Is the Euro good for Ireland?

jady88

All the talk about the Lisbon treaty, how Ireland needs Europe etc, has me wondering about the relationship between Ireland and Europe. Forgetting the European Union in a general sense, I would like to think specifically about the Euro and the monetary union.

Is the Euro constraining our capacity to react to this recession? I mean we are tied in with several countries that have vastly different economic problems and situations to our own, moreover those countries namely France and Germany are vastly more populace than our own so their economies will obviously dominate the Euro's movements etc. so does the Euro actually helping or hindering our response to the difficult economic reality facing us.

I'm no economics expert I just find the theory fascinating and from my limited knowledge it would seem to me that there would at least be some benefits to having our own currency, at least at this moment in time. Any thoughts or scathing corrections would be appreciated.

Sand

Is the Euro constraining our capacity to react to this recession? I mean we are tied in with several countries that have vastly different economic problems and situations to our own, moreover those countries namely France and Germany are vastly more populace than our own so their economies will obviously dominate the Euro's movements etc. so does the Euro actually helping or hindering our response to the difficult economic reality facing us.

This comes up a lot. Theres a myth doing the rounds that the Euro was a bad thing, that having the punt would offer an easy and painless way to regain competition. Its a myth though. The Euro offers benefits, and costs. The punt would offer benefits, and costs. Being in the Euro outweighs being in the Punt in my opinion.

About the only benefit to having the punt is that Fianna Fail could resort to the good old devalue trick to try get us instantly competitive.

Itd be great. Theyd just devalue the punt by 30%. Awesome.

You probably wouldnt even notice that you had just become 30% poorer. Youd probably only notice when you tried to take your punts abroad and realised...****, Spain a lots more expensive than it used to be. About 30% more expensive. Plus DVDs, music, concerts, movies, all sorts of imports from abroad (So like a massive portion of the Irish economy...) becomes 30% more expensive. But you wont be able to figure out why.

As well as you be stealth taxed for 30% of your entire wealth, any indication of an Irish government devaluing ( and lets face it, Irish government are renowned for taking the easy way out) would lead to massive capital flight, devastating the economy. Nobody would want to hold or invest in Irish assets with the threat of a 30% loss from devaluation hanging over them. Plus the wealthiest Irish, and those connected to the Golden Circle would probably come out ahead, as they would have more assets in foreign currency than the average Irish person. The Fianna Failers, the bankers and the developers would all move their assets to Sterling beforehand, and then transfer back with a 30% instant gain.

Trust me, there are some benefits to an independant monetary policy, but nothing that cant be adjusted for with a stern fiscal policy. Seeing as Fianna Fail have shown they cant even spell stern fiscal policy, theres no reason to think they can be trusted to manage a monetary policy. We are much, much better off in a strong Euro which encourages investment as opposed to a wild wild west punt which can see saw in value to suit short term political gains.

SkepticOne

I would disagree with Sand that it is a myth. The truth is there are pros and cons to an independent currency. Whether you want one has a lot to do with your ideology.

In general the points that Sand makes about the problems associated with an independent country are true. However, in the specific situation Ireland finds itself in, the ability to devalue to quickly gain competitiveness would be advantageous even though there is a cost to doing so.

It is like borrowing. In general it is not good to get into debt. Better to have a positive net worth, most people would agree. However there are times when borrowing is appropriate.

It is true that imports would get more expensive relative to wages and exports but this is what you want if your problem is lack of competitiveness.

In general the general situation capital flight is a potential problem with a floating currency but in the specific case of Ireland capital flight is a problem due to the fact that we allowed our economy to gorge on cheap credit due to the fact that we were in a currency union with countries at a different stage of the business cycle.

The main advantage to having an independent currency is that you can also have an independent monetary policy handled by an independent central bank.

In Ireland's case the only way of dealing with a low interest rate during the time of the housing bubble would have been to have punitive fiscal policies and our government was too weak to implement that. An independent central bank would simply have set interest rates a lot higher and thereby prevented the worst of the housing bubble and construction booms, the bursting of which has our banks in trouble now.

Nody

SkepticOne wrote: »

In Ireland's case the only way of dealing with a low interest rate during the time of the housing bubble would have been to have punitive fiscal policies and our government was too weak to implement that. An independent central bank would simply have set interest rates a lot higher and thereby prevented the worst of the housing bubble and construction booms, the bursting of which has our banks in trouble now.

And you seriously think that they would because I sure as heck don't...

Also with a floating pound think how fun it would be for Ireland to borrow to cover that nice little gap in the budget since you'd have to borrow in hard currency (no one would risk borrowing in pounds after all and lose 30%+ of the loan).

Then of course there is also the banks and the foreign properly people bought; would be fun to pay back those loans. The banks of course would have to pay a very nice premium on the international market making it even harder to get a loan then today for anything.

Oh yes, floating currency is definitely the way Ireland should have gone

SkepticOne

Nody wrote: »

And you seriously think that they would because I sure as heck don't...

Presumably you are talking about the interest rates set by the central bank. You realise that when Ireland joined the Euro there was a substantial drop in interest rates just as our bubble was getting going making borrowing much cheaper. Are you suggesting that this was the correct interest rate policy at that point in time?

Also with a floating pound think how fun it would be for Ireland to borrow to cover that nice little gap in the budget since you'd have to borrow in hard currency (no one would risk borrowing in pounds after all and lose 30%+ of the loan).

But that gap can be explained by the fact that we gorged on cheap credit that we had access to because we were within the Eurozone causing an unsustainable building boom that the government depended on for revenue. When it inevitably collapsed we were left with the gap.

Then of course there is also the banks and the foreign properly people bought; would be fun to pay back those loans. The banks of course would have to pay a very nice premium on the international market making it even harder to get a loan then today for anything.

Again, they would have found it a lot harder to raise this sort of money had we been outside a currency union with very low interest rates.

Oh yes, floating currency is definitely the way Ireland should have gone

Oh yes, we're the envy of the world economically aren't we, Nody, because we are in the eurozone. I think you might like to read the papers about what is happening in our economy at the moment.

jady88

Thanks for the replies...

you see the monetary (i think thats the right word anyway) policy would be one major advantage in our present condition or even going back over the recent patterns of growth in our economy.
For a good while while we were growing at very strong rate and our inflation rates were quite high our interests rates were arguably too low. higher interests rates might have made borrowing less attractive and put some form of reigns on the excessive construction industry. However because in France and Germany growth was non existent to slow and they had persistently high unemployment it made sense to keep interests rates low and since they are way bigger than us obviously those pressures won out.
Secondly, at the beginning of this recession when it was obvious from the day Northern Rock buckled that Ireland's economy was about to take a nose dive into the recessionary pavement our interests should, arguably have been slashed, instead ours remained higher than Britain and Americas for a good period of time.

In relation to the devaluation this is not really what I was referring to, I know it comes with a great price but we can see in Britain and America that their currencies' slide in recent period has benefited them, similarly I don't think anyone would doubt that our own currency would have lost value this would be advantageous to recovery in some ways. However we are not experiencing this at all instead our currency has roughly strengthened.

What really at the moment is the benefit of the Euro to Ireland especially concerning our present economic woes? Apart from the fact that it is dead handy

SeanW

SkepticOne wrote: »

Presumably you are talking about the interest rates set by the central bank. You realise that when Ireland joined the Euro there was a substantial drop in interest rates just as our bubble was getting going making borrowing much cheaper. Are you suggesting that this was the correct interest rate policy at that point in time?But that gap can be explained by the fact that we gorged on cheap credit that we had access to because we were within the Eurozone causing an unsustainable building boom that the government depended on for revenue. When it inevitably collapsed we were left with the gap.

True enough HOWEVER, while the lever of moetary policy was not available to us, the lever of fiscal policy was - while the ECB was cutting interest rates, Charlie McCreevy was cutting taxes and increasing government spending. This injected huge amounts of money into an economy that was overheating - the equivalent of a pre-diabetic person drinking a 2 litre bottle of Pepsi - it made no sense and is part of the reason we now have to raise taxes and cut spending in a recessionary period.

But it helped Fianna Fail buy the 2007 election and made a lot of rich property developers a lot richer. Which is what most Irish government policy is all about.

There's no point in blaming the Euro - we were not that helpless.

ei.sdraob

Is the Euro good for Ireland?

go to Iceland and ask them how they are getting on

jady88

ei.sdraob wrote: »

go to Iceland and ask them how they are getting on

Yeah I understand that but it isn't as simple as one liners...

Also I am actually in favour of the Euro and of greater integration I'm just trying to have a proper discussion of the benefits and costs of the euro.

thebman

Its good for us because our government would just devalue our currency if it could to get out of the mess leaving us in a big mess still as who would want to have anything to do with a currency we devalue whenever it suits us?

Basically the Euro saves us from FF being FF IMO.

jimmmy

The euro is good for Ireland because think how much we would have to pay our Central Bank otherwise if we had to pay someone to look after our own currency ( as said before, John Hurley, the retiring head of the Irish Central Bank, is the highest paid central banker in the world, getting € 368,703 per year. The head of the Bank of England gets € 283,564 per year, the head of the European Central bank gets € 345,252 per year and the head of the US federal reserve Bank gets € 186,600. ).


Maybe we should hand our currency bank to be tied in with the Bank of England ( with a note of apology for the state we are in ) ....that way we would have a bigger say in setting interest rates to suit our economy:D.

During the tiger, interest rates were too low for our economy, and we had to toe the German line, Ireland making up only 1% of Europe.

jady88

jimmmy wrote: »

The euro is good for Ireland because think how much we would have to pay our Central Bank otherwise if we had to pay someone to look after our own currency ( as said before, John Hurley, the retiring head of the Irish Central Bank, is the highest paid central banker in the world, getting € 368,703 per year. The head of the Bank of England gets € 283,564 per year, the head of the European Central bank gets € 345,252 per year and the head of the US federal reserve Bank gets € 186,600. ).

Ha they should have bench marked him to his counterparts abroad...

jimmmy wrote: »

Maybe we should hand our currency bank to be tied in with the Bank of England ( with a note of apology for the state we are in ) ....that way we would have a bigger say in setting interest rates to suit our economy:D.

LoL cause they have it so good...

jimmmy wrote: »

During the tiger, interest rates were too low for our economy, and we had to toe the German line, Ireland making up only 1% of Europe.

This is my point, and not so much the tiger but the post 2002 growth which was almost all construction based and speculative in it's nature. We could have and arguably should have increased our interest rates to dampen the excess.

caseyann

I am wishing the Euro away.I have never in my life been so tight for money until the euro came in.
Whats the minimum wage amount and how much does it change into if was Irish punt?

I miss the Irish punt

jady88

caseyann wrote: »

I am wishing the Euro away.I have never in my life been so tight for money until the euro came in.
Whats the minimum wage amount and how much does it change into if was Irish punt?

I miss the Irish punt

In fairness the euro has been in for 7 years and been here through a decent diversity of economic situations so it can hardly be blamed for individual instances of shortage of cash.

caseyann

jady88 wrote: »

In fairness the euro has been in for 7 years and been here through a decent diversity of economic situations so it can hardly be blamed for individual instances of shortage of cash.

In all fairness people i know who earn a very good wage also find the euro to be less valuable then the punt And spent with hardly anything to show for it and have been saying after the first year and half of it coming in.

jady88

Em... obviously the euro was worth less than the punt the initial exchange rate was below par value.

Also even if we reverted or the numeric value of their wages would decline in line with the prices of commodities. Theoretically at least more likely we'd be ripped off.

thebman

Can't really blame the Euro for inflation. Its worth less than the punt was but you get more of them.

The problem is value for money and the cost of living not the Euro. Again a problem of the construction based economic bubble and not the Euro.

Interest Rates could be blamed but the government had other ways to slow the boom and they threw fuel on the fire instead of trying to put it out. Blame the government not the Euro.

ei.sdraob

jady88 wrote: »

Yeah I understand that but it isn't as simple as one liners...

Also I am actually in favour of the Euro and of greater integration I'm just trying to have a proper discussion of the benefits and costs of the euro.

Well its quite simple

the euro allowed Ireland to tap into very low interest rates

but unfortunately all that cheap money was essentially squandered on property and public sector during the boom instead of being wisely invested (germany now being a leader in renewable energy for example)

now the euro is keeping this country afloat since we are now tied to large (And sensible) economies like Germany which are now out of recession

Joining the euro was the best decision this country made

Alot of people point at UK but their economy is much larger than ours and devaluation effectively wiped 30% of the wealth of all savers/investors there which is very slimy and is a form of indirect taxation

SkepticOne

thebman wrote: »

Interest Rates could be blamed but the government had other ways to slow the boom and they threw fuel on the fire instead of trying to put it out. Blame the government not the Euro.

Why not blame both?

thebman

SkepticOne wrote: »

Why not blame both?

Well for one thing there is no evidence that we would have increased interest rates to prevent a bubble.

More evidence we would have left them low given the people in charge and the other incentives put in place to make the bubble even bigger rather than trying to control it.

joolsveer

caseyann wrote: »

I miss the Irish punt

Was that a flat bottomed boat?
http://en.wikipedia.org/wiki/Punt_%28boat%29

The currency we had before the euro was the pound.
http://en.wikipedia.org/wiki/Irish_pound

thebman

joolsveer wrote: »

Was that a flat bottomed boat?
http://en.wikipedia.org/wiki/Punt_%28boat%29

The currency we had before the euro was the pound.
http://en.wikipedia.org/wiki/Irish_pound

:P http://en.wikipedia.org/wiki/Talk:Irish_pound#Use_of_the_term_.22punt.22_in_English

SkepticOne

thebman wrote: »

Well for one thing there is no evidence that we would have increased interest rates to prevent a bubble.

More evidence we would have left them low given the people in charge and the other incentives put in place to make the bubble even bigger rather than trying to control it.

Interest rates were higher just before Ireland entered the Euro. When we adopted the Euro we adopted much lower interest rates. Interest rates lowered considerably upon Ireland's adoption of the Euro.

Would the central bank have lowered interest rates anyway to match the government's fueling the bubble? They don't appear to have acted in this fashion prior in the period that they had control of interest rates.

I think it has got to be remembered that the central bank is not an organisation looking to be re-elected every five years. They don't need to seek popularity to the same extent as the government.

thebman

SkepticOne wrote: »

I think it has got to be remembered that the central bank is not an organisation looking to be re-elected every five years. They don't need to seek popularity to the same extent as the government.

Yes it should not be ignored that it would benefit those in charge of it to keep favor with the government though.

RTE don't have to seek re-election either but can hardly be called unbiased.

SkepticOne

thebman wrote: »

Yes it should not be ignored that it would benefit those in charge of it [the central bank] to keep favor with the government though.

I don't think unsuitably low interest rates was something they were known for prior to entry into the Euro tbh but I stand to be corrected on that.

Amhran Nua

SkepticOne wrote: »

Why not blame both?

Because the same rates applied across many countries, but only a few of them used that to fuel a credit boom, I would say.

jady88

thebman wrote: »

Well for one thing there is no evidence that we would have increased interest rates to prevent a bubble.

More evidence we would have left them low given the people in charge and the other incentives put in place to make the bubble even bigger rather than trying to control it.

I don't think thats true at all, our interest rates were higher before entry and I think it reasonable to assume that the central bank would have held them higher.

jady88

Given the events of the past two weeks I think this thread well and truly deserves a bump.

Since default is a serious possibility at this stage and the future of the euro is becoming less and less certain might we be better to call it quits right now and just leave?

raymann

ei.sdraob wrote: »

Well its quite simple

the euro allowed Ireland to tap into very low interest rates

but unfortunately all that cheap money was essentially squandered on property and public sector during the boom instead of being wisely invested (germany now being a leader in renewable energy for example)

now the euro is keeping this country afloat since we are now tied to large (And sensible) economies like Germany which are now out of recession

Joining the euro was the best decision this country made

Alot of people point at UK but their economy is much larger than ours and devaluation effectively wiped 30% of the wealth of all savers/investors there which is very slimy and is a form of indirect taxation

this is completely untrue. you always persists in repeating the same untruths. prices have not risen by 30% in the uk. nothing like it. total nonsense. if they travel abroad then yes sterling is worth less. but most people spend the vast majority of their time at home.

the reality is all across europe since the euro came in prices have risen massively. if you want to talk about peoples purchasing power being destroyed (ie really attacking peoples savings and wages) go to greece, spain ireland portugal or italy and ask the man on the street earning national average wages if living on that wage has got harder since joining the euro.

you will get a total unequivocal yes answer. look at how expensive it is to live in ireland. relative to wages, its even more expensive in the other countries i mentioned. this is the REAL destruction of peoples standard of living through destroying the purchasing power that really matters, the ability to spend in their home market.

i live in france after a long period living in england and i cant believe the prices here. i spend a lot of time in spain and its worse there. its impossible for people to survive on welfare and the wages that people need to survive instantly make businesses uncompetitive. i get asked all the time, where have the irish gone? why dont they come on holiday any more? we know the answer, the few that can still afford it go to turkey or bulgaria because its cheaper.

i associate joining the euro with a real significant cut in ties with the uk and such a good vibrant feeling in ireland. that doesnt change the fact we should never have joined without the uk, our main trading partner. it felt like the act of a maturing nation ready to decide its own path independently. i now realise the mature approach was to honestly recognise that while culturally and socially it was the right time, economically and politically it was completely wrong.

djpbarry

raymann wrote: »

look at how expensive it is to live in ireland.

Look how high incomes are in Ireland.

raymann wrote: »

i associate joining the euro with a real significant cut in ties with the uk and such a good vibrant feeling in ireland. that doesnt change the fact we should never have joined without the uk, our main trading partner.

We trade more with mainland Europe than we do with the UK – they are no longer our main trading partner.

EastTexas

raymann wrote: »

this is completely untrue. you always persists in repeating the same untruths. prices have not risen by 30% in the uk. nothing like it. total nonsense. if they travel abroad then yes sterling is worth less. but most people spend the vast majority of their time at home.

the reality is all across europe since the euro came in prices have risen massively. if you want to talk about peoples purchasing power being destroyed (ie really attacking peoples savings and wages) go to greece, spain ireland portugal or italy and ask the man on the street earning national average wages if living on that wage has got harder since joining the euro.

you will get a total unequivocal yes answer. look at how expensive it is to live in ireland. relative to wages, its even more expensive in the other countries i mentioned. this is the REAL destruction of peoples standard of living through destroying the purchasing power that really matters, the ability to spend in their home market.

i live in france after a long period living in england and i cant believe the prices here. i spend a lot of time in spain and its worse there. its impossible for people to survive on welfare and the wages that people need to survive instantly make businesses uncompetitive. i get asked all the time, where have the irish gone? why dont they come on holiday any more? we know the answer, the few that can still afford it go to turkey or bulgaria because its cheaper.

i associate joining the euro with a real significant cut in ties with the uk and such a good vibrant feeling in ireland. that doesnt change the fact we should never have joined without the uk, our main trading partner. it felt like the act of a maturing nation ready to decide its own path independently. i now realise the mature approach was to honestly recognise that while culturally and socially it was the right time, economically and politically it was completely wrong.

Great post
Thank you
Just looking at it from the outside, I always saw continental Europe and then GB and Ireland.
Two countries with so much in common, starting with language, culture, neighbors and trading partners.
Not to be glib, but if the Euro where good for Ireland, it wouldn’t be in this situation today.
Perhaps the cheap interest rates on the Euros where nothing but bait.
There are most certainly not cheap today, looking at the big picture.

djpbarry

EastTexas wrote: »

Not to be glib, but if the Euro where good for Ireland, it wouldn’t be in this situation today.

If staying out of the Euro was good for Hungary and Latvia, they wouldn’t be in their respective situations today.

See what I did there?

EastTexas

djpbarry wrote: »

If staying out of the Euro was good for Hungary and Latvia, they wouldn’t be in their respective situations today.

See what I did there?

Touché

Though I wouldn’t put those countries anywhere near on par with Ireland, economically speaking.

Apples and Oranges

raymann

djpbarry wrote: »

Look how high incomes are in Ireland.
We trade more with mainland Europe than we do with the UK – they are no longer our main trading partner.

nope sorry. not right. people in ireland are struggling with falling wages and increasing taxes IF they are lucky enough to find/keep a job. the background to all this is that prices of goods and services are not falling at even close to the same rate.

its a nightmare scenario for people including family members of mine. celtic tiger pricing with a 1980's economy. the overriding characteristic of this economy is that people are really really struggling. trying to deflate our way back to competitiveness, due to not having full fiscal control, is a ridiculous situation to find forced upon us.

i think that no government in europe, with the exception of one, would have had the willpower or more importantly the mandate from the electorate at more than one election, to control the virus of unlimited credit at negative rates combined with an interest rate set for countries in a completely different cycle.

it would have required such aggressive regulation and taxation of various parts of the economy to tame the tiger, that the public would not stand for it.

the euro has been a disaster for ireland. we should never had entered. again, i believe that people look at the euro as part of the cetlic tiger years and finally cutting the apron strings from the uk. this clouds thier judgement as to the predicament that we are now in. i believe that if things pan out as i think it will it will be looked at as the biggest mistake in the short history of our republic.

with regards to britain not being our main trading partner, the figures are twisted by the huge huge amount of transfer pricing between ireland and belgium. trade with the uk tends to be SME's perhaps even producing and exporting irish goods with all of the benefits that brings to your ordinary working irish citizen.

djpbarry

EastTexas wrote: »

Though I wouldn’t put those countries anywhere near on par with Ireland, economically speaking.

How do you mean?

raymann wrote: »

nope sorry. not right. people in ireland are struggling with falling wages and increasing taxes IF they are lucky enough to find/keep a job. the background to all this is that prices of goods and services are not falling at even close to the same rate.

Got some figures to back that up?

raymann wrote: »

its a nightmare scenario for people including family members of mine. celtic tiger pricing with a 1980's economy.

You’re not old enough to remember the 80’s, are you? You think the country has regressed 25 years? Really?

raymann wrote: »

it would have required such aggressive regulation and taxation of various parts of the economy to tame the tiger, that the public would not stand for it.

Perhaps. But that does not excuse what happened.

raymann wrote: »

the euro has been a disaster for ireland.

You really think anything would have been different had we been trading crap properties to each other in punts rather than Euros? Personally, I’m extremely sceptical.

raymann

djpbarry wrote: »

Got some figures to back that up?

are you seriously going to try and disagree with this? really? ok, just incase you really have some problem accepting reality. one word. mortgages. peoples livelihoods and incomes are collapsing all around them. but the debt remains the same. do we even need to start looking at esb, broadband, grocery costs?

djpbarry wrote: »

not old enough to remember the 80’s, are you? You think the country has regressed 25 years? Really?

hmmm. i think to most people its pretty clear i wasnt making a statistic, i was trying to illustrate a point. its very clear to most people that with the imf called in deciding our new fiscal policy things are CONSIDERABLY worse than they ever got in the 80's.

djpbarry wrote: »

Perhaps. But that does not excuse what happened.

the markets would have regulated us years earlier if we didnt have the blanket protection of being part of the euro.

djpbarry wrote: »

really think anything would have been different had we been trading crap properties to each other in punts rather than Euros? Personally, I’m extremely sceptical.

yes. you have no idea what your on about. do you really thing that anglo and aib would have had access to so much much cash at such a low rate without the assumption that the whole euro project was backing the whole thing up?

do you really think that in 2005 when our property had gone up in value 3 times what it was in 1998 our currency would not have been affected?

you know what the real difference between iceland and ireland is? we are totally done in and they will probably be out of this mess way way quicker than us.


so come on, answer that. also let me know if you are a member of the green party, because i think its only fair to know if you are affiliated to the ruling coalition when answering these points.

later12

People actually question whether the Euro is good for Ireland

Look, if even Germany, having to bailout the PIGS to the tune of billions of euro for their fiscal irresponsibility after years of Germany enduring fiscal prudence, wage restraint and battling for low unemployment, are not even contemplating leaving Europe, then why would we?

Particularly at a time when we are receiving to GET liquidity for our banks, GET sovereign funding and GET a credible reliance on the powerhorses of Europe.

The PIGS get 60% of emergency ECB funding - thats hundreds of billions of euro, and have done so since September 2008. Yet together we are only 18% of gross Eurozone GDP - and half of that is Spain's anyway.

Enough said?

raymann

later10 wrote: »

People actually question whether the Euro is good for Ireland

Look, if even Germany, having to bailout the PIGS to the tune of billions of euro for their fiscal irresponsibility after years of Germany enduring fiscal prudence, wage restraint and battling for low unemployment, are not even contemplating leaving Europe, then why would we?

Particularly at a time when we are receiving to GET liquidity for our banks, GET sovereign funding and GET a credible reliance on the powerhorses of Europe.

The PIGS get 60% of emergency ECB funding - thats hundreds of billions of euro, and have done so since September 2008. Yet together we are only 18% of gross Eurozone GDP - and half of that is Spain's anyway.

Enough said?

what are you on about? germany has just released almost full employment statistics based around their strong exports. these exports would cost way, way more if the dmark was being floated against other currencies.

the fact is its almost perfect for germany, they arent bailing out anybody. their banks are lent at crazy rates to the piigs, now the ecb is loaning money to the piigs at higher rates to pay the german banks back. all the while the combined effect of the piigs is making german exports more competitive.

you couldnt make it up.

EastTexas

later10 wrote: »

People actually question whether the Euro is good for Ireland

Look, if even Germany, having to bailout the PIGS to the tune of billions of euro for their fiscal irresponsibility after years of Germany enduring fiscal prudence, wage restraint and battling for low unemployment, are not even contemplating leaving Europe, then why would we?

Because Germany are the only ones so far to profit on the banking crises.
Does anybody really believes this is benevolence?
Putting smaller Eurozone nations into perpetual insurmountable debt to a foreign nation by tying them to their currency.

Whilst flooding them with their exports til they choke.

Quit ingenious if you think about it.
Not even the Chicago mob in their best days could think up such a money laundering scheme, but hey they didn’t have the EU as a facilitator.
They don’t call Germany the powerhouse of Europe for nothing.

Scofflaw

Some posters here appear to be going down the "Fourth Reich" road of claiming that Germany is trying to achieve through finance what they failed to achieve in two world wars. Save it for the Conspiracy Theory forum, please, unless you have hard evidence.

moderately,
Scofflaw

View

EastTexas wrote: »

Not to be glib, but if the Euro where good for Ireland, it wouldn’t be in this situation today.
Perhaps the cheap interest rates on the Euros where nothing but bait.

And no doubt that also applies to the various US states suffering the effects of their own property implosions, right?

It's all the Dollar's fault... :rolleyes:

EastTexas

View wrote: »

And no doubt that also applies to the various US states suffering the effects of their own property implosions, right?

It's all the Dollar's fault... :rolleyes:

There is no question that ground zero of this debacle is in the US.
The spread is from the banks being so deeply connected to another internationally.
Combined creating their own “ too big to fail” safety net.

View

EastTexas wrote: »

There is no question that ground zero of this debacle is in the US.
The spread is from the banks being so deeply connected to another internationally.
Combined creating their own “ too big to fail” safety net.

That's not quite the same as saying "Oh, it's the Dollar's fault" or "The Fed's interest rate was all a trap to lure the (various US) states into poverty" though, is it?

EastTexas

View wrote: »

That's not quite the same as saying "Oh, it's the Dollar's fault" or "The Fed's interest rate was all a trap to lure the (various US) states into poverty" though, is it?

Not quite sure how I should read that.
The impact has differed much from state to state.
But there is not shortage of hanky panky and an extreme reluctance to transparency from the Fed.
Why on earth they won’t audit them is beyond me.
Congress rejecting this.

Poverty…depends on what you define as poverty.

raymann

Scofflaw wrote: »

Some posters here appear to be going down the "Fourth Reich" road of claiming that Germany is trying to achieve through finance what they failed to achieve in two world wars. Save it for the Conspiracy Theory forum, please, unless you have hard evidence.

moderately,
Scofflaw

eh? total over reaction. why even mention 'the forth reich'? germanys government is trying to maximise their competitive advantage. which incidentally we do through our 'beggar thy neighbour' tax policy.

raymann

View wrote: »

And no doubt that also applies to the various US states suffering the effects of their own property implosions, right?

It's all the Dollar's fault... :rolleyes:

the dollar is a good example of how a currency union can work. larger states, such as california subsidise smaller states such as wyoming through different federal taxes. this is done in recognition of the imbalances in the make up of the union.

for the eurozone to be successful there has to be a recognition that a similar situation exists. ie the industrialised states needs to accept that the price of the bennefits of the union is that they need to give away a portion of their profits to other members.

and here lies the problem. im sat in bed in france. i am the living example of the modern mobile european. the only way union can work is if we secede full taxation and law making capabilities to brussels.

am i ready to do that? in one word, no. i am european, all my lifestyle choices are european, but that is too far.

K-9

raymann wrote: »

the markets would have regulated us years earlier if we didnt have the blanket protection of being part of the euro.




yes. you have no idea what your on about. do you really thing that anglo and aib would have had access to so much much cash at such a low rate without the assumption that the whole euro project was backing the whole thing up?



you know what the real difference between iceland and ireland is? we are totally done in and they will probably be out of this mess way way quicker than us.

Interesting you mentioned Iceland.

Despite being outside the Euro, the markets didn't regulate them much and despite much higher interest rates, their banks had access to substantial cash. Exactly because of high interest rates.

swampgas

raymann wrote: »

the dollar is a good example of how a currency union can work. larger states, such as california subsidise smaller states such as wyoming through different federal taxes. this is done in recognition of the imbalances in the make up of the union.

for the eurozone to be successful there has to be a recognition that a similar situation exists. ie the industrialised states needs to accept that the price of the bennefits of the union is that they need to give away a portion of their profits to other members.

and here lies the problem. im sat in bed in france. i am the living example of the modern mobile european. the only way union can work is if we secede full taxation and law making capabilities to brussels.

am i ready to do that? in one word, no. i am european, all my lifestyle choices are european, but that is too far.

We have short memories.
The more developed states did support the less developed ones - what about the billions of structural funds that Ireland and Greece have received? You don't have to drive far to see a sign showing that "this road was partly funded by the EU" or words to that effect. Personally I think Ireland has done very well out of Europe and the Euro, but our mindset as a people, and our political system have some catching up to do.

raymann

K-9 wrote: »

Interesting you mentioned Iceland.

Despite being outside the Euro, the markets didn't regulate them much and despite much higher interest rates, their banks had access to substantial cash. Exactly because of high interest rates.

the only thing that saved us was the collapse of lehmans. if it hadnt happened we would have carried on the insanity for at least another year and coud you imagine things being even worse than they are now. now that is a scary thought.

iceland is a great example because it looks like they took the big hit in 08 that we postponed (and made worse by not acting decisively on our banks) and now have a platform to build their way out of.

i am not saying that they havent had a massive hit in their standard of living or that the good times are going to roll again for them. quite the contrary, i think times will be very tough for that other island race.

but not nearly as tough as its going to get for us. i think now default is the inevitable conclusion. if it is next year or three years down the line i am not clever enough to know. but even with my limited understanding, the debt interest will crush us. factor into this an unstable global market and the possibilty of a wave of mortgage defaults....

raymann

swampgas wrote: »

We have short memories.
The more developed states did support the less developed ones - what about the billions of structural funds that Ireland and Greece have received? You don't have to drive far to see a sign showing that "this road was partly funded by the EU" or words to that effect. Personally I think Ireland has done very well out of Europe and the Euro, but our mindset as a people, and our political system have some catching up to do.

the only way the euro can work is if this redistribution of wealth continues and with it there is a federalised eu wide tax and spend policy. the indusrialised wealth generating states need to fund the other states to make up for the imbalances.

this is the price of union. this is the only way it can work. it was called subsidies originally, but this is exactly what this was trying to do. the only way the eu can work is that it operates as a full state with total tax and spend powers and the ability to address imbalances. the current system is a political solution that is trying to defy the economics, and has many in built flaws that are very obvious at the moment

K-9

raymann wrote: »

the only thing that saved us was the collapse of lehmans. if it hadnt happened we would have carried on the insanity for at least another year and coud you imagine things being even worse than they are now. now that is a scary thought.

iceland is a great example because it looks like they took the big hit in 08 that we postponed (and made worse by not acting decisively on our banks) and now have a platform to build their way out of.

i am not saying that they havent had a massive hit in their standard of living or that the good times are going to roll again for them. quite the contrary, i think times will be very tough for that other island race.

but not nearly as tough as its going to get for us. i think now default is the inevitable conclusion. if it is next year or three years down the line i am not clever enough to know. but even with my limited understanding, the debt interest will crush us. factor into this an unstable global market and the possibilty of a wave of mortgage defaults....

True.

Don't agree on Lehmans though. If the Irish Govt. had its way, yes but in mid 06, before Lehmans, ECB rates rose and the market stalled.

The political crisis at the time was McDowell wanting to scrap stamp duty and FG/Labour similar. Cowen doubled mortgage interest relief instead, worth up €2,000 a year for some couples.

So, even when interest rates rose and the market cooled, we and I include the opposition on this, wanted to reignite the bubble.

So, while I agree the bubble would have continued, only if the main Irish political parties had their way.

Mortgage Interest relief was recommended to be scrapped years ago, not increased to be worth up to €4,000 per couple! Little done on tax allowances for developers, stamp duties reduced etc.

We had plenty of tools to use to slow the bubble, we chose not only to ignore them, but to use them to swell it.