Further to the mortgage arrears crisis.
A finger-wagging warning from history.
“I think right now the world thinks more of Ireland than many Irish think of their own country. There’s not a single person who knows anything about the global economy who lives outside of Ireland who has a moment’s doubt that you will recover from this, the question is, how quickly and how. So I will resist my normal temptation to be almost maudlin every time I come here and try to say some very specific things.
This country made a big macro-economic decision when you made up your mind that you would save your financial structure and not be seen as defaulting on your debt, and I’m sure it made a lot of people mad because they thought we’re helping people who profited out of our misery. It was the right decision it made people want to be here.
Now you have one more big economic decision which,and I just got briefed by your leaders on it and it’s the same decision America had to make but you’re way here further than we are down the road.
You’ve already decided you’re not going to throw many homeowners out of their homes but when you carry around as much unresolved debt as we have and you have because your own people are afraid to spend, they actually save more which is a personal virtue but a collective problem in a downturn in which interest rates are virtually zero and there’s not enough demand.
So even if you recapitalise the banks, they’re reluctant to lend and people are reluctant to borrow.
The only way to do it is to deleverage the economy, so the government has come a long way on this and they are looking at a variety of options, there are fifteen ways to do that in which people who have to make a little sacrifice now to deleverage and to work out the mortgage terms whether you lengthen the term of the mortgage or whatever you do to clean this debt up can get it back on the back end as the value of housing goes up and the country returns to full health.
I know that they’re dealing with it so when the decisions are made and proposals put forward just remember this, this depends on whether you want beat the five-year average.
Japan spent two trillion dollars on infrastructure projects the good ones by the way which will add to its long-term productivity and help it for 30-40 years into the future kept a lot of people working, they had a 20% personal savings rate but when their banks collapsed in 1990, a decade later they had not yet returned to a full-employment high-growth economy because they could never find out how to deleverage and work through all this debt. so without even knowing the details of what they’ll wind up proposing, I support it, because there is no perfect solution, someone will be disappointed, somebody has to give a little today to get tomorrow.
But I’m telling you, I want you to beat the five years, and you can read, you don’t have to take my word for it, you can go down to any of the university libraries and dig out old economic tomes, you can go back five hundred years, it takes five years to get out of these things, or ten years, because it’s always politically difficult to deleverage when you’ve got excess debt.
But if you don’t then even the best Irish entrepreneurs, particularly those that have markets in Ireland, have to get up every day with chains on their legs so that’s the first thing I want to say, I’m for it and I want to know what they’re going to propose but if it helps you to accelerate this you’ll be doing something that most countries do not have the sense, the courage or the political will or ability to do, then the United States has to do it too if we want to beat the five years.
Bill Clinton [starts at 9.10] addressing The Global Irish Economic Forum, Dublin , October 2011.
There you go now.