Finance Column » Your Money This Week » Motown sings, Irish sigh

Motown sings, Irish sigh

By Gregg Fields ·
Monday, November 22, 2010
Posted 10 am ET

It was a week of sad Irish lullabies.

But there was no mistaking that joyful Motown sound.

First, let's visit Ireland. The Emerald Isle that just a few years ago was living in clover -- boosters nicknamed it the Celtic Tiger -- last week was in the humiliating position of fighting off a force-fed international bailout. Where's a leprechaun and a rainbow when you need them?

Clearly, it isn't just the luck of the Irish that's running low in the eurozone. Last summer, the economic gods weren't kind to Greece, which was rocked by riots as the heavily indebted country instituted austerity measures.

The crisis kissed the French next, who responded by telling their government leaders what they could kiss.

And now, some suspect, Portugal is next in line. It's enough to make an economist reach for a bottle of Madeira.

Admittedly, European-style austerity measures may not strike many Americans as especially austere. In Greece, public workers had their wages frozen. Then again, they have risen 30 percent since 2006.

Meanwhile, France nearly had a second revolution when the government got tough on the retirement age, tough being a relative term. Minimum retirement was raised to 62 from 60. So much for its unofficial motto, "Liberty, equality, retire early."

Yet, American consumers should care about this constant patchwork to the "euro quilt of nations" because it appears it will likely be increasingly affecting their pocketbooks.

One piece of evidence last week was the direction of mortgage rates. A Bankrate survey found interest rates on home loans surged to their highest levels in three months.

Wasn't this the week the Fed's QE2 program was going to start exerting downward pressure on rates, as some European banks fear? Perhaps it would have if markets hadn't been roiled by the disaster in Dublin.

In addition, Europe's difficulties could make America's tepid recovery even more problematic.  In all likelihood, they'll be buying even less from us. Not that they buy near enough now: Statistics show the trade deficit with the European Union this year was nearly $59 billion through September.

But Americans could take pride in one piece of last week's economic news: General Motors is a stock again. After a government bailout that left Washington a major stockholder, and a bankruptcy that would have been unthinkable even a decade ago, GM shares hit the road running, climbing 3.6 percent after debuting at $33 in its first day of trading.

It's impossible to overstate the cultural significance of GM, of course. Remember the "baseball, hot dogs, apple pie and Chevrolet'' campaign? It was enough to give Cubs fans hope.

What young man in the 1964 didn't dream of owning a "Little GTO''? Three deuces and a four-speed, and a 389! (A deuce is a nickname for a carburetor. Fuel economy and air bags were presumably not yet public policy concerns.)

If you're old enough, you may even remember Charles Erwin Wilson, GM's president, telling Congress in the 1950s that "what was good for General Motors was good for America, and vice versa.'' That was some 55 years before the Great Recession.

But on Thursday, the Treasury sold much of its stake in the iconic automaker, netting $13.6 billion.

It's not enough to bail out Ireland. In fact, it still isn't clear the government will ultimately break even on GM.

Nevertheless, in a nation short on optimism, it was good to see GM and America -- good for each other, once again.

In this holiday-abbreviated week we'll get new information about October's trends in personal income. Released on Wednesday, it just might provide an added reason to give thanks.

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