Susan Hayes, the Irish self-styled ‘Positive Economist’, believes the micro-economic status in troubled eurozone states like Ireland is much stronger than that portrayed by their macro-economic situation and taxpayers would be more willing to do their bit for their economies if they were made to feel good about spending.
Ms Hayes is in Malta for a month with a diary packed with lecturing and training commitments and networking opportunities. In a fortnight, she has delivered talks to the Malta Institute of Accountants, MCAST, and the University of Malta. She is also to lead a training programme for wealth managers and will give presentations on e-learning and entrepreneurship.
While in Malta, Ms Hayes is working on making her own finance training business mobile and has led a webinar from her hotel room, submitted her column for Ireland’s Independent from Malta, and mentored her clients online.
It is her way of ‘doing’, rather than ‘talking’, by identifying ways to be more efficient and innovative with some help from technology. She is so positive with the business-friendliness in Malta – her first visit was only last January – she is keen to help facilitate commercial exchange between Ireland and the island in other sectors apart from finance, like English language tuition.
She says entrepreneurship in Ireland, which received an €85 billion bailout from the IMF and the EU earlier this year, was stronger than it had been for a long time and exports are rocketing. Last year, exports reached €164 billion, higher than the country’s nominal GDP.
“I do not think I will ever emigrate,” she told The Times Business on Tuesday. “My business is doing well at home and internationally. Ireland’s economics have been out of the news for a while. The Irish are extremely good at picking themselves up and dusting themselves off, but they are not so good at success and it is as if they are uncomfortable with wealth – if they have it, they will spend it.
“I was in Portugal this time last year. Ireland and Portugal are two countries facing the same fate but Ireland benefitted more from the EU. Our infrastructure is far more developed and people are better off.”
Ms Hayes explained four to 10 companies are set up in Ireland each day – despite there being no social welfare on offering if the ventures failed – there were more incubation centres and more importantly, more belief. The property sector faced an overhang that would take years to work off and the collapse of the construction sector meant many young males had caused levels of emigration Ireland had not seen in 30 years. Many had relocated to the Gulf and were not flying home for the weekend, underpinning the significant social cost attached to the phenomenon.
Undeveloped youth and unemployment was a significant contributor to a recession’s longevity and was similarly an important factor in Spain’s crisis. Europe, Ms Hayes insisted, was working hard to keep Spain out of the spotlight, particularly as it was in no-one’s interest to address the country’s banking crisis.
After Portugal received its own €78 billion bailout on Monday and with Greece contemplating a request for a second rescue loan, Europe’s leaders did not seem to be drawing a line under the crisis which continued to deliver new instalments of bad news.
“People have been glibly saying it will be Spain next, then Belgium or Italy,” Ms Hayes said. “There is €750 billion in the IMF, €440 billion in the European Financial Stability Facility, which is really €250 billion. Ireland has a quarter of all the ECB’s resources. The money is not there. Is it turning on the printing press or are you going to eat into the pockets of European citizens in order to bail out the periphery?
“One crisis emerges after another and European leaders sit around tables not knowing what they are doing. They know that, we know that. What is really going on at the higher echelons? These secret meetings between member states is becoming a ‘Big Boys’ Club’ and it seems we have very little say.”
Greece, she insisted, cannot pay the bailout back, even if it were thrown a second lifeline.
Ms Hayes said there were some radical solutions that could be considered. One was warehousing the debt: putting it into ‘storage’ for it to be addressed at a later stage as a way to allow economies to start afresh, grow and inflate past it. The proposal could present a moral hazard but there was also a moral hazard in funding an open bucket, she stressed.
Another solution could be aggregating Europe’s debt and issuing Euro bonds, which was essentially what the EFSF was – an expensive bond. The strong buttresses of France, Germany and Finland were essential, but discontent over the eurozone’s state of affairs continued to grow in all three countries.
“Are we going to have real European elections?” Ms Hayes asked. “Do we need a Valletta Treaty or a Dublin Treaty? Is it going to take 10 years? Europe cannot wait. We have tried bailouts. In terms of Ireland’s bailout, the market did not believe in it from day one. The bond yield only rose since the bail out. Around that time it was around nine per cent and is now at 10.5 per cent. In Greece, they are offering 25 per cent to your money and the markets don’t believe that. Even if Greece were allowed to default, the eurozone would still have internal problems to deal with – all of which the world was aware of many years ago.”
The ‘Positive Economist’ believes consumers should be given a sense of hope by lifting the sense of national doom. If people were told there will be no more austerity, no more tax increases, lower VAT, but no more incentives, consumers would go out and spend.
“The Irish people have become humble and our tourism is up,” she added. “Continued austerity is not going to teach us much more. The demographics are interesting. We have been in recession for three years: the people who left college in the beginning of the recession and began to work have learnt lessons and will be the prudent spenders of the future. The 28-48 age group are in negative equity and are essentially the working poor. The 50+ were always the cautious spenders but they are afraid to spend. There is a tangible worry about their children. Three years of planned austerity does not help.”
Behind the scenes, Ireland’s heavyweight fund industry was prosperous. New regulation was leaving no stone unturned. While that implied higher costs for funds, it presented significant employment potential for fund services providers.
In building a wall around the EU, the looming Alternative Investment Fund Managers Directive presented considerable opportunities for Ireland and Malta.
Ms Hayes lauded the creation of Dublin’s International Financial Services Centre in 1987: 92,000 jobs had been created in a square mile of what was once wasteland bringing foreign direct investment that was integrated into the capital.
It was one of Ireland’s greatest successes in innovation and marketing itself to the world. Sadly, the country seemed to have forgotten to develop indigenous industry.