[itzme]

Originally Posted by later12

But economic policy is not adequately dealt with in this treaty, it's mainly about the bare indicators.

A question for you on this later12, I was considering responding to the OP on this particular issue.
To me, I think strong tight economic policy in the treaty has been intentionally (and correctly) left out. This is to allow for a country to have political autonomy to make decisions on its economy that suit it at that time. To put it very simply, policies that would work for a German recession are not guaranteed to work for an Irish recession, French, Belgian....
Can you think(/be kind enough to tell me) of many policies that have been left out that are applicable in a full European context?

[later12]

Originally Posted by K-9

Would it not have kicked in in 08/09 when we started running huge deficits and gave banks huge bailouts increasing our debt above 60%?

Presumably they could get away with it under Article 3 of the Treaty:

1. (c) the Contracting Parties may temporarily deviate from their respective medium-term objective or the adjustment path towards it only in exceptional circumstances, as defined in point (b) of paragraph 3;

3. (b) "exceptional circumstances" refers to the case of an unusual event outside the control of the Contracting Party concerned which has a major impact on the financial position of the general government or to periods of severe economic downturn as set out in the revised Stability and Growth Pact, provided that the temporary deviation of the Contracting Party concerned does not endanger fiscal sustainability in the medium-term.

[PopeBuckfastXVI]

Originally Posted by itzme

A question for you on this later12, I was considering responding to the OP on this particular issue.
To me, I think strong tight economic policy in the treaty has been intentionally (and correctly) left out. This is to allow for a country to have political autonomy to make decisions on its economy that suit it at that time. To put it very simply, policies that would work for a German recession are not guaranteed to work for an Irish recession, French, Belgian....
Can you think(/be kind enough to tell me) of many policies that have been left out that are applicable in a full European context?

Indeed, it leaves the individual Government the freedom to come up with an action plan which is based on either growth, cuts, or some combination of the two.

Highly sensible, in my own opinion.

[later12]

Originally Posted by itzme

A question for you on this later12, I was considering responding to the OP on this particular issue.
To me, I think strong tight economic policy in the treaty has been intentionally (and correctly) left out. This is to allow for a country to have political autonomy to make decisions on its economy that suit it at that time. To put it very simply, policies that would work for a German recession are not guaranteed to work for an Irish recession, French, Belgian....

Of course, but having said that, it is architecture supporting the economic governance of the Euro Area which is lacking. We cannot have a situation where an economic and monetary union only vaguely requests that its members consult one another on major economic policy changes. Nobody has addressed the issue of why Ireland and Spain were allowed to pursue particularly disastrous domestic policies; there is nothing in the Treaties which makes us confident that the situation has been addressed so that major sovereign crises of similar geneses could not happen again down the line.

[RandomName2]

Originally Posted by meglome

Does that stop it being a good idea for the future?

In isolation, it probably does, although from a Eurozone POV, it doesn't.

[RandomName2]

Originally Posted by K-9

Would it not have kicked in in 08/09 when we started running huge deficits and gave banks huge bailouts increasing our debt above 60%?

In such a case it would have made our recession even nastier. Woop.

[Vita nova]

Originally Posted by mediator1964

Scorn not my simplicity
I was looking for a reason to vote yes or no

In the context of a referendum, we need to examine the relative merits of both options as looking at one option in isolation is not very useful when it comes to making a choice.

There are things which we can say for certain. The status quo does not work; it did not prevent the extreme boom-bust of the last 10 years, and that is a matter of historical record. Given it didn't work in the past, it's unlikely to work in the future - see Albert Einstein's definition of stupidity.

Nobody can say for certain if the new system would work, so the question is: is it more likely to prevent the economic conditions we experienced than the existing system and why? During our boom we ran surplus, and the new system would not be triggered by such surpluses. However, the new system commits us to more oversight of our economy at a national, and more importantly, international level. I would imagine that rogue economic behaviour would get a lot more attention than heretofore especially from those reviewers from outside of Ireland, and that might be enough to cause our government to reconsider. So although the proposed system is far from perfect, it's certainly seems better than the totally dysfunctional system we have now, furthermore, it's the only new system on offer.

.

[K-9]

Originally Posted by later12

Presumably they could get away with it under Article 3 of the Treaty:

25% debt to GDP to over 100%, that would effect fiscal sustainability in the long term, I would have thought.

Originally Posted by RandomName2

In such a case it would have made our recession even nastier. Woop.

How so?

[swampgas]

My (somewhat limited) understanding of the rules is that the structural deficit has to be kept at less than 0.5% - so when we were running a big net surplus during the construction bubble, would the construction related component of that surplus have been counted as structural or not?

If not, presumably the underlying weakness of the economy (eroded tax base for example) would have been noted and action would have been required?

[later12]

Originally Posted by K-9

25% debt to GDP to over 100%, that would effect fiscal sustainability in the long term, I would have thought.

But sure that was done with repeated, ongoing assurances that not only was it fiscally sound, anything less would be fiscally and economically irresponsible. Even today we are told it is sustainable.

You don't always start out on a path like that knowing it will become unsustainable, you often discover it is unsustainable over time.

[later12]

Originally Posted by swampgas

My (somewhat limited) understanding of the rules is that the structural deficit has to be kept at less than 0.5% - so when we were running a big net surplus during the construction bubble, would the construction related component of that surplus have been counted as structural or not?

Part of it probably would have been; there are things called cyclical sensitivity measurements which are an econometric exercise designed to catch this sort of thing. But there are any number of methods of calculating the structural deficit, with widely vacillating results depending on the methodology and the benefit of hindishgt. For example, in 2006 the EU Commission said Ireland enjoyed a structural deficit of just 2.2% while the IMF said it was well more than twice that, at 5.6%. In hindsight, both would say something different.

[K-9]

Originally Posted by later12

But sure that was done with repeated, ongoing assurances that not only was it fiscally sound, anything less would be fiscally and economically irresponsible. Even today we are told it is sustainable.

You don't always start out on a path like that knowing it will become unsustainable, you often discover it is unsustainable over time.

True, the blanket guarantee would have raised a few eyebrows with the budget oversight panel though!

[meglome]

Originally Posted by K-9

True, the blanket guarantee would have raised a few eyebrows with the budget oversight panel though!

Perhaps it's my positive nature but I'd like to believe this too. And it's one of the main reasons I'd like a Yes vote in this treaty so future Irish governments will find it much more difficult to wreck the place with poor fiscal policies.

[later12]

Originally Posted by K-9

True, the blanket guarantee would have raised a few eyebrows with the budget oversight panel though!

That depends whether you they thought the 30th September guarantee was a bad idea or not. I know it's the popular thing to deride it, but with the possible exception of covering dated sub debt, I don't feel we can say with confidence that the EU leaders or the FAC would have opposed the Guarantee - aka "the cheapest bailout in history".

Originally Posted by meglome

Perhaps it's my positive nature but I'd like to believe this too. And it's one of the main reasons I'd like a Yes vote in this treaty so future Irish governments will find it much more difficult to wreck the place with poor fiscal policies.

Policies? As long as they stick within the fiscal indicators, they are essentially free to pursue whatever fiscal policies they choose; that includes stoking a property bubble or blowing it all on fizzy drinks.

[K-9]

Originally Posted by later12

That depends whether you they thought the 30th September guarantee was a bad idea or not. I know it's the popular thing to deride it, but with the possible exception of covering dated sub debt, I don't feel we can say with confidence that the EU leaders or the FAC would have opposed the Guarantee - aka "the cheapest bailout in history".

The problem from the Brussels end seemed to be going of and doing things unilaterally, an overnight decision without informing them. Maybe they would have thought it was a eureka moment.

What makes you think they would have gone along with "the cheapest bailout in history" line?