California and Ireland – A Crisis in Common
Published in Die Zeit
(Germany) on 11 April 2008
by Joachim Fritz-Vannahme (link to original)
(Germany) on 11 April 2008
by Joachim Fritz-Vannahme (link to original)
Translated from
by Ron Argentati.
Edited by Annie Moulton.
The Pretty Glow Around the Edges
Ireland is one of the losers in the economic crisis. California is as well. How is the European Union reacting, and what’s Washington doing?
Not long ago, everybody was astounded: Ireland, Europe’s poorhouse for centuries, was suddenly rich, young, beautiful and modern. It became a success story on the edge of Euro-Land. And California? Fun, fun, fun, as the Beach Boys once sang; a model state of the rich and beautiful from Hollywood to the redwood forests, a dream factory wonderland from Napa Valley (wine) to Silicon Valley (spirit).
Gone. Now California goes begging for handouts from Washington and Ireland does the same in Brussels. Four million inhabitants on the Emerald Isle, 38 million in the Golden State are seeing their hopes dashed. The magnificent glow around the western edges is gone. The Irish, like the Californians, are in danger of losing their expensive homes as well as their jobs (in Ireland to Polish workers, in California to the Latinos). In short, a cloudy future filled with debt, debt, and more debt.
If one looks at the numbers behind those losses, the horror is easily understood: unemployment in California is around 10 percent. At least that’s the officially reported figure; in Ireland, that level will be reached in a few weeks – Ireland, where just a year or two ago they were proudly reporting just 4 percent unemployed.
California is over its ears in debt, both private and public, and the state budget is short by $42 billion. We would have wished a more pleasant exit from the political stage for Arnold Schwarzenegger in his final powerless role as the “Governator”. Irish Prime Minister Brian Cowen has a physique very unlike his Californian counterpart but he, too, misused his muscles by allowing his nation’s budget deficit to reach 10 percent of GDP. Both have thrown in the towel on expecting their experts to slow the economic descent.
They lay the blame, of course, on Wall Street and London where speculative bubbles burst and the wealthy of both states ended up having their feathers plucked. No, their domestic politicians must also share the blame for poor governance during the good times and governing not at all during the bad.
Like his predecessor Bertie Ahern, Brussels repeatedly warned Cowen over the years that his country was living on credit that drove prices and wages to dizzying heights. Neither Irishman listened to the warnings because everyone was enjoying the drunken ride of their success and the only thing they were interested in was reelection, despite the scandals of their administrations.
California is proud of its position as eighth largest economy in the world (they’re in a perpetual clinch with France; one day one is ahead, the next day the other, and so much for size making any difference). But the glow has long since become a chimera; California has more prison inmates than China and its potholed streets compare to those of a third world country. Schwarzenegger is ineligible for reelection and his successor will have to go hat in hand to Washington, just as the Irish Prime Minister is doing now in Brussels.
One small side point should be made: if California lies sick and ailing on the beach, that won’t bring out the doomsayers calling attention to California’s importance to the survival of the dollar. If Ireland, on the other hand, starts taking on water in these stormy economic seas, Europe will go into panic mode as to whether the Euro will be able to withstand that. The rules of play are essentially the same in the United States as they are in Europe: each and every state will be expected to get its own house in order before anything else can happen.
These are two small stories on the edge of a great crisis, no more than that. But both contain valuable lessons because pride (or at least cockiness) comes before a fall. Fun, fun, fun . . .
Ireland is one of the losers in the economic crisis. California is as well. How is the European Union reacting, and what’s Washington doing?
Not long ago, everybody was astounded: Ireland, Europe’s poorhouse for centuries, was suddenly rich, young, beautiful and modern. It became a success story on the edge of Euro-Land. And California? Fun, fun, fun, as the Beach Boys once sang; a model state of the rich and beautiful from Hollywood to the redwood forests, a dream factory wonderland from Napa Valley (wine) to Silicon Valley (spirit).
Gone. Now California goes begging for handouts from Washington and Ireland does the same in Brussels. Four million inhabitants on the Emerald Isle, 38 million in the Golden State are seeing their hopes dashed. The magnificent glow around the western edges is gone. The Irish, like the Californians, are in danger of losing their expensive homes as well as their jobs (in Ireland to Polish workers, in California to the Latinos). In short, a cloudy future filled with debt, debt, and more debt.
If one looks at the numbers behind those losses, the horror is easily understood: unemployment in California is around 10 percent. At least that’s the officially reported figure; in Ireland, that level will be reached in a few weeks – Ireland, where just a year or two ago they were proudly reporting just 4 percent unemployed.
California is over its ears in debt, both private and public, and the state budget is short by $42 billion. We would have wished a more pleasant exit from the political stage for Arnold Schwarzenegger in his final powerless role as the “Governator”. Irish Prime Minister Brian Cowen has a physique very unlike his Californian counterpart but he, too, misused his muscles by allowing his nation’s budget deficit to reach 10 percent of GDP. Both have thrown in the towel on expecting their experts to slow the economic descent.
They lay the blame, of course, on Wall Street and London where speculative bubbles burst and the wealthy of both states ended up having their feathers plucked. No, their domestic politicians must also share the blame for poor governance during the good times and governing not at all during the bad.
Like his predecessor Bertie Ahern, Brussels repeatedly warned Cowen over the years that his country was living on credit that drove prices and wages to dizzying heights. Neither Irishman listened to the warnings because everyone was enjoying the drunken ride of their success and the only thing they were interested in was reelection, despite the scandals of their administrations.
California is proud of its position as eighth largest economy in the world (they’re in a perpetual clinch with France; one day one is ahead, the next day the other, and so much for size making any difference). But the glow has long since become a chimera; California has more prison inmates than China and its potholed streets compare to those of a third world country. Schwarzenegger is ineligible for reelection and his successor will have to go hat in hand to Washington, just as the Irish Prime Minister is doing now in Brussels.
One small side point should be made: if California lies sick and ailing on the beach, that won’t bring out the doomsayers calling attention to California’s importance to the survival of the dollar. If Ireland, on the other hand, starts taking on water in these stormy economic seas, Europe will go into panic mode as to whether the Euro will be able to withstand that. The rules of play are essentially the same in the United States as they are in Europe: each and every state will be expected to get its own house in order before anything else can happen.
These are two small stories on the edge of a great crisis, no more than that. But both contain valuable lessons because pride (or at least cockiness) comes before a fall. Fun, fun, fun . . .
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