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New EU treaties - need more info. (See in-thread Mod Warning before posting)
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01-04-2012 2:20am#1Hi Politics heads;
I'm hoping someone can help me clear up something. I know we're voting on a Treaty at the end of May that will put in place new rules about deficit spending, an idea that I broadly agree with. It basically codifies the idea of "live within your means" and that seems fair to me.
But there seems to be a second treaty floating around about the propsed European Stability Mechanism (ESM) and the treaty surrounding that is one that I do not agree with as I think it's a bad deal for all the peoples of Europe, in both the "rich" countries like Germany and the peripheral and Eastern states. The text of that treaty is here.
Is there a link between the two? Assuming that our political class supports the "Treaty Establishing the European Stability Mechanism (2012)"- Will we get to vote on that before it gets signed?
- Is there any connection between the treaty we have to vote on and the ESM treaty?
Thanks in advance;0
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It's my view that the EZ needs a mechanism like this to help ensure its future coherence. The need to have recourse to such a mechanism in the future is lessened where member countries have their economies and fiscal positions in order. So the fund effectively becomes an instrument to hold in reserve.
The simplest way I can understand the whole process is something along these lines:
1. The original Maastricht criteria need to be spelled out explicitly. The 'voluntary' code simply didn't work.
2. The fiscal compact is verifiable commitment to stick within the Maastricht criteria
3. The EZ needs a central fund to be able to autonomously address imbalances
4. The ground needs to be prepared for a future Eurobond which will provide a high level of security for the EZ's economic and fiscal condition. The fiscal compact and ESM will need to be seen to be delivering before the net contributing states have the confidence to commit to it, let alone setting in train a new 'Eurobond' treaty.
To me FCT + ECM is not particularly controversial. It's good housekeeping + laying the foundations for proper fiscal and economic autonomy in the global environment.0 -
Hi Politics heads;
I'm hoping someone can help me clear up something. I know we're voting on a Treaty at the end of May that will put in place new rules about deficit spending, an idea that I broadly agree with. It basically codifies the idea of "live within your means" and that seems fair to me.
But there seems to be a second treaty floating around about the propsed European Stability Mechanism (ESM) and the treaty surrounding that is one that I do not agree with as I think it's a bad deal for all the peoples of Europe, in both the "rich" countries like Germany and the peripheral and Eastern states. The text of that treaty is here.
Is there a link between the two? Assuming that our political class supports the "Treaty Establishing the European Stability Mechanism (2012)"- Will we get to vote on that before it gets signed?
- Is there any connection between the treaty we have to vote on and the ESM treaty?
Thanks in advance;
Will we get to vote on that before it gets signed?
We don't vote on any treaty before it's signed - there's nothing to vote on until that happens. But no, there's not likely to be a referendum on allowing the government to ratify the ESM Treaty, because it has no implications for sovereignty - that is, it doesn't involve the State handing over any powers to anyone. It does involve a charge on public funds, though, so there will be an Oireachtas vote on ratification.
Is there any connection between the treaty we have to vote on and the ESM treaty?
A lot depends on what you mean by "connection". There is a connection, in that you can only access ESM bailout funds if you've ratified the Fiscal Treaty. However, you can ratify one or the other on its own, so they're not "connected" in that sense. We could ratify the Fiscal Treaty (FST), but not take part in the ESM at all, although by ratifying the FST we would be eligible to get ESM bailout funds - and we could ratify the ESM, meaning we put money into it, but not ratify the FST, meaning we wouldn't be eligible to get ESM bailout funds.
|Ratify ESM|Don't ratify ESM|Ratify FST|Don't ratify FST
Put money into ESM|Yes|No||
Get money from ESM|-|-|Yes|No
Subject to fiscal rules|-|-|Yes|No
||||
Who Votes|Oireachtas||Referendum|
What exactly is a "bad deal" about the ESM, by the way?
cordially,
Scofflaw0 -
Now here's a question. What can we do?
I've never been involved in any politics (besides a couple of societies back in uni in London) so I really don't know where to start.
But having watched the Household Tax debacle, a lot of people are angry and open to being misinformed. Yet I know from my bridge club (a lot of angry misinformed pensioners) a lot of them are open to being informed.
The Household tax debacle has shown that a) we can't trust the current Gov to actually inform people when certain arrogant parties cannot understand why anyone might disagree with them/ be angry, and that b) certain political parties are willing to engage in a widespread disinformation campaign to suit their own domestic political ambitions.
Does any one know if there is any pro-treaty organisation, to which we can contribute either cash or time?
Not, I should point out, that I think that the Fiscal compact is a great idea. Rather I don't see any downside to Ireland ratifying it, but quite a bit if we don't.0 -
I don't know of any non-political bodies who are campaigning for a Yes on the Treaty.
Well, except the IMF perhaps. They could certainly do with the cash, if you feel thus inclined...0 -
My problems with this treaty are multiplefold.
Treaty text is here:
Chapter 2: Establishes yet another Eurocracy whose members are appointed exclusively by politicians and whose officers the people do not elect and cannot remove. Basically, directors of the ESM will be accountable to nobody, which is not for reasons below.
Chapter 3: Article 9, Section 3:
That's a lot of power, they can demand whatever they like, from whichever country they like, and there's nothing the country can do about it, including rescinding their acceptance of the ESM treaty since one they've agreed to it, it's irrevocable. But there's no accountability by the ESM, as we'll see below.ESM Members hereby irrevocably and unconditionally undertake to pay on demand any capital call made on them by the Managing Director pursuant to this paragraph, such demand to be paid within seven days of receipt.
Chapter 4: ARTICLE 15 Financial assistance for the re-capitalisation of financial institutions of an ESM Member
Seems to me to be a crystal clear statement of intent that future banking failures will be dealt with the same way Ireland's was in 2008 - throw the people of the affected country under the bus to bail out the banks in question, compensate every bondholder to the max, rather than letting failed banks go, as happens routinely with small and regional banks in the U.S. and worked spectacularly and successfully with even the main banks in Iceland. Something similar happened in Sweden some years ago I think.The Board of Governors may decide to grant financial assistance through loans to an ESM Member for the specific purpose of re-capitalising the financial institutions of that ESM Member.
And make no mistake - between incompetent politicians and a one-size-fits-all interest rate policy in the Eurozone, there WILL be another banking crisis, somewhere in Europe, at some point in time.
This makes it clear that even if a member state does not have the resources to fund a mass bank-bailout, the ESM has the specific enumerated responsibility of lending money to GOVERNMENTS (i.e. not the banks themselves) for that purpose and you can be damn sure that the member state in question will borrow the money or extreme political pressure from the Eurocrats will be brought to bear on them to do so.
In short, Article 15 provides an example of what is wrong with Europe and the Euro, and it's the complete opposite of what we should be doing.
Chapter 6: Article 32
Basically puts the ESM above any kind of scrutiny, oversight or responsibility for its actions of any kind whatsoever.
Chapter 6: Article 35, Immunities of Persons.
So the staff of the ESM are above any sort of law?In the interest of the ESM, the Chairperson of the Board of Governors, Governors, alternate Governors, Directors, alternate Directors, as well as the Managing Director and other staff members shall be immune from legal proceedings with respect to acts performed by them in their official capacity and shall enjoy inviolability in respect of their official papers and documents.
Two main questions come to mind:- What the hell are these people planning to do that requires so much protection from due process and the rule of law?
- Why should they have so much power, and so little responsibility? That seems like an open invitation to abuse of power.
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Participating states are shareholders committing to a fund. If there are no crises to address, the money is not called up. If there is, then you're quids in. Of course, you get the money back, with interest in the meantime.
Once you understand what you're getting into, I don't see anything particularly controversial about the ESM.0 -
This is a problem with all quangos. Can't single the ESM out, same applies to the ECB and lord knows how many domestic Irish bodies. Objecting on these grounds requires being prepared to dismantle the whole system. Look at it from the other side. If there were truly democratic elections, factoring in which electorates had contributed the most cash, the Germans would run the show. This at least means that the ESM is not answerable to the German electorate as Frau Merkel is.My problems with this treaty are multiplefold.
Treaty text is here:
Chapter 2: Establishes yet another Eurocracy whose members are appointed exclusively by politicians and whose officers the people do not elect and cannot remove. Basically, directors of the ESM will be accountable to nobody, which is not for reasons below.
As McDave explained this is how any commercial fund is set up. Parties agree how much they're willing to contribute and when, but they don't pony up the cash until it is needed. If there wasn't a need for another bailout for 15 years (unlikely I know) it would make no sense to the Finnish and German taxpayers for their cash to be sitting in the ESM. On the flip side if a bailout was required by e.g. us in three years time and we had run out of cash (we were unusual getting a bailout with cash due to the ECB issue, normally you ask when you've run out as Greece and Portugal did) it would be a disaster if every contributing State had to spend months getting it through their national legislatures. If, heaven forbid, it happened in the midst of a harsh winter pensioners could die of hypothermia because their pensions couldn't be paid until the other States agreed the bail outs. Schools could close, hospitals etc...Chapter 3: Article 9, Section 3:
That's a lot of power, they can demand whatever they like, from whichever country they like, and there's nothing the country can do about it, including rescinding their acceptance of the ESM treaty since one they've agreed to it, it's irrevocable. But there's no accountability by the ESM, as we'll see below.
Just saw your post on another thread so had to amend this one. Capital calls can only be made pro-rata the agreed capital investment. Say only Germany and Finland are left contributing and the original agreement means that Finland contributes 10% i.e. 1 € for every €9 Germany contributes. If Belgium suddenly needs €300 the capital calls can only be made Finland €30, Germany €270. It doesn't matter if Finland's pledged amount exceeds the €300 Belgium needs, the fund cannot call on Finland in preference to Germany. Countries make their original pledges and capital calls reflect that ratio. So there is no risk that Ireland could ever be asked to pony up all the cash for bailing out someone else. We can only ever be asked to stump up our percentage of the total.
Bit of a valid point here but it needs some perspective. The second that the "crisis" is over we need to seriously readdress how we treat banks. The Commission's paper on bailing in senior bondholders released on Friday sets down some kind of blue print. The problem with trying to readdress it head on during a crisis is that it inevitably makes the crisis worse. So if this clause was omitted, that very fact could up the pressure on Spain (the most under pressure at the moment) and no one can afford for Spain to fail because they'll take France with them and game over EZ. For now, the more the world believes that the Spanish banks have a backstop, the less likely a run on the Spanish banks. A run on the Spanish banks puts Spain right where we are, the resulting run on French banks.....Chapter 4: ARTICLE 15 Financial assistance for the re-capitalisation of financial institutions of an ESM Member
Seems to me to be a crystal clear statement of intent that future banking failures will be dealt with the same way Ireland's was in 2008 - throw the people of the affected country under the bus to bail out the banks in question, compensate every bondholder to the max, rather than letting failed banks go, as happens routinely with small and regional banks in the U.S. and worked spectacularly and successfully with even the main banks in Iceland. Something similar happened in Sweden some years ago I think.
And make no mistake - between incompetent politicians and a one-size-fits-all interest rate policy in the Eurozone, there WILL be another banking crisis, somewhere in Europe, at some point in time.
This makes it clear that even if a member state does not have the resources to fund a mass bank-bailout, the ESM has the specific enumerated responsibility of lending money to GOVERNMENTS (i.e. not the banks themselves) for that purpose and you can be damn sure that the member state in question will borrow the money or extreme political pressure from the Eurocrats will be brought to bear on them to do so.
In short, Article 15 provides an example of what is wrong with Europe and the Euro, and it's the complete opposite of what we should be doing.
Stop looking at small US banks, look at Lehmans. Iceland actually adds nothing to this discussion given they resorted to capital controls and until they reverse those we have no idea how the Icelandic recovery will look. Capital controls (which would kill our FDI - of which Iceland has practically none) are artificially inflating their domestic economy.
Not true. The ESM is a fully fledged EU institution subject to the rules laid out in the TEU and TFEU and justiciable in any Member State, or more likely, directly before the Court of Justice.Chapter 6: Article 32
Basically puts the ESM above any kind of scrutiny, oversight or responsibility for its actions of any kind whatsoever.
Chapter 6: Article 35, Immunities of Persons.
So the staff of the ESM are above any sort of law?
All this means that they can't be subject to petty nuisance law suits, they can't have their decisions second guessed by a court, but this rule cannot displace some of the fundamental rules on which the EU is built. Essentially if they make a good faith mistake they're protected from litigation. Hell, in a financial crisis we can't tell what's a mistake or not for the better part of a decade. But if they act in bad faith then the CJEU will still be able to hear a case. The issue here is, I suspect, the German equivalent of Crotty who's busy litigating against every thing Germany is trying to do to resolve the crisis (and I think most of us suspect that Germany is still not doing enough). In his world German taxpayers shouldn't have to help anyone, because he doesn't understand that the EU and euro more specifically, are benefiting Germany. He's one of the reasons Angela can't do more. Thus far he's only litigated in the German Courts and they haven't referred the matter to the Court of Justice, because just as in Crotty he's phrased his claim based on domestic constitutional law. The Irish Supreme Court in Crotty, just as the German Supreme Court now, should have made the 267 reference and the results would have been entirely different. But because the question posed was couched in domestic constitutional terms they didn't realise that actually EU law was probably already invoked, so they didn't make the reference.Two main questions come to mind:- What the hell are these people planning to do that requires so much protection from due process and the rule of law?
- Why should they have so much power, and so little responsibility? That seems like an open invitation to abuse of power.
It is not ideal. Of course it is not. But neither is a properly democratic solution unless you're happy with the notion of the Germans calling all of the shots and not needing to have any recourse to any one else just because they own the cheque book. It is a fudge, but to prevent nationalism tearing the EU apart a fudge is what is needed. That's why the Eurocrats. That's why the history of Eurocrats. Because if you tried to introduce a truly democratic mandate into the EU the national electorates would tear the entire thing down. As they would on many occasions in the past. The longest ever period of peace in Europe is down to tempering national politics through the use of Eurocrats.0 -
That's a lot of power, they can demand whatever they like, from whichever country they like, and there's nothing the country can do about it, including rescinding their acceptance of the ESM treaty since one they've agreed to it, it's irrevocable.
Hi Sean, I think you're misinterpreting the following text:ESM Members hereby irrevocably and unconditionally undertake to pay on demand any capital call made on them by the Managing Director pursuant to this paragraph, such demand to be paid within seven days of receipt.
The key word is ESM Members. If you're a member, you irrevocably and unconditionally undertake to do x, y, z - if you're a member.
But if you cancel your membership, the irrevocable and unconditional undertakings no longer apply.
That is my reading of it, anyway.0 -
Hi Politics heads;
I'm hoping someone can help me clear up something. I know we're voting on a Treaty at the end of May that will put in place new rules about deficit spending, an idea that I broadly agree with. It basically codifies the idea of "live within your means" and that seems fair to me.
But there seems to be a second treaty floating around about the propsed European Stability Mechanism (ESM) and the treaty surrounding that is one that I do not agree with as I think it's a bad deal for all the peoples of Europe, in both the "rich" countries like Germany and the peripheral and Eastern states. The text of that treaty is here.
Is there a link between the two? Assuming that our political class supports the "Treaty Establishing the European Stability Mechanism (2012)"- Will we get to vote on that before it gets signed?
- Is there any connection between the treaty we have to vote on and the ESM treaty?
Thanks in advance;
Being prepared to surrender sovereignty so quickly, eh?
No sane minded person would vote yes to become a bankrupt slave to the EU.
Being cut off from the ESM means zilch because we would still be able to borrow solely from the IMF.
There is no way 45 million Irish-Americans will stand by and watch their motherland burn. And if that wasn't enough, Ireland would also be able to avail of bi-lateral loans from Canada, Australia, NZ etc.
On a more important note, do you really think they will actually cut Ireland off from ESM and risk the stability of the euro? :rolleyes: Not a chance...
Anyway, going by the poll on the other thread, it seems a majority will reject this enslavement treaty.0 -
Being prepared to surrender sovereignty so quickly, eh?
No sane minded person would vote yes to become a bankrupt slave to the EU.
There is little to no evidence that this would, in fact, happen. Actually there appears to be a significant amount of confusion regarding the level or nature of the application of the "new rules" if this were ratified. It would certainly not apply immediately to Ireland; it would only arise in the event of future "breaches" of the rules - and we don't want that to happen again anyway, so what's the problem?
Is there evidence to support that? Where does that leave our relationship with the Eurozone? Remember that there is no mechanism to leave the EZ without also leaving the EU.Being cut off from the ESM means zilch because we would still be able to borrow solely from the IMF.
:rolleyes: Some pretty stretched financial thinking there... They'll all pass around a hat and throw a few dollars in. You'd be lucky to get $225m/€170m from the Irish-Americans fundraising and I don't see any support for bi-lateral loans from commonwealth countries or otherwise. It's pie in the sky wishful thinking.There is no way 45 million Irish-Americans will stand by and watch their motherland burn. And if that wasn't enough, Ireland would also be able to avail of bi-lateral loans from Canada, Australia, NZ etc.
Yes, I think they would. If Ireland refuses to accept that there will be consequences for fiscal ineptitudes in the future that fundamentally damages market confidence in the Euro itself. In order to alleviate this fear the EU will have to strongarm Ireland and show the international markets that they will not cave on this issue. Play by the rules or don't, but having your cake and eating it too is not an option.On a more important note, do you really think they will actually cut Ireland off from ESM and risk the stability of the euro? :rolleyes: Not a chance...
:rolleyes: Because people like you, who have no actual understanding of the treaty or desire to educate yourself on it, go around and call it an "enslavement treaty" when it is nothing of the sort.Anyway, going by the poll on the other thread, it seems a majority will reject this enslavement treaty.0 -
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Being prepared to surrender sovereignty so quickly, eh?
No sane minded person would vote yes to become a bankrupt slave to the EU.
Being cut off from the ESM means zilch because we would still be able to borrow solely from the IMF.
There is no way 45 million Irish-Americans will stand by and watch their motherland burn. And if that wasn't enough, Ireland would also be able to avail of bi-lateral loans from Canada, Australia, NZ etc.
On a more important note, do you really think they will actually cut Ireland off from ESM and risk the stability of the euro? :rolleyes: Not a chance...
Anyway, going by the poll on the other thread, it seems a majority will reject this enslavement treaty.
The IMF will not lend us more money, because their maximum lending is supposed to be 600% of quota - in other words, six times our contribution to the IMF. They're currently lending us 1350% of quota due to our "exceptional circumstances", which is to say as a favour to the EU.
You can forget further IMF lending.
Bilateral loans and bailouts from Irish Americans? Even more wishful thinking. We've already been in a position where we needed to be bailed out, and we didn't get anything from those sources then.
You can forget meaningful bilateral funding or bailouts from Irish Americans.
ESM funding? No, of course we won't get it. Legally, if we haven't ratified the Fiscal Treaty, we can't get access to ESM funding, making it illegal for the governments involved in the ESM to give us any.
You can forget ESM funding.
Other European funding? Yes, almost certainly we'd get that, rather than being allowed to sink. But it would be on worse terms than the ESM, because the parliaments of the countries being asked to put up the money for us will be unwilling to provide fresh funds in addition to their ESM obligations, and it will be on worse terms because there would have been absolutely no point in agreeing to ESM if any country not using ESM gets a better deal.
regards,
Scofflaw0 -
FreudianSlippers wrote: »There is little to no evidence that this would, in fact, happen. Actually there appears to be a significant amount of confusion regarding the level or nature of the application of the "new rules" if this were ratified. It would certainly not apply immediately to Ireland; it would only arise in the event of future "breaches" of the rules - and we don't want that to happen again anyway, so what's the problem?
Is there evidence to support that? Where does that leave our relationship with the Eurozone? Remember that there is no mechanism to leave the EZ without also leaving the EU.
:rolleyes: Some pretty stretched financial thinking there... They'll all pass around a hat and throw a few dollars in. You'd be lucky to get $225m/€170m from the Irish-Americans fundraising and I don't see any support for bi-lateral loans from commonwealth countries or otherwise. It's pie in the sky wishful thinking.
Yes, I think they would. If Ireland refuses to accept that there will be consequences for fiscal ineptitudes in the future that fundamentally damages market confidence in the Euro itself. In order to alleviate this fear the EU will have to strongarm Ireland and show the international markets that they will not cave on this issue. Play by the rules or don't, but having your cake and eating it too is not an option.
:rolleyes: Because people like you, who have no actual understanding of the treaty or desire to educate yourself on it, go around and call it an "enslavement treaty" when it is nothing of the sort.
But here is a look at the fiscal issues facing Ireland: http://viableopposition.blogspot.com/2012/01/ireland-microcosm-of-worlds-sovereign.html
Despite severe austerity measures imposed as conditions of our bailout, Ireland is expecting to see debt to GDP from 96 percent in 2010 to just under 120 percent by 2014. One can hardly call that situation “under control”. This board doesn't really give a full perspective anyway because most (if not all) the moderators love Europe whatever the cost. There doesn't appear to be many posters on this board - presumably for that reason. But interestingly, the poll suggests a majority will reject this austerity-fiscal treaty.
There's no downside to voting down the referendum... the idea that bailout funds won't be there in the event of a future crisis is simply wrong. Given what has transpired with Greece, the ECB and Euro finance ministers have tipped their hand that they will do whatever is necessary to avoid a member default and exit. Reject the referendum, then there will be alot of belicose rhetoric about lack of access to future bailout assistance, but everyone knows the ECB will be right there front and center with a pot of cash should Ireland ever get into trouble again. Such is the slippery slope when dealing with bailing out European Banks. We must use this bargaining chip.
Voting on austerity is the only democratic way. The people's voice should be heard.0 -
Despite severe austerity measures imposed as conditions of our bailout, Ireland is expecting to see debt to GDP from 96 percent in 2010 to just under 120 percent by 2014. One can hardly call that situation “under control”.
That is exactly what our government proposed right from the start - namely, back at the end of 2008/start of 2009 (when they still thought our bank bailout was going to cost little to nothing), they stated they were going for a leisurely 6 year adjustment period to balance the state's budget (look up Ireland's "Excessive Deficit Procedure" documentation on the Commission's website if you want).
You may question the wisdom of that strategy but please don't believe for a splt second that borrowing up to 60% of the monies you spend on "day-to-day" (i.e. non-bank related) government spending is even remotely "severe austerity".
Cutting yourself off from such borrowings - as you propose - would though leave the government with little choice but to embrace that concept with gusto. That might be a "good" thing in the medium term (in that we'd have no choice but to balance our books faster) but no one should be under any illusion that it wouldn't involve short term austerity on a scale that the general public has shown little inclination that they are willing to face.0 -
That is exactly what our government proposed right from the start - namely, back at the end of 2008/start of 2009 (when they still thought our bank bailout was going to cost little to nothing), they stated they were going for a leisurely 6 year adjustment period to balance the state's budget (look up Ireland's "Excessive Deficit Procedure" documentation on the Commission's website if you want).
You may question the wisdom of that strategy but please don't believe for a splt second that borrowing up to 60% of the monies you spend on "day-to-day" (i.e. non-bank related) government spending is even remotely "severe austerity".
Cutting yourself off from such borrowings - as you propose - would though leave the government with little choice but to embrace that concept with gusto. That might be a "good" thing in the medium term (in that we'd have no choice but to balance our books faster) but no one should be under any illusion that it wouldn't involve short term austerity on a scale that the general public has shown little inclination that they are willing to face.
My worry is that FG / LAB think there is a recipe solution which can be followed to solve the problem. Undoubtably, Iceland did the right thing, but apart from banking there was not much structurally wrong with Ireland. It probably is a recipe that the pro-treaty supporters haven't grasped, but Ireland fundamentally has a few more issues, namely bank debt which needs to be wiped. Its not a plain choice between austerity and default, it should be seperate discussions. Whether to default should be determined on whether your economy can grow with the debt levels it has. The other choices are whether you fix the structural problems and whether you apply short term stimulus. We've already done that and it's failed. FG / LAB politicians are making a hash of things by half heartedly tackling structural problems and not burning the bondholders or really tackling debt.
This treaty will require more deeper spending cuts which will lower our standard of living - there is no way anyone will embrace that.
As for protest songs then I think they are still out there. The King Blues could put even Billy Bragg to shame. That these are not so prominent is a reflection on a more fragmented youth culture and a mature music industry. Can you really judge whether rebellion by singing protest songs, or rebellion by breaking societies rules by being selfish and expecting the easy root to fame and fortune is correct. Perhaps the problem is that there is so many things to tackle now, with so many differing voices that no single voice comes to the forefront. What I do know, is the simmering anger is still there underneath on a whole swathe of issues across different society, unlike anthing I have seen before.
The question is how much can you be bought for and what are you willing to give up as a person and a country - there needs to be a benefit to both sides. right now it is pretty one sided. Maybe the EU needs to include a proposal to wipe the promissory note to Anglo Irish Bank that helped get this country into the mess we are in today.0 -
I remain slightly puzzled on account of the regularity with which people propose a course involving an overnight and permanent balancing of the State's finances as a way of avoiding a treaty requiring the State to balance its finances permanently but gradually, based on the argument that the latter would involve excessive austerity.
Nowt so queer as folk.
amused,
Scofflaw0 -
I remain slightly puzzled on account of the regularity with which people propose a course involving an overnight balancing of the State's finances as a way of avoiding a treaty requiring the State to balance its finances, based on the argument that the latter would involve excessive austerity.
Nowt so queer as folk.
amused,
Scofflaw
I've had the same conversation on The Journal multiple times. It makes no sense and pointing out that it makes no sense seems to have no effect.0 -
Undoubtably, Iceland did the right thing
This meme is so tired so lets deal with the three points it misses.
1. Capital controls as necessitated by allowing your banking system collapse would be illegal for an EU Member State so we couldn't do what Iceland did.
2. Capital controls as necessitated... collapse would be economically suicidal for a country with significant FDI as we do, and Iceland does not, and
3. Iceland generates 80% of its primary energy needs domestically which Ireland doers not. They have only been able to avoid the horrible inflation one would associate with a devaluation with rising energy prices because of this. In the 70s when Iceland was less energy independent and oil prices rose in krona terms 4 fold as they have done in the last 4 years Icelandic inflation ran at 40%.
We have no idea how the Icelandic option will even work out for Iceland as at some stage they must remove their capital controls. What we do know is that that option was not possible for us.
You make it sound like default is a choice? It is not, if you can afford to pay, and don't pay, you will get sued and will have to pay at the end of the day - Argentina is still being sued all over the shop which is one (cooked books being another) of the reasons they're not back in the bond markets.Whether to default should be determined on whether your economy can grow with the debt levels it has.
On top of which most of our debt is EFSF/ ECB and we cannot, as in legally cannot, default on this debt without leaving the EU. See previous comments about FDI.The question is how much can you be bought for and what are you willing to give up as a person and a country - there needs to be a benefit to both sides. right now it is pretty one sided. Maybe the EU needs to include a proposal to wipe the promissory note to Anglo Irish Bank that helped get this country into the mess we are in today.
This is not possible. We cannot default on the CBI (we own it so collapsing it would be a shot in our own foot). We cannot default on the ECB without leaving the EU.
Really, the treaty is there. The funding is there. We want access to the funding we need to ratify the treaty. The treaty will do nothing worse for us than the markets will over the next twenty years. The treaty might give the Germans sufficient political cover to actually allow the role of the ECB be amended in order to actually solve the problem.
It is not a good treaty for us. It is not a bad treaty for us. It is just a treaty which we have to ratify because we have no alternatives.
It doesn't mean we shouldn't be angry about our banking collapse. It doesn't mean we shouldn't expect to see accountability. But that is all separate from our need to ratify this treaty to be eligible for ESM funding.0 -
how about some supposed backdrop to these treaties. What really is at stake for Germany..?
Is it all about saving Germany from itself?
http://www.golemxiv.co.uk/2012/03/a-rumour-concerning-e1-trillion-in-german-bad-debt/0 -
Voodoo_rasher wrote: »how about some supposed backdrop to these treaties. What really is at stake for Germany..?
Is it all about saving Germany from itself?
http://www.golemxiv.co.uk/2012/03/a-rumour-concerning-e1-trillion-in-german-bad-debt/
Did you notice the total absence of any substantiated facts in that story? I might just as easily write an article saying that Scofflaw is a menace to the environment or that the Isle of Man is hiding aliens who arrived last week. I have no evidence of either, and I'm no expert in either field, but making a generalized statement absent any facts to back it up is pretty easy.0 -
Iceland also had another advantage Ireland doesn't have, rich Scandinavian friends.
For a few days it wasn't possible to transfer any money into or out of Iceland, until the governments and central banks of the Scandinavian stepped in. A country small country being cut off totally from the world financial system, would mean people would starve (before anyone says in Iceland they could fish, remember boats require fuel).0 -
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beeftotheheels wrote: »This meme is so tired so lets deal with the three points it misses.
1. Capital controls as necessitated by allowing your banking system collapse would be illegal for an EU Member State so we couldn't do what Iceland did.
2. Capital controls as necessitated... collapse would be economically suicidal for a country with significant FDI as we do, and Iceland does not, and
3. Iceland generates 80% of its primary energy needs domestically which Ireland doers not. They have only been able to avoid the horrible inflation one would associate with a devaluation with rising energy prices because of this. In the 70s when Iceland was less energy independent and oil prices rose in krona terms 4 fold as they have done in the last 4 years Icelandic inflation ran at 40%.
We have no idea how the Icelandic option will even work out for Iceland as at some stage they must remove their capital controls. What we do know is that that option was not possible for us.
You make it sound like default is a choice? It is not, if you can afford to pay, and don't pay, you will get sued and will have to pay at the end of the day - Argentina is still being sued all over the shop which is one (cooked books being another) of the reasons they're not back in the bond markets.
On top of which most of our debt is EFSF/ ECB and we cannot, as in legally cannot, default on this debt without leaving the EU. See previous comments about FDI.
This is not possible. We cannot default on the CBI (we own it so collapsing it would be a shot in our own foot). We cannot default on the ECB without leaving the EU.
Really, the treaty is there. The funding is there. We want access to the funding we need to ratify the treaty. The treaty will do nothing worse for us than the markets will over the next twenty years. The treaty might give the Germans sufficient political cover to actually allow the role of the ECB be amended in order to actually solve the problem.
It is not a good treaty for us. It is not a bad treaty for us. It is just a treaty which we have to ratify because we have no alternatives.
It doesn't mean we shouldn't be angry about our banking collapse. It doesn't mean we shouldn't expect to see accountability. But that is all separate from our need to ratify this treaty to be eligible for ESM funding.
No it's not a ''separate issue''....This treaty can always be passed at another referendum. Let's not ratify it until we see what happens with our bank debt being written off FIRST. The proof of the pudding is in the eating.
A default / restructuring would be the way to go for us, then we could recover more quickly, lenders would know they could service their debts once more, interest rates would come down – but you would have to somehow credibly insulate the banks or we’ll be looking at a severe recession across Europe driven by a new liquidity crisis. The EU treaties have never been written in stone - there has never been one treaty that hasn't been broken - the most recent in the case of Greece being given a write down on their sovereign debt which by the way is illegal under these treaties. Another example is the ECB buying bonds which is supposedly against the treaty too... You get the point. So, in our case; YES WE CAN ALLOW ANGLO IRISH BANK TO GO. The ECB would simply step in to prop it up if we didn't. Being sovereign is great unless your politicians are institutionally corrupt. In our case, FG has always been a pro-Europe party no matter what the cost. Ireland needs a free market way to rein in the borrowing of our politicians. The stability and growth pact was a total sham! This fiscal pact does nothing to address that except impose austerity on the ordinary citizen. Ireland also needs to attract more foreign investment.
Thus Ireland needs to use the Euro but outside the EU and ECB with free market interest rates (like Kosovo). No capital controls. Thus the market can respond quickly to halt excessive borrowing and foreign investors don't have to worry about devaluations and hyperinflation.0 -
WillieFlynn wrote: »Iceland also had another advantage Ireland doesn't have, rich Scandinavian friends.
For a few days it wasn't possible to transfer any money into or out of Iceland, until the governments and central banks of the Scandinavian stepped in. A country small country being cut off totally from the world financial system, would mean people would starve (before anyone says in Iceland they could fish, remember boats require fuel).
"We are offering a loan similar to those given to Iceland and Latvia," -Swedish Finance Minister Anders Borg
Sweden loans €600 million to Ireland0 -
beeftotheheels wrote: »Did you notice the total absence of any substantiated facts in that story? I might just as easily write an article saying that Scofflaw is a menace to the environment or that the Isle of Man is hiding aliens who arrived last week. I have no evidence of either, and I'm no expert in either field, but making a generalized statement absent any facts to back it up is pretty easy.
It's true because earlier today, Germany failed to sell an oversubscribed auction of bonds:
German Bond Auction Raises EUR 3.87 Bln, Below Max. Target
This is the second time that's happened over the last 6 months.0 -
So much wrong with that post and I was tempted to just point out that most of those myths have been debunked in previous threads here but let's go through them again.No it's not a ''separate issue''....This treaty can always be passed at another referendum. Let's not ratify it until we see what happens with our bank debt being written off FIRST. The proof of the pudding is in the eating.
They cannot. Not they will not, they cannot absent changing the treaties and the required treaty change is vehemently opposed by Germany. So you're advocating p!$$ing the German electorate off more in the hopes that then they'll do what we need them to do rather than doing what they want us to do which then gives their Government political cover? If we fail to ratify this treaty that underlines every preconception that is preventing the German Government altering the terms of the ECB's role.
Despite the fact that this line keeps being trotted out there is just no evidence for it. Argentina defaulted, they're being sued, they're cooking the Government books to hide rampant inflation such that The Economist no longer uses their Government data and has publicly said as much, and this with global and economic headwinds in their favor.A default / restructuring would be the way to go for us, then we could recover more quickly, lenders would know they could service their debts once more, interest rates would come down – but you would have to somehow credibly insulate the banks or we’ll be looking at a severe recession across Europe driven by a new liquidity crisis.
Russia defaulted and then the price of Oil went through the roof making Russia very, very rich. But still, foreign investors are wary of Russia.
There is no example of an unstructured default leading to lollipops and ice-cream for every one.
Let's look at how you default. If you look at the Greek example of a structured default you need as your starting point a country whose investors believe cannot pay its debts. Not will not pay, but cannot pay. Ireland can still pay her debts so there is no reason for our investors to even come to a negotiating table.
Then in order to negotiate with those investors you have to give them new paper which for some reason is better than the old paper. In Greece's case the governing law of the new bonds is not Greek which increases their security. They also got some EFSF paper. And CACs were put in the old bonds to make them worth less. All of this can only be done when the investors don't want to sue, because they recognise that the country cannot pay so winning in court will be of no benefit. While we can pay, we must pay.The EU treaties have never been written in stone - there has never been one treaty that hasn't been broken - the most recent in the case of Greece being given a write down on their sovereign debt which by the way is illegal under these treaties.
????? The only way their restructuring would have breached EU law would be if they had imposed losses on the ECB. Which they did not. Indeed they were very careful not to do so.
That is the German view and not the consensus view. Bond buying is not an assumption of liabilities contrary to Art 125 according to most people since the expectation is that the bond will be repaid in full. Hence the structuring around the ECB's SMP holding of Greek debt.Another example is the ECB buying bonds which is supposedly against the treaty too...
The point being that you could do with a refresher course on the TFEU Articles applicable to the current financial crisis? Arts 123 and 125 would be your starting points.You get the point.So, in our case; YES WE CAN ALLOW ANGLO IRISH BANK TO GO. The ECB would simply step in to prop it up if we didn't.
The party who would be at risk if we didn't put the money into IBRC is not the ECB. It is the Irish Central Bank who we own. That's why we're repaying it. We can't not. If we don't put it into IBRC to allow it repay the CBI then we'll have to put exactly the same amount into the CBI to make it solvent.
I know that this is complicated, and confusing, and numerous public personalities including politicians make it sound simple, but they're also getting it hugely wrong. In fact I don't think I've seen a single public figure come out and explain this properly. We have to pay IBRC because one way, or another, we're on the hook for the money.
I'm not saying that this is fair, or just, or anything else because I don't believe that it is. But it is where we are at right now absent a treaty change on the role of the ECB.Ireland also needs to attract more foreign investment.
Thus Ireland needs to use the Euro but outside the EU and ECB with free market interest rates (like Kosovo). No capital controls. Thus the market can respond quickly to halt excessive borrowing and foreign investors don't have to worry about devaluations and hyperinflation.
Outside the EU will help attract foreign investment? Really? Have you thought that through? The FDI that's already here will leave. We'd need capital controls to stop everyone taking their cash out of the country and when we stopped Microsoft getting their global cash back to the US I think they might be pretty p!$$ed off with us.
There are no easy answers here. And it is not helped by the amount of misinformation being put about.
But we need to ratify this treaty first time around. Austerity is here for the longer term whether we ratify it or not because no one will lend to us at the moment.
Failing to ratify the treaty, locking ourselves out of the ESM can only be a bad thing.
Leaving the EU, reneging on our debts and introducing capital controls while alienating all our FDI doesn't strike me as a good idea. It strikes me as an economically suicidal one.0 -
There is a huge difference in scale."We are offering a loan similar to those given to Iceland and Latvia," -Swedish Finance Minister Anders Borg
Sweden loans €600 million to Ireland
The nordic countries loaned 1.8 billion euros (2.5 billion dollars) to Iceland which has a population less than a tenth of Ireland. To be on a similar scale we would need loans of 18 billion.0 -
It's true because earlier today, Germany failed to sell an oversubscribed auction of bonds:
German Bond Auction Raises EUR 3.87 Bln, Below Max. Target
This is the second time that's happened over the last 6 months.
A telling lack of confidence in the bondmarket, hmm.
Nothng substantiated indeed - would that it is only a rumour.
Try reading this Ms Beeftotheheels(!).
Yes, I'll 'spoonfed this if i have to!
Too important to ignore or miss.
So hier is the link
http://www.golemxiv.co.uk/2012/03/more-evidence-of-german-banking-worries/0 -
Voodoo_rasher wrote: »A telling lack of confidence in the bondmarket, hmm.
Nothng substantiated indeed - would that it is only a rumour.
Try reading this Mr Beeftotheheels(!).
Yes, I'll 'spoonfed the boardies if i have to!
Too important to ignore or miss.
So hier is the link
http://www.golemxiv.co.uk/2012/03/more-evidence-of-german-banking-worries/
Ms not Mr and posting more disreputable drivel to support the original disreputable drivel...
In the end of days scenario target 2 imbalances come into play and German companies, including banks, will suffer mightily. No one denies that. But in something less than the end of days scenario...
No one denies that Germany benefits from the euro, no one denies that actually how much they benefit doesn't appear to have been made clear or been understood by the German electorate.
But unsubstantiated drivel is unsubstantiated drivel and golemxiv is just that.0 -
It takes one fact and then extrapolates an entirely fictional conclusion. Much like me taking the fact that you assumed I was male and coming to the conclusion that all boardsies are misogynists.Voodoo_rasher wrote: »whats disreputable about the content of my 2nd link, Ms B.?
you don't really want me to answer thatVoodoo_rasher wrote: »Have you merely glossed over the articles? So the 18 or so comments at the end of the article are made by idiots?
A link completely out of context simply explaining the interconnectedness of the financial system which we're all aware of since Lehmans.Voodoo_rasher wrote: »The first link contains a pertinent link from Der Spiegel; is that a 'disreputable' publication?
What Greeks are paying off DB's debt? Really, Ackermann hinted pretty heavily that DB had been muscled into hanging onto Greek bonds after they wanted to exit the market, and were muscled into accepting the PSI which makes perfect sense from a German political position. So DB will have booked a huge loss because the Greeks didn't honor the debts they ran up and DB is the bad guy?Voodoo_rasher wrote: »"T##### is hideously under-capitalized and Deutsche doesn’t have the spare cash to ship from Germany to the US to shore up it’s US operation. At least not till a few million Greeks start really knuckling down to paying off Deutsche’s debts for it." I think thats a fair insight.Voodoo_rasher wrote: »I take it you will be voting Yes to the shall I say the 'tighten your belts for the sake of German banks' Treaty , end of May.
It is not about protecting German banks. Right now we have two choices. We turn our backs on capitalism (and democracy, please on democracy) and build a whole new system from scratch acknowledging that there'll be a few famines and wars along the way as we all try to figure things out. Or we try fixing the existing system, but doing so over time in order to prevent the whole thing collapsing around our ears.
I'm in the latter school, we try and fix the system over time. The Fiscal compact is part of that fix. It gives the German politicians political cover when it comes to either a redefined ECB or eurobonds, while changing nothing for Ireland because we're in the austerity game for a decade regardless of what we do.
So I am in the yes camp, not least because I actually think about these things for myself rather than accepting as gospel the rubbish fed to us.0 -
This treaty will require more deeper spending cuts which will lower our standard of living - there is no way anyone will embrace that.
Which clauses in the Stability Treaty require that? How indeed do they alter our existing - as opposed to any possible adverse future - situation?
Moreover, why are you in favor of a course of action that could well require greater austerity (should we preclude our ability to borrow from the ESM), particularly since your opposition seems to be based on the current "milder" (relatively speaking that is) austerity measures?0 -
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It doesn't require any more austerity if we vote No. We would still be able to get bilateral loans from other countries like the U.S, U.K, Sweden, Australia etc. Besides, the Ireland-America fund will soon be reinstated by the U.S government. If anything, we have the U.S on our side. I'll be voting no. I think the fiscal compact is potentially limiting to countercyclical policy and doesn't allow countries the flexibility they may need in the future to steer their economies. Ireland's bailout was primarily as a result of the transfer of private banking debt to the taxpayer via guarantees given in 2008 to bank bondholders, not as a result of profligate spending (contrary to the emerging narrative). Our economy would still be in the toilet, but a bailout would not have been required without the constant siphoning of public money to bondholders who long since cut their losses in secondary markets. Almost every politician in this country is an economically illiterate two-bit huckster, only willing to cut programmes which impact on the weakest in society while paying themselves some of the highest salaries in the EU. I'm tired of them, and not a fan of the European incompetence project.0
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