TEXT OF INTERVIEW
STEVE CHIOTAKIS: European leaders this morning did a lot of talking about Ireland. Investors worry the country may require a debt bailout from other European nations. So, we’ve been covering this story for the past week. And it’ll probably keep coming up. Kinda reminds us of the Greek debt crisis. But what’s really going on in Ireland?
Marketplace’s Stephen Beard is here to walk us through. Hi Stephen.
STEPHEN BEARD: Hello Steve.
CHIOTAKIS: Is Ireland any different than Greece.
BEARD: Both countries are in a severe downturn, so their public finances are shot to pieces for the usual reasons — low tax revenues and higher public spending on unemployment pay and things like that. But there’s a critical difference between the two. Greece is in trouble, really in trouble, because of a wildly irresponsible government living beyond its means, overspending on the Olympics, providing pensions and other benefits it couldn’t afford. While in Ireland it was wildly irresponsible banks at the root of the problem. They inflated a massive property bubble which has now burst. Simon Tilford is with the Center for European Reform.
SIMON TILFORD: Now they have a huge overhang of unsold houses, highly indebted banking sector, and an economy that is unlikely to grow much for many years to come.
Because the Irish government feared that wild spread bank defaults could bring down the whole economy it guaranteed most of the bank debts. So now the Irish government is as heavily in dept as the Greek government
CHIOTAKIS: Alright Stephen, but we keep hearing about more and more European countries with these debt problems. Where is this all going to lead?
BEARD: Worst case scenario — the Euro could break up. The country to watch as ever is Germany. The absolutely bottom line I believe is will Germany be prepared to pick up the tab for the weaker member states that can’t pay their way. That’s the ultimate question — will the Germans agree to pay more, a lot more, to keep the Euro going.
CHIOTAKIS: Alright, Marketplace’s Stephen Beard in London. Stephen, thank you.
BEARD: OK Steve.
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