Madam, - As we know, the construction and property boom was fuelled by the big drop in interest rates brought about by adopting the euro. Euro-zone membership has been a great benefit to Ireland, but it left us with an inability to adjust interest rates in controlling the consequent credit explosion. The feast of cheap credit is now ended and we look like facing an undesirable over-correction.
There is a valuable lesson for the future to be learned from our recent experience. Don't we need to try harder to influence the vital function of credit expansion in our economy? The European Central Bank cannot really help us on this one, given that the large economic blocks of France and Germany seem to be in different stages of the economic cycle to us.
Granted, our own Central Bank does not now have the power to restrict credit, but shouldn't we try to achieve an informal national consensus between the Government and credit providers on the issue, ideally with the blessing of fellow EU members?
Surely our economic planners can estimate the broad credit requirements of the economy in rolling five-year cycles as part of the national planning process. Sectoral guidelines could then be issued to credit providers. These guidelines could be reviewed annually in the light of events.
Economists may argue that this is not possible in a free market and that external providers would intervene and, in the process, take market share from local banks and building societies. I am not convinced by this argument. Apart from doing large capital market transactions, I don't believe that external providers would provide regular business and consumer credit without a presence on the ground; there seems little sign of a single market developing in this area.
Common sense dictates that credit expansion in our economy is far too important a vehicle to leave with nobody at the wheel. - Yours, etc,
PAUL SHOVLIN,
Mount Anville Lawn,
Dublin 14.
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Madam, - With €45 million of the Government's planned spending cuts (over 10 per cent of the total) coming from the Overseas Development Assistance budget, it seems the Minister for Finance has forgotten the legends of his boyhood. Perhaps it's time for a polite reminder that Robin Hood did it the other way round. - Yours, etc,
MARIE ALTZINGER,
Sweetmount Drive,
Dublin 14.
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Madam, - Is it not incongruous that in these times of supposed restraint, major retailers in Ireland continue to fleece the Irish consumer with impunity? Yesterday I declined to purchase a garment showing a price-tag of £15 or €30. What is going on and why is it tolerated? - Yours, etc,
MICHAEL POWER,
Stillorgan Wood,
Kilmacud,
Co Dublin.