Sometimes, credit scores can hurt whole countries

In a place where the Blarney stone brings ancestors from around the globe together, and good luck charms spring forth from the ground in abundance, there is economic turmoil. Once the most promising economy in the European Union, Ireland has taken a major hit on the economic front, and as a result, their credit rating has tanked.

One of the fastest growing economies in Europe in 2006 and 2007, Ireland has since fallen victim to a deep economic slump due primarily to the removal of easy credit and a crash in home prices.

Last year Ireland's economy shrank a staggering 7.1 percent and continues to implode, causing a steep decline in tax revenue. Not only that, but the ratio of national debt to G.D.P. rose to 64 percent by the end of 2009 and isn't showing signs of recovering any time soon.

Shaken to the foundation, Ireland's consumer confidence has been anything but good, and has sent shockwaves across the international community. The consequences of this shaken consumer confidence translate into a downgraded credit rating for the country as a whole from a major player in the international credit agency game, Moody's Investor Services.

Citing a weak banking system and rising national debt, Moody's has dropped Ireland from an Aa1 to an Aa2 credit rating.

"Today's downgrade is primarily driven by the Irish government's gradual but significant loss of financial strength, as reflected by its deteriorating debt affordability," said Dietmar Hornung, a senior credit officer at Moody's, to Associated Press on July 19. Although Ireland was only taken down one peg, there are still significant consequences inherent in the downgrade to the country's borrowing and lending power.

In response to the rising deficit, Irish politicians have raised taxes and cut salaries for nurses, professors, and other public workers by as much as 20 percent. If that wasn't enough of a daunting statistic, Ireland's unemployment rate is now above 13 percent, 4 percent higher than that of the United States, who is facing a serious economic recession of its own. Moody's has also downgraded, from Aa1to Aa2, the rating of Ireland's National Asset Management Agency, its so-called "bad bank," whose debt is guaranteed by the government.

But, there is hope for Ireland in the midst of this world-wide credit crisis. The country hopes to sell somewhere in the ballpark of $2,000,000,000 worth of bonds-yes that's nine zeros, maturing in 2016 and 2020 to assist the floundering banks, and if all goes according to plan, rebuilding Ireland's credit over the next decade.

-AJ Register