Ciarán O'Hagan: Our credit is safe as houses, but we must plug the deficit
Published 21/09/2010 | 05:00
We are now entering our fourth year of world financial crisis, since subprime exploded on the scene. While many have been hurt by the recurring crises, there has been one big beneficiary -- that's the taxpayer, through paying very low yields on government borrowings. Public deficits have risen around the world, as governments have sought to smooth the massive losses to wealth and income.
At the same time, bond yields have fallen, creating a windfall gain of some €1,500bn for taxpayers across the US and western Europe. That gain for the public purse has given governments time to get their houses in order, while some have used it instead to put off the day of reckoning.
June 14, 2007, the very day Brian Cowen was elected Taoiseach, was also a day when mortgage risk in the US exploded on the scene. Ireland, given the openness of its economy, was among the first to be hit.