Further investment from US on horizon - economist
Expert who coined term Celtic Tiger plays down Irish problems
IRELAND'S problems are not unique and the country is likely to benefit from a further flow of foreign direct investment from the United States in the near future, the inventor of the term Celtic Tiger said yesterday.
"You are not in this alone," former Morgan Stanley analyst Kevin Gardiner told a conference. "Some are struggling every bit, and more so than Ireland."
Mr Gardiner was speaking at a conference on the future of Ireland's financial services industry and regulation in Dublin.
Most of Ireland's problems were caused by foolish lending practices, he said.
"It was just bad lending. It was reckless and bad lending," added the economist who coined the phrase Celtic Tiger back in 1994. "The good news is that its easier to fix than the opaque financial transactions in the international markets."
Assets such as the property held by Irish banks were easier to value than some of the complicated investments which brought down banks elsewhere.
The difficulty of valuing assets was prolonging the crisis and wrongly leading some pensions funds to close or to write down their values excessively, he added.
Ireland was no longer a tiger economy because the tiger term properly referred to economies which had not caught up with their neighbours and the Irish economy was now on a par with European rivals, Mr Gardiner said.
"A tiger economy is a small economy growing quickly to catch up with its neighbours. I don't think it is helpful here anymore."
Mr Gardiner believes that US companies will soon resume investing overseas. "US companies are throwing off cash and they will invest overseas," he added. World trade is recovering because the present crisis is a financial crisis rather than a trade crisis.
Mr Gardiner blamed much of the present crisis on behavioural scientists and financial models which failed to predict either the future or people's actions. Nobody can predict the future, he noted.