Ireland Admits Need for a Bailout

With the rise in Ireland's debt fast approaching, the leaders of Ireland have decided on Thursday that they need a substantial amount of money to stay afloat and avoid complete economic collapse. The European Union, the International Monetary Fund and the European Central Bank have been favored to work together to supply the current demand. Despite the monetary needs that may be achieved, Ireland's leaders need a solid plan that can not only pull Ireland out of debt, but keep them from slipping back into it. 

Ben May, an economist with Capital Economics in London, said the size of any bailout would depend on what the examiners found on the books of the Irish banks. He said that 60 billion euros ($82 billion) might suffice if it was to cover only the government’s financing needs for the next few years but that more might be necessary to have firepower in reserve.

The U.S. can use Ireland as an example of what our potential deficit can look like, if left uncontrolled. Money without a plan will be wasted, but taking into account all variables will result in a well-balanced system. Having Ireland take the bailout, is a clear signal of widespread, European cutbacks and economical catastrophe, like in Greece. Hopefully, Americans can see the dangers that can be over the horizon.

While Greece’s woes result largely from overspending and flawed record-keeping by previous governments, Ireland’s woes have come mainly from the damage caused to overextended banks by the bursting of a real estate bubble. The authorities have had to nationalize a large portion of the Irish financial sector, and there are signs that the problems are getting worse, as more people are falling behind on their mortgage payments.

This extra attention to countries in need will cause worldwide reduction in disposable income, which directly affects the exchange of goods internationally. Misinformed people will most likely let this incident go unnoticed, but fail to realize the direct impact it has on the United States.