Advertisement
If you have a new account but are having problems posting or verifying your account, please email us on hello@boards.ie for help. Thanks :)
Hello all! Please ensure that you are posting a new thread or question in the appropriate forum. The Feedback forum is overwhelmed with questions that are having to be moved elsewhere. If you need help to verify your account contact hello@boards.ie
Hi all! We have been experiencing an issue on site where threads have been missing the latest postings. The platform host Vanilla are working on this issue. A workaround that has been used by some is to navigate back from 1 to 10+ pages to re-sync the thread and this will then show the latest posts. Thanks, Mike.
Hi there,
There is an issue with role permissions that is being worked on at the moment.
If you are having trouble with access or permissions on regional forums please post here to get access: https://www.boards.ie/discussion/2058365403/you-do-not-have-permission-for-that#latest
There is an issue with role permissions that is being worked on at the moment.
If you are having trouble with access or permissions on regional forums please post here to get access: https://www.boards.ie/discussion/2058365403/you-do-not-have-permission-for-that#latest
Time to burn Greece?
Comments
-
Both genetically and culturally, the Greeks will be a difficult population to occupy. Quite a good population to have on the frontline.0
-
Why wouldn't there?There would be a default, but certainly not a repudiation a la Cuba. The debt would still stand, in the event of a hard restructuring it would be more akin to Argentine, Mexican and Russian debt in the past 30 years.
People seem to think default means debt wipeout, it cannot realistically be taken to mean that,
In the position of a Greek Finance Minister whose country had just been unceremoniously been booted out of the euro, I know I'd call for a total repudiation of the debt as it had been agreed to in different circumstances.0 -
Cannibal Ox wrote: »
So where's the incentive? Why accept it? Default is worse then austerity, sure, but when austerity looks like your country being stripped, chained and led around the EU as an example of what not to do, why go for austerity?
Because, as you just wrote, however bad austerity is, default is probably worse. However the issue is that austerity is happening and it's effects can be seen, whereas default is a theoretical abstract, until that is some Euro state goes through it.
IMHO the problem here is one of trust. Yes, the Germans and French know that an unstructured default would be a disaster for the Euro and by attachment them, but at the some time they want to be convinced that the Greeks, and Ireland and Portugal are willing to try to sort out their finances. In our case the trust issue is based on the deficit. If the deficit were reduced to manageable proportions, then I think they would be more willing to consider a restructuring of the total debt. What they are afraid of is that if they make things too easy, then we will not take the hard decisions which the debt crisis is demanding.
Unfortunately we have a chicken and egg scenario. A doctor/teacher/politican/public servant earns more than in Germany. Why? Because the cost of living is higher here. Why? Because people are paid more. Why? Because the cost of living is higher... Unravelling that into a soft landing is going to be extremely difficult, but if at all possible that's what must be done. A hard landing is not to be desired, despite the calls for such by many people who cannot possibly understand what it would mean. They point to getting out of the hole quicker via such a default. That might be true but if you look at what happened in Argentina and Russia you might question whether such an outcome is better.
Ix.0 -
To be fair though, the opposition is refusing tax increases, they want to reduce the size of the public sector.
http://businessetc.thejournal.ie/greek-opposition-party-rejects-new-austerity-plan-142802-May2011/
So they aren't against austerity really, just tax increases as they fear it will prevent an economic recovery when you read through the rest of the world crying, Greeks worst country in world, garbage journalism.
The party in government is socialist and wants to increase taxes and not sell off state assets so they are in a conflicting position while the government looks for cross party support which they probably knew they weren't going to get anyway.
It is, to be fair, a very similar position to where we were before our election. FG promised cuts not taxes and FF weren't making cuts and were increasing taxes and looking for FG's support on it but FG smelt blood/power and denied them that to force an election to get power.
So it looks like Greece is where Ireland was 2-3 months ago which is itself a bad sign.
If it were that simple then I would agree with you but I really don't think that it is. A huge problem is the inability to deal with tax evasion
http://www.nytimes.com/2011/02/21/world/europe/21greece.html
And that is one of the major reasons why they have fallen behind on the terms of their bailout.
If the issue was as simple as the Irish issue (we need to grow to get out of this while adjusting our imbalance) then I would agree with the need to consider some of their arguments including the opposition's proposal to reduce corporate income tax. But drawing a line in the sand on tax cuts when they cannot even collect the taxes they currently levy is daft, at least link the two.
http://uk.reuters.com/article/2011/05/30/uk-greece-idUKTRE74S2NS20110530
But while a huge part of the problem remains institutional corruption then it is perfectly fair for their lenders to suggest that they take over dealing with the area that is suffering from that corruption i.e. take responsibility for the oversight of tax collection.
When they are dependent on huge amounts of foreign debt is is fair for their lenders to request asset sales to repay that debt, and indeed fair for those lenders to behave like private institutions and appoint a receiver (which is what is being proposed).
A creditor won't always put their debtor into receivership if they believe that the debtor can trade their way back into the black and this is where Ireland is at the moment.
Greece is failing to do so and their creditors are looking at appointing receivers to kick start things. Once Greece start moving in the right direction then they should be given help and support, but I really can't see arguments against appointing receivers right now if the alternative is bankruptcy.
If the Greek people want to retain their democratic right to bankrupt themselves then sobeit, I personally think a receiver is a less severe alternative.0 -
beeftotheheels wrote:By refusing austerity they increase their chances of default, which is cutting off their nose to spite their face.
If I were a young, unemployed, educated Greek person, I'm not particularly sure how I would see default as being worse then austerity in regards to my own short and long term situation, particularly in regards to how austerity is being portrayed.
In which case, I wouldn't so much see it as cutting off my nose to spite my face, as cutting off my nose to spite someone else's face.
I'm not arguing for default, I'm just saying that the way this is being done, how Greece is being treated, and how its future is being portrayed, could be handled an awful lot better by those who are running the show.0 -
Cannibal Ox wrote: »If I were a young, unemployed, educated Greek person, I'm not particularly sure how I would see default as being worse then austerity in regards to my own short and long term situation, particularly in regards to how austerity is being portrayed.
In which case, I wouldn't so much see it as cutting off my nose to spite my face, as cutting off my nose to spite someone else's face.
I'm not arguing for default, I'm just saying that the way this is being done, how Greece is being treated, and how its future is being portrayed, could be handled an awful lot better by those who are running the show.
And this is a problem with democracy because the average voter doesn't actually have to understand the consequences of doing something like defaulting which as Ix pointed out is something vague in the future, whereas austerity is real and now.
The problem with the handling of it comes back to the same point. If the ECB could educate each Greek man woman and child on the effects of default, then I am sure that they would do so. The Greeks could then take to the streets in anger against political corruption, carrying placards saying "end political corruption now - but don't default so we'll accept the austerity for now".
But the ECB cannot do this.
If the ECB said nothing, and the Greek government does as is necessary to avoid default (the consequences of which the Greek government probably knows) the Greek people would blame their own government entirely for the austerity and this could lead to a revolution. At least by speaking out the Greek government can point to the ECB as being the reason for the austerity which gives them some cover at home for doing that which they have to do anyway to avoid default.0 -
You don't have to explain the ins and outs of austerity versus default. You need a carrot. You need to give them some sense of security, some sense of hope for the future. You can't just use a stick. If you don't give some incentive, you're not going to win them over to your side no matter how many economists you have educating the public.
If nobody is telling you, it'll be alright, this is what we're going to do to guarantee a prosperous for you and your family, our young Greek is hardly going to consent to their actions. Why would he? There's absolutely no incentive for him to accept austerity, particularly when it is such a very grim known and default is such an unknown.
Badly handled, badly led, badly it will end.0 -
-
Cannibal Ox wrote: »You don't have to explain the ins and outs of austerity versus default. You need a carrot. You need to give them some sense of security, some sense of hope for the future. You can't just use a stick. If you don't give some incentive, you're not going to win them over to your side no matter how many economists you have educating the public.
If nobody is telling you, it'll be alright, this is what we're going to do to guarantee a prosperous for you and your family, our young Greek is hardly going to consent to their actions. Why would he? There's absolutely no incentive for him to accept austerity, particularly when it is such a very grim known and default is such an unknown.
Badly handled, badly led, badly it will end.
What carrot?
That the ECB will allow burden sharing which could bring down the entire eurozone banking system and throw all of Europe into a depression?
That the German taxpayer will give them a gift?
Right now the eurozone crisis is impacting on the entire world economy, the Americans are worried, the German growth is being pared back, the markets are living on their nerves.
For there to be a carrot someone has to a) have money, and b) see a benefit whereas right now what we actually have is
a) very little money, and
b) huge risks
The ECB is not lecturing austerity to make the Greek people pay for some perceived wrong, that argument generally comes from the heads of state, not the ECB. The ECB is simply arguing that to allow Greece default would have catastrophic consequences for everyone which greatly outweigh the benefits that any default could generate for Greece.
Italy and Spain are the ones lecturing on austerity apparently http://www.athenswire.com/spain-and-italy-turn-against-greece-over-reform-efforts/
because they want to stop the contagion bringing them down.0 -
Advertisement
-
Btw I am disgusted by the rhetoric above from @beefoftheheel to reduce a whole nation to a bunch of stereotypes is lazy,
What stereotypes?
Tax evasion is endemic - fact, I've already posted links to articles on this thread from reasonably reputable sources like the NY Times
Greek people taking to the streets/ striking is causing additional political instability in Greece which is causing consternation in the markets and which is making matters worse.
Explain how this is stereotyping?0 -
beeftotheheels wrote: »If Colm cannot tell the difference between the ECB and other EU institutions then he should just stop talking about it. The ECB has been entirely consistent on restructuring and I challenge you to find one public utterance from an ECB (as distinct from say Juncker who does not speak for that institution) official on this which has done other than toe the party line. Even former ECB board members have toed the party line.
We heard from Papademos
http://online.wsj.com/article/BT-CO-20110528-701521.html
Noyer
http://www.bloomberg.com/news/2011-05-24/ecb-s-noyer-rejects-greek-restructuring-as-horror-transcript.html
Stark
http://www.reuters.com/article/2011/05/19/us-ecb-stark-collateral-idUSTRE74I1RQ20110519
Bini Smaghi
http://www.ft.com/cms/s/0/8e4a75d2-8a18-11e0-beff-00144feab49a.html?ftcamp=rss
...and of course Trichet
http://uk.reuters.com/article/2011/05/05/uk-ecb-bailouts-idUKTRE7443V120110505
I cannot see the inconsistency that Colm has noted and indeed I have trawled through google looking for ECB and Greek restructuring and all I find are the above, or more of the above, nothing suggesting that the ECB is conflicted on this.
What about Axel Weber former head of the Bundesbank and one time front runner to suceed Trichet. It's been acknowledged in Der Speigel that he got shafted by Merkel, having been told that he was their preferred candidate for the job he was shunted to the side after describing the EU and ECB measures as 'unambitious'. ANyway he's gone now they got one of the 'company men' above in his place.
Wouldn't argue about the tax evasion thing. I think it will be a bigger issue here as well. The head of the revenue has already been on TV to talk about VAT reciepts and additional spot checks. I read somewhere else that academics in Iceland already fear the recriminalisation of businesses trying to evade/avoid taxes. Never considered a good move to raise taxes in a recession but often necessary.
In the case of Greece though, it's more that tax evasion was already a big problem. The Italians had the same problem which Romano Prodi tried to fix and subsequently got booted out of power. Not sure a foreign collector could do much better though0 -
Never considered a good move to raise taxes in a recession but often necessary.
Indeed, and the reality is that we should have been raising taxes during the boom... and which of our celebrity economists were advocating that? None, it wasn't popular to suggest that, so no one did.
Ix.0 -
Talk is cheap. You have the luxury of not being a finance minister. Perhaps there is a good reason why no credible economist, no central banker and no independent observer is suggesting a unilateral repudiation of debt. Repudiation of debt is something we associate with military revolutions - it is completely off the map, and the armchair economists who promote it are little better than keyboard warriors.In the position of a Greek Finance Minister whose country had just been unceremoniously been booted out of the euro, I know I'd call for a total repudiation of the debt as it had been agreed to in different circumstances.0 -
What about Axel Weber former head of the Bundesbank and one time front runner to suceed Trichet. It's been acknowledged in Der Speigel that he got shafted by Merkel, having been told that he was their preferred candidate for the job he was shunted to the side after describing the EU and ECB measures as 'unambitious'. ANyway he's gone now they got one of the 'company men' above in his place.
Which is to say someone who was in the running to become head of the ECB, but who isn't now going to be. Hardly a contradictory voice on ECB policy, surely?
cordially,
Scofflaw0 -
Indeed, and the reality is that we should have been raising taxes during the boom... and which of our celebrity economists were advocating that? None, it wasn't popular to suggest that, so no one did.
Ix.
Well during the boom, we didn't really need to raise targets, we needed to spend smarter and introduce measures to slow the property bubble.
Which we didn't do as it wasn't popular yet our real economists were saying it at the time but were ignored by the media and everyone else who now asks them where were they then.0 -
Advertisement
-
Which is to say someone who was in the running to become head of the ECB, but who isn't now going to be. Hardly a contradictory voice on ECB policy, surely?
cordially,
Scofflaw
Not sure where what you're saying here. Weber wouldn't have been the only one to raise questions about the direction the bank(and the EU) was taking probably just the one who said it publicly.
But I think the ECB has been twisting and turning with this. It's come this far out the window to save troubled banks but is now doing the best it can to go back on that by reducing credit to what it calls 'addicted banks'. You may well make the point that it was only envisaged as a short term solution but it's not a crisis anymore it's a saga. Either the full support of the ECB is there or it isn't.
You can't 'kinda' guarantee something, which is how it appears to the rest of the world. Eurobonds is probably something beyond it's remit(not sure about this). But it can print money. All three bailout cases are different so it's hard to find a clear line in any of the ECB thinking or than no bank can be allowed to fail. Do you not think it bizarre that on the one hand the ECB is promising full support for Greek banks and at the same time privately threatining the destruction of the Greek financial system?
All politics aside, either you're in or you're out!0 -
@beeftoheelsIf Colm cannot tell the difference between the ECB and other EU institutions then he should just stop talking about it. The ECB has been entirely consistent on restructuring and I challenge you to find one public utterance from an ECB (as distinct from say Juncker who does not speak for that institution) official on this which has done other than toe the party line. Even former ECB board members have toed the party line.
From my reading its quite clear what Colm McCarthy was referring to when discussing the ECBs disastrous/uncoordinated media campaign.
A - ECB assuring Ireland to stick to the plan, and it will be back in the markets in 12 months.
B - ECB threatening to rain fire and destruction down upon the Greeks, spreading market consternation and decreasing Irelands chance of re-entering the markets in 12 months as markets factor in the chance of ECB withdrawing liquidity support to Irish banks on a whim...
So its communication in B, undermines its proclaimed efforts in A. Hence stupid, uncoordinated communication strategy which would get people sacked in a proper central bank.
Glad to see though that Colm McCarthy is already beginning his descent into the pantheon of "celebrity economists" who are ridiculed because they dont pull on the green jersey and dare to disagree with the plan...0 -
Angela Merkel could go to Corfu for her summer holidays? Oli Rehn could be pictured drinking Ouzo in a bar in Athens? Trichet could recite some lines from The Illiad in his next speech?beeftotheheels wrote:What carrot?
I'll wait and see exactly what they offer the Greeks. Who knows, it all could've been leaked so that they can do a "turn around" later on in the week and offer the Greeks a "better" deal after some valiant negotiations by Papandreou.0 -
Not sure where what you're saying here. Weber wouldn't have been the only one to raise questions about the direction the bank(and the EU) was taking probably just the one who said it publicly.
Yes, but not actually being a member of the ECB, whatever he says can't actually be evidence that the ECB appears to be divided on policy.But I think the ECB has been twisting and turning with this. It's come this far out the window to save troubled banks but is now doing the best it can to go back on that by reducing credit to what it calls 'addicted banks'. You may well make the point that it was only envisaged as a short term solution but it's not a crisis anymore it's a saga. Either the full support of the ECB is there or it isn't.
You can't 'kinda' guarantee something, which is how it appears to the rest of the world. Eurobonds is probably something beyond it's remit(not sure about this). But it can print money. All three bailout cases are different so it's hard to find a clear line in any of the ECB thinking or than no bank can be allowed to fail. Do you not think it bizarre that on the one hand the ECB is promising full support for Greek banks and at the same time privately threatining the destruction of the Greek financial system?
All politics aside, either you're in or you're out!
I don't really think it's bizarre, but that's at least partly because all they've done is point out the consequences of a Greek default on the collateral the Greeks offer the ECB (timeo Danaos et bona ferentes, if I may be excused the substitution of 'goods' for 'chattels').
As far as I can see the ECB don't really have a policy of "no bank allowed to fail" - it's one of "no bank allowed to fail through the ECB's actions where a member state wishes it not to", and it can only be stretched so far before it has to be abandoned. The quality of the collateral in the ECB has already been the subject of adverse comment - allowing face valuation of collateral from a country that had already defaulted seems more than a little ridiculous.
cordially,
Scofflaw0 -
From my reading its quite clear what Colm McCarthy was referring to when discussing the ECBs disastrous/uncoordinated media campaign.
A - ECB assuring Ireland to stick to the plan, and it will be back in the markets in 12 months.
B - ECB threatening to rain fire and destruction down upon the Greeks, spreading market consternation and decreasing Irelands chance of re-entering the markets in 12 months as markets factor in the chance of ECB withdrawing liquidity support to Irish banks on a whim...
So its communication in B, undermines its proclaimed efforts in A.
That does not really fit in with what McCarthy actually said, though. He spoke specifically about public disagreement.There is no other central bank in the world that would tolerate uncoordinated public musings about market-sensitive issues from its non-executive directors and full-time executives. The ECB appears to have somewhere between 20 and 30 spokespersons on policy questions, free apparently to disagree in public.
I have no idea what he is talking about there.
Anyway, I think it is doing a huge dis-service to Colm McCarthy to describe him as a celebrity economist. Sure, he enjoys a certain reputation, but not what I would describe as one seeking popularity. Overall his views seem well thought out (perhaps, in this case, with the above exception) and I actually find myself broadly agreeing with him.
Colm McCarthy's office is directly across the corridoor from that of Morgan Kelly in the Economics department at UCD. Perhaps Professor Kelly might wander across sometime to take lessons in how to appeal to common sense without resorting to demolishing one's professional standing. I would not put them in the same league at all.0 -
Advertisement
-
@beeftoheels
From my reading its quite clear what Colm McCarthy was referring to when discussing the ECBs disastrous/uncoordinated media campaign.
A - ECB assuring Ireland to stick to the plan, and it will be back in the markets in 12 months.
B - ECB threatening to rain fire and destruction down upon the Greeks, spreading market consternation and decreasing Irelands chance of re-entering the markets in 12 months as markets factor in the chance of ECB withdrawing liquidity support to Irish banks on a whim...
Yet Ireland is complying with the terms of her bailout and Greece is not. S&P get this but I should not???
http://www.reuters.com/article/2011/05/25/us-standardpoors-ireland-idUSTRE74O2P7201105250 -
beeftotheheels wrote: »Yet Ireland is complying with the terms of her bailout and Greece is not. S&P get this but I should not???
http://www.reuters.com/article/2011/05/25/us-standardpoors-ireland-idUSTRE74O2P720110525
Well will all due respect to ratings agencies, there word means nothing if the rating on our debt doesn't change.
We need to get upgraded and that will show they believe what they are saying.
Saying they may not downgrade us, they'll see how things go is a little different to them being confident it won't affect us.0 -
Conditions in Ireland and Greece seem to be appreciably different:Despite mounting pressure on the country’s socialist government, sources close to the talks said it was still refusing to recognise the severity of the measures required to assert control over the Greek public finances. “They’re still arguing over the detail,” said one European official.
Another said the Greek stance was markedly different to that encountered by the troika in Ireland. “They have a different attitude. It’s not like the current Irish Government. The Greeks, they tell you whatever you want to hear and then they go home.”
Not sure whether there's an emphasis on "current" there...
cordially,
Scofflaw0 -
First they came for the Greeks - and I didn't speak out because I wasn't a Greek.
Then they came for the Portuguese- and I didn't speak out because I wasn't Portuguese.
Then they came for the Irish -and there was no one left to speak out for us.0 -
@Later10That does not really fit in with what McCarthy actually said, though. He spoke specifically about public disagreement.
Which is clearly (to my mind) referring to a situation where the ECBs right hand is undermining the work of the left hand. If the ECB cant figure out that hysterically threatening to withdraw liquidity support from Greek banks doesnt affect how the market views the nature of the support for the Irish banking system then they really need to knock some heads together.
The alternative is that Colm McCarthy, respected economist and advisor to multiple Irish governments, cant tell the difference between the ECB and the EU.
Probabilities of that approach zero.Anyway, I think it is doing a huge dis-service to Colm McCarthy to describe him as a celebrity economist.
I think it does a huge dis-service to many economists who have dared to cross the DoF to describe them as celebrity economists. But that appears to be their defining characteristic: Getting up on TV, the radio or the newspaper highlighting dangerous flaws in government policy. Poor old Colm McCarthy is already getting schooled by internet posters on the EU/ECB.
And then of course there are those economists who are breezily dismissed as being the dogs who didnt bark...
Economists just cant win. If they get public attention, theyre attacked as publicity whores. If they dont get public attention, theyre attacked as not doing enough to warn us in advance.I would not put them in the same league at all.
Yet.
@BeefYet Ireland is complying with the terms of her bailout and Greece is not. S&P get this but I should not???
The ECB is signalling that liquidity support to a peripheral banking system is theres to grant or withdraw on a whim. That weakens market confidence in the peripheral banks chances of survival.
And Ireland sovereign credit rating is utterly anchored to perhaps the worst bunch of peripheral banks in Europe. And whilst you can see clear blue sky between Greece and Ireland, your opinion is irrelevant. The markets do see the link, as Irish bond rates climbed in response to the ECBs hysteria:
Look at the Irish 10 year rate
In mid May its fairly stable, with even a minor decline in rates.
May 18th: ECB opens its big trap, blabbing on about dropping Greek debt as collateral and with it ending banking liquidity support. Must be the first time a Central Bank tries to undermine confidence in its own banking system.
May 19th-May 20th: Irish bond rates begin to rise, taking off like a rocket on May 20th as the full implications of the ECBs threats are digested. Finish up just over 11% by May 27th.
The goal of the ECB programme in Ireland is to get us back into the markets and their stupid, hysterical threats are actually sabotaging that effort. The ECB needs to figure out what the hell they want and then they need to get on with it, making sure that *all* their public comments are made with this goal in mind. If they want to see Ireland back in the markets, then they need to stop making stupid comments that undermine Irelands chances of getting back into the market.
LBS is also running around screaming and waving his arms in the air like Chicken Little, doing his best to convince anyone and everyone that its completely and totally *impossible* to organise a default in any way, shape or form. Which is only going to make it all the harder to actually get the job done. As must happen.
@ScofflawThe quality of the collateral in the ECB has already been the subject of adverse comment - allowing face valuation of collateral from a country that had already defaulted seems more than a little ridiculous.
The whole thing has been ridiculous so far, so why stop now?
The quality of Greek debt would actually be stronger after a default (once it was clear the Greeks could cope with their remaining debt, post-default) than it currently is when *everyone*, including the ECB, expects Greek default. If your debt is still honoured after a default, you can be more certain of it than you were before the default.
As for the ECBs collateral rules - they set their own collateral rules. Theres nothing to say they couldnt change them, if they wanted to. But it seems theyre currently trying to play politics to avoid having to take a hit on their balance sheet in an era where its far from the certain that the Germans will recapitalise them.0 -
Which is clearly (to my mind) referring to a situation where the ECBs right hand is undermining the work of the left hand. If the ECB cant figure out that hysterically threatening to withdraw liquidity support from Greek banks doesnt affect how the market views the nature of the support for the Irish banking system then they really need to knock some heads together.
The alternative is that Colm McCarthy, respected economist and advisor to multiple Irish governments, cant tell the difference between the ECB and the EU.
Probabilities of that approach zero.
The ECB has been entirely consistent on being averse to bondholder funding since before our bailout (and arguably had they been listened to at that time we may have avoided the bailout)
http://www.bloomberg.com/news/2010-11-03/merkel-s-bond-pain-plan-provokes-selloff-foreseen-by-trichet-euro-credit.html
So forgive me for doubting you when you sayThe alternative is that Colm McCarthy, respected economist and advisor to multiple Irish governments, cant tell the difference between the ECB and the EU.
Probabilities of that approach zero.
There is absolutely no evidence of the ECB being conflicted on this. There is no conflict in the ECB threatening to pull funding to prevent a systemic threat to the eurozone banking system. This is them doing their job.
There have been many conflicting reports from other EU institutions, which is understandable given the inherent conflict of interest between national and EU allegiances in e.g. the Council, but there have been none from the ECB which does not have such an inherent conflict.
Occam's razor.The goal of the ECB programme in Ireland is to get us back into the markets and their stupid, hysterical threats are actually sabotaging that effort. The ECB needs to figure out what the hell they want and then they need to get on with it, making sure that *all* their public comments are made with this goal in mind. If they want to see Ireland back in the markets, then they need to stop making stupid comments that undermine Irelands chances of getting back into the market.
LBS is also running around screaming and waving his arms in the air like Chicken Little, doing his best to convince anyone and everyone that its completely and totally *impossible* to organise a default in any way, shape or form. Which is only going to make it all the harder to actually get the job done. As must happen.
The ECB do not have "a programme in Ireland", the ECB have a job to do which involves policing price stability within the EU. The ECB do not care whether we get back into the markets, the EU/ EFSF/ EFSM/ IMF care about that, not the ECB. The ECB care about Europe's banking system working, the ECB have threatened to bring down a rain of fire and brimstone on this precisely because (per my previous link) had they been listened to earlier we may not be in this mess.
The ECB are doing their job, and doing it consistently, whether you agree with their job description or not.0 -
Just a note to thank all contributors to this thread. I have been trying to get to grips with the issues, and your contributions have really helped. I still don't understand the issues, but I begin to see how incredibly complicated it all is.
It is also distressing that there does not appear to be any overall solution.
Most of the actions being taken, or being advocated, appear to be focused on dealing with symptoms of the malaise - e.g. the particular problems of Greece, or Spain, or Ireland - but I can't get a sense of what is being proposed as a route back to some stable financial system.
In simple terms, it seems to me that those who lend money have a duty of care to determine the borrower's ability to pay. This basic principle seems to have been abandoned during the "boom", but is being applied with draconian enthusiasm now. Ireland has as little chance of repaying the €250 billion which, according to Morgan Kelly (http://www.irishtimes.com/newspaper/opinion/2011/0507/1224296372123.html?via=mr) we will owe by 2014, as the property developers who borrowed to buy vastly overpriced tracts of land. So actions currently being taken/proposed by ECB/IMF/Ireland Government, seem to be focused on deferral rather than resolution.
In the "good" old days of the punt, it is highly unlikely we could have been able to get ourselves into this level of debt. But if we had, it would have been punt debt. Devaluation of a sovereign currency at least spreads the pain evenly over all citizens. The anger of most Irish (and Greek) people is largely focused on the unfairness in which austerity is applied within our society.
It seems to me that the fundamental flaw which led us to where we are, is monetary union without political union.
It's hard to see political union being a reality in the foreseeable future, so maybe the "overall" solution is some orderly return to individual currencies, with the way being paved with debt reduction?0 -
It's hard to see political union being a reality in the foreseeable future, so maybe the "overall" solution is some orderly return to individual currencies, with the way being paved with debt reduction?
I think that sums it up just fine. In the long run we have political union - a federal Europe where individual state's budgets are centrally overseen in return for the creation of a eurozone bond - or a break up. Or a third option is a decade, maybe two, of socially unacceptable austerity which would lead to a break down of law and order in peripheral countries. And that third option won't be allowed to happen. Believing there is some kind of 'muddle through' middle road is surely living in denial0 -
That is a conflict between the ECB's role and any possible penalties it might apply. It is quite clear to most people that the ECB's directors have not been engaging in public disagreements nor dismissing one another's statements.Which is clearly (to my mind) referring to a situation where the ECBs right hand is undermining the work of the left hand. If the ECB cant figure out that hysterically threatening to withdraw liquidity support from Greek banks doesnt affect how the market views the nature of the support for the Irish banking system then they really need to knock some heads together.
Not at all. The alternative is that Colm McCarthy is misreading some public statement, but nobody seems to know what, nor does he mention it. I don't think it's a major deal, but it is misleading for him to suggest that the ECB are having a public disagreement.
The alternative is that Colm McCarthy, respected economist and advisor to multiple Irish governments, cant tell the difference between the ECB and the EU.
Come now, plenty of economists both at home and abroad have criticised the DoF, the regulator, the CB and the Irish Government - present or past forms included. That is not the defintion of a celebrity economist in my book.I think it does a huge dis-service to many economists who have dared to cross the DoF to describe them as celebrity economists.
In my book, the celebrity economists are those who, possibly to enhance their own celebrity or to provoke a response, greatly exaggerate or mislead the public while the public reply with the response to the damning psalm ''It's ok, he's an economist''. Such economic psalms are - as psalms are wont to be - usually backed up with more doom, hyperbole and emotion than with statistics (or at least, accurate statistics).
Nobody is including all ''famous economists'' in that. While David McWilliams and Morgan Kelly come immediately to mind, the likes of Patrick Honohan, Antoin Murphy and Colm McCarthy certainly would not.
Nobody is immune from making mistakes, I think it is a fair enough point to make that Colm McCarthy is mistaken if there is no factual basis for what he has apparently claimed to be fact. You shouldn't invest so much faith in experts unless their points can be substantiated in evidence. You seem to believe that anybody who has a PhD in economics and writes for a newspaper must be beyond criticism or correction.Poor old Colm McCarthy is already getting schooled by internet posters on the EU/ECB.0 -
That is a conflict between the ECB's role and any possible penalties it might apply. It is quite clear to most people that the ECB's directors have not been engaging in public disagreements nor dismissing one another's statements. Not at all. The alternative is that Colm McCarthy is misreading some public statement, but nobody seems to know what, nor does he mention it. I don't think it's a major deal, but it is misleading for him to suggest that the ECB are having a public disagreement.
If you whisper something in private to a journalist it's public, and it's probably intentional. The ECB has poor form when it comes to forming and implementing policy. Trichet has already been seen to be in two minds when it comes to raising or leaving rates as they are(for better or worse). I think MacCarthy is completely right about this and it's you who is wrong!In my book, the celebrity economists are those who, possibly to enhance their own celebrity or to provoke a response, greatly exaggerate or mislead the public while the public reply with the response to the damning psalm ''It's ok, he's an economist''. Such economic psalms are - as psalms are wont to be - usually backed up with more doom, hyperbole and emotion than with statistics (or at least, accurate statistics).
Reality is a particularly harsh mistress for politicians. Are you one of the "we've turned the corner" brigade. With BOI shares at a new low should we buy some shares? Should these economists go off and "commit suicide"?
It's okay he's not a politician or one of the lackeys who've advanced themselves by pushing the govt. line, or giving the govt. a line that they can push!Nobody is including all ''famous economists'' in that. While David McWilliams and Morgan Kelly come immediately to mind, the likes of Patrick Honohan, Antoin Murphy and Colm McCarthy certainly would not.
Kelly's primary source of income AFAIK is from his job as an academic. I think it's sound policy for any media organisation to solicitthe views of someone whose predictions -figures aside I can't confirm them- on- the Irish banks being in crisis 2007
- the bailout before it happened
They have every right to advance themselves financially. It doesn't necessarily mean that they are intentionally misleading anyone or that they are corrupt!Nobody is immune from making mistakes, I think it is a fair enough point to make that Colm McCarthy is mistaken if there is no factual basis for what he has apparently claimed to be fact. You shouldn't invest so much faith in experts unless their points can be substantiated in evidence. You seem to believe that anybody who has a PhD in economics and writes for a newspaper must be beyond criticism or correction.
See above or my other posts. You can't kinda guarantee something(as we've discovered). The fact is they are now trying to withrawing the support that they've given to eurozone banks. Still referring to it as a crisis (derived from a greek word for short period of stress) when clearly it's become a saga. How many years is it since they opened the emergency window and how far out the window have they come? They never had any intention of giving this kind of support and yet here they are!
I think you're last point is hilarious. Relax we're not all morons!0 -
Advertisement
-
@BeefThe ECB has been entirely consistent on being averse to bondholder funding since before our bailout
And Colm McCarthys article didnt say they were conflicted on that point - he referred to their megaphone diplomacy with Greece sabotaging the Irish plan that Trichet insists Ireland must stick too. You're off trying to disprove something that he didnt claim. Carry on the good fight.Occam's razor.
From the article Colm McCarthy quite clearly distinguishes between the EU and ECB:The EU Commission seems to be less wedded to the ECB line than had been the case in the earlier phases of the crisis, while the ECB itself is quite simply the world's strangest central bank, constrained by the inadequacies in the design of the single-currency zone over which it presides. There are other actors, in particular the outgoing governments (both look likely to lose office as soon as their electorates are consulted) of France and Germany, the traditional leaders of European integration of which the common currency is the showcase project.
Where then does that leave Occams razor? Is it more likely Colm McCarthy cant differentiate between the ECB and EU institutions....or that someone is wrong on the internet?
Honestly - give it up.The ECB do not have "a programme in Ireland"
Oh right. Their deliberate leaking to press to push Ireland out of the market, their involvement in the negotiation of the "bailout" and constant demands Ireland sticks to its terms whilst offloading liquidity support onto the Irish central bank and Trichet's bragging about the unprecedented ECB support for Ireland must have all been my imagination.The ECB do not care whether we get back into the markets
Fully agreed. They clearly cant think too far ahead.
But thats just another argument why we should ignore Trichets increasingly shrill tone when it comes to figuring out how were going to get out of this mess. Because Irish people very definitly ought to care about getting back into the market.The ECB care about Europe's banking system working, the ECB have threatened to bring down a rain of fire and brimstone on this precisely because....
The ECB are doing their job, and doing it consistently, whether you agree with their job description or not.
Yes, by threatening to put a bullet through the head of the banking system, and with it the sovereigns the ECB are clearly doing their job. :rolleyes:On top of that drastic measures such as a default or restructuring would produce contagion effects in other countries and affect taxpayers in the other countries. Why should they pay for the mistakes of others?" he was quoted as saying.
"Restructuring can be orderly, or even beneficial for investment banks and lawyers, but not for the Greek people. It would entail a major economic, social and even humanitarian disaster, within Europe. Orderly implies things go smoothly, but if you wipe out the banking system, how can it be smooth
LBS
I mean - cant you see the incoherence of their position: they rule out default for fear of contagion and instability, and their solution is to ensure contagion and instability by finishing off the banks? Ireland requires financial stability, which the ECB claims to be providing on the one hand whilst busily undermining it on the other.
Its not the job of the ECB to represent the taxpayers or plan social/humanitarian policy in Europe. Its the job of the taxpayers, through their elected representitives, to determine their own policy solutions. Its the job of the ECB to maintain price stability and to support financial stability - not to threaten to destroy it.
@Later10That is a conflict between the ECB's role and any possible penalties it might apply. It is quite clear to most people that the ECB's directors have not been engaging in public disagreements nor dismissing one another's statements.
See above.Nobody is immune from making mistakes, I think it is a fair enough point to make that Colm McCarthy is mistaken if there is no factual basis for what he has apparently claimed to be fact.
As above - the only people who think McCarthy was mistaken are themselves mistaken as to what they believed he was claiming.Come now, plenty of economists both at home and abroad have criticised the DoF, the regulator, the CB and the Irish Government - present or past forms included. That is not the defintion of a celebrity economist in my book
Did I miss the additional requirements of:
A - Doing so in a public place?
B - Being annoyingly correct?0 -
A much easier route is just to cut off lending and offer advice on how to sort out their problems. Once the problems are resolved, lending can be renewed. In fact that's pretty much what the IMF does.beeftotheheels wrote: »But while a huge part of the problem remains institutional corruption then it is perfectly fair for their lenders to suggest that they take over dealing with the area that is suffering from that corruption i.e. take responsibility for the oversight of tax collection.0 -
Amhran Nua wrote: »A much easier route is just to cut off lending and offer advice on how to sort out their problems. Once the problems are resolved, lending can be renewed. In fact that's pretty much what the IMF does.
Which I would agree with were it not for the fact that Greece are in the euro and as we are seeing the Greek problems are causing issues for the entire Eurozone so a Eurozone solution is required (unless as I suggested at the top of the thread we can remove Greece from the Eurozone/ EU in a manner which stops their problems impacting on the rest of us).0 -
Its the job of the ECB to maintain price stability and to support financial stability - not to threaten to destroy it.
That is presumably what they believe they are doing. They appear to be saying, in the article, you quote that should Greek debt be restructured its "quality" will be degraded to such an extent that they would no longer be able to accept it as collateral for liquidity operations.
It is not reasonable to expect the ECB to accept bonds irrespective of their quality. Indeed were they to do so the ECB would certainly undermine financial stability since no one would take the credibility of a Central Bank stuffed to the gills with junk seriously (and the ECB probably already run that risk as it is).Its not the job of the ECB to represent the taxpayers or plan social/humanitarian policy in Europe. Its the job of the taxpayers, through their elected representitives, to determine their own policy solutions.
The ECB is putting the ball back in the court of the politicians to come up with policy solutions. It isn't the job of the ECB to keel over at the request of politicians and agree to everything they propose. That indeed is why it is an independent Central bank.
The alternative is non-independent Central banks. These in the past have just opened the floodgates in the run up to elections - at the request of the politicians - to make the economy seem rosy which creates problems as a result (albeit ones that only become apparent after the elections).0 -
Realistically I think the Irish government are hoping Greece forces the Germans into a solidarity bond situation so we don't get get blamed when that is the only solution left on the table that is acceptable politically across the union.
Anything else I believe results in a fracture of the EU and potentially the destruction of the Euro.0 -
@Beef
And Colm McCarthys article didnt say they were conflicted on that point - he referred to their megaphone diplomacy with Greece sabotaging the Irish plan that Trichet insists Ireland must stick too. You're off trying to disprove something that he didnt claim. Carry on the good fight.The ECB policy is to pretend that everything is fine, stick to the programme and Ireland will be an attractive borrower in the bond market inside 18 months.
Some ECB executives were pushing this line on Ireland last week as certain of their colleagues publicly threatened Greece with a peremptory discontinuation of liquidity support to Greek banks! The flawed design of the euro system cannot fairly be blamed on ECB officials, but their dysfunctional communications strategy has gone on far too long. There is no other central bank in the world that would tolerate uncoordinated public musings about market-sensitive issues from its non-executive directors and full-time executives. The ECB appears to have somewhere between 20 and 30 spokespersons on policy questions, free apparently to disagree in public.
Okay, explain to me what the ECB's job is and why they have a conflict?
Colm seems to have inferred that their job somehow involves Ireland getting back into the bond markets and that is not borne out by the treaties.
If your analysis holds true that would also require him to have inferred that the problems with the eurozone at the moment are being caused by the ECB rather than by Greece.
Greece has failed to comply with the terms of her bailout. Whether you agree or disagree with the position the ECB is taking in terms of finding a solution the problem was caused by Greece, not the ECB.
Our problems were caused by failures in our regulatory and political systems, not by the ECB.
The ECB has consistently spoken out against bondholder burning because their job is to protect price stability within the Eurozone, and they fear the risk of contagion. Like Morgan Kelly they have already been proven right in their analysis of the risks here, which is not to say that they could be mistaken here, but they are not obviously conflicted.
That they threaten to pull funding from Greek banks if Greece "defaults" is in no way inconsistent with their line to date. If Greece defaults that threatens to bring down the entire eurozone, so the ECB are making the point that they too are empowered to, and obliged to by law, collapse the eurozone banking system before they tolerate a default which would not have the same consequences, but which they view as having potentially worse consequences.
Either define their job description, under the treaties, in a manner which suggests that they are not doing their job or are suffering from a conflict of interest, or accept Occam's Razor.0 -
According to this article http://www.bloomberg.com/news/2011-06-02/moody-s-downgrade-puts-greece-in-debt-rating-hall-of-shame-alongside-cuba.html released today,Greece now has a debt rating the same as Cuba.And;
'The Greek five-year swaps imply a 72 percent probability the country will default within that time, according to a standard pricing model used by traders'.
..hope I've entered that link correctly.0 -
@Sand you would be interested in this long but very relevant article from William Black
I am not going to repaste the article here since its long but detailed! just the conclusion below, but the overall point is simple, the ECB is putting the whole EU project at risk with its crazed policies.
This guy is a professor of Law and Economics looking at the whole picture from the outside not some boardsie who believes that the ECB can do no wrong.If the ECB is not curbed it will destroy the European project. The ultimate irony is that it will be the Germans and French who dominate the ECB and represent the two nations that have been the strongest proponents of an ever closer union, who will fracture the union unless they give up their theoclassical dogmas.0 -
Since you are endorsing this article, surely you will be able to answer a few questions that arise.@Sand you would be interested in this long but very relevant article from William Black
I am not going to repaste the article here since its long but detailed! just the conclusion below, but the overall point is simple, the ECB is putting the whole EU project at risk with its crazed policies.
This guy is a professor of Law and Economics looking at the whole picture from the outside not some boardsie who believes that the ECB can do no wrong.
The objective of the ECB is to maintain price stability, as per Article 105 of the Maastricht Treaty
How, given its defined role in stabile Eurozone monetary (and not fiscal or sovereign) policy, could the ECB possibly make transfer payments to Greece without causing financial instability elsewhere in the Eurozone and thereby leading to price instability. The institution responsible for price stability would now be printing money and throwing it out of helicopters down on the Greeks if William Black had his way it seems, since he expressly denies a requirement that monetary aid be of a loan. Investors would start to anticipate similar moves in the peripherals, and a self fulfilling prophecy with the inevitability of inflation 9already increasing) would ensue.1. The primary objective of the ESCB shall be to maintain price stability. Without prejudice to the objective of price stabilty, the ESCB shall support the general economic policies in the Community with a view to contributing to the achievement of the objectives of the Community as laid down in Article 2. The ESCB shall act in accordance with the principle of an open market economy with free competition, favouring an efficient allocation of resources, and in compliance with the principles set out in Article 3a.
What William Black is suggesting is that the ECB break the rules. The ECB is independent and apolitical - its executive members are economists, not pig farmers and schoolteachers who are elected representatives. You cannot blame them for following the rules that have been laid down for them.
Yes European monetary policy needs an overhaul, no the crisis mechanisms are not not working well, yes we need deeper fiscal integration and perhaps, to some extent, capital transfersm, but the ECB is only the messenger of European governments, shooting the ECB for executing its predefined role is a blatant example of shooting the messenger.
In fact the one time when the ECB has come in for deserved criticism, in my opinion, is when it has acted outside of what many of us (but not everyone) considers its official remit. I am referring particularly to buying up sovereign debt and interfering with peripheral governments and their own respective crisis policies pre-bailouts.0 -
Advertisement
-
Since you are endorsing this article, surely you will be able to answer a few questions that arise.
The objective of the ECB is to maintain price stability, as per Article 105 of the Maastricht Treaty
How, given its defined role in stabile Eurozone monetary (and not fiscal or sovereign) policy, could the ECB possibly make transfer payments to Greece without causing financial instability elsewhere in the Eurozone and thereby leading to price instability. The institution responsible for price stability would now be printing money and throwing it out of helicopters down on the Greeks if William Black had his way it seems, since he expressly denies a requirement that monetary aid be of a loan. Investors would start to anticipate similar moves in the peripherals, and a self fulfilling prophecy with the inevitability of inflation 9already increasing) would ensue.
What William Black is suggesting is that the ECB break the rules. The ECB is independent and apolitical - its executive members are economists, not pig farmers and schoolteachers who are elected representatives. You cannot blame them for following the rules that have been laid down for them.
Yes European monetary policy needs an overhaul, no the crisis mechanisms are not not working well, yes we need deeper fiscal integration and perhaps, to some extent, capital transfersm, but the ECB is only the messenger of European governments, shooting the ECB for executing its predefined role is a blatant example of shooting the messenger.
In fact the one time when the ECB has come in for deserved criticism, in my opinion, is when it has acted outside of what many of us (but not everyone) considers its official remit. I am referring particularly to buying up sovereign debt and interfering with peripheral governments and their own respective crisis policies pre-bailouts.
Price stability for all 3xx million people in the eurozone as per Trichet's comments, yes that includes Greece and Ireland too.
Please do tell us what would happen to "price stability" and the euro itself for that matter if the ECB did not start to act as lender of last resort.
Oh and where was "price stability" when property asset prices went thru' the roof in many of the member states, oh yes I forgot the decided to exclude property from inflation indexes.
edit: For an "apolitical" and undemocratic entity they are certainly throwing their weight around via the media, as has been seen with their comments towards Ireland and Greece which in turn continue to drive both countries into deeper trouble as illustrated by the bond indexes taking a nosedive everytime they open their mouth.0 -
Yes, but Trichet and his executive board are obliged to look at price stability on the Eurozone as a whole. They cannot take it in turns to set their policies for each member state. It has to be done on a wholesale basis - that is the architecture that they have to work with. They did not write these rules, they are obliged to follow them. Therefore I cannot understand why they are the guys being blamed.Price stability for all 3xx million people in the eurozone as per Trichet's comments, yes that includes Greece and Ireland too.
The ECB is not, in the strict financial sense, the lender of last resort.Please do tell us what would happen to "price stability" and the euro itself for that matter if the ECB did not start to act as lender of last resort.
Property was not exluded, rent is included but house prices were not. The problem was that not enough countries have the same infatuation that Ireland has had with property, and do not collect house price data in the NCPIs, and those handful of states that were collecting it, were using different methods, so there was little to no cross-comparability.Oh and where was "price stability" when property asset prices went thru' the roof in many of the member states, oh yes I forgot the decided to exclude property from inflation indexes.
I have taken the time to answer your question and I would have hoped you would have taken the time to answer mine. Nevertheless I will ask you again.
How, given its defined role in stabile Eurozone monetary (and not fiscal or sovereign) policy, could the ECB possibly make transfer payments to Greece without causing financial instability elsewhere in the Eurozone, and after answering this using a thought out economic reasoning, perhaps you will approach the legal perspective of overturning the treaty remit.0 -
@ViewThat is presumably what they believe they are doing. They appear to be saying, in the article, you quote that should Greek debt be restructured its "quality" will be degraded to such an extent that they would no longer be able to accept it as collateral for liquidity operations.
If this is truly the ECBs position then, to quote Orwell, it is a position so stupid that only very intelligent people can hold it.
Lets compare Greek debt at two points in time. Between those points in time, lets presume a default occurs. Then ask yourself a question: Would you rather hold Greek debt *before* a default, or *after* it? Before you answer, remember that your Greek Debt is more at risk of being defaulted on *before* the default, than it is *after* the default. Especially as the Greek debt position *after* a default would be more sustainable, having defaulted on the unsustainable portion of it.It is not reasonable to expect the ECB to accept bonds irrespective of their quality.
And yet, the ECB accepts Greek bonds *now* despite everyone expecting a default on Greek bonds...which is exactly the *worst* time to hold Greek bonds as collateral against a dodgy loan.
Withdrawal of support for the peripheral banking system (if they have the big brass balls to do it) will be a political decision by the ECB - and it will result in a meltdown that will make Lehmans look like "the good old days", with the ECB/Eurozone being wiped out and Trichet and Co. joining the dole lines.
Hence they wont do it. Self interest is guiding their hysterical interventions, and self interest will guide their responses to a Greek default.It isn't the job of the ECB to keel over at the request of politicians and agree to everything they propose.
No, but it is their job to support financial stability - threatening to destroy financial stability to intimidate politicians attempting to find a policy solution that the ECB doesnt like isnt their job.
No one says default would be a painless, no downside solution - but only the ECB says it will do everything in its power to ensure its as damaging as possible. Square that with their commitment to support financial stability...
@beefOkay, explain to me what the ECB's job is and why they have a conflict?
Colm seems to have inferred that their job somehow involves Ireland getting back into the bond markets and that is not borne out by the treaties.
The ECB (along with the IMF and the EU) negotiated a plan with Ireland in November 2010, and to this day Trichet demands Ireland sticks to it.
A major component of this plan is that Ireland returns to the market in 2012 (witness the hysteria over Varadkar noting that probably wouldnt happen). A goal which was ludicrous to me in November 2010, but which has become increasingly accepted by Official Ireland as time has passed. Even though Gilmore is sticking to form by publically lying to us, whilst privately he probably agrees with Varadkar.
The ECBs screaming and shouting regarding Greece is undermining confidence in its commitment to its role as a provider of liquidity support to the peripheral banks, and with it to the peripheral sovereigns. A role which Trichet has bragged about - claiming unprecedented support by the ECB for Ireland. Ireland is a peripheral sovereign, which is anchored to the worst set of peripheral banks in the Eurozone.
I cant explain it any more simply than that to you. Either you get it, or you choose not to.
Meanwhile, you continue to assign positions to Colm McCarthy which he hasnt actually taken. I presume because you find it easier to knock down strawmen than to deal with actual positions. If you cant deal with the points he did raise, and instead try to knock down points he hasnt, what does that say for your own views?Greece has failed to comply with the terms of her bailout.
No issues there - so why is the ECB beating Ireland to punish the Greek government? Are we the whipping boy?Our problems were caused by failures in our regulatory and political systems, not by the ECB.
Were is the operative term there that makes that statement correct. Our problems are caused by failures of the ECB and our political systems....or accept Occam's Razor
I have, someone is wrong on the internet. All your twisting and turning doesnt change that. Build a bridge, and get over it.
@bmanRealistically I think the Irish government are hoping Greece forces the Germans into a solidarity bond situation so we don't get get blamed when that is the only solution left on the table that is acceptable politically across the union.
Probably true, though it would be generous to credit the concept of coasting along on inertia and hope something happens before we drive over the cliff by describing it as a strategy.
For all those who claim Ireland has no negotiating chips it worth noting that as soon as it looked like Greece would refuse to meet the terms of its current deal, a second bailout package is already being discussed. It seems like the EU/ECB really, really, really dont want to deal with the mess of a default.
Advantage Ireland?0 -
Irish Times wrote:The Economic and Financial Committee (EFC) of deputy ministers and senior officials of the 17-nation currency zone approved the Greek programme in principle in talks in Vienna that ended after midnight, the source said.
The second programme for Greece is said to involve some participation of private sector investors but limited to avoid triggering a credit event. Details of that involvement, and the apportionment of the additional official international funding, remain to be worked out in time for a June 20th meeting of euro zone finance ministers, the source said.
...
On the eve of this deal, however, 16 MPs in Mr Papandreou’s Socialist Pasok party issued a letter in which they challenged his preparations to put new austerity measures and a €50 billion privatisation plan to a single vote of parliament.
The development rattled the government, which has a six-seat majority in parliament, and prompted anxiety in European circles as officials weighed the possible consequences of the challenge to Mr Papandreou’s authority.
Full link
Well, would you look at that.
I've no idea whether they're doing it to save their own skins, really believe the deal is bad or are just trying to gain some space for negotiation.
Either way though, it makes things interesting. We know the conservative opposition aren't going to support it, the communist party sure as hell isn't, and the people are sitting outside making their opposition pretty vocal.
So, if it does go through, and if nobody in Greece supports it, can it work?0 -
If Greece sets the precedent, then no. Greece is being steamrolled into this and, as far as I can see, that is setting a precedent for us to be steamrolled into a similar agreement.Sand wrote:For all those who claim Ireland has no negotiating chips it worth noting that as soon as it looked like Greece would refuse to meet the terms of its current deal, a second bailout package is already being discussed. It seems like the EU/ECB really, really, really dont want to deal with the mess of a default.
Advantage Ireland?
I know we are in a different crisis then Greece. But every EU leader has their own public to contend with and their own elections to deal with. The German public doesn't need to distinguish between an Irish and Greece crisis, all they need to know is that their money is being used to solve our problems. They aren't going to like that, particularly when it isn't working, and it isn't going to make our bargaining situation any easier.
I mean, in truth, Greece could pull the plug and all hell would break loose. As could we. That's the ultimate bargaining chip, but no one is going to use it because it would be sheer lunacy.0 -
Not necessarily, nor does it necessarily matter. Economic history clearly shows that defaults have a very strong tendency to happen in clusters, especially when there is some form of union or advanced economic relationship between those countries (e.g. in Latin America, US states, Asian economies).Cannibal Ox wrote: »I know we are in a different crisis then Greece.
If you go through the Greek, Irish, Portuguese and Spanish problems on a point by point basis, yes you will find differences, but you will also find similarities.
Nevertheless, from economic history we know that capital markets tend not to isolate problem economies in this fashion, there is a clear tendency for capital markets to target clusters instead, this is based on a record that goes back about 200 years. My bet is with history on this.0 -
Advertisement
-
Doesn't look like the EU is interested, judging by the latest Rehn communiqué:Following the conclusion today of the Fourth Review Mission to Greece, EU Commissioner for Economic and Monetary Affairs, Olli Rehn, made the following remarks.
"The latest commitments by the Greek authorities are essential to restore fiscal sustainability and create the conditions for sustained growth and improving employment in Greece. They are crucial decisions at a critical moment to safeguard financial stability and economic recovery in Europe.
"The government's commitment to significantly accelerate the privatization plan, a cornerstone of the recovery programme, is particularly important, as it will alleviate the debt burden and also contribute to boost competitiveness of the economy.
"Effective and smooth implementation of the structural reforms remain key, especially in the healthcare sector, in the labour market as well as in transport and energy sectors. All these sectors have the potential to become growth drivers for the country. A successful implementation of these reforms will further contribute to restore confidence in the Greek economy among its international partners and market participants.
"In this sense, the European Commission and the Member States are ready to reinforce their technical assistance in those economic areas where the authorities may feel the need. Since the beginning of the adjustment programme, Greece has received such technical assistance from the Commission and the IMF in various policy areas relevant to implementation of the programme. We remain open to explore possibilities for further and reinforced assistance should there be a need, for instance in taxation and privatization matters.
"These decisive steps by the Greek authorities, if followed by full implementation, will pave the way for the Eurogroup to look into further steps to ensure that Greece can pursue such economic policies.
"Once again, I call on all political forces in Greece to put aside their domestic disputes and endorse the main objectives and policies of the programme, for the sake of the recovery of the country, for the sake of growth and employment."
Stick to the programme and there's more money in the kitty for the Greeks, in other words.
I see as well that Merkel has lately reiterated Germany's commitment to the euro - possibly realising that her domestic angle in public pronouncements has been worth a couple of percentage points on Greek rates.
cordially,
Scofflaw0 -
@ScofflawStick to the programme and there's more money in the kitty for the Greeks, in other words.
I suppose though that the EU/ECB dont want to allow a scenario where the Greeks arent sticking to the plan. As Groucho Marx might have said, this is the plan you have to stick to, and if you dont like it, I have another plan. So long as there is a plan, and the Greeks are sticking to it, the messy default doesnt have to be acknowledged. Thats the Greek negotiating chip.
Its worthy noting I have absolutely no sympathy for the Greek protestors who complain about tax hikes and spending cuts whilst running such a deficit and being in such debt. But being the most servile, pliant and humble hasnt won us any negotiations on a second "bailout". At best we have been compared favourably to the Greeks for being easy to negotiate with (I.E. we are chumps). We cant even get a minor adjustment on an interest rate which everyone acknowledges is set at a stupid level. Meanwhile, the class truants, the selfish and unruly and badly behaving Greeks are getting a second bailout and people stretching the plan so that the Greeks can still be claimed to be sticking to it.
The "harsh" terms are merely external support to the Greek government to get necessary reforms through which even the Greeks would acknowledge are required.I see as well that Merkel has lately reiterated Germany's commitment to the euro - possibly realising that her domestic angle in public pronouncements has been worth a couple of percentage points on Greek rates.
Hmmm, but commitment to the Euro and commitment to Greece are two seperate and perhaps conflicting goals. And Merkel has never stated anything other than total German commitment to the Euro. Her actions on the other hand have been far more mixed...
@Cannibal OxI mean, in truth, Greece could pull the plug and all hell would break loose. As could we. That's the ultimate bargaining chip, but no one is going to use it because it would be sheer lunacy
Well, the MAD doctrine assumed that everyone involved were rational, competent and forward thinking individuals who could understand the risks of a nuclear war, the likely results of one and then draw an appropriate conclusion.
However, we in Ireland are not considered to be rational, competent or forward thinking as a state. If we were, we wouldnt have gotten into this mess, would we? Hence, the theme of a reckless, feckless idiotic paddies in the periphery not being able to run their own affairs actually plays to our advantage here. If we threaten to default, the core have to presume we might actually be that crazy. Then its a question of are they - the rational, competent, diligent and forward thinking core states - lunatic enough to allow all hell to break loose? We've seen the answer in Greece where despite all the provocation offered by the Greek protestors (the most unsympathetic protest group around I think) the rational, competent, diligent and forward thinking core states are still trying to find a plan the Greeks can stick to.
Seriously, put the EU/ECB negotiating team in a room with Joe Higgins and Gerry Adams and let them present their plans for default to the ECB/EU. Then present the the EU/ECB with the option of dealing with them, or the option of dealing with the Irish people who are happy to pay their debts, but not the debts of the banks. I think common ground will be found.
Of course - a precursor to a serious threat of default is getting the deficit down ASAP. Not in a matter of a decade or more as Labour might envisage, but in a matter of months. Our deadline for eliminating the deficit has to be 2013 because we are not going to be able to re-enter the markets under the "burden sharing" clauses envisaged without running a hefty surplus.0 -
However, we in Ireland are not considered to be rational, competent or forward thinking as a state. If we were, we wouldnt have gotten into this mess, would we? Hence, the theme of a reckless, feckless idiotic paddies in the periphery not being able to run their own affairs actually plays to our advantage here. If we threaten to default, the core have to presume we might actually be that crazy. Then its a question of are they - the rational, competent, diligent and forward thinking core states - lunatic enough to allow all hell to break loose? We've seen the answer in Greece where despite all the provocation offered by the Greek protestors (the most unsympathetic protest group around I think) the rational, competent, diligent and forward thinking core states are still trying to find a plan the Greeks can stick to.
The problem there would seem to be that Ireland sells itself as a rational, competent, and forward-thinking place to do business...in a rather less than diligent regulatory environment. Publicly metamorphosing into heavily bearded financial terrorists issuing a warning that we've placed a bomb under the world monetary system could be somewhat detrimental to that carefully cultivated image.
Something worth bearing in mind here is the role of the US, and their attitude to an Irish default. Out of all the interesting titbits in Morgan Kelly's piece in the IT, the one that has perhaps attracted least attention (perhaps because it doesn't fit the common narrative of blame) is the statement that the IMF's willingness to push haircuts on unguaranteed debt was torpedoed by the US Treasury Secretary, something which resulted in a carefully worded non-denial repudiation statement by the US Treasury (see here for some discussion).
cordially,
Scofflaw0 -
The ECB (along with the IMF and the EU) negotiated a plan with Ireland in November 2010, and to this day Trichet demands Ireland sticks to it.
A major component of this plan is that Ireland returns to the market in 2012 (witness the hysteria over Varadkar noting that probably wouldnt happen). A goal which was ludicrous to me in November 2010, but which has become increasingly accepted by Official Ireland as time has passed. Even though Gilmore is sticking to form by publically lying to us, whilst privately he probably agrees with Varadkar.
The ECBs screaming and shouting regarding Greece is undermining confidence in its commitment to its role as a provider of liquidity support to the peripheral banks, and with it to the peripheral sovereigns. A role which Trichet has bragged about - claiming unprecedented support by the ECB for Ireland. Ireland is a peripheral sovereign, which is anchored to the worst set of peripheral banks in the Eurozone.
I cant explain it any more simply than that to you. Either you get it, or you choose not to.
Meanwhile, you continue to assign positions to Colm McCarthy which he hasnt actually taken. I presume because you find it easier to knock down strawmen than to deal with actual positions. If you cant deal with the points he did raise, and instead try to knock down points he hasnt, what does that say for your own views?
....
Were is the operative term there that makes that statement correct. Our problems are caused by failures of the ECB and our political systems.
I have, someone is wrong on the internet. All your twisting and turning doesnt change that. Build a bridge, and get over it.
So, the markets have reacted with hysteria every time that the ECB have restated their view but not reacted at all to the notion that the Greek people might fail to comply with their bail out?
And all the while you have empirical evidence that had the ECB never intervened things would be good for us right now. Because you have mastered the quantum leap yet have been unable, for reasons best understood by yourself, to share it with the wider scientific community.
There is no conflict on the part of the ECB here unless you infer more into their role than they have been given by us "lender of last resort" anyone?
Their job is to police price stability within the EU and that Ireland may be collateral damage in that does not negate their job description under the treaties.0 -
There's no particular reason why we couldn't ditch the bank debt in a rational, competent and forward thinking manner though. At the end of the day the sovereign is supreme. If that means some banks need replacing, so be it. We might even find we have a lot of support among the citizens of Europe. Contagion, horrors, domino effects, I don't buy it and neither do the markets.The problem there would seem to be that Ireland sells itself as a rational, competent, and forward-thinking place to do business...in a rather less than diligent regulatory environment.
Sand and other commentators are right though, we need to cut the deficit, and I do mean cut, in any and all cases. It should be a matter of urgent public interest that the government has no intention of doing so.0 -
Advertisement
Advertisement