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Analysis/Comment Last Updated: Nov 4, 2010 - 4:11:21 PM

Irish Economy 2009: Cowen says Irish standard of living likely to drop by 10-12% in coming years; However, that is the estimate for the lucky ones
By Michael Hennigan, Founder and Editor of Finfacts
Feb 6, 2009 - 6:16:37 AM

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Irish Economy 2009: Taoiseach Brian Cowen said on Thursday, that the Irish standard of living was likely to drop by 10-12 per cent in the coming years. However, that is the estimate for the lucky ones.

This assertion like much else that is presented as government strategy, is plucked out of the air.

With some forecasts of unemployment claims rising to 500,000 by the year end and many self-employed encountering a tumble in incomes, Cowen is in danger  of resembling the Depression era US President Herbert Hoover.

Harry McGee of the Irish Times reports that Cowen, who was guest of honour at a Dublin Chamber of Commerce dinner, directed remarks on Thursday at what he described as the sense of cohesive nature of the community.

The Irish people had the qualities required to meet the challenge posed in these difficult times, he said.

“The one thing that characterises their success is their self-belief. If we decide to wallow in the sea of doubt do not be surprised if we remain in the turbulent waters that we are in today.”

But he added that it would be difficult.“We owe it to the next generation. We have had some good times. We have had better times than previous generations and perhaps the next.

“The profound changes that are happening in the global economy mean that we won’t revert to the high rates of growth but we can revert to growth more quickly if we stick together as a community.”

He received a standing ovation from the close to 300 guests.

Blather about self-belief and cohesion may impress some but in the absence of commitment to serious reform, it is empty rhetoric.

With unemployment rising sharply and many self-employed facing big tumbles in income, the claim regarding the fall in the standard of living isn't credible.

For the lucky in safe jobs, the increases in taxes in various form, will alone have a bigger impact.

For the second time in a generation, Cowen's Fianna Fáil Party, has run the economy into the ground and it is as unprepared now for a global recession, as it was in 1982.

The Irish national debt trebled in the period 1977-1982 and is set to do so again in the period 2007-2012.

Even in the area of fiscal policy rules, has the former Minister for Finance any proposal, that would prevent a repetition of the economic havoc, which he was a party to, in recent times?

Any reforms on ending cronyism, preventing future housing bubbles and credible reforms for building an efficient economy?

More blather about "smart economy" aspirations is not a serious strategy.

The same people who dished up back-of-an-envelope decenralisation, have little vision beyond what they have been nurtured on - - stroke politics and cronyism.

Dare anyone contemplate reform of the Oireachtas, to improve the standard of TDs - - to have even a small number who could at least speak coherently on the economic challenges facing the country - -  and consider a partial List system, which was recommended in 1996, by a committee on the Constitution, chaired by Dr. TK Whitaker?

As for the comparison with Herbert Hoover, William Manchester (1922 – 2004), author of popular biographies on Winston Churchill and Douglas MacArthur and the controversial chronicler of President Kennedy's assassination, had his bookThe Glory and the Dream: A Narrative History of America 1932-1974, published in 1974.

Here is a sample on President Herbert Hoover:

Riffling through Hoover's papers, one sometimes has the strange feeling that the President looked upon the Depression as a public relations problem -- that he believed the nightmare would go away if only the image of American business could be polished up and set in the right light.

Faith was an end in itself; "lack of business confidence" was a cardinal sin. Hoover's first reaction to the slump which followed the Crash had been to treat it as a psychological phenomenon. He himself had chosen the word "Depression" because it sounded less frightening than "panic" or "crisis."

In December 1929 he declared that "conditions are fundamentally sound." Three months later he said the worst would be over in sixty days; at the end of May he predicted that the economy would be back to normal in the autumn; in June the market broke sharply, yet he told a delegation which called to plead for a public works project, "Gentleman, you have come sixty days too late. The Depression is over."

Already his forecasts were bring flung back to him by critics, but in his December 2, 1930, message to Congress -- a lame duck Republican Congress; the Democrats had just swept the off-year elections -- he said that "the fundamental strength of the economy is unimpaired."

At about the same time the International Apple Shippers Association, faced with a surplus of apples, decided to sell them on credit to jobless men for resale at a nickel each. Overnight there were shivering apple sellers everywhere.

Asked about them, Hoover replied, "Many people have left their jobs for the more profitable one of selling apples."

Reporters were caustic, and the President was stung. By now he was beginning to show signs of the most ominous trait of embattled Presidents; as his secretary Theodore Joslin was to note in his memoirs, Hoover was beginning to regard some criticism "as unpatriotic."

Nevertheless, he persevered, pondering new ways of waging psychological warfare. "What this country needs," he told Christopher Morley, "is a great poem." To singer Rudy Vallee, he said in the Spring of 1932, "If you can write a song that will make people forget the Depression, I will give you a medal."

When Brian Cowen and his colleagues were cheerleaders of the out-of-control property boom, critics of public policy were dismissed as threats to economic prosperity. The Government then lacked a credible strategy to put the economy on a sustainable course. Since the bust, it has been scrambling from crisis to crisis and still lacks a comprehensive policy to deal with the economic challenges.

Cowen said on Thursday, that political leadership required a cohesive, rational and determined effort to get the country through the problem.

The country is waiting.

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