EU 'saved country from total collapse'

Scofflaw

THE Irish economy would have collapsed during the banking crisis last year had it not been for the support of Europe, Finance Minister Brian Lenihan admitted yesterday.

Support from the European Central Bank, after the banks were guaranteed in September of last year, helped save our bacon, he added.

"Were we not in the euro zone in the last year, our banking crisis could have resulted in a general collapse of the State," Mr Lenihan said in Brussels.

"That didn't happen because of the ECB. I believe that Ireland should play its full part in constructing a robust system of European financial supervision."

Independent

Of course he's only saying that to try to get people to vote Yes...oh, no, wait...he's only saying it to get Fianna Fáil off the hook...no, wait...he's probably just wrong, anyway, I'm sure.

amused,
Scofflaw

ei.sdraob

did you not hear some bright whooring sparks (DMcW im looking at you) think we should leave the euro and "float" on our own

peasant

From the same article:

Since the time of the bank guarantee scheme, the European Commission and the ECB have been monitoring the Irish banking sector and economy.

The Commission is currently reviewing restructuring programmes for Anglo, Allied Irish and Bank of Ireland.

Does this mean possible nationalisation (or should that be EU-isation?) of those banks via EU commission decree?

mike65

I read somewhere that the ECB intervention was worth about 30 billion euro in short term finance.

Scofflaw

peasant wrote: »

From the same article:


Does this mean possible nationalisation (or should that be EU-isation?) of those banks via EU commission decree?

Not based on those couple of phrases, anyway. As far as I know, though, the rules on state aids to banks can have the result that the government winds up getting more and more shares in the bank.

cordially,
Scofflaw

ei.sdraob

peasant wrote: »

From the same article:


Does this mean possible nationalisation (or should that be EU-isation?) of those banks via EU commission decree?

actually i wouldn't be surprised if EU steps in and does something about Irish banks

the current pseudo-nationalization is very anti competitive, and they already stepped in last month and sorted that dutch bank out

K-9

ei.sdraob wrote: »

actually i wouldn't be surprised if EU steps in and does something about Irish banks

the current pseudo-nationalization is very anti competitive, and they already stepped in last month and sorted that dutch bank out

I'd read the Commission was keeping a close eye on Anglo Irish.

BetterLisbon

Our banking crisis was caused by our eurozone membership in the first place. So i dont see why we should be so grateful to europe.

Martin 2

BetterLisbon wrote: »

Our banking crisis was caused by our eurozone membership in the first place. So i dont see why we should be so grateful to europe.

Our banking crisis was caused by poor banking practice and ineffective government regulation. Our banking sector survival is largely due to Eurozone membership and associated ECB liquidity support.

evercloserunion

BetterLisbon wrote: »

Our banking crisis was caused by our eurozone membership in the first place. So i dont see why we should be so grateful to europe.

I suppose you could pin the banking crisis on Europe in that if it weren't for our membership of the EU we would have no money to put in banks, so we couldn't have a banking crisis.

But I'm not sure that option is much better.

BetterLisbon

We could be like Sweden. In the EU but not in the euro. Its worked out very well for them despite a tsunami of scaremongering during their 2003 referendum campaignabout economic collapse if they said no.

K-9

BetterLisbon wrote: »

We could be like Sweden. In the EU but not in the euro. Its worked out very well for them despite a tsunami of scaremongering during their 2003 referendum campaignabout economic collapse if they said no.

Don't think they had a property bubble or huge banking crisis like say Iceland, neither did Germany come to think of it.

SkepticOne

K-9 wrote: »

Don't think they had a property bubble or huge banking crisis like say Iceland, neither did Germany come to think of it.

They did have one in the early nineties and the memory of this may have influenced their decision.

K-9

SkepticOne wrote: »

They did have one in the early nineties and the memory of this may have influenced their decision.

Considering only a couple of countries in the Euro had property bubbles that would have been an incorrect influence.

Even Spain hasn't had the same banking crisis as us. The wonders of bank regulation.

oscarBravo

BetterLisbon wrote: »

Our banking crisis was caused by our eurozone membership in the first place.

As was the recent flooding throughout the country. And the puncture I got there a while back.

nesf

K-9 wrote: »

Even Spain hasn't had the same banking crisis as us. The wonders of bank regulation.

Aye, Spain is a good example of how a housing bubble doesn't automatically cause a banking crisis.

jhegarty

oscarBravo wrote: »

As was the recent flooding throughout the country. And the puncture I got there a while back.

So you don't think the low interest rates during the bubble made the problem worse ?

K-9

jhegarty wrote: »

So you don't think the low interest rates during the bubble made the problem worse ?

Personally, I believe Bertie telling naysayers to commit suicide, Tax Relief on €1,700 a month Interest for First Time Buyers, Yep, €20,000 a year mortgage interest was tax deductible and encouraged (would be a €Million mortgage), ignoring warnings from the ECB, you know the EUROPEAN CENTRAL BANK, Regulators being warned about lending to affordability ratios and asking banks about how much they where lending as far back as 2003, Banks said "Nah, of course we aren't lending too much", Regulator said "OK then", everybody ignoring warnings from as far back as 2002 on the property bubble, "Rent is dead money" mantra, the keeping up with the Jones lifestyle, investors flooding the market with tax incentives, property always goes up, the Irish obsession with property, Govt. and Unions giving income tax cuts for people to afford houses, the I deserve a house mentality, investors in for a quick buck and selling for a quick buck, Estate Agents, nobody bothering to invest in anything not property related, FF, Coalitions, FG/Labour, I could go on.

But YEP, it was mostly down to the Euro.

Flamed Diving

BetterLisbon wrote: »

Our banking crisis was caused by our eurozone membership in the first place. So i dont see why we should be so grateful to europe.

What a pathetically simplistic statement.

ei.sdraob

Flamed Diving wrote: »

What a pathetically simplistic statement.

sounds like something he read in Daily Mail

SkepticOne

Flamed Diving wrote: »

"EU 'saved country from total collapse'" What a pathetically simplistic statement.

FYP

nesf

Flamed Diving wrote: »

What a pathetically simplistic statement.

It's from the Indo, what do you expect!

Flamed Diving

SkepticOne wrote: »

FYP

Wellllll, you know that isn't true.

utick

Flamed Diving wrote: »

What a pathetically simplistic statement.

no more pathetically simplistic than ' EU 'saved country from total collapse'

View

utick wrote: »

no more pathetically simplistic than ' EU 'saved country from total collapse'

The difference is the ECB actually DID provide Irish banks (which was used to buy Irish Government debt) with money during the worst of the financial crisis last year when no one else would. So, it may be simplistic but it is actually true in this case.

Flamed Diving

utick wrote: »

no more pathetically simplistic than ' EU 'saved country from total collapse'

No, it really isn't when you actually know what the terms suggest.

Max Power1

ei.sdraob wrote: »

did you not hear some bright whooring sparks (DMcW im looking at you) think we should leave the euro and "float" on our own

I would say we would more than likely sink, rather than "float" on our own. Do you think we would survive as a country and economy, with the vast ever increasing levels of debt we have?

Did you know for example, that the mooted €4Billion savings will only go to pay the interest on our national debt next year?

RedPlanet

I'm still waiting for those jobs we were promised for voting yes.

seamus

RedPlanet wrote: »

I'm still waiting for those jobs we were promised for voting yes.

Here you go:
http://www.businessandleadership.com/leadership/news/article/17969/leadership/50-lismore-jobs-created-by-pharma-manufacturer

Furious-Dave

RedPlanet wrote: »

I'm still waiting for those jobs we were promised for voting yes.

Well you have to wait until the Lisbon Treaty is written into law first, and then a little bit more time for it to actually take effect. Even if jobs were promised, which they weren't, did anyone actually give a time frame for their creation, or is that some people thought and still think, despite being told otherwise, that they would just suddenly start appearing?

View

RedPlanet wrote: »

I'm still waiting for those jobs we were promised for voting yes.

Well, anytime you want you can have a job as a conscript in the EU Army. Just ask your local No group to find out where you need to report...

PS The changes in Lisbon really turned out make a really, really big deal in our day-to-day lives, didn't they? :rolleyes:

free-man

Furious-Dave wrote: »

Well you have to wait until the Lisbon Treaty is written into law first, and then a little bit more time for it to actually take effect. Even if jobs were promised, which they weren't, did anyone actually give a time frame for their creation, or is that some people thought and still think, despite being told otherwise, that they would just suddenly start appearing?

Maybe you should ask these people?

Flamed Diving

free-man wrote: »

Maybe you should ask these people?

Sorry, I seemed to miss the link where the --->EU<--- promised Ireland jobs for voting yes. Could you point it out, perhaps?

sceptre

I'm still disappointed that anyone with a basic understanding of the english language interpreted the likes of "Yes for jobs and investment" as a direct promise of jobs. From anyone. Especially compared to that "abortions for all"-style idiocy.

Actually, I sometimes think that half the population can't read (even though my fears are officially unfounded) so perhaps I shouldn't be that disappointed. But I'm disappointed nonetheless. And extra disappointed that with about a week to decipher each letter on the poster I've quoted since the referendum that we're still having this idiotic conversation about something that someone with english as their fifth language could and should understand.

Ah, there's the disappointment coming out again... it's bitter, I blame the education system and my own sense of dystopian sadness.

Seriously, one week per letter on the posters, it's time to actually understand it if you don't already. Apologies where appropriate but my being any less blunt on this one would be unfair to the future and the present and the people who taught us all to read so if you're offended and still don't understand that a poster that says "Yes for jobs and investment" is not a direct promise of jobs (in general or particular in my view but definitely not particular), that's a shame but you need to read it again. And again if necessary. Because the Irish education system is and was good enough that everyone in the country should be and is able to understand the distinction. Being deliberately obtuse is just timewasting.

kerryjoe

Scofflaw wrote: »

Independent

Of course he's only saying that to try to get people to vote Yes...oh, no, wait...he's only saying it to get Fianna Fáil off the hook...no, wait...he's probably just wrong, anyway, I'm sure.

amused,
Scofflaw

I'm an Irish person and I'm glad I'm also a European.

Nehaxak

I think the wording to use would be that those posters "implied" a vote for yes was a vote for more jobs and investment.

Which was and is the case as another no vote had a preceived chance of pushing away further investment and as such, further jobs in Ireland.
Whereas a yes vote from Ireland gave the impression we supported it, and Europe, and therefore business should continue to invest in Ireland and as such more jobs would (should?) be created.

I see no evidence that either any further investment or jobs have been created since the yes vote went through though it could take time, but either way, there's nothing to say any future investment and jobs that might come our way, would not otherwise have come our way if we'd voted no.

The yes for jobs/investment posters in question were just baseless propaganda imho but sure so were those from the no side, if not more so.

In fairness, you should never ever believe any promise made by a politician, they would know that themselves and hence the word promise wasn't used, as it would imply they were telling fibs, whereas not having the word promise on the poster never made you really question their intentions much more than you already did. Crafty buggers

nesf

Nehaxak wrote: »

I think the wording to use would be that those posters "implied" a vote for yes was a vote for more jobs and investment.

Which was and is the case as another no vote had a preceived chance of pushing away further investment and as such, further jobs in Ireland.
Whereas a yes vote from Ireland gave the impression we supported it, and Europe, and therefore business should continue to invest in Ireland and as such more jobs would (should?) be created.

I see no evidence that either any further investment or jobs have been created since the yes vote went through though it could take time, but either way, there's nothing to say any future investment and jobs that might come our way, would not otherwise have come our way if we'd voted no.

The yes for jobs/investment posters in question were just baseless propaganda imho but sure so were those from the no side, if not more so.

In fairness, you should never ever believe any promise made by a politician, they would know that themselves and hence the word promise wasn't used, as it would imply they were telling fibs, whereas not having the word promise on the poster never made you really question their intentions much more than you already did. Crafty buggers

Or the posters could be interpreted as a No vote would reduce investment into this country by FDIs by creating uncertainty into Ireland's place within the EU which wasn't an uncommon view at the time to be fair.

You're also assuming in your interpretation that these jobs will be over the short term, i.e. a year or two and not a long term view looking at patterns over a decade and so on.

And I could go on for longer but meh this issue is so 2009..

Amhran Nua

Scofflaw wrote: »

Independent

Of course he's only saying that to try to get people to vote Yes...oh, no, wait...he's only saying it to get Fianna Fáil off the hook...no, wait...he's probably just wrong, anyway, I'm sure.

amused,
Scofflaw

The EU and the ECB are two completely different institutions.

Scofflaw

Amhran Nua wrote: »

The EU and the ECB are two completely different institutions.

Er, no:

The European Central Bank (ECB) is the institution of the European Union (EU) tasked with administrating the monetary policy of the 16 EU member states taking part in the Eurozone. It is thus one of the world's most important central banks. The bank was established by the Treaty of Amsterdam in 1998, and is headquartered in Frankfurt, Germany.

The ECB is an EU institution established under the Treaties.

cordially,
Scofflaw

Amhran Nua

Scofflaw wrote: »

The ECB is an EU institution established under the Treaties.

cordially,
Scofflaw

The ECB is a notoriously independent entity - it has told the EU, Germany, and the US to take a hike on record previously; generally before the economic crisis, the rule of thumb was that the amount of action taken by the ECB was inversely proportional to the pressure put on it. A bit more information here, I can't find the full legislative explanation I was looking for:

Advocates of central bank independence argue that a central bank which is too susceptible to political direction or pressure may encourage economic cycles ("boom and bust"), as politicians may be tempted to boost economic activity in advance of an election, to the detriment of the long-term health of the economy and the country. In this context, independence is usually defined as the central bank’s operational and management independence from the government.

In addition, it is argued that an independent central bank can run a more credible monetary policy, making market expectations more responsive to signals from the central bank. Recently, both the Bank of England (1997) and the European Central Bank have been made independent and follow a set of published inflation targets so that markets know what to expect.

This is why Minister Lenihan didn't refer to the EU in his speech, but only to the ECB. Not to say the EU is bad or anything, just in this case the credit goes to a different entity.

Scofflaw

Amhran Nua wrote: »

The ECB is a notoriously independent entity - it has told the EU, Germany, and the US to take a hike on record previously; generally before the economic crisis, the rule of thumb was that the amount of action taken by the ECB was inversely proportional to the pressure put on it. A bit more information here, I can't find the full legislative explanation I was looking for:

This is why Minister Lenihan didn't refer to the EU in his speech, but only to the ECB. Not to say the EU is bad or anything, just in this case the credit goes to a different entity.

The ECB exists in order to coordinate the monetary affairs of the EU, and bailed out us out because we're EU members. If you prefer to use the independence of the ECB from political control to make a very fine distinction, though, that's up to you - but the ECB's independence doesn't seem to have extended to bailing out Iceland, curiously enough.

cordially,
Scofflaw

Amhran Nua

Scofflaw wrote: »

The ECB exists in order to coordinate the monetary affairs of the EU, and bailed out us out because we're EU members. If you prefer to use the independence of the ECB from political control to make a very fine distinction, though, that's up to you - but the ECB's independence doesn't seem to have extended to bailing out Iceland, curiously enough.

cordially,
Scofflaw

Iceland isn't in the Eurozone, the ECB has no reason to assist them. There is a very strong distinction between the ECB and the larger EU, the ECB doesn't take directions from the EU - it has a seperate mandate which includes things like maintaining inflation at a certain level.

If a Eurozone member runs into difficulties which threaten that, or in Ireland's case might have caused a contagion issue on the bond markets among other things, the ECB acts, although its actions were verging on stepping outside of its boundaries in this very unusal environment.

Regardless, while the ECB might exist because of the EU, and I do see your point in that respect, it is an entirely seperate entity from the EU, so saying the EU saved our bacon (which Minister Lenihan did not say) is misleading, and leads to all sorts of "what ifs" about our involvement in the EU in the first place.

The Irish government duffed things up in a spectacular fashion, hand in glove with Irish banks (the opportunity to do so being given to them by dint of being in the EU, which is what confuses some people about the source of our financial difficulties), and the ECB will hopefully help to straighten them out again, the efficacy of such aid remaining to be seen.

Red_Marauder

BetterLisbon wrote: »

Our banking crisis was caused by our eurozone membership in the first place. So i dont see why we should be so grateful to europe.

The only way we would have avoided economic damage during the worldwide recession would be to live in a tiny, insular Irish bubble and not trade, do business with or interact with the outside world. It's not the EU's fault - in many ways it has actually become their problem.

Amhran Nua wrote:

Iceland isn't in the Eurozone, the ECB has no reason to assist them.

Regardless, while the ECB might exist because of the EU, and I do see your point in that respect, it is an entirely seperate entity from the EU, so saying the EU saved our bacon (which Minister Lenihan did not say) is misleading, and leads to all sorts of "what ifs" about our involvement in the EU in the first place.

So what, if Lenihan said EU membership saved our bacon, that would be fine, since implicit in that is ECB association?

The EU and the ECB are inextricably linked. Being, as the ECB is, an institution of the EU, I think it is fair that the EU saved our bacon.

Amhran Nua

Red_Marauder wrote: »

So what, if Lenihan said EU membership saved our bacon, that would be fine, since implicit in that is ECB association?

The EU and the ECB are inextricably linked. Being, as the ECB is, an institution of the EU, I think it is fair that the EU saved our bacon.

It doesn't work like that, since were we not in the EU, the opportunities might not have been presented to our goverment to make such a lamentable mess of things as they did - its a misleading statement which leads to argument. Heres a bit more information.

The ECB is designed to be independent of political interference. It also has financial independence by virtue of its having its own budget, separate from the EU's budget, sourced from national central banks. Its political independence was an attribute taken from the bank it was modelled after, the German Bundesbank, due to a consensus amongst economists that an independent central bank was the best way to avoid manipulation of the macroeconomy for political purposes. Furthermore, not only must the bank not seek influence, but EU institutions and national governments are bound by the treaties to respect the ECB's independence by not seeking to influence its decision-making bodies.

This is also aided by the members of the bodies having security of tenure. For example, the minimum term of office for an national central bank governor is five years and members of the executive board have a non-renewable eight-year term. To offer some accountability, the ECB is bound to publish reports on its activities and has to address its annual report to the European Parliament, the European Commission, the Council of the European Union and the European Council. The European Parliament also gets to question and then issue its opinion on candidates to the executive board.

The bank's independence has notably come under intense criticism since the election of Nicolas Sarkozy as French President. Sarkozy has sought to make the ECB more susceptible to political influence, to extend its mandate to focus on growth and job creation, and has frequently criticised the bank's policies on interest rates.

Scofflaw

Amhran Nua wrote: »

It doesn't work like that, since were we not in the EU, the opportunities might not have been presented to our goverment to make such a lamentable mess of things as they did - its a misleading statement which leads to argument. Heres a bit more information.

That's not an argument that disentangles being bailed out by the ECB from EU membership, but an entirely separate argument which is extremely easy to dispute - going on the economic record of Fianna Fáil, about the most one can say is that our government would most probably have made a somewhat different but equally lamentable mess of our economy had we not been in the EU.

The facts of the matter remain very straightforward - we would not have been bailed out by the ECB if we were not EU members, whereas the capacity of our government to make a mess of our economy has been tested many times without the EU, and has been, if anything, somewhat hampered by EM membership.

cordially,
Scofflaw

Amhran Nua

Scofflaw wrote: »

That's not an argument that disentangles being bailed out by the ECB from EU membership, but an entirely separate argument which is extremely easy to dispute - going on the economic record of Fianna Fáil, about the most one can say is that our government would most probably have made a somewhat different but equally lamentable mess of our economy had we not been in the EU.

No doubt, but thats off in the realms of what-if again. We can deal with what has happened in this thread, no more, no less.

Scofflaw wrote: »

The facts of the matter remain very straightforward - we would not have been bailed out by the ECB if we were not EU members

The decision being referred to by Minister Lenihan was not made by the EU, but by the ECB, which is a different institution, as already pointed out the EU is expressly forbidden to interfere in ECB affairs by treaty, even in the face of harsh criticism. Had the ECB decided otherwise, and they could have, this thread might have a different title, if you see where I'm headed. EU members are not entitled to assistance.

evercloserunion

The decision being referred to by Minister Lenihan was not made by the EU, but by the ECB, which is a different institution, as already pointed out the EU is expressly forbidden to interfere in ECB affairs by treaty, even in the face of harsh criticism. Had the ECB decided otherwise, and they could have, this thread might have a different title, if you see where I'm headed. EU members are not entitled to assistance.

The ECB is not a different institution to the EU. It is a different institutions to the other institutions of the EU, of course, and no other institution may interfere with its business. But it is part of the EU, and the benefits which derive from it derive from our membership of the EU and EMU.

Scofflaw

Amhran Nua wrote: »

No doubt, but thats off in the realms of what-if again. We can deal with what has happened in this thread, no more, no less.

You did introduce the "what-if" yourself, I'm afraid.

evercloserunion wrote:

The ECB is not a different institution to the EU. It is a different institutions to the other institutions of the EU, of course, and no other institution may interfere with its business. But it is part of the EU, and the benefits which derive from it derive from our membership of the EU and EMU.

Pot-ay-to.

Amhran Nua wrote: »

The decision being referred to by Minister Lenihan was not made by the EU, but by the ECB, which is a different institution, as already pointed out the EU is expressly forbidden to interfere in ECB affairs by treaty, even in the face of harsh criticism. Had the ECB decided otherwise, and they could have, this thread might have a different title, if you see where I'm headed. EU members are not entitled to assistance.

Pot-ah-to.

I think it depends on how you look at it. The ECB is not the EU, but it is an EU institution, set up under the EU treaties, with a membership comprising only member states, with duties concerned solely with the member states, and which wouldn't exist in the absence of the EU. That it has its own governing board makes it no less part of the EU than the Commission, the Council, the Parliament, the European Council, or any of the other institutions that form the EU.

cordially,
Scofflaw

Amhran Nua

evercloserunion wrote: »

The ECB is not a different institution to the EU. It is a different institutions to the other institutions of the EU, of course, and no other institution may interfere with its business. But it is part of the EU, and the benefits which derive from it derive from our membership of the EU and EMU.

The EU has no real jurisdiction over the ECB, therefore the benefits the ECB represents are entirely the ECB's to dispense.

Scofflaw wrote: »

You did introduce the "what-if" yourself, I'm afraid.

Only as an example of whats not productive to discuss - hypotheticals.

Scofflaw wrote: »

which wouldn't exist in the absence of the EU.

Okay, so the ultimate question to ask is, does assistance from the ECB depend on goodwill or lack thereof from the EU? The answer to that is of course, no. Therefore pointing at the EU as the source of ECB assistance is a misnomer. Regardless of our membership within the EU, or how other member states feel about us, the ECB will act as it sees best.

I realise this may seem a bit fine grained, but understanding these details is a vital element in organising and planning for the financial future of the country. There is a difference, and it does make a difference.

evercloserunion

The EU has no real jurisdiction over the ECB, therefore the benefits the ECB represents are entirely the ECB's to dispense.

This is highly circular. The ECB is *part* of the EU, therefore benefits which derive from the ECB derive, by definition, from the EU. Now, depending on what it is you're actually trying to say you may have a point about the ECB being operationally separate from the other institutions, but you'd want to be a bit clearer because currently what you are saying does not make sense.

Nor am I just being excessively pedantic; we would not benefit from the existence or decisions of the ECB if the EU did not exist (as the ECB would not exist), or if we were not members of the EU (because we would not be in EMU).

Scofflaw

Amhran Nua wrote: »

The EU has no real jurisdiction over the ECB, therefore the benefits the ECB represents are entirely the ECB's to dispense.


Only as an example of whats not productive to discuss - hypotheticals.


Okay, so the ultimate question to ask is, does assistance from the ECB depend on goodwill or lack thereof from the EU? The answer to that is of course, no. Therefore pointing at the EU as the source of ECB assistance is a misnomer. Regardless of our membership within the EU, or how other member states feel about us, the ECB will act as it sees best.

I realise this may seem a bit fine grained, but understanding these details is a vital element in organising and planning for the financial future of the country. There is a difference, and it does make a difference.

I appreciate the point that the goodwill of the EU is not necessarily a guarantee of the assistance of the ECB, but it's somewhat more important that membership of the EU is a necessary prerequisite.

What vital impact do you regard this fine grained distinction as having in organising and planning for the financial future of the country?

cordially,
Scofflaw