Greeks Must Mimic the Irish to Overcome its Financial Turbulence?

According to the site: www.gulfnews.com Greece must mimic the Irish in order to face the crisis.
While Germany and France are the biggest economies in the Euro region, the survival of the currency union as it stands now, may depend on whether the Greeks on the Aegean can be successful in mimicking the Irish 2,897 kilometres away on the Atlantic.
Facing the largest budget deficit among the 16 countries sharing the euro, Ireland began raising taxes and cutting pay for state workers 18 months ago. Greek Prime Minister George Papandreou belatedly embraced the Irish model and acknowledged that failing to emulate the northern Europeans would return his country to the financial underworld.
“The scale of cuts in pay and spending here are unprecedented across Europe,” said Garret FitzGerald, 84, the former Irish Prime Minister who reduced budgets and raised taxes in the ’80’s. “We’re Northern European, less emotional, and more accepting of what needs to be done in a crisis.”
The cost of insuring against a default on Irish sovereign debt fell by more than a third during the past 18 months, while it more than quadrupled for Greek debt.

By 1999, Ireland was the fastest-growing economy in western Europe and a founding member of the euro, giving it easier access to international credit. Then the bubble burst in the real-estate market in 2007 with prices plunging as much as 50 per cent and the country’s biggest banks, led by Anglo Irish Bank, faced financial ruin. The government spent seven billion euros ($9 billion USD) to rescue The Bank of Ireland and Allied Irish Banks, and then set out to cut government spending.

The country could serve as a role model to Greece.
Ireland’s economy has emerged from the worst recession of any developed nation since the Great Depression and is forecasted by the European Commission to expand at the fastest pace of anywhere in the euro region next year.
Greece, whom was telling the world its budget was in control and its economy was growing as the Irish wielded the axe, is headed toward its sharpest contraction since the ’80’s and inflation is en route to be the worst in a decade.

Ireland’s economy shrank about 10% in the past two years as the decade long real estate boom imploded and unlike in Greece, the financial system came close to collapse. “If the government hadn’t acted, we would have ended up as a ward” of the International Monetary Fund Whelan said, “We still might.”

Irish labour costs will drop 10% from 2009 to 2011, compared with an increase of 3 – 4% cent across Europe, according to estimates from the European Commission. In Greece the commission forecasts costs will rise 6.7 % in the 3 year period, though Greece’s largest union for non-state workers agreed to a pay accord last week that includes a pledge to freeze salaries this year.

“If you don’t have the option of a currency devaluation, there’s no other way out,” said Alan McQuaid, chief economist at Bloxham Stockbrokers in Dublin. “Take the pain.”
Elected in October on pledges to raise wages for public workers and step up spending to boost the economy, Papandreou’s union-supported PASOK government revised the 2009 budget deficit to more than 12% of GDP, or four times the EU limit and twice the previous government’s estimate. The government waited until March to lower pay for state workers as part of deficit-reduction decisions that triggered a wave of strikes and protests across Athens and in other cities.
Bond spreads at that time hovered at about 300 basis points.

“What is certain now is that people here understand what the problem is in Greece and we have to get out of this hole we’re in,” said Dimitris Maroulis, manager of the economic analysis division at Alpha Bank SA in Athens.
“We have to reduce public sector debt and return to markets. That’s why they’ve accepted all these substantial reforms.” Austerity-related protests have been all but muted in Ireland.
On March 31, the day after the government said it would pump as much as 22 billion euros into Anglo Irish to keep it alive, fewer than 100 demonstrators protested outside the company’s headquarters in central Dublin.
“While the Irish complain about official corruption of their political and business elites, there is greater trust in those groups and the state to provide what they are supposed to,” stated Scott MacDonald via email, who is the head of credit and economics research at Aladdin Capital Holdings in Stamford, Connecticut, which oversees $12.5 billion.
“The anger and mistrust in Greece is far higher.”