights. The root cause of the debt crisis in Greece was that the...
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...Ireland, Rise and fall of the Celtic Tiger INB-300 International Business Abstract This paper will attempt to summarize the rise and fall of the Irish Celtic Tiger. The paper will begin with a brief description of Irish history and religion. A map will be utilized as a reference to provide Ireland’s geographical location and reference to other European nations. The paper will discuss the factors that influenced the Irish name “Celtic Tiger” and the rise thereof. It will examine Irish policy maker’s decisions that set the stage for unprecedented economic stature. The paper will then transition to the changes and decisions that led to the fall of the Celtic Tiger and near bankruptcy of the government. Specific discussions will include the real estate bubble, unemployment, exports, emigration and currency. Then the paper will describe the unsupported bail out negotiated with the EU/IMF. In conclusion the paper will discuss the end of one ruling party and entry of a new government and the challenges they are faced with in light of the country’s economic situation. References Anonymous (2011) Celtic storm: Irelands voters exact revenge for country’s debt. McClatchy –tribune News. Retrieved March 17, 2011 from http://ehis.ebscohost.com Associated Press. (2011). Ireland Upper House Passes Financial Bailout Bill. Pitsburgh Post-Gazette. Retrieved March 17, 2011 from http://ehis.ebscohost.com Eurpeon Map. (2011). Gate-1 Travel. Retrieved from http://www...
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...The Eurozone crisis (often referred to as the Euro crisis) is an ongoing crisis that has been affecting the countries of the Eurozone since late 2009. It is a combined sovereign debt crisis, a banking crisis and a growth and competitiveness crisis.[8] The crisis made it difficult or impossible for some countries in the euro area to repay or re-finance their government debt without the assistance of third parties. Moreover, banks in the Eurozone are undercapitalized and have faced liquidity problems. Additionally, economic growth is slow in the whole of the Eurozone and is unequally distributed across the member states.[8] In 1992, members of the European Union signed the Maastricht Treaty, under which they pledged to limit their deficit spending and debt levels. However, in the early 2000s, a number of EU member states were failing to stay within the confines of the Maastricht criteria and turned to securitising future government revenues to reduce their debts and/or deficits. Sovereigns sold rights to receive future cash flows, allowing governments to raise funds without violating debt and deficit targets, but sidestepping best practice and ignoring internationally agreed standards.[9] This allowed the sovereigns to mask (or "Enronize") their deficit and debt levels through a combination of techniques, including inconsistent accounting, off-balance-sheet transactions as well as the use of complex currency and credit derivatives structures.[9] From late 2009, fears of...
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...approach of two companies to the ongoing financial crisis from 2009 and on. By the means of a comparative analysis, the reader will get a summarized overview of the measures of the two companies and will be able to reflect on them. There are two persons involved in this project; It will be written and submitted by Julian Koster. The final assessment will be done by the lecturer, Ms. Gina Noonan. Who is also responsible for correcting the drafts as well as grading the report in the end. The timeframe of this project is as follows; Date: | Event: | October 25, 2011 | First Draft of Executive Summary submission. | November 8, 2011 | First Draft of Methodology submission. | November 15, 2011 | First Draft of Comparative Analysis and Conclusion. | December 2, 2011 | Final Submission of Entire Project. | The structure of the report is made up of the following points; * Cover Page * Table of Contents * Terms of Reference * Methodology * Executive Summary * Comparative Analysis 1. KLM-Air France 2. Aer Lingus * Conclusion * Bibliography Executive Summary; This report was written to examine the way in which two companies handled the economic crisis of the late 2000s. The companies are; KLM – Air France and Aer Lingus. The research conducted focuses on the policies of both companies in the fields of finance, personnel, public relations and environmental concern during harsh economic times. During the research, a great range of sources...
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